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A Promising New Rural Emergency Hospital Model

Today, one in five Americans lives in a rural community, where access to local and convenient health services is far from a given. The situation has likely become worse with the closure of 138 rural hospitals over the last 10 years. Now, an opportunity for rural hospitals to focus more on emergency and outpatient services could help, but much will depend on how the Department of Health and Human Services (HHS) implements it.

Accessing care has long been a problem in rural areas. Rural residents on average travel twice as far as their urban counterparts to receive health care services. And of the hospitals that have kept their doors open, many have had to cut important services, such as obstetrics units. While rural hospitals benefited from federal financial assistance during the COVID-19 pandemic, experts predict that some may again struggle to make ends meet, which is why ensuring success of the new Rural Emergency Hospital (REH) model is critical.

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Why are rural hospitals closing?

Rural health care has long centered on inpatient hospital services. However, the need for inpatient care has diminished as medical advancements and innovations have allowed many common procedures to shift to the outpatient setting. For example, certain invasive and therapeutic surgeries that providers used to perform primarily in inpatient settings, like cataract surgery or certain knee and hernia repairs, now commonly take place in ambulatory settings.

Meanwhile, rural populations continue to shrink, reducing the need for inpatient hospital beds. Over the last decade, the number of people living in rural areas declined by 0.5%, or 226,000 people, while urban areas grew by about 8%, or roughly 21 million people. Taken together, these trends have decreased the number of rural residents needing inpatient hospital care.

Policymakers support a new care delivery and reimbursement model

Last December, Congress created the REH program, which holds great promise for stabilizing and expanding access to health care services in rural America. It gives rural communities a new care delivery option within the Medicare program and allows communities to transform inpatient hospitals into emergency and outpatient care facilities. The Consolidated Appropriations Act of 2021 created the new Medicare designation, which will take effect in 2023. Hospitals with fewer than 50 beds will be able to convert to the new model.

Under the new program, REH facilities will be reimbursed for patient care via the Medicare outpatient prospective payment system. In addition, REHs will receive a new, additional “facility payment” that stakeholders hope will be used to provide extra medical and support services. These additional patient services could include wellness and preventive care, behavioral health, oral health care services, and other patient supports, like transportation to medical appointments and nutrition assistance. This is good news for rural residents and rural communities.

Regulators continue to seek input on how to implement the new Rural Emergency Hospital model

Regulators are working to flesh out the details of the Rural Emergency Hospital Program. The Bipartisan Policy Center recently submitted comments to HHS highlighting a range of important issues to be considered as this new model comes on-line. BPC’s key comments include recommendations for HHS to:

  • Allow REHs to provide care via telehealth and virtual health platforms and allowing REHs to offer behavioral health services to the local community.
  • Clarify the rules around how REHs will be paid for providing care to Medicaid beneficiaries, including those patients who participate in both the Medicare and Medicaid programs.
  • Support local communities in embarking on a community needs assessment that involves the input of an array of stakeholders. Such assessment will ensure transformation to the REH model will improve access to high-quality care in the local area.
  • Evaluate the REH reimbursement structure on an ongoing basis to ensure it will support sustained transformation among rural hospitals for both the near and long-term.

BPC looks forward to continuing to work with rural stakeholders to seek input and inform the development of this critical new rural hospital model into the coming months.

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