Executives grapple with decisions on CMS' Rural Emergency Hospital designation

The new Rural Emergency Hospital designation is putting providers between a rock and a hard place, offering an infusion of cash from the federal government that is available only if they eliminate inpatient care, The New York Times reported Dec. 9

CMS released the final rule for the new designation in November. The rule aims to curb rural hospital closures by offering them a chance to shutter infrequently used inpatient beds and focus on providing outpatient and emergency department services. The new designation is set to go into effect in January. 

Hospitals that convert will receive monthly payments of $272,866, with annual increases based on inflation, according to the report. They will also receive higher Medicare reimbursements than larger hospitals.

Some rural healthcare providers and health policy analysts said officials behind the rule are "out of touch with the difficulties of transferring rural patients," according to the Times. Bigger hospitals are dealing with their own set of challenges and are increasingly unwilling to accept transferred patients, especially from small field hospitals that are unaffiliated with their systems. 

Katy Kozhimannil, PhD, director of the University of Minnesota Rural Health Research Center, told the Times she is concerned that gambling with transfers could mean "some of the most extremely remote and marginalized communities could end up with no care at all — and that's what we were trying to avoid in the first place."

Some hospitals, such as Sturgis (Mich.) Hospital, have said they are planning to convert to a rural emergency hospital. The hospital was on the verge of closing when the Michigan Hospital Association suggested it convert to a rural emergency facility. Sturgis Hospital CFO Bobby Morin said 80 percent of the facility's revenue comes from outpatient services, and a sizable portion of its expenses comes from the inpatient side. 

Others, such as Bucktail Medical Center in Renovo, Pa., have ruled out the conversion because there would be nowhere to transfer patients in the case of another pandemic surge, according to the report. Bucktail's financial margin for patient services was minus-43 percent in 2021.  

"Am I going to lose some revenue? Possibly," CEO Time Reeves told the Times. "But is it more important to provide the services needed? That's the position we're taking." 

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