The Consolidated Appropriations Act, 2021 (the “Act”) signed into law on December 27, 2020, created a new Medicare provider type called a Rural Emergency Hospital (“REH”). Critical access hospitals (“CAHs”) and rural hospitals with 50 beds or fewer could transition to REH status starting January 1, 2023. On June 30, 2022, the Centers for Medicare & Medicaid Services (“CMS”) released proposed regulations (“Proposed Rule”) addressing the Conditions of Participation (“CoPs”) that a provider will need to meet to qualify as an REH. The Proposed Rule did not contain the details of the payment policies for REHs, which CMS will develop in separate notice and comment rulemaking.
Takeaways
- The Act created the new REH Medicare provider type.
- An REH must provide 24/7 emergency services and certain other outpatient health services.
- CAHs and other small rural hospitals may convert to REH status and qualify for enhanced payments starting on January 1, 2023.
- The Proposed Rule looks to establish CoPs for REHs that closely mirror current CoPs for CAHs, hospitals or ambulatory surgical centers.
- The Proposed Rule does not include any details on the payment policies for REHs.
- The Proposed Rule also includes updates to the CoPs for CAHs, CMS proposes to:
- Incorporate a primary road definition into the CoP regulations that have been in the State Operations Manual (“SOM”), and
- Allow CAHs that are part of a system to meet CoPs at the system level.
Proposed REH CoPs
The Proposed Rule reiterated that REHs must provide emergency department and observation services. An REH may act as an originating site for telehealth services, provide ambulance services and have a distinct part skilled nursing facility unit. In addition, the Act allows an REH to provide other certain outpatient services as designated by HHS, and CMS is proposing to allow REHs to provide a broad array of outpatient services if the REH is able to demonstrate that the services are needed based on a community assessment.
In general, the Proposed Rule CoPs for REHs closely align with the current CAH CoPs, but in some instances, the Proposed Rule follows the current hospital or ambulatory surgical center standards, such as the policies for outpatient services and life safety code. Of course, there are variations in the REH CoPs compared to the CAH, hospital and ambulatory surgery standards to account for distinctions for REHs, including the requirement that REHs must provide emergency services by definition.
REH Payment Policies
As stated above, the Proposed Rule did not include details on REH payment policies. The Act specifies that REHs will be paid for outpatient services at 105% of the otherwise applicable rates under the Outpatient Prospective Payment System (“OPPS”). In addition, REHs will receive a monthly facility payment equal to 1/12th of the average annual benefit experienced by CAHs in 2019 of cost reimbursement over the payment that would have been received under a prospective payment system. This facility payment will be adjusted each year by the annual hospital market basket update factor. CMS is expected to address the REH payment policies in the upcoming CY 2023 OPPS Proposed Rule.
CAH Proposed CoPs
The Proposed Rule also includes updates for CAHs. Specifically, CMS is proposing to add a definition of “primary roads” to the current location and distance requirements used to determine if facilities qualify as CAHs. With several minor nuanced revisions, CMS is effectively proposing to include the standards that have been in the Medicare manuals for years, in the CoP regulation. CMS is also requesting comments from the industry on whether 2 lane Federal highways should be considered primary roads, as they currently are under the SOM guidance. A change in that policy could open the door to CAH status for facilities that are less than 35 miles but more than 15 miles from other hospitals or CAHs.
The Proposed Rule also contains proposals allowing CAHs that are a part of a larger health system (containing other hospitals and/or CAHs) to unify and integrate their infection control and prevention and antibiotic stewardship programs, medical staff, and quality assessment and performance improvement programs to ensure consistent and safe care. This is a potentially significant break from CMS’s longstanding policy that each separately certified provider (CAH or otherwise) must independently demonstrate satisfaction of the relevant COPs. The CMS enforcement policy has been that there is no such thing as “system” certification – only certification for each separately enrolled provider. Allowing system-level satisfaction of the CoPs could streamline the certification process for these small rural facilities. However, separate state licensure requirements could impact the practical effect of such a change. CMS also is proposing to establish a patient’s rights CoP for CAHs to provide clear requirements for the protection and promotion of patient rights.
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- Joseph Krause at (414) 721-0906 or jkrause@hallrender.com;
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