The Potential for Eligibility of non HOPD FSEDs for REH Designation by CMS

David Ernst MD FACEP
Alternate Councilor

In an attempt to reverse the loss of access to emergency medical care in rural communities due to the closure of Critical Access Hospitals (CAH), CMS has created a new category of services eligible for Medicare reimbursement known as Rural Emergency Hospitals (REH) that went into effect January 1, 2023 as part of the Consolidated Appropriations Act of 2021. The purpose of REH allows for the potential of continued access to EM care in rural communities without the inpatient component, which many CAHs are financially unable to sustain due to low inpatient volume.

Critical Access Hospitals have been closing at a steady rate over the last 20 years, due to declining reimbursement and low patient volume. This leaves the impacted rural communities without access to emergency care and having to drive many times up to 50 – 75 miles to the nearest hospital emergency room.  REH would allow Critical Access Hospitals in imminent danger of closing, or have closed after December 27, 2020 to apply for conversion to REH status.

REH’s will provide emergency and outpatient services, without inpatient care, by statute and are subject to EMTALA. Reimbursement for Medicare patients would be at the OPPS rate plus 5%.

Under current Medicare program rules, CMS does not recognize nonhospital based FSED’s (not under a hospital license) as eligible for reimbursement for Medicare patient care services. Because REH designation currently requires a hospital license for conversion, FSED’s are not currently eligible to apply.

However, discussion around FSED’s being the ideal business model to provide this REH-style service are taking place at the Federal level and NAFEC has been lobbying congress to pass legislation permitting CMS recognition. Recent legislation introduced as HR 1694 – Emergency Care Improvement Act would provide for permanent recognition of FSED’s by Medicare and Medicaid for reimbursement, and thus allow them to potentially qualify for REH designation.  HR 1694 is currently referred to the Subcommittee on Health. Since REH’s are not considered hospitals for purposes of physician ownership, they would not pose a violation of the Stark Law.  

Please contact your congressmen to support sponsorship and passing of HR 1694.