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Rural Emergency Hospitals: The Regulations Come Into Focus

The passage of the Consolidated Appropriations Act in late 2020 established a new type of hospital eligible for Medicare and Medicaid funding: the Rural Emergency Hospital (REH). Now, the Centers for Medicare & Medicaid Services is ironing out the regulatory details.

On July 7, CMS released its proposed Conditions of Participation, with public comments open until late August. The new REH categorization is set to pay out Medicare benefits beginning January 2023.

Similar to Critical Access Hospitals, which debuted 30 years ago, the REH designation is designed to ensure sustainable healthcare in non-metropolitan areas.

Under the proposed rules, REHs would provide 24-hour emergency services, observation services, and “other outpatient medical and health services.” But unlike CAHs, Rural Emergency Hospitals cannot provide inpatient services, “except those services provided in a distinct part SNF (Skilled Nursing Facility) of the REH.”

Staffing requirements vary somewhat between the two hospital types, and a key attraction of REH status might be the potential cost savings associated with lower salary expenses. Probably because of the more robust services that they offer, CAHs are required to have professional health care staff present during all operating hours – specifically, a “doctor of medicine or osteopathy, nurse practitioner, clinical nurse specialist, or physician assistant.”

Because REHs provide outpatient emergency services only, the proposed rule allows physicians and advanced care providers to be “on call” and within a certain physical distance from the healthcare site. For 24/7 on-site staffing, CMS would allow nurses, clinical technicians, EMTs, or other auxiliary medical personnel to fulfil that role as long as they are “competent to receive patients and activate the appropriate medical resources for the treatment of the patient.”

The new REH categorization has less stringent nursing requirements, too. The CAH rules dictate that a registered nurse, clinical nurse specialist, or licensed practical nurse must be on site “whenever the CAH has one or more inpatients.” But the REH rules – modeled after requirements for ambulatory surgery centers – only require “an organized nursing service that is available to provide 24-hour nursing services for the provision of patient care.”

Outside of the two required categories of care – 24-hour emergency services and observational services – REHs also are permitted to “provide additional medical and health outpatient services that include, but are not limited to, radiology, laboratory, outpatient rehabilitation, surgical, maternal health, and behavioral health services.” REHs are expected to establish the need for such outpatient services by conducting a community assessment.

Commentary accompanying the proposed CMS rules particularly focuses on maternal healthcare needs in rural communities, as well as the opioid crisis affecting many nonmetropolitan areas. CMS says that opioid treatment is an acceptable service for REHs to provide if such treatment is strictly relegated to outpatient care. CMS also encourages REHs to provide maternal healthcare. Labor and delivery services are recommended, along with outpatient surgical intervention when needed.

Like CAHs, the proposed rules permit REHs to serve as “telehealth originating sites” while providing an optional, more efficient alternative path to telemedicine privileging.

REH classification is available to hospitals with designated CAH status as of Dec. 27, 2020, when the Consolidated Appropriations Act was passed. Without CAH status, “a rural hospital with not more than 50 beds” at the time of the CAA’s passage may also be eligible.

REHs and CAHs are held to the same standards for laboratory services, radiology, infection prevention measures, and antibiotic stewardship. And the proposed REH requirements for drug preparation, administration, and storage are identical to CAH requirements.

Looking forward, an REH designation could help facilities avoid the logistical and financial burdens implicated in providing inpatient care to rural communities that lack the population density to support such services. In fact, the designation carries two additional funding benefits: REH classification comes with a monthly facility payment, and service reimbursement is proposed at 105% of the Medicare Hospital Outpatient Prospective Payment System.

But some major details are still to be decided: According to CMS, “payment and enrollment policies for REHs will be developed under separate rulemaking.” CMS will continue taking public comment on the proposed regulations (electronically and via mail) until August 29.

Adrianne Cleven is a Nelson Mullins summer associate working in the office of RHI cofounder Bob Wilson.

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