Estimated Costs of Rural Freestanding Emergency Departments
OVERVIEW
Since 2005, more than 100 rural hospitals have closed and more are at risk.1,2 Rural hospital closures jeopardize access to emergency services in the affected communities. As communities react to and/or prepare for closures, providers and policy makers seek a viable alternative for emergency services provided in a rural hospital setting. A rural freestanding emergency department (RFED) is one potential model for providing emergency services in areas where hospitals have closed. To inform the current policy discussion around RFEDs, this brief explains the concept of an RFED and estimates the costs of operating an RFED under three different volume scenarios.
BACKGROUND
Freestanding Emergency Departments (FEDs) A FED is a facility licensed by the state to provide emergency services and is physically separate from a hospital.3 It provides the same level of access and care as a hospital-based emergency department, except for trauma services, which are provided through transfer agreements between a FED and an area hospital(s). FEDs differ from urgent-care facilities because they are required to be open 24 hours a day, have physicians on-site at all times, provide round-the-clock lab and imaging services, stock medications not required in urgent-care centers, fulfill specific architectural and equipment requirements, and train staff at a higher level than that required of urgent-care centers.3,4 In addition to emergency services, FEDs provide outpatient services such as lab and imaging services.5 FEDs are either hospital-owned or independent from a hospital, which affects federal regulation, state licensure, and reimbursement.6 Most FEDs are owned by a hospital and are recognized by the Centers for Medicare and Medicaid Services (CMS) as part of the parent hospital, subjecting them to the same regulations and billing practices as the parent hospital.7 Hospital-owned FEDs can bill facility fees under the parent hospital’s Tax ID.4,6 Independent FEDs are owned by individuals or organizations other than hospitals and are not recognized by CMS as emergency departments. Thus, they are not subject to CMS regulations as emergency departments and are ineligible to receive a CMS facility fee.6,8 Licensing authority for both types of facilities is left to states and varies significantly. For example, California does not license any FEDs, whereas Texas recognizes both hospital-owned and independent FEDs.4,9 Therefore, differences in hospital ownership of an FED can have important implications with regard to CMS and state-specific regulations.