Florida implements new law to support rural hospitals with new designation, increased Medicare payments

by | May 29, 2024

Governor Ron DeSantis authorized legislation that established a new “rural emergency hospitals” designation to increase Medicare payments and support rural hospitals facing financial and operational challenges.

Gov. Ron DeSantis signed legislation on Wednesday to help address rural hospital closures by creating a new hospital designation and increasing Medicare payments to these facilities.

The measure, Senate Bill 644, sponsored by Sen. Corey Simon, establishes “rural emergency hospitals” (REH) and outlines the requirements for rural or critical access hospitals to apply for this status.

The new law, effective July 1, aims to prevent further closures of rural hospitals, which have faced significant challenges such as low patient volumes, high operating costs, and staffing shortages, exacerbated by the COVID-19 pandemic. From 2010 to 2021, 136 rural hospitals closed nationwide, including three in Florida: Healthmark Regional Medical Center in DeFuniak Springs, Regional General Hospital in Williston, and Shands Lake Shore Regional Medical Center in Lake City.

“Rural hospitals naturally face challenges due to low patient volumes, which can make it challenging to maintain fixed-operating costs and meet performance measures, and the fact that many of the patients treated in rural hospitals are older, sicker, and poorer when compared with the national average,” a House legislative analysis states. “In addition to the patient-side issues, rural hospitals also suffer from above average staffing shortages with only 10 percent of physicians in the U.S. practicing in rural areas despite 20 percent of the population residing in those areas.”

The bill brings Florida in line with a federal law from the Consolidated Appropriations Act of 2021, which created the REH designation to address the nationwide trend of rural hospital closures. The REH designation allows hospitals with no more than 50 beds to apply for certification if they provide 24/7 emergency services and meet federal requirements.

Under the new law, REHs will receive Medicare payments for services at rates comparable to other hospitals, plus an additional five percent. Additionally, they will receive a monthly facility payment from Medicare, starting at $272,866 and slightly decreasing after October 1, 2024, with annual adjustments based on the hospital market basket percentage.

Florida is the 16th state to adopt this federal provision, joining states like Arkansas, Illinois, and Texas. As of January, Florida had 22 licensed rural hospitals.


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