Rural Community Hospital Demonstration
The Rural Community Hospital Demonstration is a demonstration program designed to test the feasibility and advisability of cost-based reimbursement for small rural hospitals that are too large to be Critical Access Hospitals. There will be an intensive evaluation of the demonstration, assessing the financial impact on participating hospitals, as well as the effect on health care for the populations served.
Hospitals selected for the demonstration will be paid the reasonable costs of providing covered inpatient hospital services, with the exclusion of services furnished in a psychiatric or rehabilitation unit that is a distinct part of the hospital, using the following rules. For discharges occurring:
- In the first cost reporting period upon the hospital's participation in the demonstration, reasonable costs for covered inpatient services
- During the second or subsequent cost reporting period, the lesser of their reasonable costs or a target amount. The target amount in the second cost reporting period is defined as the reasonable costs of providing covered inpatient hospital services in the first cost reporting period, increased by the inpatient prospective payment system update factor (as defined in section 1886(b)(3)(B) of the Medicare Prescription Drug, Improvement and Modernization Act of 2003) for that particular cost reporting period.
Eligible applicants are rural community hospitals in the designated service area.
Definition of rural community hospital:
- Is located in a rural area (as defined in section 1886(d)(2)(D) of the Social Security Act (the Act)) or is treated as being so located pursuant to section 1886(d)(8)(E) of the Act
- Has fewer than 51 acute care inpatient beds (excluding beds in a distinct psychiatric or rehabilitation unit of the hospital) as reported in its most recent cost report
- Provides 24-hour emergency care services
- Is not designated or eligible for designation as a Critical Access Hospital under section 1820 of the Act
Project period: May 1, 2025 - June 30, 2028
Estimated number of participants: 10
A link to the application instructions is available on the program website.
Email completed applications to rchdemo@cms.hhs.gov.
Related Content
News (1)
- CMS: Medicare Program; Rural Community Hospital Demonstration Program: Solicitation of Additional Participants, view details
Organizations (1)
- Centers for Medicare and Medicaid Services, view details
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