Rural Emergency Hospital Designation Improvement Act
- Sponsor
- Rep. Tokuda, Jill N. [D-HI-2]
- Committees
- Ways and Means Committee (primary)
- Last action
- Sep 3, 2026
Bottom line
This bill aims to enhance the financial viability and service offerings of rural emergency hospitals, thereby improving access to a broader range of healthcare services in underserved rural areas.
What it actually does
This bill expands eligibility for facilities to convert to Rural Emergency Hospitals (REHs) and grants the Secretary of HHS waiver authority for certain requirements. It permits REHs to maintain distinct inpatient units for psychiatric, rehabilitation, and obstetric care, and allows them to operate swing beds for skilled nursing services. The bill also provides a 5% add-on payment for diagnostic laboratory tests, ensures REHs reverting to Critical Access Hospitals can regain 'necessary provider' status, and makes REHs eligible for National Health Service Corps site designation and Small Rural Hospital Improvement Program grants. Finally, it mandates Medicaid coverage for REH services.
Proponents argue
Supporters argue that this bill is crucial for preserving and expanding access to essential healthcare services in rural communities, which often face hospital closures and limited specialized care. By broadening REH eligibility, allowing specialized inpatient units, providing payment enhancements, and integrating REHs into existing support programs, the bill strengthens the rural healthcare infrastructure and addresses critical needs like behavioral health, rehabilitation, and obstetric care.
Opponents contend
Critics might express concerns about the potential for increased federal spending due to expanded payment add-ons and program eligibility without clear offsetting measures. Some might also question the operational feasibility or quality of care in REHs that maintain specialized inpatient units, arguing that the REH model was designed for emergency and observation services, not comprehensive inpatient care.
The bill is relatively short and its provisions are clearly laid out, making it accessible for a reader to understand its core impacts within a reasonable timeframe.
Section 2(a) and 2(b)
Expanded Eligibility for Rural Emergency Hospitals and Waiver Authority
This section broadens the eligibility criteria for facilities to convert to Rural Emergency Hospitals (REHs) by allowing them to have been a critical access hospital or a hospital with 50 or fewer beds at any point since January 1, 2015, rather than strictly 'as of' that date. It also mandates the Secretary of Health and Human Services to create regulations within one year to waive these requirements for facilities that operate similarly to an REH, making more facilities eligible for conversion.
Supporters argue
Supporters argue this expands the safety net for rural healthcare by allowing more struggling hospitals to convert to the REH model, preventing closures and preserving vital emergency services in underserved areas. The waiver provision adds necessary flexibility.
Critics contend
Critics might contend that broadening eligibility too much could dilute the original intent of the REH designation or allow facilities that are not truly suitable to convert, potentially impacting quality of care or increasing federal costs without commensurate benefits.
Tradeoffs
Balances the need for flexibility to save rural hospitals against concerns about maintaining the specific operational focus and financial sustainability of the REH model.
Section 3
Authorization for Inpatient Distinct Part Units
This section amends the Social Security Act to allow Rural Emergency Hospitals (REHs) to maintain or include distinct part units licensed for inpatient psychiatric care (behavioral health), inpatient rehabilitation, and obstetric services (obstetric wing, labor and delivery unit, or obstetric emergency department). This significantly expands the types of services an REH can offer beyond emergency and observation services.
Section 4
5% Add-On Payment for Diagnostic Lab Tests
This section establishes a new payment mechanism for Rural Emergency Hospitals (REHs). For clinical diagnostic laboratory tests and other diagnostic laboratory tests that are not already covered as outpatient department (OPD) services, REHs will receive a 5 percent add-on payment above the standard fee schedule amount, effective January 1, 2027. The copayment amount will be calculated as if this increase had not occurred.
Section 5
Authorization for Swing Bed Agreements
This section allows Rural Emergency Hospitals (REHs) to enter into agreements with the Secretary of Health and Human Services to use their facilities for 'swing beds,' which means they can furnish services typically provided by a skilled nursing facility (extended care services). Payment for these services would be based on the reasonable cost, similar to how Critical Access Hospitals are reimbursed for swing beds.
Section 6
Regaining 'Necessary Provider' Status for Reverting CAHs
This section mandates the Secretary of Health and Human Services to issue regulations within one year to allow a Rural Emergency Hospital (REH) that reverts to its previous designation as a Critical Access Hospital (CAH) to regain its 'necessary provider' status. This is contingent on the facility having held 'necessary provider' status before converting to an REH. 'Necessary provider' status is crucial for CAH designation, often indicating a facility is essential for access to care in a rural area.
Section 7
REHs Deemed Health Professional Shortage Areas
This section directs the Secretary of Health and Human Services, through the Health Resources and Services Administration (HRSA), to promulgate regulations that deem Rural Emergency Hospitals (REHs) as Health Professional Shortage Areas (HPSAs). This designation makes REHs eligible sites for the National Health Service Corps (NHSC) program, which provides scholarships and loan repayment to healthcare professionals who agree to work in underserved areas.
Section 8
REH Eligibility for SHIP Grants
This section amends the Social Security Act to include Rural Emergency Hospitals (REHs) as eligible entities for the Small Rural Hospital Improvement Program (SHIP) grants. These grants provide funding to small rural hospitals and Critical Access Hospitals (CAHs) for quality improvement, health information technology, and value-based purchasing initiatives.
Section 9(a) and 9(b)
Medicaid Coverage for REH Services and Distinct Part Nursing Facilities
This section amends the Social Security Act to explicitly include 'rural emergency hospital services' (as defined in section 1861(kkk)(1)) under Medicaid's definition of 'medical assistance,' provided they are licensed or approved by the State. It also clarifies that services provided in a nursing facility that is a distinct part unit of a rural emergency hospital are included under Medicaid's coverage for nursing facility services. The effective date is upon enactment, with an exception for states requiring legislative changes.
Directs the Secretary of Health and Human Services to promulgate regulations within one year to waive the standard eligibility requirements for REH conversion for facilities that operate similarly to an REH.
Section 2(b)(3)
Why it matters:This is standard legislative practice to grant regulatory agencies flexibility in implementing new programs, rather than being evasive. It allows for adaptation to unforeseen circumstances or specific local needs.
Case for: Supporters argue this waiver authority is crucial for ensuring that the REH model can adapt to the diverse realities of rural healthcare and capture facilities that, despite not meeting rigid criteria, are functionally aligned with the REH mission and can provide vital services.
Case against: Critics might express concern that broad waiver authority could lead to inconsistent application of eligibility standards or allow facilities that are not truly appropriate for the REH model to convert, potentially undermining the program's integrity or increasing costs.
Estimated impact: Potentially expands the pool of eligible REH conversion candidates beyond those explicitly defined by the statutory criteria, with the exact number depending on future regulatory interpretation.