Rural Emergency Hospital bill expected to help financial crisis for some

Rep. Lee Johnson, R- Greenwood, filed a bill aimed at helping rural hospitals in financial distress. HB 1127, the Rural Emergency Hospital Act, would grant the Arkansas Department of Health (ADH) the authority to license hospitals as “rural emergency hospitals.”

In an interview with Talk Business & Politics, Johnson explained this type of licensure can help hospitals in rural areas with their finances.

“It [Rural Emergency Act] provides a pathway for rural hospitals in Arkansas to take advantage of a new designation that was created by CMS [Center for Medicare & Medicaid Services] at a federal level. This new designation would allow qualifying rural hospitals to get reimbursed at a higher rate for outpatient services and procedures,” he said.

Arkansas hospitals, particularly rural hospitals, have been under financial strains from COVID-19. Disruptions with supply chains for equipment and products as well as staffing shortages have led to rising expenses for health care centers. Additionally, the pullback of funding for COVID-19 coupled with stagnant Medicare and Medicaid reimbursement rates has exacerbated the financial picture for rural and urban hospitals.

Rural Emergency Hospital licenses were created by CMS to address the closures of hospitals in rural areas, according to the agency’s website.

Ashley Warren, director of communications for the Arkansas Hospital Association, said Arkansas doesn’t have any hospitals licensed as rural emergency hospitals. She added Johnson’s bill would create that type of licensure.

Since the ADH already is responsible for the licensing of hospitals, Johnson said there won’t be a need for the department to create a new division to handle the processing of the licenses. He added he doesn’t see an influx of hospitals taking advantage of the rural emergency hospital licenses.

“The rural hospitals will be the ones that could have the opportunity to take advantage of this, not all of them will. In Arkansas, a dozen or less hospitals will look at this and say ‘this is the right financial decision for us,’” Johnson said.

There are hospitals that will decide to continue to be critical access hospitals, Johnson added.

“If you’re critical access, you get reimbursed for Medicare services in an inpatient setting at a higher rate than non-critical access hospitals. The idea is you’re providing care in an underserved area,” Johnson said.

He said hospitals can be a rural emergency hospital or critical access hospital but not both. Currently, Arkansas has 28 hospitals that are designated as critical access hospitals by the federal government, according to the Arkansas Hospital Association.