Fact Sheets

Rural Emergency Hospitals Proposed Rulemaking

Rural Emergency Hospitals (REHs) are a new provider type established by the Consolidated Appropriations Act, 2021 to address the growing concern over closures of rural hospitals. The REH designation provides an opportunity for Critical Access Hospitals (CAHs) and certain rural hospitals to avert potential closure and continue to provide essential services for the communities they serve. Conversion to an REH allows for the provision of emergency services, observation care, and additional medical and health outpatient services, if elected by the REH, that do not exceed an annual per patient average of 24 hours. This new provider type, effective January 1, 2023 will promote equity in health care for those living in rural communities by facilitating access to needed services.

Rural Emergency Hospitals: Payment Policies

REHs are facilities that convert from either a critical access hospital (CAH) or a rural hospital (or one treated as such under section 1886(d)(8)(E) of the Social Security Act) with less than 50 beds, and that do not provide acute care inpatient services with the exception of skilled nursing facility services furnished in a distinct part unit. In this rule, CMS is proposing the provider enrollment procedures and payment rates that would apply to REHs. Along with the REH Conditions of Participation, the policies in these proposed rules will allow rural hospitals to seek this new designation and provide continued access to emergency services, observation care, and additional medical and outpatient services.

By statute, REH services include emergency department services and observation care and may include other outpatient medical and health services as specified by the Secretary. Covered outpatient department services provided by REHs will receive an additional 5% payment for each service. Beneficiaries will not be charged coinsurance on the additional 5% payment. REHs will also receive a monthly facility payment. After the initial payment is established in CY 2023, the payment amount will increase in subsequent years by the hospital market basket percentage increase.

To improve access to all types of care in rural settings, CMS is broadly proposing to consider all covered outpatient department services (that is, services that would otherwise be paid under the OPPS) as REH services. REHs would be paid for furnishing REH services at a rate that is equal to the OPPS payment rate for the equivalent covered outpatient department service increased by 5%. CMS is also proposing that REHs may provide outpatient services that are not otherwise paid under the OPPS (such as services paid under the Clinical Lab Fee Schedule) as well as post-hospital extended care services furnished in a unit of the facility that is a distinct part of the facility licensed as a skilled nursing facility; however, these services will not be considered REH services and therefore will be paid under the applicable fee schedule for such services and will not receive the additional 5% payment increase that CMS proposes to apply to REH services.

Conditions of Participation to Ensure Quality Care

On June 30, 2022, CMS proposed to establish Conditions of Participation (CoPs) to ensure the health and safety of patients who will receive REH services in the most efficient manner possible, while taking into consideration the access and quality of care needs of an REH’s patient population. CMS has proposed standards for REHs that closely align with the current CAH CoPs in most cases, while taking into account the uniqueness of REHs and statutory requirements. In some instances, the proposed REH policies closely align to the current hospital and ambulatory surgical center standards, such as the polices for outpatient services’ requirements and life safety code, respectively. CMS is seeking input from the rural community on specific proposed REH standards, including the ability of an REH to provide low-risk childbirth-related labor and delivery services and whether CMS should require that an REH also provide outpatient surgical services in the event that surgical labor and delivery intervention is necessary. CMS is also requesting comments regarding whether it is appropriate for an REH to allow a doctor of medicine or osteopathy, a physician assistant, a nurse practitioner, or a clinical nurse specialist, with training or experience in emergency medicine, to be on call and immediately available by telephone or radio contact and available on site within specified timeframes.

Rural Emergency Hospital (REH) Provider Enrollment

Providers and suppliers are required to enroll in Medicare to receive payments for services and items furnished to Medicare beneficiaries. The purpose of the provider enrollment process is to help confirm that providers and suppliers seeking to bill Medicare meet all federal and state requirements to do so. The provider enrollment proposals would update our existing Medicare provider enrollment regulations in 42 CFR Part 424, subpart P to address enrollment requirements for REHs. (Additional information regarding these requirements is included in the proposed rule’s preamble as well as in future sub-regulatory guidance.) One of the most important REH enrollment provisions in the proposed rule is that the facility may submit a Form CMS-855A change of information application (rather than an initial enrollment application) in order to convert from a CAH to an REH. We believe that not requiring an initial application, which generally takes longer for a Medicare Administrative Contractor (MAC) to process than a change of information application, would help expedite the CAH-to-REH conversion.

Rural Emergency Hospitals (REH) Physician Self-Referral Law Update

The physician self-referral law, commonly known as the “Stark Law”: (1) prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, unless the requirements of an applicable exception are satisfied; and (2) prohibits the entity from filing claims with Medicare (or billing another individual, entity, or third-party payer) for any improperly referred designated health services. A financial relationship may be an ownership or investment interest in the entity or a compensation arrangement with the entity. The statute establishes a number of specific exceptions and grants the Secretary the authority to create regulatory exceptions for financial relationships that do not pose a risk of program or patient abuse. 

In the CY 2023 OPPS/ASC proposed rule, CMS is proposing updates to the physician self-referral law for the new rural emergency hospital (REH) provider type. Specifically, CMS is proposing (1) a new exception for ownership or investment interests in an REH; and (2) revisions to certain existing exceptions to make them applicable to compensation arrangements to which an REH is a party.

Next Steps

Both the Conditions of Participation proposed rule issued on June 30, 2022 and the payment policies and provider enrollment procedures proposed in the CY 2023 OPPS/ASC payment system proposed rule are anticipated to be finalized together this fall.

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