July 07, 2022

One Step Closer to a New Provider Type: CMS Issues Proposed Rule on Rural Emergency Hospital Conditions of Participation

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On June 30, 2022, the Centers for Medicare & Medicaid Services (CMS) released the long-awaited proposed rule establishing the Conditions of Participation (CoPs) that Rural Emergency Hospitals (REHs) would be required to meet to participate in the Medicare and Medicaid programs. Congress established REHs as a new provider type in the Consolidated Appropriations Act of 2021 (CAA) in response to the increasing closure of rural and Critical Access Hospitals (CAHs), and in an effort to preserve access to emergency and outpatient department and skilled nursing services in rural communities. For more information about the statutory requirements and prior CMS request for information on REHs, please see our On the Subjects.


While the proposed CoPs for REHs do not address all concerns expressed by rural health advocates, they are generally consistent with the corresponding CoPs for CAHs and appear to provide for flexibility in staffing and breadth of outpatient services to accommodate the wide range of healthcare needs and challenges that affect rural communities.

Rural Emergency Hospital CoPs

CMS estimates that as many as 68 facilities will convert to REHs to ensure continued access to, and federal assistance for, emergency and outpatient department care (including maternal health, behavioral health and substance use disorder services) that does not exceed an annual per patient average of 24 hours. CMS's proposed CoPs for REHs are taken largely from the CAH CoPs. CMS recognizes that REHs will not provide inpatient services and therefore will not require the same level of staffing and oversight as general acute care hospitals. But the CoPs would require an REH to maintain a staffed emergency department 24 hours a day, seven days a week, with a physician, nurse practitioner, clinical nurse specialist or physician assistant immediately available to provide emergency services in the facility. REHs also would be required to have a transfer agreement in place with a Level I or Level II trauma center. Consistent with CAA CMS proposes to require that REHs with distinct part skilled nursing units comply with the skilled nursing facility CoPs.

The proposed rule also would require that facilities seeking to become REHs have either been a CAH or a rural hospital with not more than 50 beds, participating in Medicare, as of December 27, 2022 (date of CAA enactment), and be either located in a rural area or in an urban area reclassified as rural for Medicare payment purposes. REHs would be required to maintain licensure and operate under applicable state or local licensure laws, which may impose more stringent requirements than CMS, in order to operate as an REH. As required by statute, the proposed rule would limit REHs to an annual average length of stay of 24 hours. CMS emphasizes that REHs could keep patients for more than 24 hours if necessary, but the agency does not anticipate that the frequency with which this might be required would result in an REH exceeding the 24-hour average annual length of stay requirement.

The proposed CoPs for REHs additionally take the following actions:

  • Apply staffing requirements that are similar to those for CAHs. CMS would require that a registered nurse, clinical nurse specialist or licensed practical nurse remain onsite whenever patients receive emergency or observation services at the REH. A doctor, physician assistant, nurse practitioner or clinical nurse specialist with training or experience in emergency care also would be required to be on call and immediately available by telephone or radio contact. (CMS declined to require that a board-certified emergency physician serve as the medical director but did encourage such designation when possible.)
  • Require REHs to develop, implement and maintain a data-driven quality assessment and performance improvement program (QAPI), consisting of the following five parts: program and scope, program data collection and analysis, program activities, executive responsibilities, and unified and integrated QAPI program for an REH in a multi-hospital system. (REHs that are part of a multi-facility system consisting of multiple separately certified hospitals, CAHs and/or REHs may elect to have a unified and integrated QAPI program in accordance with state and local laws.)
  • CMS specifically seeks additional comments regarding any possible unintended consequences that could occur as a result of allowing REHs to participate in a unified and integrated QAPI program, feedback regarding how an integrated system would ensure the unique circumstances and differences in populations and services offered at the REH are considered, and feedback on how an integrated system would ensure that an REH provided the appropriate level of care to patients treated in the REH
  • Require that emergency, laboratory, radiologic and pharmaceutical services be provided to meet the needs of an REH's patients in a manner consistent with the CoPs for CAHs.
  • Require discharge planning that focuses on returning the patient to a home or community-based setting and aligns with CoPs for hospitals and CAHs. This requirement is notable because the discharge planning CoPs for hospitals and CAHs do not generally apply to outpatients. However, CMS expects that some REH patients may be discharged from the REH to a post-acute setting, and discharge planning would allow for a smooth transition and continuity of care for the patient across the continuum of treatment facilities.
  • Allow REHs to serve as telehealth originating sites and would apply medical staff credentialing rules for telehealth providers similar to those for telehealth services provided in hospitals and CAHs.
  • Allow REHs to provide any outpatient services consistent with the needs of the community (based on a community needs assessment) that meet certain additional requirements. For example, the outpatient services must be provided in a manner based on nationally recognized guidelines or standards of practice, and the REH must have a system for referral of patients receiving outpatient services to different levels of care, as appropriate.
  • CMS specifically seeks additional comments on whether REHs should be allowed to perform low-risk labor and delivery services, and whether CMS should require REHs to provide outpatient surgical services in the event surgical labor and delivery intervention is necessary.

Practical Implications

The proposed rule provides long-awaited details about the requirements for operating as a REH, including CoPs for REHs that are generally consistent with the corresponding CoPs for CAHs. The rule appears to provide for flexibility in staffing and breadth of outpatient services, and will likely curb fears expressed by some stakeholders that CMS might limit the types of outpatient services that could be provided. Interested providers should continue to actively engage with CMS as it finalizes this rule. Interested providers should also engage with state and local regulatory agencies to ensure that such authorities will permit REHs to operate, as CMS's establishment of the REH provider type does not supersede any state or local rules that would not allow such facilities to operate.

Comments to the proposed rule can be submitted to CMS electronically or by mail no later than August 29, 2022, with reference to file code CMS-3419-P. CMS is obligated to finalize regulations establishing and governing REHs in time for the statutorily required effective date of January 1, 2023.

CMS has indicated that REH payment policies, quality measures specifications and quality reporting requirements for REHs will be set forth in separate notice and comment rulemaking.

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