CMS Gives More Detail on New Provider Type, Rural Emergency Hospital

July 11, 2022


Craig Wilson, JD, MPA
Director, Health Policy

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On June 30, the Centers for Medicare and Medicaid Services (CMS) provided more detail about what a hospital must do to become a rural emergency hospital (REH). The proposed REH conditions of participation follow congressional action in late 2020 through the Rural Emergency Acute Care Hospital (REACH) Act, which created the new provider type in the federal Medicare program.

Here are seven things to know:

  1. The REH conditions of participation are very similar to those required of critical-access hospitals.
  2. Hospitals converting to the REH designation will discontinue offering inpatient services, which require intense staffing and have higher overhead costs compared to other services, and be able to turn their attention to offering much-needed urgent, emergent, and outpatient services, including maternal and behavioral health services, in rural communities. Notably, CMS said it expected that some REHs would be interested in being opioid treatment providers, which would be permitted on an outpatient basis under the proposal.
  3. REH payment rates were not included in the proposed regulation but are expected to be included when the regulation is finalized in the fall as part of the Calendar Year 2023 Outpatient Prospective Payment System-Ambulatory Surgical Center. However, the REACH Act indicates that REHs will receive 105% of the Medicare Prospective Payment System rates for hospital outpatient department services, as well as additional monthly facility payments. Medicare payments may begin as early as Jan. 1, 2023, although it is likely that few, if any, hospitals will convert by that time.
  4. In order for a hospital to be eligible to be paid as an REH through Medicare, the proposed rule requires state-based licensure as an REH. Licensure also will provide a pathway for the REH to be a Medicaid provider.
  5. CMS is requesting additional comments regarding a) the ability of REHs to provide low-risk childbirth-related labor and delivery services, and, if permitted, whether REHs must also provide surgical services in the event of necessary intervention, and b) the appropriateness of staffing requirements for emergency services that would allow a practitioner to be on-call and immediately available versus on-site at all times.
  6. REHs must have a transfer agreement with a Level I or II trauma system but may also have additional transfer agreements with lower-level trauma systems.
  7. An REH may be an originating site — the location of the patient receiving services — for the provision of telemedicine services.

The REH designation offers an opportunity for rural acute-care hospitals with 50 or fewer beds, including critical-access hospitals, to avoid closure and continue to offer essential services to their communities. States surrounding Arkansas have seen 59 closures since 2012, while Arkansas has seen only one closure. However, Arkansas remains among the states with the highest percentages of rural hospitals at high risk of closing.