MDHHS Releases Proposed Policy on REH Reimbursement

The Michigan Department of Health and Human Services (MDHHS) recently released a proposed policy to establish Medicaid reimbursement methodology for hospitals that convert to the new rural emergency hospital (REH) provider type. Critical access hospitals and rural hospitals with 50 or fewer beds are eligible to apply for the Medicare REH designation effective Jan. 1, 2023.

Hospitals that convert to the REH designation are required to update their enrollment and subspeciality with the MDHHS and must end date their inpatient services. Providers must notify the MDHHS via the Community Health Automated Medicaid Processing System within 35 days of any change to their enrollment information.

The MDHHS will reimburse REHs using existing Outpatient Prospective Payment System (OPPS) methodology. Critical access hospitals that convert to the REH designation will continue being paid based on the higher OPPS payment factor while others will be paid based on their current payment factor. The MDHHS updates the outpatient payment factors annually effective Jan. 1 to maintain budget neutrality following the Medicare update.

Hospitals are encouraged to review existing supplemental payment program policy to evaluate the potential impact. While the proposed policy does not provide specifics, the MHA anticipates that REHs will continue to receive outpatient Medicaid Access to Care Initiative and Hospital Rate Adjustment payments. The MHA will ask the MDHHS to clarify how the REH conversion will impact supplemental payment programs in the final policy. Hospitals are encouraged to review the proposed policy and submit comments to the MDHHS by May 10.

Members that are evaluating REH conversion are encouraged to contact Lauren LaPine at the MHA and  members with questions regarding the proposed reimbursement policy should contact Vickie Kunz at the MHA.