Key Takeaways on the Rural Emergency Hospital Model
- Evaluate financial tradeoffs to see whether more predictable Medicare payments outweigh the loss of inpatient, swing bed, and 340B revenue for your hospital.
- Use recent operating data to build a realistic pro forma and compare your current revenue against the REH model before making the switch.
- Plan for care transitions so you can support patients who need inpatient or skilled nursing services through transfer agreements or other local arrangements.
- Align staffing with the model to keep outpatient and emergency services sustainable without disrupting care quality.
What It Takes to Transition and Thrive
Transitioning to the rural emergency hospital model helps eligible hospitals access a more consistent and predictable revenue stream. Medicare adds 5% on top of the Hospital Outpatient Prospective Payment System (OPPS) rate for rural emergency hospitals (REHs). It also pays each REH a facility fee of $295,051.54 a month in 2026 — or $3,540,618.48 for the year.1 And that rate may go up in 2027.
Still, the REH designation isn’t right for every hospital. The flipside of more consistent revenue is providing only outpatient services, not providing inpatient care, and giving up swing bed and 340B income. But for hospitals with low inpatient volumes or inconsistent revenue, the REH designation may make perfect sense.
For DeWitt Hospital in DeWitt, Arkansas, the transition made sense. And in May 2024, it moved from a critical access hospital (CAH) to the rural emergency hospital model.
Want to Make Your Running an REH Hassle-Free?
Make Sure the Rural Emergency Hospital Model Numbers Work
When considering whether or not to convert to an REH, DeWitt Hospital CEO Brian Miller asked his CPA to look at the numbers. Brian found that in one month, the hospital had 53 patients. But only five were inpatients. Others were admitted for observation.
DeWitt already transferred patients needing surgery to other hospitals. And if it moved to the REH designation, it would get paid the monthly facility payment whether it had patients or not.
Of the monthly payment, Brian says, “You don’t have to bill for it. You don’t have to send a claim out. Medicare sends us $295,000 and some change every month, and that number stays the same all year.”
Brian’s advice for rural hospital CEOs looking to transition is to work with your CPA and the Rural Health Redesign Center (RHRC) Rural Emergency Hospital Technical Assistance Center. Your CPA or the RHRC can run a proforma to understand what you might lose and gain if you switch and what makes the most sense for your hospital and community.
Brian says, “…make sure you look at everything. What was your 340B money? What was your swing bed? etc.” He also recommends using numbers from more recent years, like 2024 and 2025 — instead of years impacted by COVID — and comparing your potential REH numbers against that revenue as a good way to see if transitioning makes sense.
““Taking everything into consideration, the numbers came out very positive for us.”
Brian Miller, CEO
DeWitt Hospital
Beyond the Numbers — Tips for a Successful Transition to an REH
Brian and his team worked with the RHRC on DeWitt’s transition. RHRC is a nonprofit committed to creating access to quality rural healthcare. It has a rural health grant to help hospitals understand and navigate the regulatory needs and application process. Because DeWitt Hospital was one of the first small rural hospitals to make the switch, RHRC’s guidance helped with the unknowns at the time.
DeWitt did have an advantage that made the switch easier — an existing nursing home. REHs lose their swing beds. But DeWitt’s nursing home lets it admit patients to its nursing home for ongoing skilled nursing care.
Other REHs create a transfer arrangement with outside facilities for inpatient care. That’s an area where understanding the impacts on revenue is critical. And why for some hospitals, the switch may not work and for others, it makes perfect sense.
Brian cautions hospitals to make sure they’re staffed right for the transition too. DeWitt had reduced staff in 2019 and was at the right level to make the transition sustainable without negatively impacting DeWitt’s high-quality care. Brian shared, “We were staffed appropriately since 2019, which made it easy.”
Little to No Impact on Patients
For Dewitt residents, the change wasn’t even noticeable. Patients admitted to the hospital before the change didn’t know whether they were inpatients or under observation anyway.
DeWitt already transferred patients needing surgery to other hospitals. Today, patients that need inpatient status are moved to other hospitals as well. And those that need skilled nursing care are admitted to DeWitt’s nursing home.
Happy with the Transition to the REH Model
Brian and his team at DeWitt Hospital don’t regret making the switch. “Taking everything into consideration, the numbers came out very positive for us. Having the cash guaranteed each month from Medicare was a big part of that.”
“And we’ve still got respiratory to intubate. We’ve got radiology, to run CT. We’ve got lab. We’ve got all that. None of that went away. We’re constantly looking for other outpatient services, such as recently added sleep studies, wound care, and specialty clinics of any kind, for extra cash flow.”
“As an REH, we can sustain critical care. There’s some hospitals now that are going from PPS to critical access. And I know it’s better than being PPS, but critical access literally in my mind is, if you make a dollar, they’re going to take a dollar. If you lose a dollar, they’ll give you a dollar. They make you wait 12 months to get it. You’re never going to get ahead that way, which always made it hard to keep up your building or give raises.”
Basic REH Requirements
You’re eligible to become an REH if your hospital was a critical access hospital (CAH) or rural Prospective Payment System (PPS) hospital as of December 27, 2020, and you:2
- Have 50 or fewer beds
- Are located in a rural area
- Offer 24×7 emergency department services
- Have at least one physician, nurse practitioner, clinical nurse specialist, or physician assistant/associate trained in emergency care available for immediate telehealth consults or onsite within 30 minutes (60 in frontier areas) 24×7
- Offer no acute care inpatient services unless via a distinct, licensed skilled nursing facility
- Have an annual average patient stay of 24 hours or less
- Have a transfer agreement with a Level I or II trauma center
- Comply with Medicare Conditions of Participation (CoPs)
- Participate in Medicare (and Medicaid as required by state policy)
- Meet state licensure requirements if applicable
Find more details on the rural emergency hospital designation. And for more information on becoming an REH, see the cms.gov Rural Emergency Hospitals fact sheet or contact the RHRC.
Sources
1 Centers for Medicare and Medicaid Services (CMS), CMS Manual System: Pub 100-04 Medicare Claims Processing Transmittal 13536
2 Code of Federal Regulations, § 485.618 Condition of participation: Emergency services
