Revolutionizing Rural Healthcare: The Benefits and Requirements of a Rural Emergency Hospital Designation

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Freed Maxick Healthcare Consulting Team


Learn how the Rural Emergency Hospital (REH) designation can increase revenue and expand healthcare services in rural areas while providing greater flexibility for medical staff appointments.

The Consolidated Appropriations Act of 2021 made it possible for CMS to include the Rural Emergency Hospital (REH) status in its regulatory authority. This was officially done in the Medicare CY 2023 OPPS Final Rule [CMS-1772-FC].

Freed Maxick highlights the key points of what this means and why it matters if you’re a hospital, physician, or sub-acute stakeholder:

Eligibility Requirements for Rural Emergency Hospital Designation

To qualify for REH designation, a hospital must be either a Critical Access Hospital (CAH) or a Rural Hospital with less than 50 beds. If the hospital is not located in a rural area, it must have an active MGCRB urban-to-rural reclassification. The hospital must also provide ER and Observation Care with 24/7 staffing that includes a physician or midlevel practitioner on-call and within 30 minutes of the facility. The governing board has more flexibility with the appointment of medical staff privileges. Additionally, the hospital must have an agreement for the transfer of higher acuity inpatients to a level I or II trauma center. This center does not have to be in the same state. The hospital may not offer inpatient care but can operate a hospital-based SNF that receives SNF Part A Prospective Payments.

Rural Emergency Hospital Services

OPPS services will be paid at a prospective rate plus a 5% add-on, and non-OPPS fee schedule services will be paid at relevant fee schedule rates. Non-OPPS services required should mirror the CAH Conditions of Participation, including laboratory, radiology, and pharmacy or drug storage area. SNF Part A PPS Services are allowed and paid at PPS rates under the PDPM system at SSA Section 1888(e). Ambulance services are also allowed and paid at relevant fee schedule rates.

Monthly Level Payments

Each REH will receive monthly payments of $272,866 per month enrolled as an REH.

Quality Reporting

The requirements for quality reporting are still yet to be finalized.

How to Enroll to become a Rural Emergency Hospital

For REH enrollment, a "fast track" election in the PECOS system has been set forth where the provider completes the 855-A Change of Information (CHOI) rather than an initial enrollment.

State Law Considerations

Currently, most states have enacted legislation specifically allowing for REH licensure. There are a few states that still need to finalize legislation, but those states are home to very few, if any, hospitals that meet the criteria.

The Rural Emergency Hospital (REH) status is an opportunity for qualifying hospitals to expand their services and receive higher reimbursements for certain services. As a hospital, becoming an REH could increase your revenue, as you will receive payments of $272,866 (CY 2024 forward will see MEI increase) per month enrolled as an REH, as well as prospective and fee schedule payments for certain services. Additionally, the REH designation allows more flexibility in appointing medical staff privileges, which can help streamline operations. As a physician or sub-acute stakeholder, this could mean increased access to specialized care in rural areas, as REHs are required to have agreements for the transfer of higher acuity inpatients to level I or II trauma centers. It's important to note that REH designation is not available in all states, so it's important to consider state law considerations and seek professional guidance to understand the potential impact on your facility and community.

The Healthcare consulting team at Freed Maxick can help. If you are interested in the election of REH status, contact Clinton Ballew, Senior Manager at Freed Maxick ( or 205-936-4345) for a more detailed analysis of the impact to your facility and community.

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