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[Federal Register Volume 89, Number 247 (Thursday, December 26, 2024)]
[Notices]
[Pages 105049-105050]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-30719]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-5051-N2]

Medicare Program; Rural Community Hospital Disemonstration 
Program: Solicitation of Additional Participants

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (HHS).

ACTION: Notice.

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SUMMARY: This notice announces a solicitation for up to 10 additional 
eligible hospitals to participate in the Rural Community Hospital 
Demonstration program, to run through June 30, 2028.

DATES: To be assured consideration, applications must be received at 
the address provided below by 11:59 p.m. Eastern Standard Time (E.S.T.) 
on March 1, 2025.

ADDRESSES: Please email completed applications to the following email 
address: [email protected].

FOR FURTHER INFORMATION CONTACT: Alexis Lilly at 410-786-3501 or by 
email at [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    Section 410A(a) of the Medicare Prescription Drug, Improvement and 
Modernization Act of 2003 (Public Law (Pub. L. 108-173) required the 
Secretary to establish a demonstration program to test the feasibility 
and advisability of establishing cost-based reimbursement for ``rural 
community hospitals'' to furnish covered inpatient hospital services to 
Medicare beneficiaries. The demonstration pays rural community 
hospitals for such services under a cost-based methodology for Medicare 
payment purposes for covered inpatient hospital services furnished to 
Medicare beneficiaries. A rural community hospital, as defined in 
section 410A(f)(1) of Public Law 108-173, is a hospital that--
     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; and
     Is not designated or eligible for designation as a 
critical access hospital under section 1820 of the Act.
    The demonstration is designed to test the feasibility and 
advisability of reasonable cost reimbursement for inpatient services to 
small rural hospitals. The demonstration is aimed at increasing the 
capability of the selected rural hospitals to meet the needs of their 
service areas.
    We began the demonstration in 2004 for the initial 5-year period 
mandated under section 410A of Public Law 108-173. The demonstration 
has been extended three times, each time for an additional 5-year 
period--first, by sections 3123 and 10313 of the Affordable Care Act 
(Pub. L. 111-148); then by section 15003 of the 21st Century Cures Act 
(Pub. L. 114-255), and again by section 128 of the Consolidated 
Appropriations Act of 2021 (Pub. L. 116-260). The current 5-year period 
of participation, mandated by Public Law 116-260, ends June 30, 2028.
    As part of our broader rural strategy initiative and recognizing 
the health care challenges facing rural communities, we are conducting 
a new solicitation to select 10 additional qualifying hospitals to 
participate in the Rural Community Hospital Demonstration approving 
such hospitals on a rolling basis beginning May 1, 2025 through June 
30, 2028. Please note that, although previous agreements ran for 5-year 
periods, agreements under this provision will run only until June 30, 
2028. Given the upcoming statutory termination of the model, we are 
aligning performance dates for the selected hospitals with the last 
performance day for the last currently participating hospital in this 
performance cycle.
    Section 410A(a)(4) of Public Law 108-173 specified that the 
Secretary was to select for participation from among the applicants in 
rural areas of States that the Secretary identified as having low 
population densities. Therefore, we will only accept applications to 
this solicitation from hospitals in the 20 least densely populated 
States, according to data for 2020 from the U.S. Census Bureau. These 
States are: Alaska, Arizona, Arkansas, Colorado, Idaho, Iowa, Kansas, 
Maine, Mississippi, Montana, Nebraska, Nevada, New Mexico, North 
Dakota, Oklahoma, Oregon, South Dakota, Utah, Vermont, and Wyoming. We 
will not accept applications from hospitals located in other States or 
in the US territories.\1\ The statute states that no more than 30 rural 
community hospitals can participate. Twenty hospitals are currently 
participating in the demonstration program as of November 1, 2024; 
therefore, up to 10 additional hospitals may be selected to be able to 
begin participation in the demonstration in 2025.
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    \1\ See the United States Census Bureau: Historical Population 
Density Data (1910-2020) available at: https://www.census.gov/data/tables/time-series/dec/density-data-text.html.
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II. Provisions of the Notice

    This notice announces the solicitation for up to 10 additional 
hospitals to participate in the Rural Community Hospital Demonstration 
Program. Hospitals that enter the demonstration under this solicitation 
will be able to participate from May 1, 2025 through June 30, 2028

A. Demonstration Payment Methodology

    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 report period upon the hospital's 
participation in the demonstration, reasonable costs for covered 
inpatient services; and
     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 Act) for that 
particular cost reporting period. The target amount in subsequent cost 
reporting periods is defined as the preceding cost reporting period's 
target amount increased by the hospital inpatient prospective payment 
system (IPPS) update factor for that particular cost reporting period.
    Covered inpatient hospital services means inpatient hospital 
services (as defined in section 1861(b) of the Act) and includes 
extended care services furnished under an agreement under section 1883 
of the Act (also known as ``swing beds'').
    Section 410A of Public Law 108-173 requires that, in conducting the 
demonstration program under this section, the Secretary shall ensure 
that the aggregate payments made by the

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Secretary do not exceed the amount which the Secretary would have paid 
if the demonstration program under this section was not implemented. To 
achieve budget neutrality for this demonstration program in fiscal 
years (FYs) since 2004, we have adjusted the national IPPS rates by an 
amount sufficient to offset the added costs of this demonstration 
program. We will present an estimate of the amount to offset additional 
costs due to the demonstration program in FY 2026, including the costs 
of additional rural community hospitals, in the FY 2026 IPPS/long-term 
care hospital (LTCH) PPS proposed rule.

B. Participation in the Demonstration

    To participate in the demonstration, a hospital must be located in 
one of the identified States with low-population density and meet the 
criteria for a rural community hospital. Eligible hospitals that desire 
to participate in the demonstration must properly submit a timely 
application. Only applications that are received by the deadline 
specified in the DATES section of this notice will be considered 
``timely'' and reviewed by the technical panel. Information about the 
demonstration and details on how to apply can be found on the CMS 
website: https://www.cms.gov/priorities/innovation/innovation-models/rural-community-hospital.

III. Collection of Information Requirements

    The information collection requirements contained in this notice 
are subject to the Paperwork Reduction Act of 1995. As discussed in 
section II.B. of this notice, a hospital must submit the required 
information listed on the cover sheet of the CMS Medicare Waiver 
Demonstration Application to receive consideration by the technical 
review panel. The burden associated is the time and effort necessary to 
complete the Medicare Waiver Application and submit the information to 
CMS and is associated with OMB control number 0938-0880.
    The Administrator of the Centers for Medicare & Medicaid Services 
(CMS), Chiquita Brooks-LaSure, having reviewed and approved this 
document, authorizes Chyana Woodyard, who is the Federal Register 
Liaison, to electronically sign this document for purposes of 
publication in the Federal Register.

Chyana Woodyard,
Federal Register Liaison, Centers for Medicare & Medicaid Services.
[FR Doc. 2024-30719 Filed 12-20-24; 4:15 pm]
BILLING CODE 4120-01-P
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