An Overview of the New Rural Emergency Hospital Medicare Designation

Over 135 rural hospitals have closed since 2010 with hundreds more identified as vulnerable based on performance levels. Despite the challenge’s rural facilities face, access to emergency services and higher-level outpatient services are necessary. A new model for rural hospitals developed by Congress aims to provide an alternative model for these hospitals.

Beginning in 2023, the Centers for Medicare & Medicaid Services (CMS) will offer a new Rural Emergency Hospital (REH) Medicare designation to facilities. This designation will be available to current Critical Access Hospitals (CAHs) and rural Prospective Payment System hospitals with fever than 50 beds. These facilities must increase their outpatient services and decrease their inpatient care – with the goal of achieving financial stability by maintain critical services for patients while reducing costly inpatient care.  

Using this designation, REHs can furnish outpatient services, including around-the-clock emergency care, observation, nursing facility services and ambulances—but not inpatient services. Because they are getting rid of inpatient care, REHs must have transfer agreements with regional Level 1 or Level 2 trauma centers.

Hospitals that opt for this designation will receive a Medicare outpatient rate that is 5% higher than what “full service” hospitals receive and will receive a monthly facility payment.

Rural hospitals will have to consider whether there is a need in their community for inpatient services or whether this new REH model will be enough for the community. 

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