Rural Emergency Hospital Program Could Resuscitate Hospitals on Life Support
Rural healthcare has been on life support for some time now and may have just received a lifeline that is too good to refuse. To no one’s surprise, rural hospitals struggled during the pandemic, but federal aid did manage to keep many afloat. According to a recent analysis, more than 180 rural hospitals have closed in the United States since 2005, with 19 closing in 2020 alone. Now while other industries are feeling like they are finally out of the woods from COVID-19, the aid rural healthcare once had is drying up, and more financial support is essential. The American Hospital Association (AHA) projected in September of 2022 that some hospitals may not make it.
A large contributor to rural hospital closures is the cost of maintaining inpatient units, otherwise known as beds for patients who need to stay more than a few days. In most cases, patients requiring longer stays or complex surgeries will be transported to larger, higher acuity hospitals, leaving rural hospitals with only a few inpatient beds full. In comes CMS’ new Medicare provider designation for rural hospitals, the Rural Emergency Hospital (REH) program, which was implemented in January. The program requires rural hospitals to only provide emergency, observation, and potentially outpatient care, and transfer all inpatients (patients requiring lengths of stay longer than 24 hours), to a network of hospitals that provide higher levels of care.
This will allow rural hospitals to adjust their healthcare infrastructure to fit their needs, while still providing the medical and emergency services their communities need. Rural and critical access hospitals that meet the conditions of participation will receive huge financial relief through a 5% payment increase for their services, a monthly facility payment, amounting to more than $3 million a year, a 3.8% pay increase for 2023 outpatient providers, and restored rates for medicines acquired by the 340B drug payment program.
REH Program
Although the REH program will provide a much-needed lifeline to rural healthcare, nearly 1600 hospitals aren’t sold due to the requirement to cease inpatient services. These facilities argue that inpatient care is not only key income for the hospital but also an essential need for their patients. Under this program, patients that require inpatient care would be transferred to a large hospital in the closest city, which could be at capacity itself or difficult to travel depending on weather, roadblocks, and more; leaving the patients with only a few options – wait or travel out of state.
The question many rural hospitals are now trying to answer is whether a hospital without inpatient services is better than no hospital at all. While it is unknown how many hospitals will eventually get on board with the REH program and how many will continue to provide for the needs of their community, even if that means financially suffering, a few other steps were taken in the last few months by policymakers to mitigate the closures.
Spending Bill
In December 2022, Congress passed an omnibus spending bill that included a two-year extension of Medicare payment adjustments targeted toward rural hospitals. Additionally, the Center for Medicare & Medicaid Innovation (CMMI) is testing the Pennsylvania Rural Health Model which provides rural hospitals with an all-payer global budget and is intended to reduce costs, increase quality, and improve the sustainability of rural hospital finances.