CMS Cites CLA Study in Proposed Rural Emergency Hospital Rule

  • Regulations
  • 7/22/2022
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Key insights

  • CMS proposes conditions of participation (CoPs) for REHs that generally align with those for CAHs or hospitals.
  • Specific attention is paid to telemedicine, patient rights, and use of seclusion or restraints.
  • CMS proposes several changes to CAH CoPs, including clarifying "primary road" and creating a patient rights CoP

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The Centers for Medicare & Medicaid Services (CMS) released proposed policies for the Rural Emergency Hospital (REH) designation. The REH was created under the Consolidated Appropriations Act of 2021 and is a designation available only to small, rural hospitals with fewer than 50 beds.

Earlier this year, CLA analyzed and modeled four REH financial simulations in our article, A Path Forward: CLA’s Simulations on Rural Emergency Hospital Designation, to estimate the number of Critical Access Hospitals (CAHs) and rural Prospective Payment System (PPS) hospitals that may benefit by converting to an REH. CMS refers to these simulations as it assesses the burden estimates of conversions.

“CLA is pleased to have the Centers for Medicare & Medicaid Services refer to and utilize our REH simulations in its proposed regulations. Our goal is to provide insightful perspectives that can assist our clients, the market, and legislative and regulatory stakeholders like CMS.” Matt Borchardt, Principal

Overview of REH conditions of participation

The proposed regulation covers conditions of participation (CoPs) for REHs. REH payment and other policies are expected to be released under the FY 2023 Outpatient Prospective Payment System rule.

As laid out in statute, CMS defines the REH as “an entity that operates for the purpose of providing emergency department services, observation care, and other outpatient medical and health services specified by the Secretary in which the annual per patient average length of stay does not exceed 24 hours. The REH must not provide inpatient services, except those furnished in a unit that is a distinct part licensed as a skilled nursing facility to furnish post-REH or post-hospital extended care services.”

CMS would add REHs to the list of providers required to obtain a provider agreement and allow qualifying conversions for CAHs or rural PPS hospitals with fewer than 50 beds. Additionally, CMS proposes to allow a hospital located in a metropolitan county with an active reclassification from urban to rural status as of December 27, 2020, to convert.

As required by statute, REHs are only allowed if licensed by their respective state or local agency. REHs must comply with all necessary federal, state, and local laws.

Governing body

CMS proposes an REH must have an effective governing body, or responsible individual or individuals, legally responsible for its conduct. In addition to oversight, the governing body or responsible individual must also determine that the REH is effectively executing its policies and decision making about the REH’s vision, mission, and strategies. Consistent with hospital governing body CoPs, the government body, in accordance with state law, would determine which categories of practitioners are eligible candidates for appointment to the medical staff along with other medical staff requirements and oversight.


CMS proposes that an REH will be an originating site for the purposes of telehealth beginning on or after January 1, 2023.

Further, CMS distinctly uses the term “telemedicine” for REHs because it views telemedicine “as encompassing the overall delivery of health care to the patient through the practice of patient assessment, diagnosis, treatment, consultation, transfer and interpretation of medical data, and patient education all via a telemedicine link (for example, audio, video, and data telecommunications as may be utilized by distant-site physicians and practitioners).”

This distinction is important under Medicare’s more prescriptive requirements for “telehealth” (i.e., synchronous). As such, CMS is making it clear that credentialing and privileging provisions proposed for REHs are not limited to the narrower subset of services and sites eligible for Medicare telehealth payment — and that it specifically chose to use the term “telemedicine” throughout this rule instead of “telehealth.” However, payments for telehealth and telemedicine at an REH will be addressed in the forthcoming payment rule.

CMS believes allowing an expediated process for credentialing and privileging at distant sites is valuable. The agency proposes the option of allowing the REH’s governing body to rely on the distant site hospital and practitioner’s existing privileges and credentials. There are a number of considerations and provisos to consider, such as the distant site must be a Medicare-participating hospital.

Emergency services

In general, REHs must comply with CAH emergency services requirements. There must be adequate medical and nursing personnel qualified in emergency care to meet the needs of the facility. To comply with this requirement, CMS would expect the REH to conduct an analysis based on the anticipated staffing needs. Once the REH begins to provide services, the analysis would then be actual staffing needs.

Lab services

An REH must provide basic laboratory services that are essential to the immediate diagnosis and treatment of the patient and should be consistent with national standards for emergency care. In addition to the laboratory services identified in the CAH CoPs, CMS encourages the REH to provide laboratory services that include other tests (e.g., complete blood count, basic metabolic panel, liver function tests, cardiopulmonary tests). The lab tests must be performed in a facility certified in accordance with the Clinical Laboratory Improvement Amendment requirements and always available, 24 hours a day.

Radiologic and imaging services

CMS proposes an REH’s radiologic requirements mirror a hospital’s CoP radiologic requirements and is also consistent with the current CAH standard. CMS proposes to require that a qualified radiologist, or other personnel qualified under state law either full-time, part-time, or on a consulting basis, interpret radiologic tests that require specialized knowledge. They can only sign reports of their own interpretations. Records must be maintained, and radiological reports and films preserved, for five years.


REHs must meet the needs of patients and must have a pharmacy or drug storage area administered in accordance with accepted professional principles and in accordance with state and federal laws. A registered pharmacist — or other qualified individual in accordance with state scope of practice laws — must direct the pharmaceutical services. Drug storage areas must be supervised by an individual who is competent to do so.

All compounding, packaging, and dispensing of drugs must be done by a licensed pharmacist or a licensed physician, or under the supervision of a pharmacist or other qualified individual in accordance with state scope of practice laws and be performed consistent with state and federal laws. Drugs and biologicals must be kept in secure areas, and locked when appropriate. Adverse reactions would be reported to the physician responsible for the patient and documented in the record.

Additional outpatient, medical, and lab services

CMS states these may be provided and should be based on a community health needs assessment. CMS specifically discussed maternal health needs, such as prenatal care, low-risk labor and delivery, and postnatal care. CMS seeks input on whether REHs should be permitted to provide low-risk labor and delivery, and whether they should require the REH to also provide outpatient surgical services in the event surgical labor and delivery intervention is necessary.

An REH must have a system for referral from the REH to different levels of care, including follow-up care as appropriate, and have an established relationship with hospitals. CMS proposes a requirement that the REH have effective communication systems in place between the REH and patients (or responsible individuals) and their family, verifying that the REH is responsive to their needs and preferences.

CMS specifically proposes that outpatient medical and health services may only be ordered by a practitioner who:

  1. Is responsible for the care of the patient
  2. Is licensed in the state where they provide care to the patient
  3. Is acting within their scope of practice under state law
  4. Is authorized in accordance with state law and policies adopted by the medical staff, and approved by the governing body, to order the applicable outpatient services

For outpatient surgical services, CMS would align with existing CAH requirements.

Infection prevention and control, antibiotic stewardship

CMS proposes these would mirror hospitals and CAHs.


CMS would require that the emergency department of the REH be staffed 24 hours a day, 7 days a week — but believes there should be flexibility in determining how to staff the department. CMS expects that staffing would be competent to receive patients and activate the appropriate medical resources for the treatment of the patient. This includes notifying a practitioner of the patient’s arrival in the emergency department. Such staff may include a nurse, nursing assistant, clinical technician, or an emergency medical technician.

CMS proposes REHs meet the applicable CAH requirements for staffing and staff responsibilities. For instance, since REHs must furnish emergency services and observation care, CMS proposes requiring a registered nurse, clinical nurse specialist, or licensed practical nurse be on duty whenever the REH has one or more patients receiving emergency services or observation care.

CMS proposes requiring REH standards to align with the CAH emergency services requirements, such as there be a doctor of medicine or osteopathy, a physician assistant, a nurse practitioner, or a clinical nurse specialist with training or experience in emergency care, on call and immediately available by telephone or radio contact, and available on-site within specified time frames.

CMS proposes REHs have an organized nursing service available to provide 24-hour nursing services with a sufficient number of nurses to provide services, based on the number of patients receiving services in the REH and the level of care required to be provided to those patients.

Discharge planning requirements would closely align with the requirements for hospitals and CAHs.

Patient rights

CMS would establish a CoP for a patient’s right to receive care in a safe setting and provide protection for a patient’s emotional health and safety and physician safety. CMS specifically discusses the issue of restraints and seclusion with behavioral health patients in this section of the proposed rule.

In general, patients have a right to make informed decisions regarding their care, to be fully informed about such care, to request or refuse treatment, to formulate advance directives, and to have REH staff and practitioners who provide care in the REH comply with these directives. CMS proposes to specify that the patient has the right to personal privacy, receive care in a safe setting, and be free from all forms of abuse or harassment. Patients have the right to the confidentiality of their medical records and the ability to access them. Patients also have the right to have visitation and an REH would be required to have written policies and procedures regarding the visitation rights of patients, including those setting forth any clinically necessary or reasonable restriction or limitation that the REH may need to place and the reasons for the clinical restriction or limitation.

Regarding use of seclusion or restraints, CMS proposes to specify that all patients have the right to be free from physical or mental abuse, from corporal punishment, and from restraint or seclusion, of any form, imposed as a means of coercion, discipline, convenience, or retaliation by staff.

CMS proposes to define restraint as “any manual method, physical or mechanical device, material, or equipment that immobilizes or reduces the ability of a patient to move their arms, legs, body, or head freely; or a drug or medication when it is used as a restriction to manage the patient’s behavior or restrict the patient’s freedom of movement and is not a standard treatment or dosage for the patient’s condition.” Restraint may only be imposed when the immediate physical safety of the patient, a staff member, or others is at risk and must be discontinued at the earliest possible time.

CMS proposes to define seclusion as “the involuntary confinement of a patient alone in a room or area from which the patient is physically prevented from leaving.” Seclusion may only be used for management of violent or self-destructive behavior.

Staff competency-based training is required, including on use of less restrictive interventions before restraint or seclusion. CMS refers to training on trauma-informed knowledge competencies and effective de-escalation techniques that can be used to avoid the use of restraint and seclusion and the trauma that may be associated with their use. CMS also proposes that an REH would be required to inform CMS no later than the close of business the next day if a death results from the use of seclusion or restraint.

Quality Assessment and Performance Improvement program (QAPI)

CMS will require that a QAPI program should conform to the current health care industry standards. The proposed QAPI program contains the following five parts:

  1. Program and scope
  2. Program data collection and analysis
  3. Program activities
  4. Executive responsibilities
  5. Unified and integrated QAPI program for an REH in a multi-hospital system

Transfer agreement

CMS would require REHs to have an agreement in effect with at least one Medicare-certified hospital that is a level I or level II trauma center for the referral and transfer of patients requiring emergency medical care beyond the capabilities of the REH. An REH may have pre-existing relationships with hospitals that are not designated as level I or level II trauma centers. In these instances, the proposed requirement would not preclude them from maintaining those relationships and leveraging resources and capacity that may be available to deliver care that is beyond the scope of care delivered at the REH.

Medical records

The CAH requirements would be established as appropriate for REHs.

Emergency preparedness requirements

REHs must establish a comprehensive, consistent, flexible, and dynamic regulatory approach to emergency preparedness that aligns with the existing emergency preparedness standards for Medicare and Medicaid participating providers and suppliers. Proposed requirements mirror the existing CAH emergency preparedness requirements.

Life safety code, physician environment requirements

Refer to proposed rule text for details.

Skilled nursing facility (SNF) distinct unit

CMS highlights that a distinct part SNF unit is different from a CAH or hospital utilizing swing-beds. CAHs and hospitals may provide swing-bed services, allowing them to use their beds for acute inpatient care or for post-hospital or CAH SNF care. These facilities must be certified by CMS to provide swing-bed services. CAHs or hospitals utilizing swing-beds are not required to have their swing-beds in a special unit or area within the facility. To implement the statutory provision allowing REHs to establish distinct part SNFs, CMS proposes that REHs must choose to establish such a distinct part unit to meet the requirements for long-term care facilities.

Critical Access Hospitals: proposed CoP changes

CMS also includes several proposed changes to the CAH CoPs.

CAH distance requirements, primary road clarified

CMS proposes to incorporate the definition of “primary road” in the CAH distance requirement regulations, both as part of the 35-mile drive requirement, and as applicable through the secondary roads definition for the 15-mile drive requirement.

Specifically, CMS proposes to revise and clarify that the location distance for a CAH is to be more than a 35-mile drive on primary roads (or, in the case of mountainous terrain or in areas with only secondary roads available, a 15-mile drive) from a hospital or another CAH. Additionally, CMS proposes to specify that primary road of travel for determining the driving distance of a CAH and its proximity to other providers as a numbered federal highway — including interstates, intrastates, expressways, or any other numbered federal highway — or a numbered state highway with two or more lanes each way.

CMS also plans to establish a centralized, data-driven review procedure that focuses on hospitals being certified in proximity to a CAH, rather than focusing specifically on road classifications. Under this approach, CMS would review all hospitals and CAHs within a 50-mile radius of the CAH during each review of eligibility, and then subsequently on a three-year cycle.

Following the initial review of distance and location, further investigations would focus primarily on expanded health care capacity and access to care within the 35-mile radius of the CAH being examined and less on the actual roadway designations used in making the calculations. Those CAHs with no new hospitals within 50 miles would be immediately recertified. Those CAHs with new hospitals within 50 miles will receive additional review based on the distance from the new hospital and the definitions for primary roads and mountainous terrain.

Patient rights

CMS proposes to establish a CoP for CAHs on patients’ rights that would set forth the rights of all patients to receive care in a safe setting and provide protection for a patient’s emotional health and safety as well as their physical safety. This would include proposed requirements for the CAH to inform patients of and exercise their rights, address privacy and safety, adhere to the confidentiality of patient records, understand responsibilities for the use of restraint and seclusion, and adhere to patient visitation rights. Many of these requirements would mirror what is proposed for REHs. CMS seeks comments on this CoP.

Multiple hospital systems

CMS addressed multi-hospital systems that include CAHs and REHs and allows for those to have integrated approaches to the following:

  • For medical staff, CMS proposes to allow CAHs to have either a separate and distinct medical staff for each CAH or a unified and integrated medical staff shared by multiple hospitals, CAHs, and REHs within a health care system. CMS proposes to hold a CAH responsible for showing that it actively addresses its use of a system-unified and integrated medical staff model. There are additional details around this requirement.
  • For infection prevention and antibiotic stewardship, CMS proposes that the governing body of a CAH that is part of a system consisting of multiple separately certified hospitals, CAHs, and/or REHs using a single system-governing body that is legally responsible for the conduct of two or more hospitals, CAHs, and/or REHs, to elect to have unified and integrated infection prevention and control and antibiotic stewardship programs for all of its member facilities, including any CAHs, after determining that such a decision is in accordance with all applicable state and local laws.
  • For QAPI programs, CMS proposes to allow CAHs that are part of a multi-facility system consisting of multiple separately certified hospitals, CAHs, and/or REHs to elect to have a unified and integrated QAPI program after determining that such a decision is in accordance with all applicable state and local laws.

How we can help

From strategic planning to financial modeling and beyond, CLA knows rural. Our health care team works with hundreds of hospitals and health systems, and our reimbursement leadership team has decades of experience focusing exclusively on rural providers.

Using our CAH Gold Standard Report, other data analytic capabilities, and deep industry specialization and market knowledge, we can help you assess how the REH model (or any other change) could work for your organization — and find the right balance in navigating the future of health care.

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