Rural Emergency Hospital (REH)

Key facts

Created by

Consolidated Appropriations Act, 2021

Effective

January 1, 2023

Eligible facilities

CAHs and rural hospitals of 50 beds or fewer in Medicare on Dec 27, 2020

Conditions of participation

42 CFR Part 485, Subpart E

Medicare payment

OPPS rate plus 5 percent, plus a fixed monthly facility payment

What is a Rural Emergency Hospital?

Congress created the Rural Emergency Hospital designation in the Consolidated Appropriations Act, 2021 in response to rural hospital closures. It gives struggling hospitals with low inpatient volume an alternative to closing: stop providing acute inpatient care and keep emergency, observation and outpatient services open.

Facilities eligible to convert are critical access hospitals (CAHs) and rural hospitals with no more than 50 beds that participated in Medicare as of December 27, 2020. Hospitals that met those criteria and closed after that date can also apply if they re-enroll and meet all requirements.

REH requirements

Under the REH conditions of participation, a facility must:

• Provide emergency services and observation care, with the emergency department staffed 24 hours a day, 7 days a week.
• Keep the annual per-patient average length of stay at 24 hours or less.
• Not provide acute inpatient services, although it may operate a distinct part unit licensed as a skilled nursing facility.
• Have a transfer agreement with at least one certified hospital that is a Level I or Level II trauma center.

How REHs are paid

Medicare pays REH services at the Hospital Outpatient Prospective Payment System (OPPS) rate for the equivalent service, increased by 5 percent, with no beneficiary coinsurance on the added 5 percent. Each REH also receives an additional facility payment in 12 monthly installments. The monthly amount is the same for every REH and is updated annually. Skilled nursing services in a distinct part unit are paid under their own payment system.

Why REH conversion matters

A conversion is not a closure, but it removes inpatient beds from a community. Facility datasets can show the same site under a new provider type, so analysts tracking rural hospital counts, inpatient capacity or service line availability need to account for REH conversions separately from closures. For device and supply companies, a converted facility changes what it buys: emergency and outpatient products rather than inpatient ones.