S. 5164: Rural Emergency Hospital Designation Improvement Act

This bill would change federal rules for rural emergency hospitals under Medicare and Medicaid and expand what kinds of facilities and services can qualify for that designation.

Main changes to rural emergency hospital eligibility

The bill would loosen one of the current eligibility rules for converting a facility into a rural emergency hospital. Under current law, certain facilities must have met a specific requirement during a limited point in time. The bill would change that to allow facilities that met the requirement at any time between January 1, 2015, and the relevant cutoff date to qualify.

It would also require the Secretary of Health and Human Services to write regulations within one year to create a waiver for some facilities that operate similarly to rural emergency hospitals, so they can become rural emergency hospitals even if they do not meet one of the current requirements.

Types of units a rural emergency hospital could keep or include

The bill would allow a rural emergency hospital to maintain or include certain distinct-part units, including:

• An inpatient psychiatric unit for behavioral health patients
• An inpatient rehabilitation facility unit
• An obstetric wing, labor and delivery unit, or obstetric emergency department

This means some rural emergency hospitals could offer a broader mix of specialized services while keeping their designation.

Medicare payment changes

For certain diagnostic lab tests provided by rural emergency hospitals starting on or after January 1, 2027, the bill would require Medicare to pay the usual fee schedule amount plus 5%. The 5% increase is intended to reflect higher costs at these hospitals. The patient copayment would be calculated as if that 5% increase had not been added.

The bill would also allow rural emergency hospitals to enter agreements to provide services similar to those furnished by a skilled nursing facility. Payment for those services would be based on reasonable cost rules tied to a Medicare hospital payment provision.

Other federal health program changes

The bill would require regulations allowing a rural emergency hospital that later converts back to a critical access hospital to regain “necessary provider” status, if it had that status before converting.

It would also direct the Health Resources and Services Administration to treat a rural emergency hospital as if it were located in a health professional shortage area for purposes of National Health Service Corps site eligibility.

In addition, the bill would make rural emergency hospitals eligible for Small Rural Hospital Improvement Program grants.

Medicaid changes

The bill would expressly include rural emergency hospital services in Medicaid coverage rules, as long as the services are licensed or approved by the state. It would also make Medicaid rules cover certain services provided in a nursing facility that is a distinct part of a rural emergency hospital.

These Medicaid changes would generally take effect on the date the bill is enacted, though states would get extra time if they need to pass state legislation to comply.

Relevant Companies

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