Thanks to the 21^st Century Cures Act, the Rural Community Hospital Demonstration Program through CMS has been extended for another five years, and eligible hospitals can now apply for the payment program for the first time since 2010.

The program aims to test “payment under a reasonable cost-based methodology for Medicare inpatient hospital services.” To participate, facilities must have no more than 51 beds, offer 24-hour emergency care services, and are not eligible to be, or have not been designated as, Critical Access Hospitals (CAH).

Hospitals which were participating as of the last day of the initial five -year program or as of December 30, 2014 will be allowed to return for the second extension period, unless the hospital decides not to participate. According to the CMS fact sheet, priority will be given to facilities located in one of the 20 states with the lowest population densities. Nearby rural hospital closures in the past five years will also be considered.

The last time the program accepted applications was after the Affordable Care Act was passed in 2010. The extension maintains the ACA’s 30-hospital limit for the demonstration.

The program follows two rules for when participating hospitals receive payment Medicare inpatient services:

1. For discharges occurring in the first cost reporting period on or after the implementation of the extension, their reasonable costs of providing covered inpatient hospital services;

2. For discharges occurring 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 (IPPS) update.

Applications will be accepted through May 17, with final selections announced in June.