The Evolution of Rural Emergency Hospitals as a New Model of Care

00;00;00;21 - 00;00;22;27
Tom Haederle
Nearly 20% of Americans rely on rural hospitals and health systems as the sole provider of their health care needs. An important regulatory step taken at the start of this year has expanded the scope of services that rural providers can offer. Stay with us to learn more about this welcome step forward and how it's working out so far.

00;00;22;29 - 00;00;48;06
Tom Haederle
Welcome to Community Cornerstones Conversations with Rural Hospitals in America. I'm Tom Haederle with AHA Communications. Rural Emergency Hospitals officially became a new type of care provider on January 1st, 2023. The new designation means that for the first time, Medicare will pay for emergency department and other outpatient services without requiring the facility to meet the current definition of a hospital.

00;00;48;08 - 00;01;08;05
Tom Haederle
In today's podcast, John Supplitt, senior director of AHA Rural Health Services, speaks with a hospital CEO and a public policy expert, from New Mexico and Michigan respectively, about what's involved in converting to and meeting the eligibility requirements of a rural emergency hospital and what patients stand to gain from it.

00;01;08;07 - 00;01;34;13
John Supplitt
Good day. I'm John Supplitt, senior director of AHA Rural Health Services. And joining me is Christina Campos, CEO of Guadalupe County Hospital in Santa Rosa, New Mexico. And Laura Appel, executive vice president of government relations and public policy at the Michigan Health and Hospital Association. And we're here to discuss rural emergency hospitals and its evolution as a new model of payment and delivery.

00;01;34;15 - 00;02;10;14
John Supplitt
Welcome, Christina and Laura. It's great to have you on our podcast. So effective January 1st of 2023, rural emergency hospitals are a new provider type and it allows Medicare to pay for emergency department and other hospital outpatient services in rural areas without requiring the facility to meet the current Medicare definition of a hospital. You each are bringing a unique and important perspective to the formation of rural emergency hospitals, and I want to set a baseline for our listeners regarding your interest in this opportunity.

00;02;10;16 - 00;02;41;20
John Supplitt
And first, Christina, you are a CEO of a ten-bed sole community hospital in eastern New Mexico on the Pecos River, midway between Albuquerque and the Texas border. It's also where Interstate 40 historic U.S. Route 66 and two other federal highways converge. And you are the only hospital for more than 4500 people living in an area of 3000 square miles. And the topography, high plains and natural lakes.

00;02;41;27 - 00;02;44;03
John Supplitt
So you are out there, you're remote.

00;02;44;05 - 00;02;55;26
Christina Campos
Yeah, we're about 60, 65 miles from the nearest hospital. And it's not a hospital that has a higher level of care. It's similar care. So for advanced care, you already have to drive 120 miles.

00;02;55;29 - 00;03;08;18
John Supplitt
It's significant and I think people get the picture. So what does the community expect from Guadalupe County Hospital and what are the challenges you face as an acute care hospital in this unique setting?

00;03;08;22 - 00;03;30;08
Christina Campos
Yeah, well, interestingly, acute care worked for us. Sole community hospital, our hospital specific rate worked for us for the last 20 years. It's no longer working for us and we know that critical access reimbursement will not work for us. It would be less than what our rate has been, but our community expects us to provide life saving care.

00;03;30;11 - 00;03;53;07
Christina Campos
And I think in the years that I've been involved with the AHA and with one of the original task force for ensuring access to vulnerable communities, and we kind of surveyed the field to see what does that mean. Emergency care was at the top of the list and inpatient care was not. But the money was in inpatient care and our ED was a loss leader.

00;03;53;14 - 00;03;53;23
John Supplitt
Right.

00;03;53;24 - 00;04;19;20
Christina Campos
So being able to come up with a new designation, a new model of care and reimbursement that actually fits the way we are providing care, especially as we get better at chronic care management and preventive care and start really reducing the need for inpatient care. We've been working on reducing readmissions and for years I teased we're committing a slow suicide as a hospital.

00;04;19;22 - 00;04;23;13
Christina Campos
This is a lifeline that is being thrown out to my hospital.

00;04;23;15 - 00;04;51;21
John Supplitt
Yeah. Yeah, it's interesting. I mean, the concept of a rural emergency hospital has been around probably since 2016, if I'm not mistaken. And now that it has gotten traction, it's been legislated and codified, it's an opportunity that you really can consider seriously. Now, Laura, for this new model to take effect, states have to have in place legislation that will allow the licensing, certification and payment of this new provider type and service.

00;04;51;23 - 00;05;03;04
John Supplitt
And Michigan was among the first four states to pass enabling legislation. Please share with us why this is a priority in your state and how it came to pass.

00;05;03;05 - 00;05;32;07
Laura Appel
Sure. Like you just mentioned, John, this concept has been around for quite a while and we've been paying attention to it all along for the reasons that Christina mentioned. Eliminating inpatient utilization was important because we were recognizing that that was the way to go with health care. At the same time, the reimbursement model just wasn't following that. So we've been informally asking our members, you know, how does this look to you?

00;05;32;07 - 00;05;56;05
Laura Appel
What might you do with this? And then when it became a reality, probably like many other states, we had at least one member for whom this was financially significant to get this done and started right away. And so we moved on this to get this legislation done last session and have it be signed by the governor asap so that we could jump on it.

00;05;56;07 - 00;06;02;08
Laura Appel
And we are assisting a member in particular to move forward with this as quickly as possible.

00;06;02;13 - 00;06;04;04
John Supplitt
That was a really aggressive timeline.

00;06;04;06 - 00;06;27;19
Laura Appel
Very aggressive timeline. And in Michigan in particular, our Certificate of Need program, it does not allow for what the federal statute allows for essentially banking your beds and having a do over, if you say within the first five years, this doesn't work for us. That was not allowed in Michigan statute in any way. And the way our certificate of need works, we don't have any designated bed need.

00;06;27;21 - 00;06;40;04
Laura Appel
So there was no going back if we didn't get that law change and we really needed to do that. We also didn't have a mechanism for a licensure provision for a rural emergency hospital, and we had to create that as well.

00;06;40;05 - 00;07;08;23
John Supplitt
Right. So let's fast forward now to November of 2022. CMS has finalized the roll emergency hospital conditions of permit participation and the payment rates that will apply to the emergency department and hospital outpatients services in connection with the 2023 hospital outpatient PPS final rule. So then in January of this year, CMS published guidance on this rulemaking and you've both seen and read the CMS rule and the guidance.

00;07;08;25 - 00;07;23;02
John Supplitt
The question I have is, is it what you expected? And can you work within this framework? And Laura, let's start with you. Was the final rule in January guidance what you expected? And is this a framework in which you can work?

00;07;23;03 - 00;07;45;22
Laura Appel
Yeah. I'm going to say generally we can work with this, of course. And I'm sure that Christina will have a comment on this as well. You know, to not have these types of hospitals eligible for 340B makes the financial calculation much more complex, I think. The other thing that we're very disappointed in is the opportunity for swing beds.

00;07;45;25 - 00;08;24;17
Laura Appel
We had many more opportunities to think about how to use swing beds during the recent pandemic, and we are particularly interested, we're very much looking at the example of what they've been doing at Dayton General Hospital in southeastern Washington State. They're using their swing beds for substance use disorder and other complex patients, people that need skilled nursing facilities, but also have the problems of mental illness or, you know, general difficulties of anxiety and other things, things that make it very difficult for us to place those patients in nursing and other nursing home settings.

00;08;24;23 - 00;08;31;19
Laura Appel
And we need that flexibility. And so to not have that be a part of the program, that's a disappointment.

00;08;31;21 - 00;08;55;17
John Supplitt
Well, and I think you bring up something that's really important, that's flexibility. And the limitation of a statute that codified rural emergency hospitals doesn't allow for a lot of flexibility. And as much as we have commented and tried to reach some sort of accommodations through CMS, there's only so much that they can do. So it remains a work in progress without a doubt.

00;08;55;20 - 00;09;03;00
John Supplitt
But Christina, the same question then: Was the CMS guidance what you expected and can you work within this framework?

00;09;03;07 - 00;09;21;29
Christina Campos
Well, you know, ironically, you would think that the transition would actually be easier for a critical access hospital than for an acute care hospital, but it's not. Critical access hospitals have been giving certain leeway with the swing beds where it's reimbursed on a cost basis. I don't have a swing bed at my facility because the equation wasn't good.

00;09;21;29 - 00;09;44;28
Christina Campos
It didn't work for us. So I'm not giving up swing beds. Interestingly, I don't have 340B either because in my community the primary care center is a partner. But a separate organization. So they are the 340B provider and my pharmacy at the hospital is A 340B pharmacy. So I do have an interest in it, but I am not prohibited from that aspect of it.

00;09;44;29 - 00;09;46;18
John Supplitt
Well, that's very unique.

00;09;46;20 - 00;10;14;07
Christina Campos
So I'm not losing funds for 340B, I'm not losing funds for SNF or for swing beds and having to become a SNF, which is cost prohibitive, I think. And then you have to have two administrative, separate entities. So I think for me in particular, it's a really, really great fit. But I do recognize that many of the other hospitals in New Mexico, the math doesn't quite work out for them because they are losing swing bids and because they are losing that 340B money. for

00;10;14;07 - 00;10;33;02
Christina Campos
So I think this might be a foot in the door. Yeah, but there's going to have to be a lot of work done to make it a viable option for many, many more hospitals. Right. In terms of the legislative process, New Mexico was not ready. I think my hospital is the one that put it on the radar for the state and said, hey, this came up.

00;10;33;04 - 00;10;51;27
Christina Campos
We looked at it in October. Our state hospital association put out the cost analysis for us. And, you know, when I saw what the base payment was, we did the math right away and says, this works for us. This will work for us. To date this year, we've lost already $1.8 million under our current structure. This will make up that difference.

00;10;51;28 - 00;11;18;16
Christina Campos
Wow. And we're also comparing current to pre-pandemic and the numbers that came out were pre-pandemic. So the difference is huge. But my state was not ready and my legislature was not going to go into session until January. It ended in March. So I spent, you know, a good amount of the last two months prior to April in Santa Fe advocating this was very much my bill.

00;11;18;18 - 00;11;40;07
Christina Campos
It was signed just a couple of weeks ago on on Good Friday, which made it a very good Friday. And it does not go into effect until June 16th because it did not have an emergency clause in it. However, even that makes sense for me. We're we're financially stable. We're okay. We're losing money now. But we knew that the day was coming and we had saved for it.

00;11;40;09 - 00;11;57;05
Christina Campos
But we're going to be able to become an REH on July 1st, which is going to be great because we're not going to do two separate cost reports or a cost report structure based on one payment mechanism. And then in half of the year or portion of the year based on the other. But the timing was weird. The timing was weird.

00;11;57;07 - 00;12;04;07
John Supplitt
But that's very exciting news then. So congratulations on getting the legislation passed. And so now you're going to hit the ground running on July one.

00;12;04;08 - 00;12;04;23
Christina Campos
July one. 00;12;04;23 - 00;12;05;13 John Supplitt Exciting.

00;12;05;16 - 00;12;09;20
Laura Appel
Yeah, it makes me grateful to have a full time legislature.

00;12;09;22 - 00;12;10;17
Christina Campos
Yeah, right.

00;12;10;18 - 00;12;14;04
Laura Appel
Not always, but in this case, it was good luck.

00;12;14;06 - 00;12;37;24
John Supplitt
Well, and of course, the payment, as you both have mentioned, has been a major focus of the providers and policymakers regarding the viability of rural emergency hospitals. And to review, CMS is going to pay an additional 5% over the payment rate for the hospital outpatient prospective payment for REH services. And they'll also pay an additional annual facility payment in 12 monthly installments.

00;12;37;26 - 00;12;59;17
John Supplitt
And for 2023, that monthly payment is $272,000 and change. So for 2024 and each year after then it will increase by the hospital's market basket percentage increase. So the question is, Christina, and you may have answered this, but we'll ask it again, will this payment be sufficient for you to maintain services in your communities as an REH?

00;12;59;25 - 00;13;19;08
Christina Campos
Yeah, you know, when they first started talking about the REH concept and they were the only thing they identified at that time was that 5% increase in patient services that wasn't going to do it for me. It absolutely was not. As a sole community hospital, we were already getting about us. I believe our cost report prepared. So it was somewhere about a 7.5% add on.

00;13;19;10 - 00;13;39;02
Christina Campos
So we're going to forfeit that by a couple of percentage points. But when we got that number and it was a little bit lower when it first came out in October and then it was adjusted because of low volume adjustments and other mathematical equations that went to it. It's $3,274,000. And I mean, I know the amount because I've had to apply it and reapply it.

00;13;39;03 - 00;13;59;12
Christina Campos
We just finished our preliminary budget, which will be hopefully approved at my board meeting next week. This week, in fact. And it's not going to show us, we're not going to be rich off of this. We're absolutely not going to be rich off this. We're going to have a positive margin, very slim, positive margin, which is, you know, de facto for all rural hospitals, but a survivable margin.

00;13;59;12 - 00;14;20;02
Christina Campos
And then we'll work on expanding outpatient services for our community in a wise way that will hopefully improve margins over time. But we're going to be able to quit concentrating on our lowest volume of services, which was inpatient and concentrate on our high volume, which is outpatient and emergency department services.

00;14;20;05 - 00;14;52;18
John Supplitt
I want to dive into something that you brought up and that was the involvement of your board. So you're a county hospital and so you have a public board, and so you've been working with them for the better course of two years, almost two years to try to condition them towards this conversion. Help us understand what that experience has been like from the moment where you started to consider this transition to rural emergency to the point now where you're actually going to approve a budget that will go into effect July one?

00;14;52;20 - 00;15;20;08
Christina Campos
Well, you know, at first when when the concept of REH, I was not paying attention to it because I didn't know what the base payment was. And that made all the difference. So I kind of ignored it. You know, it was it was on my radar, but it didn't seem to be the solution for us. And when those numbers first came out in in, you know, August, you know, early early numbers came out, and then when the final number came out in November, we did have a board retreat and discussed with the board, this is an opportunity for us to do it.

00;15;20;10 - 00;15;49;16
Christina Campos
And in fact, you know, when people say, what about the transition? Well, it's not. We've been transitioning into this over the last four or five years easily. Our inpatient census is almost nothing. Even our length of stay because of the quality of care that's given on the outpatient services, because of the quality of care, even on an inpatient service, that you can get your normal rural admissions like COPD, pneumonias, everything that's treated medically because we don't have surgical services.

00;15;49;19 - 00;16;13;12
Christina Campos
We're struggling to keep them a second midnight because people are turning around so much more quickly. Mm hmm. So the transition is really a financial transition, a document transition. Semantics. So even discussing it with my board, it's the same conversation that we're having with the community. We're really not changing our clinical way of providing care. We've already done this.

00;16;13;14 - 00;16;27;13
Christina Campos
We're going to change the way we build and the way we're reimbursed. But the same high level of quality of care will stay still in effect, and patients, rather than being admitted, will be opposed. So we're just going to be billing part B instead of part A.

00;16;27;15 - 00;16;52;29
John Supplitt
Well, and let me pull that thread a little bit, too, because CMS has also established rules regarding access, safety and quality of care for rural emergency hospitals. And they closely align with critical access and ambulatory surgical centers but you're a sole community PPS. Among these requirements is a quality assessment and performance improvement program. So Cristina, do you see any challenges in meeting these requirements upon conversion to an REH?

00;16;52;29 - 00;17;14;29
Christina Campos
Do you know what I see as a challenge is that people are going to assume that we can be lax because we were already having to do HCAPS, we are already having to do all the quality measures, you know, compared the same ones that the huge hospitals were doing on a micro level with a ten-bed hospital. So what I'm telling my employers that we are not going to change the quality of care, we're not going to do HCAPS anymore.

00;17;15;06 - 00;17;37;03
Christina Campos
We're going to ED CAPS. We're still going to have the same measures in terms of of, you know, diabetic patients that are kept overnight or re managing that carefully or hospital acquired infections, everything else. But we'll document a little bit differently. We're still going to want a care plan because patients might stay one night, maybe two nights on the off chance.

00;17;37;06 - 00;17;49;17
Christina Campos
So I'm going to be challenged and making sure that we keep that same high level quality care and know that we are going to be just as as scrutinized, if not more so, than we were as an acute care hospital.

00;17;49;20 - 00;18;10;13
John Supplitt
Those are really great insights. Thanks for sharing there. So Laura, given what we know about the REH payment and rules for quality assurance and patient safety, do you foresee hospitals in Michigan moving towards this new model of payment delivery? That is, do you anticipate critical access hospitals or others converting to a rural emergency hospital?

00;18;10;16 - 00;18;42;12
Laura Appel
This is such a different question now than it was three years ago. I think that this was really anticipated for a while. Again, you mentioned that this was a conversation starting in 2016, but during the pandemic, I do not know of a hospital in Michigan that didn't have a sizable number of inpatients compared to their bed availability. Everybody had a high census. Places that had a four patient census average census places had two.

00;18;42;14 - 00;19;02;20
Laura Appel
All of a sudden they were full or maybe they were at, you know, 70%. Things that had been unheard of in the past. And that just so changes your frame of reference. It's so hard now to look around for some people and say, Yeah, we were transitioning away from that and we can return back to that mindset and think about REH and that mechanism.

00;19;02;22 - 00;19;33;22
Laura Appel
We are seeing people shifting back to that, but it was not, you know, when when the bill was signed and even last year when you were saying that the first numbers came out, there were few organizations that would say, Yeah, we might have somebody for that, but really very little objective interest in it. And now I'm just now starting to see compared to, I would have thought five or maybe even ten critical access hospitals would've been absolute candidates for this.

00;19;33;25 - 00;19;56;13
Laura Appel
I think the the thing that really appeals to me about it is: there's no secret about it, Michigan has lost population in our rural areas. The prediction is we will continue to lose population, but our population that remains there will be older. So we will have a group of people who really do need services at the same time that we don't have that many people to spread the cost over.

00;19;56;14 - 00;20;23;03
Laura Appel
So we have these fixed costs that are required to keep an ED open and to have those observation services. And yet at the same time we, you know, you can't make it up on volume when you just don't have very much volume there. So I think that the model of having those fixed payments is so important. And again, we're told all the time hospitals and health care need to become much more innovative, but the payment policy almost never kept up with it.

00;20;23;09 - 00;20;27;19
Laura Appel
I really see this as being a step in the right direction by the the federal government.

00;20;27;20 - 00;20;52;17
John Supplitt
Well, it really is fascinating to see how the landscape has changed, as I call it, in ways that we might have not have anticipated. But now, as we're learning more how these opportunities might still be important to rural hospitals. Well, my last question, Laura, we'll start with you. What opportunity does conversion to rural emergency hospital mean to your hospitals and the rural residents in Michigan?

00;20;52;19 - 00;21;20;19
Laura Appel
Well, we don't have the same landmass as some of the super large states like Texas or Alaska. But the Upper Peninsula, for example, is very large and only has 300,000 people in it. And we really need to be able to have a number of different facilities spread across that area. And yet you just don't have enough people to support it at the rates that are currently paid.

00;21;20;21 - 00;21;43;25
Laura Appel
And I understand why folks don't want to see higher payment rates necessarily, but you can only drive down the fixed costs so far. We really do need emergency services spread across our state and that includes our rural areas. Our rural residents serve that kind of health care just as much as the people in our suburban and urban areas.

00;21;43;28 - 00;22;12;12
Laura Appel
So I think over time, this is going to become a much more popular model and it is going to keep access to the most vital, emergent and typically used health care services. Like Christina said, already folks drive if you need cancer care or bypass surgery or things like that. We're already driving for those services anyway. But this is going to keep those emergency services much closer to the community.

00;22;12;12 - 00;22;14;29
Laura Appel
And I'm very excited about that.

00;22;15;01 - 00;22;34;19
John Supplitt
This is a really fantastic discussion. Yeah, this is a work in progress, but there's a lot from which to work and so there is a great deal of hopefulness here. Christina, the same question: What opportunity does conversion of Guadalupe County Hospital to a rural emergency hospital mean to the community from both a medical and economic perspective?

00;22;34;24 - 00;22;53;27
Christina Campos
Do you know this is a survival mechanism. This will allow my hospital to stay open. It will allow us to continue to save lives. You know, we're an incredibly remote area, small population. But as you mentioned at the beginning of the podcast, you know, we've got I-40, we've got Route 66, U.S. 84, U.S. 54 there all converge in that community.

00;22;53;27 - 00;23;12;11
Christina Campos
So a ton of traffic. We do get a lot of motor vehicle accidents. So and we have scuba diving. Go figure. We have scuba diving in our communities. So we do have a lot of lakes. But, you know, without a hospital my community probably would little by little disappear. So it's critically important to the community. There is a lot of work that needs to be done.

00;23;12;11 - 00;23;33;23
Christina Campos
I just found out a week or two ago that my hospital will not qualify for the flex program because it's for hospitals with inpatient services and it's meant for critical access hospitals and small rural hospitals. So that's going to have to be changed, I believe, because these rural emergency hospitals are just a step away from critical access. So there's a lot, a ton work to be done.

00;23;33;23 - 00;23;53;08
Christina Campos
And I really hope that 340B fix is in there and I hope that maybe the possibility of not, you know, maybe a minimal amount of inpatient care. My concern is end of life care. Yeah, other hospitals are not going to take our patients that are that are, you know, facing end of life. We do not have a nursing home in my community.

00;23;53;08 - 00;24;13;12
Christina Campos
We do not have SNF. We do not have, you know, home health care. We have one hospice nurse in the entire county. I need to crack that nut and figure out how we're going to offer that end of life care. And there is flexibility within it because it's a 24 hour average of all of your visits. Most of our E.R. visits are, you know, 3 hours max.

00;24;13;12 - 00;24;32;27
Christina Campos
And that's from the time they walk in to the time they walk out. You average out with all our our so-called inpatient or OBS visits? We're going to stay well beyond that, no matter what. But we want to make sure that we're doing it right and that we offer the care that my citizens and my community, including my family and my neighbors, need.

00;24;32;29 - 00;25;03;04
John Supplitt
Yeah. You know, I can't imagine Santa Rosa or Guadalupe County without a very strong medical presence, given the convergence of three federal highways. So it'll be very interesting to see how this emerges. But I again, I think we all are quite hopeful. I want to thank my guest, Cristina Campos, CEO of Guadalupe County Hospital in Santa Rosa, New Mexico, and Laura Appel, executive vice president of government relations and public policy at the Michigan Health and Hospital Association.

00;25;03;07 - 00;25;28;24
John Supplitt
Your perspectives on emergency hospitals as a new model of payment and delivery are very greatly appreciated. And as this model continues to evolve, we will be looking to you and your colleagues for continued insights as to what works and how we can make this model better for patients, hospitals and the communities we serve. I'm John Supplitt, senior director of Rural Health Services at the American Hospital Association.

00;25;28;26 - 00;25;32;17
John Supplitt
Thank you for listening. This has been an Advancing Health podcast.