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S. 5164·119th Congress·Introduced Jul 29, 2026

Rural Emergency Hospital Designation Improvement Act

IntroducedHealthMajor
View bill text
Sponsor
Sen. Moran, Jerry [R-KS]
Committees
Finance Committee (primary)
Last action
Jul 29, 2026

Bottom line

This bill aims to enhance the financial viability and service offerings of rural emergency hospitals, making them more attractive for conversion and improving healthcare access in underserved rural areas.

What it actually does

This bill amends the Social Security Act to expand eligibility for rural emergency hospital (REH) designation, allowing more facilities to convert. It permits REHs to maintain distinct inpatient psychiatric, rehabilitation, and obstetric units, and authorizes them to utilize 'swing beds' for skilled nursing care. The bill also provides a 5 percent add-on payment for diagnostic laboratory tests, ensures REHs can regain 'necessary provider' status if they revert to critical access hospitals, makes them eligible for National Health Service Corps site designation and Small Rural Hospital Improvement Program grants, and mandates Medicaid coverage for REH services.

Proponents argue

Supporters argue that these changes are vital for preserving and expanding access to emergency and essential healthcare services in underserved rural communities. By making REH designation more flexible and financially sustainable, the bill helps prevent hospital closures and ensures residents have access to critical care, including specialized services like behavioral health and obstetrics, which are often lacking in rural areas.

Opponents contend

Potential opponents might express concerns about the increased federal spending associated with expanded eligibility and add-on payments, questioning the long-term fiscal sustainability. Some might also argue that expanding the scope of REHs to include distinct part units could dilute the original intent of the REH model, which was focused on emergency and outpatient services, potentially leading to less efficient resource allocation.

The bill is concise and its provisions are generally clear, making it accessible for a reader to understand its core changes within a reasonable timeframe.

Section 2(a) and (b)

Expanded Eligibility for Rural Emergency Hospital Designation

prominently featuredstraightforward

This section modifies the eligibility criteria for a facility to convert to a Rural Emergency Hospital (REH). It changes the look-back period for being a critical access hospital or other hospital from 'as of' a specific date to 'at any point during the period beginning on January 1, 2015, and ending on' that date. Additionally, it mandates the Secretary to promulgate regulations within one year to waive certain requirements for facilities that operate similarly to an REH, making them eligible for conversion.

GroupImpactMechanismScale
GroupRural hospitals, particularly those that previously qualified as critical access hospitals or other types of hospitalsImpactIncreased opportunity to convert to REH status, potentially improving financial stability and service continuityMechanismBroadening the historical eligibility window and allowing for waivers of specific requirementsScalePotentially impacts a significant number of rural hospitals struggling to maintain operations

Supporters argue

Supporters argue this flexibility is crucial for more rural hospitals to transition to the REH model, preventing closures and preserving emergency care access in communities that have lost or are at risk of losing inpatient services.

Critics contend

Some might argue that broadening eligibility too much could allow facilities that are not truly distressed or suitable for the REH model to convert, potentially leading to inefficient use of federal resources or a dilution of the REH program's focus.

Tradeoffs

Balances the need for flexibility to save rural hospitals with concerns about maintaining the integrity and specific focus of the REH designation.

Section 3

REH Authorization for Distinct Part Units (Psychiatric, Rehabilitation, Obstetric)

prominently featuredstraightforward

This section amends the Social Security Act to explicitly allow Rural Emergency Hospitals (REHs) to maintain or include distinct part units licensed as inpatient psychiatric units for behavioral health patients, inpatient rehabilitation facilities, and obstetric wings, labor and delivery units, or obstetric emergency departments. These units would allow for inpatient care within the REH structure.

Section 4

5% Add-on Payment for Diagnostic Laboratory Tests

prominently featuredmoderately complex

This section establishes a new payment mechanism for clinical diagnostic laboratory tests and other diagnostic laboratory tests furnished by Rural Emergency Hospitals (REHs) that are not already covered outpatient department (OPD) services. Effective January 1, 2027, the payment amount for these tests will be the applicable fee schedule amount increased by 5 percent, to account for the higher costs incurred by REHs. Copayment amounts will be determined as if this increase had not occurred.

Section 5

Authorization for Rural Emergency Hospitals to Utilize Swing Beds

prominently featuredstraightforward

This section allows Rural Emergency Hospitals (REHs) to enter into agreements with the Secretary to use their facilities for "swing beds," meaning 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 bed services.

Section 6

Restoration of Necessary Provider Status for Reverting Critical Access Hospitals

prominently featuredstraightforward

This section directs the Secretary of Health and Human Services to promulgate 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 prior to converting to an REH. Necessary provider status is crucial for CAH designation, indicating the hospital is essential for access to care in a rural area.

Section 7

Rural Emergency Hospitals Deemed Health Professional Shortage Areas

prominently featuredstraightforward

This section directs the Secretary of Health and Human Services, through the Health Resources and Services Administration, to promulgate regulations that deem a Rural Emergency Hospital (REH) to be a health professional shortage area (HPSA). This designation makes REHs eligible for programs like the National Health Service Corps (NHSC), which provides scholarships and loan repayment to healthcare professionals who agree to work in underserved areas.

Section 8

Inclusion of Rural Emergency Hospitals in Small Rural Hospital Improvement Program (SHIP) Grants

prominently featuredstraightforward

This section amends the Social Security Act to include Rural Emergency Hospitals (REHs) alongside critical access hospitals and small rural hospitals as eligible entities for grants under the Small Rural Hospital Improvement Program (SHIP). SHIP grants provide funding for quality improvement, health information technology, and other activities to help small rural hospitals improve their services and financial viability.

Section 9(a) and (b)

Medicaid Coverage for Rural Emergency Hospital Services and Distinct Part Nursing Facilities

prominently featuredmoderately complex

This section amends the Social Security Act to explicitly include "rural emergency hospital services" (as defined in section 1861(kkk)(1) and licensed by the State) as covered services under Medicaid. It also clarifies that services provided in a nursing facility that is a distinct part unit of a rural emergency hospital are covered under Medicaid, specifically excluding them from the general exclusion for services in institutions for mental diseases. The effective date is generally upon enactment, with an exception for states requiring legislative changes.

FOUND

Amends Section 1905(a)(4)(A) of the Social Security Act to explicitly include "services provided in a nursing facility that is a distinct part unit of a rural emergency hospital" under Medicaid, thereby exempting them from the general exclusion for services in institutions for mental diseases.

Section 9(a)(2)

Why it matters:This is standard legislative practice for making precise technical adjustments to existing law, particularly within the Social Security Act. It's not necessarily evasive but requires familiarity with Medicaid's IMD exclusion.

Case for: Supporters would argue this clarification is essential to ensure that Medicaid beneficiaries can access necessary nursing facility services, including behavioral health, when provided within an REH's distinct part unit, without being denied coverage due to the IMD exclusion. It aligns with the intent of allowing REHs to offer these specialized services.

Case against: No direct opposition to this specific technical clarification is likely. However, broader concerns about the cost implications of expanding Medicaid coverage for inpatient behavioral health services could be raised.

Estimated impact: Ensures Medicaid coverage for a specific type of inpatient care in REHs, potentially increasing access for a vulnerable population and providing a revenue stream for REHs. The fiscal impact would depend on the volume of services provided.

About this analysis. AI-Generated from the official bill text and available committee reports. Gaps in available data are noted explicitly. Verify important details with the official Congress.gov record.

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