Rural hospitals are a vital part of the Texas health care delivery system. Texas established it has a public policy interest in sustaining and supporting rural hospitals’ operations. The Office of Rural Hospital Finance and Coordination (RHFC) in the Health and Human Services Commission (HHSC) Chief Financial Officer Division provides financial and technical assistance to help preserve rural hospitals’ continued participation in the delivery of health care services to Texans.
RHFC acts as the “front door” to the Texas Health and Human Services (HHS) system (including HHSC and the Texas Department of State Health Services (DSHS) for rural hospitals. It provides dedicated technical assistance for rural hospitals and can be the first point-of-contact for them when seeking assistance for HHS and/or Medicaid-related questions.
The RHFC team augments communication efforts between HHSC and rural hospitals, conducts analysis of rural hospital participation in Medicaid payment programs, including assessing barriers to their participation, and provides technical assistance to rural hospitals wanting to participate in Medicaid directed payment and supplemental payment programs for which they qualify.
RHFC will coordinate meetings with multiple HHS divisions when a rural hospital has questions or issues that are complex and involve multiple teams and/or departments in the state HHS system. This coordination is meant to ensure a rural hospital’s inquiry is addressed as a whole and not require additional back-and-forth and follow up to get it addressed.
Rural hospitals may request help from the RHFC team by emailing Rural Hospital Finance and Coordination.
Rural Hospital Financial Assistance
Texas Rural Hospital Grants
The Texas Legislature appropriated $50 million to HHSC for fiscal years 2024-2025 to establish a grant program for rural hospitals. The grants will target the following needs: financial stabilization, maternal care operations, and alternative payment model-readiness. The grant funding is provided by House Bill 1, 88th Legislature, Regular Session 2023, Article II, Rider 88, Rural Hospital Grant Program. Additional information will be forthcoming about the eligibility criteria, award amounts and application process. Email Rural Hospital Financial Assistance with questions. More information will be posted here by early summer 2024 about upcoming grant opportunities.
Texas Rural Emergency Hospitals Financial Stabilization Grant
Grants for Texas Rural Emergency Hospitals (REH) are the first grants issued by HHSC in October 2023 to distribute the funding appropriated by the Texas Legislature for fiscal years 2024-2025. These grants are meant to provide time-limited financial support to the REH hospitals for their operational costs as they transition to improved long-term financial solvency and sustainability in their new role as an emergency hospital. Rural hospitals that obtained both the state Limited Services Rural Hospital (LSRH) license under Texas Health and Safety Code Chapter 241, Subchapter K and the federal REH designation from CMS by Aug. 31, 2023, were eligible to apply for the Texas Rural Emergency Hospitals Financial Stabilization Grant. For each eligible hospital, HHSC provided a two-year grant in the amount of $750,000 distributed quarterly in four flat fee amounts of $187,500 for the first Grant year and $375,000 distributed quarterly in four flat fee amounts of $93,750 for the second Grant year. The Open Enrollment for the Texas Rural Emergency Hospitals Financial Stabilization Grant application closed on Oct. 13, 2023. HHSC awarded grants to four REH hospitals.
Rural Hospital COVID-19 in Healthcare Relief Grant Program
In 2021, the Texas Legislature enacted Senate Bill 8, 87th Legislature, 3rd Called Session, and appropriated funds to HHSC for grants to support Texas health care providers affected by the COVID-19 pandemic. The legislation allocated $75 million in grants through the federal American Rescue Plan Act to support rural hospitals during the COVID-19 pandemic in 2022. The funding was distributed in two tiers under the Rural Hospital COVID-19 In Healthcare Relief Grant program (RH-CHRG). Tier 1 funds totaled $38 million and were released as direct grant awards. Tier 2 funds totaled $37 million and were released through competitive grants. The grants require HHSC receive documentation on which hospital costs were paid through the funds.
- Announcements about the RH-CHRG program
- RH-CHRG Program Grant Application information
- Email the HHSC Provider Finance Department for more information.
Community Health Access and Rural Transformation Model Program
On March 17, 2023, the Center for Medicare and Medicaid Innovation (CMMI) within the Centers for Medicare and Medicaid Services (CMS) announced the federal Community Health Access and Rural Transformation (CHART) Model was ending earlier than expected due to a lack of participation nationwide. Since no hospitals decided to participate in the CHART Model, CMS allowed Lead Organizations, such as Texas, the option to expend CHART Model funds by September 30, 2023, to advance the Strategic Priorities previously approved by CMS. In this effort, HHSC spent CHART Model funds to advance rural hospital knowledge of the provision of health care services through Telehealth and advance knowledge of rural Alternative Payment Models (APMs). HHSC was successful in supporting 41 staff from eleven rural hospitals in registering and receiving reimbursement for the Frontiers in Telemedicine Training, securing two rural APM subject matter experts to present at the fall 2023 Texas Organization of Rural and Community Hospitals (TORCH) Conference and scholarship funding for two rural physicians’ attendance at the Conference.
- CHART Model Information
- CHART Model Pre-Implementation Resources
- For questions, email HHSC CHART Model mailbox.
Rural Hospital Services Strategic Plan
HHSC created the Rural Hospital Services Strategic Plan to improve health care access and outcomes in rural communities. The 86th Texas Legislature added Texas Government Code Section 531.201, which requires HHSC to create the strategic plan to ensure rural Texans have access to hospital services. Per the government code, HHSC must submit a progress report regarding the development and implementation of the strategic plan by November 1 of each even-numbered year. HHSC published its first Rural Hospital Services Strategic Plan Progress Report in November 2020.
In the most recent Rural Hospital Services Strategic Plan Progress Report (PDF) published in November 2022, HHSC provided an update on activities that support the three strategies identified in the previous report published in November 2020. These strategies, outlined below, were identified to further the goal of ensuring access to hospital services and reducing rural hospital closures:
- Ensure Medicaid reimbursements are adequate and appropriate.
- Increase access to established revenue opportunities to maximize reimbursements for hospitals.
- Identify challenges hospitals experience in providing services to persons covered by Medicare and other payers.
The Rural Hospital Services Strategic Plan will be updated and published in November 2024.
Information for Rural Hospitals
New Rural Emergency Hospital Designation
A Rural Emergency Hospital (REH) is a new Medicare provider type designed to maintain access to critical emergency and outpatient hospital services in communities that may be unable to support or sustain a Critical Access Hospital (CAH) or small inpatient rural hospital. U.S. Congress established the REH designation in December 2020 through Section 125 of the Consolidated Appropriations Act, 2021, which became effective Jan. 1, 2023. Conversion to an REH allows for the provision of emergency services, observation care and additional medical and health outpatient services, if elected by the REH, that do not exceed an annual per patient average of 24 hours.
According to CMS, the REH designation provides an opportunity for CAHs and certain rural hospitals to avert a potential closure and continue to provide essential services for the communities they serve. Facilities eligible to apply for the REH designation include CAHs and rural acute care hospitals with 50 or fewer beds that were open on Dec. 27, 2020.
Learn more about the REH designation through the following resources:
- Rural Health Information Hub
- CMS Fact Sheet on November 2022 Final Rule for Rural Emergency Hospitals
- CMS Medicare Learning Network Fact Sheet on Rural Emergency Hospitals (PDF)
HHSC Licensure Information
For hospitals to apply to the Centers for Medicare and Medicaid Services (CMS) to obtain an REH designation, states must first establish licensing requirements for this new provider type. On October 5, 2023, HHSC adopted standard rules (Texas Administrative Code (TAC) Title 26 Chapter 511) concerning Limited Services Rural Hospitals. These rules permit a qualified rural hospital to be designated as an REH under the Code of Federal Regulations §§485.502 and 485.506, and to apply to HHSC for a limited services rural hospital (LSRH) license under Texas Health and Safety Code (HSC) Chapter 241, Subchapter K.
To apply for an LSRH license, applicants must complete Form 3240, LSRH License Application (PDF), follow the application’s instructions, and submit all required information to HHSC. An LSRH license is necessary for a provider to apply to become an REH Medicare provider.