Health Law Advisor

Announced in the Consolidated Appropriations Act of 2021, Rural Emergency Hospitals (REHs) will be a new type of Medicare provider starting January 1, 2023.  REHs are meant to help address the stressed health care system of rural providers by providing an option to closure for distressed critical access hospitals (CAHs) and small rural hospitals.

Existing CAHs and rural hospitals with fewer than 50 beds will be eligible to convert to an REH.  CMS is streamlining this process so that this conversion to be an REH can be accomplished through a change of information on an existing Medicare 855A enrollment rather than through a new provider application, which carries potentially significant delays and potential gaps in payment.  REHs are designed to provide primarily emergency department, observation, and outpatient services.  Because REHs will not provide inpatient care, an area that often creates a significant financial and operational burden on CAHs and small rural hospitals, REHs will allow locally-delivered healthcare to continue to be furnished by existing providers.

On November 12, 2021, the Centers for Medicare and Medicaid Services (“CMS”) released final guidance confirming that hospitals can be co-located with other hospitals or healthcare providers.

CMS’ aim for the guidance is to balance flexibility in service provision for providers with ensuring patient confidence in CMS’ quality of care oversight functions.

The final guidance provides direction to state surveyors in the evaluation of a hospital’s compliance with the Medicare Conditions of Participation (“CoPs”) when it is sharing space or contracted staff through service arrangements with another co-located hospital or healthcare provider.  CMS also reiterated a key tenet of co-location arrangements: that each provider must independently meet its applicable CoPs, but, overall, the final guidance is less prescriptive than the draft guidance CMS released in May 2019, and in its wake raises new questions for providers.