Background

The Consolidated Appropriations Act of 2021, passed in the final days of 2020, included a provision presenting a new opportunity for rural health care providers: enrollment as a “rural emergency hospital.”  More specifically, Section 125 of the Act created a new provider type, known as a ‘rural emergency hospital’, and while future regulations will establish more specifics, the Act does set forth the basic requirements providers will have to meet in order to enroll and bill for services under this new category beginning January 1, 2023.  Rural and critical access hospitals interested in this new enrollment category should begin evaluating whether the transition to rural emergency hospital may be the right fit for them, and should watch for future proposed regulations and the opportunity to submit comments on them.

Eligibility and Requirements

Rural emergency hospital enrollment is available to providers who are currently enrolled in the Medicare program as either a critical access hospital (“CAH”) or a rural hospital with 50 or fewer beds.  .  Notably, some additional requirements that future rural emergency hospitals will need to satisfy include the following:

1. Maintenance of an annual average per patient length of stay of less than 24 hours,

2. Operation of an emergency department that is staffed 24/7,

3. Availability of a physician, nurse practitioner, clinical nurse specialist, or physician assistant to provide emergency hospital services 24 hours per day,

4. Compliance with the CAH staffing condition of participation, 42 C.F.R. § 485.631,

5. Entry into a  transfer agreement with a level I or level II trauma center,

6. State licensure as a rural emergency hospital (or equivalent), and

7. Compliance with EMTALA.

In order for a CAH or rural hospital to transition its Medicare enrollment to a rural emergency hospital, the provider must submit a detailed transition plan to CMS listing which services the hospital will retain, modify, add, or discontinue. The plan will also include a description of how the new rural emergency hospital will use the additional facility payment that such new providers will enjoy as a result of their conversion.

Should future circumstances change, a hospital that elects to convert to a rural emergency hospital will be permitted to convert back to its previous status as a CAH or rural hospital. To date, however, no details have been provided with regards to that process. 

Scope of Services

Rural emergency hospitals may not furnish acute care inpatient services.  What they can provide, however, are emergency department services, observation care, and certain outpatient services as permitted by future rule making, in addition to serving as a telehealth originating site. Such facilities may also house a distinct part unit that is licensed as a skilled nursing facility (“SNF”).

Reimbursement

When the category becomes effective in 2023, rural emergency hospital services will be reimbursed at 105% of the Medicare Hospital Outpatient Prospective Payment System amount for covered outpatient services. In addition, rural emergency hospitals will also receive a monthly facility payment amount that increases annually by the hospital market basket percentage. This additional payment amount is determined from a formula that estimates the amount of money that HHS saves in reimbursement for inpatient CAH and rural hospital services (and SNF services) from facilities that convert to rural emergency hospitals. The hospital will need to maintain detailed information regarding how it uses this additional facility payment. 

Considerations for Providers

Providers considering the transition to rural emergency hospital should watch closely for HHS to promulgate proposed rules or other guidance implementing this new category of enrollment, especially for the opportunity to comment on such proposals and shape any final regulations. For example, the rules will specify which outpatient services a rural emergency hospital will be permitted to furnish, as well as what quality data hospitals will be required to report each year, and likely the ramifications of failing to do so or meet any benchmarks established. Another critical component will be to monitor state law developments or intersect with state licensing agencies and health departments to facilitate the development of any changes to state licensing requirements for rural emergency hospitals.