Rural Hospitals Respond to CMS’s Designation for Rural Emergency Hospitals and Critical Access Hospitals

On July 26, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that included new payment model for rural emergency hospitals (REH). The designation seeks to alleviate financial disturbance in the continuity of care provided in areas with limited medical resources by shifting from an inpatient bed model to prioritizing outpatient services.

Hospitals with low inpatient volumes are the target group of providers for the model, but many hospitals need clarity and adjustments on the proposed rule before they’d be willing to sign up. According to Modern Healthcare, one of the major issues is the 340B drug discount program, in which participating hospitals could not enroll. The program allows certain providers, like qualifying critical access hospitals (CAHs) to purchase drugs at a significant discount.

Other concerns include allowances for annual per-patient average stay of up to 48 hours as the current rule says that hospitals may not exceed and annual per-patient average of 24 hours.

Comment on the rule was provided this week by the American Hospital Association (AHA), which counts CAHs and rural hospitals among its members. AHA supports the REH designation, specifically the plan to use data-driven approaches to CAH location and distance requirements rather than regional designations. Furthermore, the AHA noted that it supports the established conditions of participation (CoPs) that include requirements for CAHs to inform patients of their rights and address privacy or safety concerns that a patient or family member may have.

The designation also proposes an allowance for REHs to provide labor and delivery services, which AHA notes are lacking in rural communities.

It is our expectation that REHs choosing to offer labor and delivery services also should be required to have the capacity to perform certain services, including having the necessary staff, equipment and medications to ensure that the patient can be treated or stabilized and transferred depending on the severity of the complication.

National Law Review summarizes and explains the payment provisions outlined in the Hospital Outpatient Payment System (OPPS) proposed rule. NLR covers the proposed enrollment and payment provisions for REHs, point-by-point.

Since the COVID-19 pandemic’s federal response included allowances for telemedical services provided in rural areas, the adoption of digital health solutions by rural providers has been paramount. Technological access presents a challenge to providers looking to offer care to remotely located patients who may not have access to the internet, and the influx of solutions, platforms and market participation has created a glut that can be difficult to navigate for rural clinics with lean staffing.

At the Sanford Health Summit on the Future of Rural Health Care last week, Senator John Thune (R-S.D.) voiced optimism that the market could find a coherent solution for providers without the intervention of federal agencies. Via Modern Healthcare:

My hope would be that we can solve that issue without having to have a federal government solution. I think there are good, organic solutions out there that are cropping up with the licensure issue, but that is one challenge we’ll have to look at when we start looking at a permanent extension [of telehealth waivers].