Rural Emergency Hospital Questions: Just the FAQs

Strategic Planning, Business & Financial Planning, Payers & Payment Models, CON/CHNA/Regulatory

If you have questions about the new Rural Emergency Hospital model, we finally have some answers.

Two years since Congress passed the law authorizing Emergency Rural Hospitals – and two months before billing can begin – we now know exactly what the new provider type will entail.

With yesterday’s release of the Final Rule for Rural Emergency Hospitals, rural healthcare leaders can begin in earnest to weigh the pros and cons of an REH conversion. This is something we’ve been talking about for months, and based on our many conversations, we believe the following nine questions are top of mind for most leaders.

Think of this as an REH “cheat sheet,” but be sure to read our in-depth Guide to Rural Emergency Hospitalsfor strategic considerations that go well beyond the basics that follow.

What are the major rules for Rural Emergency Hospitals?

Unique among Medicare hospital types, REHs cannot have inpatient beds, but they must offer emergency care and observation services 24/7. Staffing requirements are somewhat looser by design, including the option to have some providers on-call rather than on-site. Otherwise, rules for safety, quality, reporting, and the like will be similar to those governing Critical Access Hospitals (CAHs).

What are the major advantages of a Rural Emergency Hospital?

By doing away with low-volume inpatient services, REHs may be able to reduce operating costs. Those savings can be reinvested in outpatient services that are more broadly needed in the community, including maternal health and behavioral health. In addition to lower costs, REHs will benefit from a federal facility payment – essentially a subsidy to keep the doors open – of nearly $3.3 million per year.

What services can be offered by a Rural Emergency Hospital?

The rule is deliberately broad to allow for local decision-making. Aside from inpatient care, REHs are specifically permitted to offer any service deemed necessary after a community assessment.

How does Medicare pay Rural Emergency Hospitals?

For the first time, Medicare will offer a monthly facility payment of $272,866 – nearly $3.3 million per year – and REHs must direct a “sufficient share” of these funds to providing outpatient care. Payments will adjust upward each year based on the market basket. In addition to the monthly subsidy, Medicare will reimburse REHs at 105% of Outpatient Prospective Payment System (OPPS) rates.

Do Rural Emergency Hospitals get cost-based reimbursement?

Unlike Critical Access Hospitals, REHs will not be paid based on reasonable costs. Instead, Medicare will offer a monthly facility fee of roughly $270,000 in addition to reimbursing for outpatient services at 105% of the normal rate.

Will Rural Emergency Hospitals be reimbursed for telehealth?

REHs are considered a “permissible originating site” for telemedicine, making them eligible for Medicare reimbursement. Furthermore, to keep costs down, CMS has put most of the credentialing burden on the distant hospital site, rather than the REH.

Can Rural Emergency Hospitals participate in 340B?

Not at this time. CMS notes that the decision is out of its hands because the Health Resources & Services Administration (HRSA) determines eligibility for the 340B Program.

Which hospitals are eligible for REH status?

Any facility operating as a Critical Access Hospital or a rural acute care hospital with fewer than 51 beds can convert to REH status. In both cases, the facility must have been in operation as of Dec. 27, 2020, the date the law was passed.

How can I convert to Rural Emergency Hospital status?

CMS has tried to make the REH conversion process as frictionless as possible. Rather than applying as a new Medicare provider, existing rural hospitals can simply file a change of information form – a quick process designed to allow new REHs to start billing by Jan. 1, 2023.

Still have questions about the new Rural Emergency Hospital model? Please contact us for answers specific to your unique situation.

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