CMS announced solicitation for applications for participation in the Rural Community Hospital Demonstration Program (Demonstration). In this request for applications, CMS is seeking information from interested hospitals regarding financial and service-oriented challenges and is asking hospitals “to describe the impact of rural hospital closures on the needs of their service area, and problems posed by the need to serve a sparse population.” Hospitals that were participating in the Demonstration as of December 30, 2014, and decide to continue participation, do not have to complete this solicitation. The due date for applications for new participants is May 17, 2017.
The Demonstration began in 2004 as a 5-year program under section 410A of the Medicare Modernization Act of 2003 (MMA) and was extended for an additional 5-year period under sections 3123 and 10313 of the Affordable Care Act (ACA). The Demonstration is designed to test payments under a cost-based methodology for inpatient services furnished by participating hospitals. Specifically, the Demonstration looks at “the feasibility and advisability of cost-based reimbursement for rural hospitals that are too small to remain financially viable under Medicare's inpatient hospital prospective payment system, but are too large to convert to Critical Access Hospital status.”
Section 15003 of the 21st Century Cures Act (Cures Act), enacted December 13, 2016, requires an additional 5-year extension period for the Demonstration to begin in 2017 following the previous 5-year extension under the ACA, the period of performance for which ended on December 31, 2016. In addition to mandating an extension of the Demonstration, the 21st Century Cures Act allows for additional hospitals located in any state to participate in the Demonstration, subject to a maximum of 30 hospitals participating at the same time. The 21st Century Cures Act also allows for previously participating hospitals who decide to continue in the Demonstration to continue participation. New applicants will be required to meet the same eligibility requirements for the program, those specified in the original authorizing legislation, section 410A of the MMA. Specifically:
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Applicants must be located in a rural area (as defined in section 1886(d)(2)(D) of the Social Security Act (42 U.S.C. 1395ww(d)(2)(D)) or be treated as so located pursuant to section 1886(d)(8)(E) of 42 U.S.C. 1395 ww(d)(8)(E));
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Applicants must have fewer than 51 acute care inpatient beds, as reported in its most recent cost report (beds in a psychiatric or rehabilitation unit which is a distinct part of the hospital shall not be counted);
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Applicants must make available 24-hour emergency care services; and
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Applicants may not be eligible for Critical Access Hospital (CAH) designation, or have been previously designated as a CAH under section 1820 of the Social Security Act.
On April 14, 2017, CMS issued its Fiscal Year 2018 IPPS proposed rule (discussed in depth here), which contains information on the implementation of the second 5-year extension period authorized by the 21st Century Cures Act. CMS is proposing a 5-year performance period for each continuing hospital as well as for each newly selected hospital, to begin with the start of the first cost reporting period on or after October 1, 2017 following the announcement of the selection of additional hospitals. CMS is seeking public comment from those hospitals continuing participation in the Demonstration with regard to the proposed reporting period in the Fiscal Year 2018 IPPS proposed rule and also on any possible alternative approaches under the 21st Century Cures Act for implementing the extension.
Additional information on the Demonstration, the application process, review of submissions, and application materials can be found here. CMS has proposed a goal to finalize selections by June 2017.
