Bill > SB556

This bill creates a framework for licensing rural emergency hospitals (REHs) in Hawaii, a new type of Medicare provider designed to address rural hospital closures. The bill allows hospitals that previously had a critical access hospital designation to become REHs, which focus on emergency services, observation care, and outpatient medical services while eliminating inpatient care. The Department of Health will license an REH if it elects to receive the Medicare REH designation, provides emergency treatment with an average stay of 24 hours or less, and meets federal requirements. The bill ensures that Medicaid policy protections for these hospitals will continue after transitioning to the REH designation, including maintaining reimbursement rates and eligibility for telehealth services. Specifically tailored to places like Lanai Hospital, which currently has very low inpatient utilization, this designation would allow hospitals to receive a fixed monthly Medicare payment of approximately $3.2 million annually and 5% higher payments for outpatient services, while enabling them to better allocate resources to meet community healthcare needs. The bill requires the Department of Health to adopt implementation rules within 180 days and makes conforming amendments to various state statutes to integrate the new REH designation into existing healthcare frameworks.