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With Proposed Rule for Rural Emergency Hospitals, CMS Starts to Define New Provider Type

CMS recently published a proposed rule describing the conditions of participation for a new type of Medicare provider, the rural emergency hospital.

Congress established this new provider type in the Consolidated Appropriations Act of 2021 to address concerns about the continuing closure of rural hospitals, which CMS tallies at 138 since 2010. In general, rural emergency hospitals provide emergency department, observation care, and certain additional outpatient medical and health services, which the proposed rule states are items and services commonly furnished in a physician’s office or another entry point into the healthcare delivery system (e.g., radiology, laboratory, outpatient rehabilitation, surgical, maternal health, and behavioral health services) that “align with the health needs of the community served” by the hospital.

Rural emergency hospitals may only provide inpatient services in distinct part units licensed as skilled nursing facilities, and a rural emergency hospital’s annual per patient average length of stay may not exceed 24 hours. Additionally, a rural emergency hospital must have been a critical access hospital or rural hospital with no more than 50 beds on December 27, 2020.

Beginning January 1, 2023, Medicare will reimburse rural emergency hospitals at 105% of the rates in the Hospital Outpatient Prospective Payment System. Rural emergency hospitals will also receive an additional monthly facility payment, which CMS will determined in a separate notice and comment rulemaking.

The proposed rule defines the conditions that a rural emergency hospital must meet to participate in the Medicare program. Under these conditions, a rural emergency hospital must, among other things:

  1. have an organized medical staff that operates under bylaws approved by the hospital’s governing body;

  2. maintain, or have available, diagnostic radiology services, including a full-time or part-time consulting qualified radiologist (or other qualified personnel) to interpret radiologic tests the medical staff determines require specialized knowledge;

  3. have a pharmacy or drug storage area maintained by a pharmacist or other qualified individual in accordance with state law;

  4. provide (either directly or through a contract) basic laboratory services essential to the immediate diagnosis and treatment of patients; and

  5. have an agreement with at least one level I or level II trauma hospital for the referral and transfer of patients who require emergency care beyond the rural emergency hospital’s capabilities.

The proposed rule also states that rural emergency hospitals must staff their emergency services in the same way that critical access hospitals do. Under this requirement, practitioners do not have to be on-site at all times. Instead, a physician, physician assistant, nurse practitioner, or clinical nurse specialist must be on call and able to get to the hospital within a specific time, usually 30 minutes. CMS has requested comments about this requirement to “gain insight” about whether it is appropriate not to require that a practitioner be on-site at a rural emergency hospital at all times.

CMS also requested comments about whether rural emergency hospitals should be permitted to provide low-risk labor and delivery services and whether they should be required to provide outpatient surgical services if surgical labor and delivery intervention is necessary. Comments must be received by August 29, 2022, to be considered.


Nate Lykins
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