CMS plans new designation of ‘Rural Emergency Hospitals’

The Biden administration is touting it as a lifeline to help save smaller providers. More than 130 rural hospitals have shut their doors since 2010.

In the wake of the closures of rural hospitals, the Biden administration has proposed a new designation for rural providers that’s designed to help them survive.

The Centers for Medicare and Medicaid Services is planning to create a new provider designation dubbed “Rural Emergency Hospitals.” CMS said it will enable small, rural hospitals to provide access to emergency services, medication and outpatient services.

Under the designation, rural emergency hospitals would be eligible to receive payments on or after Jan. 1, 2023.

Since 2010, 138 rural hospitals have closed, including what CMS termed a record 19 hospital closures in 2020.

CMS Administrator Chiquita Brooks-LaSure said the move is a key step in protecting healthcare services in rural communities and reducing disparities in outcomes. The agency said it would ensure access to emergency, outpatient, behavioral health and substance use disorder services.

“The availability of the new Rural Emergency Hospital provider type will maintain access to essential health care services and help to reduce disparities in rural communities,” Brooks-LaSure said in a statement. “CMS is committed to advancing health equity, driving high-quality person-centered care, and promoting the sustainability of our programs.”

CMS is also proposing changes for Critical Access Hospitals, which are smaller providers that are a significant distance from other nearby hospitals. Part of the change includes adding the definition of “primary roads” to location and distance requirements of critical access hospitals, CMS says.

The agency also said it plans to add a provision spelling out the privacy rights of patients as a participation requirement in order to be designated as a critical access hospital.

The Biden administration has been focused on improving healthcare in rural areas, where 20% of Americans live. In a news release touting the new designation for rural emergency hospitals, CMS said those in rural areas have fewer healthcare providers and a shorter life expectancy than Americans in other communities.

The closures of rural hospitals have been more likely to hurt residents of minority groups, according to a study by the North Carolina Rural Health Research Program.

Rural hospital closures have been more likely to take place in counties with above-average populations of Black, Hispanic and American Indian residents, compared to typical rural counties, the study found.

Some analysts also project many more rural hospitals could close in the near future.

More than 500 rural hospitals are at an immediate risk of closure due to economic difficulties, according to a report from the Center for Healthcare Quality and Payment Reform. And 300 more rural hospitals are facing a high risk of closure because they have low financial reserves or because they rely heavily on government funding or other sources of revenue beyond patient volume.

Nearly 900 rural hospitals – 40% of America’s rural hospitals – are facing a serious risk of closure, the group estimates.

CMS plans to develop final policies for rural emergency hospitals later this year. The agency is seeking comments from stakeholders. Comments must be submitted by Aug. 29.

CMS has provided a fact sheet on its proposals for rural hospitals. For more information, visit the Federal Register.