CMS Guidance for Rural Hospital Growth: Introduction
The Centers for Medicare & Medicaid Services (CMS) recently released updated guidance for hospitals aiming to convert into rural emergency hospitals (REHs). This new provider type was established to address the growing challenges faced by rural healthcare facilities and improve access to essential services in underserved communities. With more than 400 rural hospitals in the United States at risk of closure, the introduction of the REH designation seeks to provide much-needed support to ensure the sustainability of rural healthcare delivery.
This comprehensive guide delves into CMS’s updated rural emergency hospital guidance, exploring the conversion process, eligibility requirements, and the benefits of becoming an REH. We will also examine the challenges rural hospitals face and how this new designation aims to improve health equity across rural America.
What is a Rural Emergency Hospital (REH)?
A rural emergency hospital (REH) is a new provider type created under the Consolidated Appropriations Act of 2021. The REH designation is specifically designed to help small rural hospitals and critical access hospitals (CAHs) that may struggle to keep their doors open due to financial constraints. By converting to REHs, these facilities can continue providing essential emergency and outpatient services while avoiding the need to offer full inpatient care.
The REH designation is intended to promote health equity by ensuring rural communities have access to emergency medical services and outpatient care without the financial burden of maintaining inpatient hospital beds.
CMS Guidance for Rural Emergency Hospitals
Conditions of Participation
CMS’s updated guidance outlines the conditions of participation for hospitals seeking to become REHs. These conditions align closely with the current critical access hospital requirements but also take into account the unique needs of REHs. Hospitals that choose to convert must meet specific operational standards to ensure quality care and compliance with Medicare and Medicaid regulations.
REHs are required to maintain emergency department services and can only offer outpatient care with a maximum 24-hour annual per-patient average length of stay. This limited scope of services helps reduce operating costs while still providing essential healthcare to rural communities.
Conversion Process
The conversion process is a critical aspect of CMS’s guidance. Hospitals interested in converting to REHs must submit an application to their Medicare administrative contractor. Eligible facilities include small rural hospitals and critical access hospitals that meet specific criteria outlined by CMS. The conversion allows hospitals to retain Medicare and Medicaid participation while transitioning to the REH designation, which enables them to focus on outpatient and emergency care services.
Benefits of Rural Emergency Hospitals
One of the key advantages of the REH designation is the additional financial support provided by CMS. REHs receive an additional 5% over the Hospital Outpatient Prospective Payment System (OPPS) rate for services provided to Medicare patients. This increase helps offset some of the financial challenges faced by rural hospitals, making it more feasible for them to continue operating and serving their communities.
Moreover, the REH designation enables rural hospitals to avoid the costs associated with inpatient care, allowing them to focus resources on emergency and outpatient services, which are often the most critical needs in rural areas.
Challenges for Rural Hospitals
Financial Struggles
Rural hospitals have long faced financial difficulties due to lower patient volumes, budget constraints, and an overall decline in revenue. According to a 2024 report by Chartis, more than 400 rural hospitals in the U.S. are vulnerable to closure, with 55% of independent rural hospitals operating at a financial loss. These financial pressures have made it difficult for rural hospitals to maintain operations and provide adequate care to their communities.
Vulnerability to Closure
The financial instability of rural hospitals has led to an increased risk of closures. Many rural communities rely on these hospitals for critical healthcare services, and the closure of a hospital can significantly impact access to care. The REH designation offers a potential solution by allowing hospitals to continue providing essential services while reducing operational costs.
The Role of CMS in Supporting Rural Emergency Hospitals
CMS plays a crucial role in supporting rural healthcare facilities through updated guidance and financial incentives. By providing a clear framework for hospitals interested in converting to REHs, CMS aims to ensure that rural communities continue to have access to vital healthcare services.
The updated CMS guidance also includes a fact sheet that helps hospitals navigate the enrollment process for Medicare and Medicaid, ensuring that they meet the eligibility requirements and can access technical assistance as needed.
Eligibility Criteria for REHs
To be eligible for the REH designation, hospitals must meet specific criteria outlined by CMS. These include being a critical access hospital or a small rural hospital, meeting the conditions of participation, and being located in a rural area where access to healthcare services is limited.
Hospitals interested in converting to REHs must also demonstrate that they can provide emergency services, maintain a staffed emergency department 24/7, and establish a transfer agreement with a Medicare-certified Level I or Level II trauma center.
Key Requirements for Rural Emergency Hospitals
Services Provided by REHs
REHs are allowed to provide emergency department services, observation care, and outpatient services. However, they are not permitted to offer inpatient care unless it is provided in a distinct part licensed as a skilled nursing facility for post-hospital extended care services.
Transfer Agreements and Staffing
REHs must establish a transfer agreement with a Medicare-certified Level I or Level II trauma center to ensure patients can access higher levels of care when needed. Additionally, REHs are required to have a fully staffed emergency department available 24 hours a day, seven days a week.
Steps to Becoming a Rural Emergency Hospital
Applying for Medicare and Medicaid Participation
Hospitals interested in becoming REHs must submit an application to their Medicare administrative contractor. This application process ensures that hospitals meet the necessary eligibility criteria and comply with CMS’s conditions of participation.
Technical Assistance and Resources
CMS encourages hospitals to utilize the Health Resources and Services Administration’s REH technical assistance center, which provides guidance and support throughout the conversion process. This resource helps hospitals determine whether the REH designation is the right fit for their community and offers assistance with the application process.
Conclusion
The updated CMS guidance for rural emergency hospitals provides a clear path for rural healthcare facilities to continue serving their communities in the face of financial challenges. By offering additional financial support and focusing on emergency and outpatient care, the REH designation helps rural hospitals remain viable while ensuring that essential healthcare services are available to underserved populations. As more hospitals explore the option of converting to REHs, the role of CMS in promoting health equity and supporting rural healthcare will continue to be critical.
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FAQs
1. What is a Rural Emergency Hospital (REH)?
A. A Rural Emergency Hospital (REH) is a new provider type designed to help small rural hospitals and critical access hospitals maintain emergency and outpatient services without offering inpatient care.
2. What are the benefits of becoming an REH?
A. REHs receive an additional 5% over the Hospital Outpatient Prospective Payment System (OPPS) rate for Medicare services and can reduce costs by focusing on emergency and outpatient care.
3. What services can REHs provide?
A. REHs are allowed to provide emergency department services, observation care, and outpatient services with a 24-hour per-patient average length of stay but cannot offer inpatient care unless licensed as a skilled nursing facility.
4. How can hospitals apply to become an REH?
A. Hospitals must submit an application to their Medicare administrative contractor and meet CMS’s eligibility requirements, including maintaining emergency services and having transfer agreements with trauma centers.
