The goal of the Rural Community Hospital Demonstration program is to test the feasibility and advisability of cost-based reimbursement for small rural hospitals that are too large to be Critical Access Hospitals. CMS is conducting an intensive evaluation of the demonstration, assessing the financial impact on participating hospitals, as well as the effect on health care for the populations served.
CMS has released a new Request for Applications (RFA) for the Rural Community Hospital Demonstration as part of our broader rural strategy initiative (PDF). Hospitals interesting in applying to the demonstration must submit an application (PDF) by 11:59 p.m. Eastern Standard Time on March 1, 2025. Hospitals currently participating in the demonstration do not need to complete a new application.
Background
The Centers for Medicare & Medicaid Services (CMS) began conducting the Rural Community Hospital Demonstration in 2004. The demonstration was initiated as a 5-year program under its original mandate, section 410A of the Medicare Modernization Act (MMA) of 2003, and extended for an additional 5-year period under sections 3123 and 10313 of the Affordable Care Act (ACA). Section 15003 of the 21st Century Cures Act (Cures Act), enacted December 13, 2016, provided another 5-year extension period of the demonstration, and the Consolidated Appropriations Act of 2021 required an additional 5-year extension, through June 30, 2028. These authorizing statutes stipulate a maximum of 30 hospitals for participation in the program.
CMS included an account of implementing the most recent extension in the Fiscal Year (FY) 2025 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Care Hospital (LTCH) Prospective Payment Final Rule. For the more information, please visit the FY 2025 IPPS Final Rule Home Page and the Long-Term Care Hospital PPS page.
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Initiative Details
The Rural Community Hospital Demonstration aims to test the feasibility and advisability of the establishment of rural community hospitals to furnish covered inpatient hospital services to Medicare beneficiaries. The demonstration provides and tests payment under a reasonable cost-based methodology for inpatient hospital services furnished by participating hospitals.
CMS is conducting a new request for applications. There are currently 20 participating hospitals. Please see the link below for a fact sheet with provisions of the authorizing statute, features of the demonstration, and a list of the participating hospitals.
Each year since 2004, CMS has included a segment specific to the Rural Community Hospital Demonstration in the proposed and final rules for the Medicare inpatient prospective payment system (IPPS). On an annual basis, this segment has detailed the status of the demonstration, as well as the methodology for ensuring budget neutrality. CMS intends to continue this approach of proposing a budget neutrality methodology in future IPPS rulemaking.
In addition, the authorizing statutes require the Secretary to submit a Report to Congress on the program. This report was issued in October 2018.
Evaluation Reports
Latest Evaluation Report
Prior Evaluation Report
Additional Information
- 2024 RCH Application (PDF)
- 2024 RCH RFA Federal Register Notice
- Medicare Waiver Demonstration Application (PDF)
- Fact Sheet (PDF)
- Frequently Asked Questions
- FY 2025 IPPS Final Rule Home Page
- Rural Community Hospital Demonstration - Report to Congress (PDF)
- Archives
Outreach
If you have questions about the Rural Community Hospital Demonstration, please email RCHDemo@cms.hhs.gov.