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Florida implements new law to support rural hospitals with new designation and higher Medicare payments


Governor Ron DeSantis approved legislation creating a new designation for “rural emergency hospitals” to increase Medicare payments and support rural hospitals facing financial and operational challenges.


Government Ron DeSantis signed legislation Wednesday to address the closure of rural hospitals by creating a new hospital designation and increasing Medicare payments to these facilities.

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

The new law, which comes into effect on July 1, aims to prevent further closures of rural hospitals, which have faced significant challenges such as low patient numbers, high operating costs and staff 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 obviously 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 seen in rural hospitals treated are older, sicker and poorer compared to the national average,” according to a House legislative analysis. “In addition to the patient-side issues, rural hospitals also face above-average staffing shortages, with only 10 percent of U.S. physicians practicing in rural areas, despite 20 percent of the population living in those areas.”

The bill brings Florida into line with a federal law in 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 those at other hospitals, plus an additional five percent. In addition, they will receive a monthly facility payment from Medicare, starting at $272,866 and decreasing slightly after October 1, 2024, with annual adjustments based on the hospital market basket rate.

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

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