Under recent end of 2020 COVID-19 relief legislation, Congress established a new Medicare provider type aimed at increasing healthcare services in rural areas. Beginning January 1, 2023, a facility may be classified as a Rural Emergency Hospital (REH) if the facility was a critical access hospital, or a general acute care hospital, in a rural area with a maximum of 50 beds when the legislation was enacted. To qualify, the facility must furnish “rural emergency hospital services.” The legislation defines rural emergency hospital services as emergency department services, observation care, and other medical and health services as defined by HHS.  Facilities designated REH will not be able to provide any acute care inpatient services. Instead, an REH must have a transfer agreement with a Level I or II trauma center.

The REH facility must also meet certain licensing requirements. To qualify as an REH, the facility must be located in a state that provides for the licensing of an REH and be so licensed pursuant to state-established standards. Additionally, Congress imposed staffing requirements for a facility to classify as an REH. The emergency department of the facility must be staffed 24 hours a day, 7 days a week, and a physician, nurse practitioner, clinical nurse specialist, or physician assistant must be available 24 hours a day to furnish REH services in the facility. The facility must also comply with staffing and staff responsibilities enumerated in the Conditions of Participation for critical access hospitals.

REH facilities will be reimbursed at the Outpatient Prospective Payment System Rate plus 5%. This reimbursement includes the application of any copayment amounts. REH facilities can also expect additional monthly payments in 2023 based on a Medicare subsidy amount. For 2024 and each subsequent year, REHs can expect to receive an amount based on the preceding year in addition to an increase determined by the hospital market basket percentage. Payments for ambulance care services and post-hospital extended care services are to be expected as well.

While Congress has recognized REHs in response to an increased number of rural hospital closures during the pandemic, CMS and state guidance is needed for providers to be able to utilize this new venue for Medicare reimbursements. Providers looking to establish REH facilities need further clarification of the following concerns:

  • When can providers expect rulemaking and guidance from CMS on this new designation?
  • Which outpatient services can REHs expect to be reimbursed for? Do these include telehealth services?
  • How will Certificate of Need requirements account for this status? Will REHs be considered a development or expansion?
  • What are the conditions for participation for services other than emergency services (which are held to the same standard that critical access hospitals are)?
  • Under the legislation, in order to be considered an REH, the facility must be licensed as an REH under state law. What happens in a state that does not provide this method of licensing?
  • What needs to be included in the action plan for initiating REH services?
  • When will the application for enrollment of REHs be available, and what type of supporting documentation should providers anticipate?
  • Any additional questions specific to you.

Despite these outstanding questions, providers should begin planning now in the event that this venue may strengthen their continuum. Advis is available to provide regulatory and financial feasibility studies to determine the impact of the REH designation and to plan for future conversions. Please contact us online or by calling (708) 478-7030 for more details.

Published: January 11, 2021