Struggling rural hospitals can go emergency-only, starting next year; new Medicare agency rule lays out the process

"The Biden administration released a proposed rule that grants more regulatory flexibility for small, rural hospitals in a bid to curb a worrying trend of facility closures," Robert King reports for Fierce Healthcare. "The Centers for Medicare and Medicaid Services’ proposed rule released Thursday outlines the conditions of participation for a facility to become a Rural Emergency Hospital, which enables a facility to offer emergency care, observation and other outpatient services."

In December 2020 Congress created the rural emergency hospital as a new type of Medicare provider. The model, which takes effect in 2023, aims to mitigate the loss of emergency services in rural areas where hospitals have closed. Some small rural hospitals or critical-access hospitals can convert to REHs, facilities that provide 24-hour emergency services but no inpatient care. The new classification matters because rural hospitals rely on Medicare reimbursements, but in order to receive it they must maintain expensive inpatient beds so they can still be classified as hospitals. (This webinar had a good overview.)

"CMS’ goal for the new designation is to enable small facilities in rural areas and critical access hospitals to “right-size their service footprint and avoid potential closure,” according to a fact sheet on the rule," King reports. "Overall, the conditions of participation closely align with current conditions for critical access hospitals. However, CMS is seeking comments on specific standards for the rural facilities, such as whether the agency should require a facility to also provide outpatient surgery services if surgical labor is necessary. "