November 17, 2022

CMS Finalizes Requirements for Rural Emergency Hospitals: Will any Hospitals Convert to this New Facility-type Next Year?

A few weeks ago, the Centers for Medicare & Medicaid Services (CMS) established final Conditions of Participation (COPs) and other payment and structural parameters for rural emergency hospitals (REHs) in the Calendar Year (CY) 2023 Outpatient Prospect Payment System (OPPS) final regulation. For a high summary of the CY 2023 OPPS final reg, please click here.

As you may recall, the Consolidated Appropriations Act (enacted on December 27, 2020) included a provision that would allow critical access hospitals (CAHs) and small rural hospitals (those with less than 50 beds) to convert to REHs starting on January 1, 2023. REHs, once established, will receive enhanced reimbursement under Medicare. They will not provide any inpatient services but must be able to provide emergency services 24 hours a day, 7 days a week. The goal of this new facility-type is to help struggling rural hospitals stay afloat by allowing them to shed their inpatient beds and continue to operate with lower administrative costs. Thus, instead of closing, these facilities could continue to serve their communities and provide access to emergency care and other outpatient services.

CMS previously issued a proposed reg outlining COPs for REHs, to which ACEP responded. Further, the CY 2023 OPPS proposed reg included additional REH policies, including the creation of a new quality payment program and a payment methodology that provides additional Medicare facility payments to REHs. The OPPS final reg released a few weeks ago addresses all of these proposed policies.

To sum up the final REH policies in one word, I would go with “flexibility.” CMS understands that rural facilities are struggling with financial and staffing issues and wants to limit their administrative burden as much as possible.

But at what cost? What effect will such lenient policies have on the quality of care that REHs will provide? The most explicit example of flexibility is around the staffing requirements for REHs. ACEP, along with the American Academy of Family Physicians (AAFP), had expressed concerns in response to the proposed REH COP reg about the lack of physician oversight that CMS proposed requiring for REHs. We stated upfront in our comments on the proposed policies that physicians should supervise all care delivered by non-physician practitioners in REHs. When possible, we believe that board-certified emergency physicians should conduct that supervision, but we understand that, due to workforce issues, that is not always possible. When a board-certified emergency physician is not available, it is still critical that physicians experienced and/or trained in emergency medicine (such as family physicians) oversee care being delivered by non-physician practitioners in REHs. Emergency patients represent some of the most complex and critically ill patients in medicine, and effective management of these patients requires years of specialized training.

ACEP also opposed CMS’ proposal to allow a nursing assistant, clinical technician, or an emergency medical technician (EMT) to intake a patient who arrives at the REH and then contact an off-site practitioner of the patient’s arrival because we believed that the finalization of this proposal poses significant patient safety concerns. Further, it could also increase the chances that REHs violate the Emergency Medical Treatment and Labor Act (EMTALA) if a trained clinician is unable to arrive in time to perform a medical screening examination and stabilize the patient if the patient has an emergency medical condition.

CMS responded to our comments in the OPPS final reg by stating that the agency “believe(s) that the intent of the legislation is to ensure that REHs have the flexibility to determine who best meets the needs of their community while ensuring the provision of safe, quality patient care” and “expect(s) REHs to determine who is best to fill this role based on the scope of services provided by the REH and the population served.” Thus, despite our objections, CMS finalized a requirement that the REH be staffed at all times “by an individual who is competent in the skills needed to address emergency medical care” and “must be able to receive patients and activate the appropriate medical resources to meet the care needed by the patient.”

In other words, under the final policy, there is no guarantee at all that there be a physician on site at all times, nor another non-physician practitioner with a certain standard or level of training necessary to handle all types of medical emergencies. All that is required is that there be a person who the REH deems “competent” to address emergency medical care. ACEP continues to believe that such a standard is unacceptable and could put patients at risk.

There are other examples of flexible policies, including around the use of telehealth services. CMS is finalizing its proposal to allow for a streamline approach to allowing distant site clinicians to deliver telehealth services to patients within the REH. Under CMS’ final policy, the governing body of the REH where patients are receiving the telehealth services could grant privileges to distant-site physicians and other practitioners based simply on the recommendations of its medical staff.

So, flexibility definitely seems to be the “name of the game” for the REH policies. However, even with this flexibility that CMS is providing, it is unclear whether many small rural hospitals or CAHs will play ball and convert to REHs. A study conducted by the North Carolina Rural Health Research Program in 2021 found that 68 hospitals nationwide (out of 1,600 rural hospitals) would fit the criteria for the program and would likely apply. Most of these facilities are in Kansas, Nebraska, Oklahoma, and Texas. However, a more recent article in Beckers Hospital Review only listed three hospitals that are considering converting to REHs. So, it appears that not many small hospitals and CAHs actually want this option. Hospital administrators in general seem to be skittish of the transition. Now that the final regs are out, many states will need to pass laws to certify or license the new facilities. Further, because of the COVID-19 pandemic, some communities may be less receptive to eliminating inpatient beds in small hospitals.

Finally, if new REHs do form (which may seem doubtful), will they be able to attract a high-quality workforce? The statute and CMS only created additional Medicare payments for the REH facilities themselves under the OPPS, not the physicians or other clinicians who actually provide the services. In order to incentivize physicians and other clinicians to work in rural areas and appropriately staff REHs, ACEP had strongly recommended that CMS consider creating an add-on code or modifier under the Medicare Physician Fee Schedule (PFS) that clinicians could append to claims for services delivered in REHs. CMS could consider setting the value of this add-on code or modifier at five percent of the PFS rate for each code that is billed—consistent with the additional OPPS payment that the statute provides. However, CMS does not address our request in the final reg and only establishes an additional facility payment for REHs.

We shall soon see as the new year approaches whether the REH program, as both Congress and CMS have defined it, is an attractive option to at least some rural hospitals and CAHs. I will keep you updated going forward on whether this new facility-type in Medicare actually winds up serving its ultimate purpose: to improve access to emergency care in rural areas.

Until next week, this is Jeffrey saying, enjoy reading regs with your eggs.

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