TITLE 410 INDIANA DEPARTMENT OF HEALTH

a. History and Background of the Rule

Rural Emergency Hospitals (REH) are a new provider type established by the federal Consolidated Appropriations Act in response to rural hospital closures. The voluntary conversion to an REH allows for the provision of emergency services, observation care, and additional outpatient medical services in the hospital. REHs are generally not permitted to provide inpatient services. REHs will receive enhanced Medicare payments for outpatient services and additional monthly payments.¹

In 2023, Indiana passed HEA 1457, establishing the definition of a Rural Emergency Hospital (REH) in Indiana. The legislation defines an REH as a hospital that was, as of December 27, 2020, a critical access hospital or a rural hospital that does not have more than fifty beds, is granted REH status by Centers for Medicare and Medicaid Services (CMS), meets the requirements of an REH by CMS and is licensed as an REH by IDOH. The same legislation also requires IDOH to regulate REHs. IDOH refers to these eligible facilities collectively as critical access hospitals (CAH).

The REH provider type is listed under IC 16-21 which provides for the licensing of current hospitals, including CAHs. Eligible facilities may voluntarily convert to an REH under the new federal Conditions of Participation for Rural Emergency Hospitals at 42 CFR Part 424, subpart P. The proposed rule establishes minimal requirements for an REH to be licensed by IDOH, mostly consisting of complying with said federal requirements and conditions that CAHs already follow.

IDOH shared the proposed rule and fiscal documents, including this regulatory analysis impact, with the Indiana Hospital Association and received their feedback. IDOH has made changes in accordance with the comments received.

b. Scope of the Rule

This rule is aligning Indiana hospital licensure rules with the current federal law regarding rural emergency hospitals.

c. Statement of Need

As of January 1, 2023, CMS established federal Conditions of Participation for a newly created category of federally certified Rural Emergency Hospitals. HEA 1457 requires IDOH to license and regulate REHs. For Indiana to continue to have state jurisdiction and regulate the new REHs (formerly Critical Access Hospitals under federal certifications and state licensure) creation and adoption of the proposed rule is necessary.

d. Statutory Authority for the Proposed Rule

The statutory authority for the proposed rule: IC 16-21-2-2

The statutory authority for the promulgation of this proposed rule: IC 16-19-3-4

e. Fees, Fines, and Civil Penalties

The rule requires a licensure fee. However, the fee totals the same amount as current hospital licensure fees in 410 IAC 15-5-1. The fee for REHs appears to be double that of the hospital fee, but this is because hospitals are required to pay an annual fee, while REHs will be required to pay a biennial fee. Accordingly, it is not an increase of any fees since the alternative option for REHs is to operate as a hospital with the same fee.

IC 16-21-3-1 authorizes penalties up to $10,000 so the rule matches the statutory language as one option for enforcement actions. This statute also applies to hospitals currently so it will not be a change for REHs.

a. Anticipated Effective Date of the Rule

IDOH anticipates this rule will be effective upon adoption in state fiscal year 2024.

b. Estimated Fiscal Impact on State and Local Government

The proposed rule is estimated to have no anticipated cost on state agencies as the majority of eligible facilities that may convert to a REH are already under the jurisdiction of the IDOH. The only change to current practice is that a new set of rules for REHs will replace the current rules applicable to a CAH and IDOH may have to review applications for facilities that make the switch. The workload will not likely change and if it does, it will be able to be absorbed by current IDOH staff. If an eligible facility that closed after December 27, 2020, decided to re-open as an REH, this would increase the number of hospitals IDOH must regulate. However, IDOH is unaware of any closed eligible facilities that plan to re-open as an REH at this time.

c. Sources of Expenditures or Revenues Affected by the Rule

This rule is not expected to affect revenue. Many CAHs fall at the lower end of the licensure fee due to their lower level of operating costs, so the fee should remain around the same. Additionally, the number of eligible facilities considering the switch to REH are very low.

The only parties IDOH anticipates may be impacted by this rule are existing or previously existing hospitals that choose to convert to an REH. Additionally, communities may also be positively impacted if a hospital chooses to convert to an REH opposed to completely shutting down.

We have included a section by section response of whether the requirements are also imposed on existing Indiana hospitals based on 410 IAC 15 or IC 16-21.

CAHs who determine the continuation of inpatient hospital services is no longer a financially viable option will now have a method to become an REH under federal regulation and state licensure rules. By providing a method for CAHs to continue providing outpatient services, rural communities will continue to have access to health care providers which would not continue if the CAH was forced into total closure. There will also likely be less staff and resources to pay for now that there will not be inpatient services provided at the REHs.

CAHs will not incur any additional cost to become licensed REHs under the proposed rule. Most will likely see a reduction in licensure fees due to the fee being tied to operational expenses which will be lower than a fully operational hospital. The IDOH will not incur any additional costs because the CAHs are currently under state licensure and will only be changing their status. This requires minimal licensure paperwork for IDOH to review. Any additional work will be able to be absorbed by current IDOH staff. There will not be an increase in the number of providers unless an eligible facility decided to re-open as an REH. IDOH is unaware of any facilities re-opening at this time. Therefore, the IDOH will not incur the cost of compliance oversight for additional providers. The risk of penalty is the same as it for hospitals so that will not change the risks associated with noncompliance.

IDOH shared the proposed rule and fiscal documents, including this regulatory analysis impact, with the Indiana Hospital Association and received their feedback.

Since there are no anticipated costs imposed on REHs or IDOH, the benefits of keeping facilities open outweigh any possible costs.

Donna Sembroski, Advisory Chief, Indiana Department of Health, (317) 234-1294, DoSembroski@health.in.gov

Notice of First Public Comment Period with Proposed Rule: 20240925-IR-410240370FNA

Notice of Determination Received: August 23, 2024

DIN: 20240925-IR-410240370RAA

Composed: Nov 21,2024 3:06:15PM EST

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