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Rural Emergency Hospitals’ (REHs) Impact on GME

Germane Solutions has summarized the 2024 IPPS Proposed Ruling regarding Rural Emergency Hospitals (REHs) to highlight the impact that this new provider type would have on Graduate Medical Education.


Germane Solutions’ Summary:

  • Many critical access hospitals (CAHs) are considering a conversion to rural emergency hospital (REHs) status because they are struggling to maintain inpatient volumes.

  • Critical access hospitals provide valuable training experiences for residents and fellows and benefit financially since they are considered “non-provider” sites.

  • By allowing Rural Emergency Hospitals the same option to be considered as “non-provider” sites, the same financial opportunities exist as previously afforded CAHs. That is, time spent training at REH’s, can be claimed as IME and DGME FTEs at the main training hospital.

  • Receiving IME and DGME reimbursement significantly increases funding as compared to the reasonable cost that would otherwise be generated if this option had not been granted.


The full text of the 2024 IPPS Proposed Ruling can be found here: https://public-inspection.federalregister.gov/2023-07389.pdf



Relevant Background:

The Consolidated Appropriations Act, 2021 (CAA) added a new section 1861(kkk) of the Act to establish REHs as a new Medicare provider type, effective January 1, 2023. REHs are facilities that convert from either a critical access hospital (CAH) or a rural hospital with not more than 50 beds, and that do not provide acute care inpatient services.


The establishment of REHs as a Medicare provider is intended to promote equity in health care for those living in rural communities by facilitating access to needed services, such as emergency, urgent, and observation care services, as well as other additional outpatient medical and health services that an REH might elect to provide.


GME Training in New REH Facilities:

CMS received the request to designate REHs as graduate medical education (GME) eligible facilities similar to the GME designation for CAHs. Cost reporting periods beginning on or after October 1, 2019, hospitals may include FTE residents training at a CAH in its direct GME and IME FTE counts as long as it meets the nonprovider setting requirements.


Consistent with our policy regarding residency training at CAHs during a hospital’s cap building period, if a hospital is at some point in its 5-year cap-building period as of October 1, 2023, and as of that date is sending residents in a new program to train at an REH, assuming the regulations governing nonprovider site training are met, the time spent by FTE residents training at the REH on or after October 1, 2023, will be included in the hospital’s FTE cap calculation.


As an alternative to being considered a nonprovider site, a CAH may decide to continue to incur the costs of training residents in an approved residency training program(s) and receive payment based on 101 percent of the reasonable costs for those training costs. In this situation, no hospital can include the residents training at the CAH in its direct GME and IME FTE counts. We believe REHs may make a similar decision to incur residency training costs directly.


In summary, CMS is proposing that effective for portions of cost reporting periods beginning on or after October 1, 2023, an REH may decide to be a nonprovider site a hospital can include the FTE residents training at the REH in its direct GME and IME FTE counts for Medicare payment purposes, or, the REH may decide to incur direct GME costs and be paid based on reasonable costs for those training costs.


CMS is proposing to add a new paragraph (d) at 42 CFR 419.92 to implement these provisions.


Please contact Germane Solutions with any questions that you have.

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