To learn more, visit NASHP’s guide of legislative and regulatory considerations for states.
Congress established a Rural Emergency Hospital (REH) Designation as part of the Consolidated Appropriations Act of 2021 for certain hospitals that meet requirements set out in 42 U.S.C. § 1395x(kkk)(2). The Centers for Medicare and Medicaid Services (CMS) promulgated final regulations for REHs at 87 Fed.Reg. 71748 (November 3, 2022) and 88 Fed.Reg. 58640 (August 28, 2023). (Amending various parts of 42 C.F.R.) This new federal REH designation took effect on January 1, 2023.
REH is a designation that allows hospitals in rural areas, as defined by federal law, to establish emergency departments for services with lengths of stay that will last, on average, less than 24 hours. The designation also allows REHs to offer outpatient services for Medicare patients that are approved by the secretary of the U.S. Department of Health and Human Services and other outpatient services approved by the state for insured and uninsured. REHs can have hospital outpatient departments and may set up a distinct skilled nursing facility unit at the site. REHs may house rural health clinics. REHs also may be independent or owned by a hospital system. To qualify for Medicare reimbursement, REHs must be licensed by the state in which they operate and meet conditions of participation set out in federal regulations cited above and sub guidance issued by CMS. (States should periodically check for updates to sub guidance.)
As states and hospitals look to this new federal designation as an option to address barriers to access services in rural communities, states need to ensure that they account for state licensure and federal requirements for the designation. In March, NASHP held a webinar for states with CMS, the Health Resources Services Administration (HRSA), and rural health experts to share information with states about REH designation requirements and the experience of early state adopters of the REH model. As of June 2023, fourteen states passed legislation and/or adopted emergency regulations to allow hospitals in their state to become eligible for the new REH designation. States have some flexibility in establishing oversight of new REHs, subject to baseline federal requirements.
NASHP developed a guide of legislative and regulatory considerations to assist states that wish to pursue the REH model. In developing this guide, NASHP solicited input from 16 states that expressed early interest in the REH model or enacted legislation to pursue the REH designation, national experts on rural health who developed or assisted in developing the REH designation, and HRSA. The guide serves only as a resource for states as they will have several decision points and will follow their own regulatory processes in drafting and enacting such legislation.
Threshold Considerations
Before pursuing legislation for REH licensure, states will have to consider some threshold issues which include:
Authorizing Vehicle
States seeking to create a process for REH licensure will need to identify the appropriate authorizing vehicle, following state specific requirements. Specifically, states may pursue emergency legislation for REH licensure, propose and enact legislation through the regular process, or allow the executive agency to adopt emergency regulations or act through regular order which may not require the issuance of regulations.
Avoiding Conflicts with Federal Law and Regulations
States may choose to build on federal REH law and regulations, but in doing so, must avoid any conflicts. For example, states may allow options for service delivery to ensure access to and payment for additional outpatient services at REHs (e.g., behavioral health services). Federal REH law and regulations contemplate that REHs may receive Medicare reimbursement for additional eligible outpatient services. States, as the regulator of licensure, also have the authority to permit REHs to provide additional services for patients who are covered by other insurers (Medicaid, employer, and other commercial plans) as well as those who are uninsured.
Licensure Process
States will need to navigate a number of questions in creating an REH licensure process. Such considerations include:
Which hospitals can qualify for an REH license
States may want to determine which, if any, hospitals could qualify for REH status under federal law before undertaking any legislative or regulatory action. For instance, a state may want to determine how many hospitals are in areas of the state that qualify as “rural” under federal law for purposes of REH designation.
Whether a state will add licensure requirements beyond the federal REH requirements
States may choose to add requirements for REH licensure beyond those articulated in federal regulations, such as reporting requirements or community input, as described below.
Whether the state will license an REH as a type of hospital under existing hospital statutory requirements or as a separate type of facility
Federal law requires that an REH be licensed. It is up to a state to decide whether to license the REH as a type of hospital or a separate type of facility (to which some hospital requirements may apply). States have adopted different approaches.
Licensing timeframes
States may decide whether an REH will be required to receive CMS approval for REH status before the state will issue an REH license or whether hospitals may apply for and be granted licensure prior to CMS approval. (Lack of CMS approval would prohibit federal reimbursement for the hospital as an REH.)
States also will need to decide the effective period of the license and/or its renewal.
Licensure fees
States will need to determine if and how they will charge entities seeking REH designation.
How to address current hospital licensure and/or certificate of need (CON) when converting to an REH
Because REHs cannot provide inpatient services, states must decide how to address the general hospital’s licensure for bed count. One option is to inactivate or suspend the general hospital license when the entity converts to an REH. This option could allow an REH to revert to general hospital status if the hospital is no longer seeking REH status. If a state has a CON requirement, a state could allow the hospital to retain its CON for beds should the hospital revert from REH back to its original status.
Considerations for the process for denials of licensure or disciplinary action
As in all licensure processes, states should consider how grounds for denials or disciplinary action for REH licensure is similar to or different from traditional hospital licensure.
Community Input
States may choose to specifically require community input into the process of considering an REH licensure request. Such input may include:
- Soliciting community input into the closure or, in the case of a CON state, requested closure of any inpatient services
- Ongoing community consultation on REH operations
- Requiring an initial plan and additional plans as part of triennial community health needs assessments, in consultation with a community advisory group, to address coordination and referrals for care with hospitals with inpatient services as well as emergency medical services (EMS)
There are differences and commonalities across the fourteen states that have authorized a process for REH licensure. Please see the table below for a summary of how states have navigated these considerations as well as those areas noted in our guide.
| State | Year | Licensure Type | Original License Status | Other Provisions |
|---|---|---|---|---|
| Arkansas | 2023 | REH — specific facility licensure | Inactivated while REH | Multiple provisions:
|
| Illinois | 2023 | REH is a hospital type | Silent | Authority for emergency rulemaking |
| Indiana | 2023 | REH — specific facility licensure, exempt from “hospital” definition | Silent |
|
| Iowa | 2023 | REH — specific facility licensure | Silent | Multiple provisions:
|
| Kansas | 2021 | REH — specific facility licensure | Inactivated while REH | Multiple provisions:
|
| Michigan | 2022 | REH is a type of hospital | Temporarily delicensed | Multiple provisions:
|
| Montana | 2023 | Designation of REH as a facility licensed as a hospital type | Silent | Multiple provisions:
|
| Nebraska | 2022 | REH — specific facility licensure | Inactivated while REH | Multiple provisions:
|
| New Mexico | 2023 | REH –— specific facility licensure | Silent | Adds new section to the Public Health Act to license requirements that requires rulemaking to establish REH licensure |
| New York | 2023 | REH as a hospital type | Silent |
|
| Oklahoma | 2023 | REH as hospital type | See regulation – inactive | Emergency regulations were issued 2/23 — agency authorized to determine compelling interest for an emergency rule. Governor approval means the rule is promulgated. |
| South Dakota | 2022 | REH as a facility type | Silent |
|
| Texas | 2019 | “Limited Services Rural Hospital” (LSRH) as a hospital type | See regulation — LSRH hospital same expiration date as current hospital license and the current hospital license is void upon issuance of LSRH license. |
|
| West Virginia | 2023 | REH as facility type | Silent | Authority for rulemaking |
*This table refers to legislation enacted as of July 2023. State regulations or other state statutory provisions may address issues not specifically mentioned here.
Acknowledgements
This blog was supported by the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) under a supplementary project with the Federal Office of Rural Health Policy (FORHP), within the National Organizations of State and Local Officials (NOSLO) cooperative agreement. The contents are those of the author(s) and do not necessarily represent the official views of, nor an endorsement, by HRSA, HHS, or the U.S. Government. For more information, please visit HRSA.gov. The authors would like to thank FORHP partners for their guidance and helpful feedback.
HRSA operates the REH Technical Assistance Center which provides technical assistance to states, providers and community leaders exploring REH designation.
