Rural Emergency Hospital (REH) Medicare Audit Services: REH Cost Report and Enrollment Compliance & ADR Response Support

Converting to Rural Emergency Hospital status requires a specific Medicare enrollment process distinct from a standard initial enrollment application, along with continued cost reporting obligations tied to the facility’s prior settled cost report history, and both elements carry documentation requirements that a reviewing contractor may examine independently of the facility’s clinical conditions of participation. Because REH enrollment and cost reporting sit at the administrative foundation of a facility’s Medicare participation, gaps in this area can create compliance exposure separate from, though related to, the clinical documentation concerns addressed elsewhere in this compliance series.

This article explains the REH enrollment process and its specific application requirements, the cost reporting obligations tied to REH status, why this documentation area draws sustained audit attention, and how REHs should structure an effective ADR response when enrollment or cost report compliance is challenged. It closes with how HealthBridge US supports Rural Emergency Hospitals strengthening cost report and enrollment compliance.

The REH Enrollment Application Process

Facilities converting to REH status generally submit a CMS-855A change of information application, rather than an initial enrollment application, to their designated Medicare Administrative Contractor, checking the “Other” designation within the applicable section and specifically writing “rural emergency hospital” or “REH” to identify the conversion. This application requires completing the sections addressing practice location information, along with the ownership and management sections applicable to the facility’s specific circumstances, and documentation should reflect that each required section was completed consistent with CMS’s specific REH enrollment instructions, rather than instructions developed for a standard initial enrollment scenario.

The State Agency Action Plan Requirement

Beyond the Medicare enrollment application itself, facilities converting to REH status must submit an action plan for initiating REH services to their designated state agency, and documentation should reflect that this action plan was submitted and addresses the specific elements the state agency requires. A chart or enrollment file review addressing REH conversion compliance should verify both the CMS-855A application and this state agency action plan exist and were properly submitted, since an incomplete enrollment record addressing only one of these two required submissions represents a compliance gap that can affect the facility’s overall REH conversion status.

The Cost Reporting Requirement Tied to Prior Settled Reports

REH cost reporting must be conducted in accordance with the regulations governing full cost reporting, and a facility newly enrolling or certified as an REH generally needs at least two of its last three most recent audited cost reporting periods for which the Secretary has a settled cost report. Documentation should reflect the facility’s cost reporting history supporting this requirement, and facilities lacking this settled cost report history should specifically address how this requirement is satisfied or why an exception applies to their particular circumstances, rather than leaving this question unaddressed in their enrollment and cost reporting records.

Why REH Enrollment and Cost Report Compliance Draws Sustained Audit Attention

Because REH represents a newer provider category with an enrollment process distinct from a standard initial application, and because its cost reporting obligations are specifically tied to prior settled cost report history, reviewing contractors examine whether facilities correctly followed the REH-specific enrollment process, whether the required state agency action plan was submitted, and whether cost reporting obligations are being satisfied consistent with the facility’s specific cost reporting history. Given how directly a facility’s REH status depends on this administrative foundation, a gap in this area can raise questions extending beyond simple administrative technicalities, potentially calling into question the facility’s underlying eligibility for the REH designation itself.

Building an Effective ADR Response

When an ADR challenges REH enrollment or cost report compliance, the response should include the complete CMS-855A change of information application demonstrating proper completion of each required section, the state agency action plan submitted as part of the conversion process, and cost reporting documentation demonstrating compliance with the applicable settled cost report history requirement. Where a genuine documentation gap exists, such as an incomplete enrollment application section, the facility should address this directly while providing whatever other contemporaneous documentation may help demonstrate the facility’s overall good-faith effort to satisfy these administrative requirements throughout the conversion process.

Common REH Enrollment and Cost Report Documentation Gaps

Several recurring gaps appear in this documentation area. CMS-855A applications missing required sections, or applications that do not clearly reflect the specific REH designation language CMS requires, represent a frequently cited issue, particularly where administrative staff completing the application are unfamiliar with the specific conversion instructions CMS has published for this newer provider category. An absence of clear documentation confirming the state agency action plan was submitted alongside the Medicare enrollment application represents another significant gap, particularly where the two submissions were handled by different staff members without a shared tracking mechanism confirming both were completed. Cost reporting documentation that does not clearly address the settled cost report history requirement rounds out a frequent finding in this area, particularly for newer facilities that have not yet accumulated the requisite settled reporting periods.

Building a Recurring Internal Audit Addressing Enrollment and Cost Report Compliance

Facilities benefit from a recurring internal audit specifically verifying that enrollment documentation remains current and accurately reflects the facility’s REH status, and that cost reporting practices remain consistent with applicable requirements over time. This recurring review is particularly valuable during the period immediately following REH conversion, when enrollment and cost reporting practices are still being established, and should continue on an ongoing basis to catch any subsequent changes affecting enrollment status or cost reporting obligations, including changes in ownership, practice location, or management structure that would require a corresponding enrollment update.

Coordinating Enrollment and Cost Reporting Documentation With Broader Compliance Efforts

Because enrollment and cost reporting compliance sit alongside the clinical conditions of participation addressed elsewhere in this compliance series, facilities should ensure their broader REH compliance program specifically incorporates this administrative documentation area, rather than treating enrollment and cost reporting as a one-time administrative task completed only at the point of conversion. A comprehensive compliance program addressing both the clinical and administrative elements of REH status together is better positioned to respond thoroughly to a review examining either dimension of compliance, rather than a program that treats enrollment and cost reporting as a separate concern disconnected from the facility’s broader compliance efforts.

Addressing Enrollment Documentation for Facilities Converting From Different Prior Designations

Because facilities converting to REH status may have previously operated as critical access hospitals, small acute care hospitals, or another prior designation, the specific changes reflected in the CMS-855A application will vary depending on that prior designation, and documentation should reflect the specific additions, deletions, and changes to enrollment information stemming from the particular conversion involved. A facility converting from critical access hospital status, for example, should ensure its application clearly reflects the discontinuation of critical access hospital-specific enrollment elements alongside the addition of REH-specific designations, rather than an application that addresses only the new REH designation without corresponding updates to the prior designation’s enrollment elements.

Verifying Cost Report Continuity Through the Conversion Period

Because cost reporting periods span the conversion from a prior designation to REH status, facilities should ensure cost reporting practices maintain clear continuity through this transition, with documentation specifically addressing how the conversion date affects the applicable cost reporting period boundaries. A cost report that does not clearly address this transition point can create ambiguity about which specific reporting requirements applied during the period surrounding the conversion itself, a gap that a reviewing contractor examining the facility’s cost reporting history around the time of conversion would likely identify.

Building a Coordinated Enrollment and Cost Reporting Timeline

Given how closely the enrollment application and cost reporting obligations interrelate during an REH conversion, facilities should build a coordinated timeline specifically tracking both the enrollment application’s submission and approval status and the cost reporting periods affected by the conversion, ensuring these two administrative workstreams remain synchronized rather than managed as entirely separate processes. This coordinated approach helps facilities identify and address any gap between when REH enrollment formally takes effect and when cost reporting practices are correspondingly updated to reflect the new designation.

Training Administrative Staff on REH-Specific Enrollment Terminology

Because the CMS-855A application requires specific terminology identifying the REH conversion, such as writing “rural emergency hospital” or “REH” within the applicable section rather than relying on a generic description, administrative staff responsible for completing this application should receive targeted training ensuring they understand and correctly apply this specific required terminology. An application using imprecise or generic language to describe the REH conversion, rather than the specific terminology CMS instructions require, risks processing delays or an incomplete record of the facility’s actual designation.

Maintaining a Complete Enrollment and Cost Reporting Documentation File

Facilities should maintain a complete, organized file containing the CMS-855A application, the state agency action plan, and the relevant cost reporting documentation supporting the settled cost report history requirement, ensuring this file remains readily accessible if a reviewing contractor requests documentation addressing the facility’s REH enrollment and cost reporting compliance. A well-organized file spanning these interrelated administrative elements supports a considerably more efficient response than reconstructing this documentation from disparate sources only after a specific request has been received.

Addressing Facilities That Do Not Yet Satisfy the Settled Cost Report History Requirement

Where a facility converting to REH status does not yet have the requisite two of the last three most recent audited cost reporting periods with a settled cost report, documentation should specifically address how this circumstance is being handled, whether through an applicable exception, a pending settlement process, or another mechanism recognized under the governing regulations. Facilities in this position should not assume the settled cost report history requirement is simply inapplicable to their circumstances, but should instead maintain clear documentation of the specific basis relied upon to address this gap, supporting a defensible position if a reviewing contractor examines the facility’s cost reporting compliance during this transitional period.

How HealthBridge US Supports Your Rural Emergency Hospital

REH enrollment and cost reporting sit at the administrative foundation of a facility’s Medicare participation, requiring documentation distinct from the clinical conditions of participation this provider category also demands. HealthBridge US supports Rural Emergency Hospitals with enrollment application review, cost reporting compliance audits, and ADR response support. If your facility wants to strengthen enrollment documentation, verify cost reporting compliance, or needs support responding to an active ADR, HealthBridge US is here to help — contact our team to discuss your facility’s compliance needs.

References

• Centers for Medicare & Medicaid Services. “Rural Emergency Hospitals.” https://www.cms.gov/medicare/health-safety-standards/certification-compliance/rural-emergency-hospitals

• Centers for Medicare & Medicaid Services. Medicare Program Integrity Manual, Chapter 10 (Medicare Enrollment). https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/pim83c10.pdf

• Electronic Code of Federal Regulations. 42 CFR § 412.108 (Special Treatment: Sole Community Hospitals). https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-412/subpart-F/section-412.108

• Centers for Medicare & Medicaid Services. “Rural Emergency Hospital (REH) Model Frequently Asked Questions.” https://rhrco.org/wp-content/uploads/2024/08/REHFAQApril2025.pdf

• Centers for Medicare & Medicaid Services. “Additional Documentation Request.” https://www.cms.gov/data-research/monitoring-programs/medicare-fee-service-compliance-programs/medical-review-education/additional-documentation-request

• Centers for Medicare & Medicaid Services. Medicare Claims Processing Manual, Chapter 29 (Appeals). https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c29.pdf

HealthBridge US is here to help. Our compliance specialists support Rural Emergency Hospitals with enrollment and cost report documentation review and Medicare ADR response — contact us to protect your facility’s reimbursement.