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CMS Creates New Healthcare Provider Type for Rural Hospitals

Posted on August 31, 2022 by Larry Johnson

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The Government is Taking Steps to Make It Easier For Medicare Beneficiaries to Receive Help From a Healthcare Provider

If you keep up with Medicare news, you’ll know that the federal government has been making big waves with Medicare and CMS healthcare over the last few months. Earlier this year, news broke that Medicare is still mulling Part B premium reductions for 2023. U.S. President Joe Biden has also called for Medicare to have the ability to negotiate prescription drug costs, a request that appears poised to become a reality in the near future.

One of the most recent Medicare news stories to make waves involves smaller rural hospitals. Outlets started reporting in July that the Centers for Medicare and Medicaid Services (CMS) would soon be implementing a new provider type that allows rural and critical access hospitals in underserved areas to increase their access to emergency and outpatient care.

What does this mean for CMS healthcare, medical finance, and healthcare finance in rural areas? Let’s find out.

Rural and Critical Access Hospitals Across the Country are Closing as a Result of Heavy Financial Losses

Over the last 12 years, 138 rural hospitals have closed their doors, leaving individuals in rural areas without access to crucial emergency care. In most cases, it’s tough for these individuals to even find an adequate healthcare provider. As there are typically few healthcare providers in these areas, closures of rural and critical access hospitals are helping contribute to increases in already-high mortality rates.

One of the biggest reasons that these types of hospitals are closing is simple: they’re losing money. In the world of healthcare finance, larger hospitals stand to make higher profits because many of the patients who walk through their doors pay for their services with private insurance, or the hospital accepts Medicare assignment. In essence, the larger hospital gets a full payment for services rendered, as either private insurance or Medicare kick in their part of the cost to offset the lower price paid by the patient. Most rural and critical access hospitals lack such a medical finance system.

Many of the patients seen at rural or critical access hospitals either lack insurance or pay with Medicaid. Some lack the resources to pay at all. For this reason, these smaller hospitals lose money much quicker. The more money they lose, the higher the decrease in their capacity to respond to medical emergencies. When these hospitals can no longer respond adequately to medical emergencies, this leads to closures

CMS is Looking to Stem These Closures With the Designation of a New Provider Type for Rural and Critical Access Hospitals

To help combat these closures, CMS began taking steps as early as 2021 to establish a new healthcare provider type for rural and critical access hospitals. Through the Consolidated Appropriations Act, CMS sought to designate these hospitals as Rural Emergency Hospitals, or REHs.

By designating these healthcare provider types as REHs, it allows rural and critical access hospitals to improve their financial situations by seeking Medicare designations. In medical finance terms, this would allow a hospital designated as an REH healthcare provider to accept Medicare insurance. The ability to accept Medicare insurance would help REHs by:

  • Increasing the flow of funds into the establishment.
  • Allowing the hospital to potentially increase its footprint by pairing with other hospitals in a larger healthcare system.
  • Allowing the hospital to continue offering critical inpatient care.

In short, designating rural and critical access hospitals as healthcare providers under the REH terminology would allow them to increase their service capacity. This would greatly benefit those that they serve by giving these hospitals the ability to provide better healthcare to more individuals more often.

Has the New Rule Already Taken Effect?

While the new rule proposed by CMS is a huge step in the right direction, it’s going to take some time before delivering a positive outcome. At this time, the rule is still under heavy consideration, and the comment period for potential changes only recently ended on August 29, 2022. This means the rule itself could see heavy changes en route to REH-designated hospitals becoming eligible to receive Medicare payments for services on January 1, 2023.

Medicare Beneficiaries in Rural or Underserved Areas Still Have Options

Being minutes to hours away from a hospital that currently accepts Medicare assignment can seem dire. However, even if you live in a rural area, you may still be able to find a healthcare provider in your area that accepts Medicare insurance. Trust us – your situation related to healthcare finance doesn’t have to become a bad one!

Many Medicare Advantage plans are accepted by providers all across the country in areas that we serve. If you’re looking to compare Medicare plans in your area, please feel free to enter your zip code into our free comparison tool below. Once you’ve found Medicare plans in your area that meet your needs, give our experienced, licensed agents a call. They’ll help you discover available Medicare options that can help you get the care you need.

About the Author

Larry Johnson

Larry is a content writer with several years of experience in creating informative content for a variety of industries on topics that matter. He is a 2009 graduate of the University of North Carolina School of the Arts.

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