SESSION OF 2021
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2261
As Recommended by House Committee on
Health and Human Services

Brief*
HB 2261 would enact the Rural Emergency Hospital Act
(Act) and create a category of licensure to enable certain
Kansas hospitals to receive federal health care
reimbursement as Rural Emergency Hospitals. The bill would
require benefits coverage for services provided by Rural
Emergency Hospitals if covered when performed by a general
hospital or critical access hospital. The bill would define
applicable terms, including “Rural Emergency Hospital” in the
Act, and reference the definition in the Kansas Medical
Facilities Survey and Construction Act.
The bill would also establish eligibility and application
requirements for licensure as a Rural Emergency Hospital,
and the bill would require the Secretary of Health and
Environment (Secretary) to adopt rules and regulations
establishing minimum standards for the establishment and
operations of Rural Emergency Hospitals in accordance with
the Act. Further, the bill would require the Secretary, in
formulating rules and regulations under the Kansas Medical
Facilities Survey and Construction Act, to give due
consideration to the requirements for receipt of federal
reimbursement for the particular type of medical care facility.


____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org
Rural Emergency Hospital Act (Sections 1-8)
Definitions (Sections 3 and Section 9 [Amending the Kansas
Medical Facilities Survey and Construction Act])
The bill would define multiple terms, including the
following:
● “Rural Emergency Hospital” would mean an
establishment that:
○ Meets the eligibility requirements described in
Section 4;
○ Provides rural emergency hospital services;
○ Provides rural emergency hospital services in
the facility 24 hours per day by maintaining an
emergency medical department that is staffed
24 hours per day, 7 days per week, with a
physician, nurse practitioner, clinical nurse
specialist, or physician assistant;
○ Has a transfer agreement with a level I or
level II trauma center; and
○ Meets such other requirements as the Kansas
Department of Health and Environment
(KDHE) finds necessary in the interest of the
health and safety of individuals who are
provided rural emergency hospital services
and to implement state licensure that satisfies
requirements for reimbursement by federal
healthcare programs as a Rural Emergency
Hospital.
● “Rural emergency services” would mean the
following services, provided by a Rural Emergency
Hospital, that do not require in excess of an annual
per-patient average of 24 hours in such Rural
Emergency Hospital:

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 ○ Emergency department services and
observation care; and
○ At the election of the Rural Emergency
Hospital, for services provided on an
outpatient basis, other medical and health
services as specified in regulations adopted
by the U.S. Secretary of Health and Human
Services and authorized by KDHE.
State Policy (Section 2)
The bill would outline how the Kansas Legislature seeks
to address the provision and regulation of a structured and
integrated system of healthcare services. The bill would
declare the State policy is to create a category of licensure to
enable certain hospitals to receive federal health care
reimbursement as Rural Emergency Hospitals, and the
implementation of the Act facilitates such policy.
Eligibility for Licensure (Section 4)
The bill would provide that a facility would be eligible to
apply for a rural emergency hospital license, if such facility, as
of December 27, 2020, was a:
● Licensed critical access hospital;
● General hospital with not more than 50 licensed
beds located in a county in a rural area as defined
in Section 1886(d)(2)(D) of the federal Social
Security Act; or
● General hospital with not more than 50 licensed
beds that is deemed as being located in a rural
area pursuant to Section 1886(d)(8)(E) of the
Social Security Act.


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 The bill would require a facility applying for licensure as
a Rural Emergency Hospital to include the following with the
licensure application:
● An action plan for initiating rural emergency
hospital services, including a detailed transition
plan listing the specific services the facility will
retain, modify, add, and discontinue;
● A description of services the facility intends to
provide on an outpatient basis; and
● Such other information as required by rules and
regulations adopted by KDHE.
The bill would outline additional prohibitions and
requirements for rural emergency hospital licensure as
follows:
● Inpatient beds would be prohibited, except a
distinct unit that is part of the hospital and licensed
as a skilled nursing facility could provide post-
hospital extended care services;
● A Rural Emergency Hospital would be allowed to
own and operate an entity that provides ambulance
services; and
● A licensed general hospital or critical access
hospital that applies for and receives licensure as a
Rural Emergency Hospital and elects to operate as
a Rural Emergency Hospital would retain its
original license as a general hospital or critical
access hospital. The original license would remain
inactive while the rural emergency hospital license
is in effect.


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Authority to Enter into Contracts for Federal Reimbursement
(Section 5)
The bill would authorize all Rural Emergency Hospitals,
including city, county, hospital district, or other governmental
or quasi-governmental hospitals to enter into any contracts
required to be eligible for federal reimbursement as a Rural
Emergency Hospital.
Protections Provided (Section 6)
In addition to the limited liability protections provided in
KSA 65-4909 when acting in good faith and without malice,
the bill would provide that entities engaging in activities and
entering into contracts required to meet the requirements for
licensure as a Rural Emergency Hospital, and officers,
agents, representatives, employees and directors of such
entities, would be considered to be acting pursuant to clearly
expressed State policy as established in the Act under the
supervision of the State. Such entities would not be subject to
state or federal antitrust laws while acting in this manner.
Rules and Regulations Authority (Section 7)
The bill would require the Secretary to adopt rules and
regulations establishing minimum standards for the
establishment, operation, and licensure of Rural Emergency
Hospitals in accordance with the Act.
Required Service Coverage (Section 8)
The bill would require benefits for services performed by
a Rural Emergency Hospital to be covered if such services
would be covered under the following policies, contracts, or
coverage, if performed by a general hospital or critical access
hospital:


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 ● Each individual and group policy of accident and
sickness insurance;
● Each contract issued by a health maintenance
organization;
● Each managed care contract for the Kansas
Medical Assistance Program authorized by KSA
39-709;
● The Children’s Health Insurance Program
authorized under KSA 38-2001; and
● Any coverage maintained by an entity authorized
under KSA 40-2222 (those entities providing
coverage in Kansas for medical, surgical,
chiropractic, physical therapy, speech pathology,
audiology, professional mental health, dental,
hospital, or optometric expenses, whether such
coverage is by direct payment, reimbursement, or
otherwise, that are presumed to be subject to the
jurisdiction of the Commissioner of Insurance,
unless the entities fall under the listed exemptions)
or by a municipal group-funded pool authorized
under KSA 12-2618.
Kansas Medical Facilities Survey and Construction Act
(Sections 9 and 10)
The bill would define “Rural Emergency Hospital” in
Section 9 by referencing the definition in Section 2 of the bill.
Rules and Regulations (Section 10)
The bill would amend the Kansas Medical Facilities
Survey and Construction Act by adding that, in formulating
rules and regulations with respect to different types of
medical care facilities to be licensed under such act, KDHE
would be required to give due consideration to the
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requirements for the receipt of medical reimbursement for the
type of medical facility. The bill would also provide that a
Rural Emergency Hospital would be deemed to satisfy the
rules and regulations requirements for a hospital consisting of
more than one establishment if such Rural Emergency
Hospital meets its licensing requirements established by the
licensing agency.

Background
The House Committee on Health and Human Services
introduced the bill at the request of the Kansas Hospital
Association (KHA).
[Note: A companion bill, SB 175, has been introduced in
the Senate.]

House Committee on Health and Human Services
In the House Committee hearing on the bill, proponent
testimony was provided by a representative of KHA and
representatives of Decatur Health and Lindsborg Community
Hospital.
The KHA representatives stated the Rural Emergency
Hospital model would allow Kansas hospitals the option to
take advantage of action taken in December 2020 at the
federal level, which was similar to an alternative rural health
model that KHA has been working on since 2012. The KHA
representatives noted Kansas needs to update its licensure
categories to include the new facility type to allow critical
access hospitals and prospective payment system hospitals
the option to convert to the new model if it best fits the
hospitals’ needs. The KHA representatives stated the Rural
Emergency Hospital model would help rural hospitals focus
their efforts on the primary care needs of the community,
chronic disease management, and emergency services most
needed but would allow the flexibility to add other services as

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determined by the facility and the community the hospital
serves. The KHA representatives stated, while still being
finalized, the Medicare payment methodology for Rural
Emergency Hospitals looks to help stabilize the financial
situation of rural communities.
The Decatur Health representative stated the Rural
Emergency Hospital model would make 24 hours per day, 7
days per week emergency care available while maintaining
health services that focus on keeping people healthy and
reduce the need for inpatient acute care. The Lindsborg
Community Hospital representative stated the Rural
Emergency Hospital model would assist hospitals that cannot
financially sustain acute inpatient beds by allowing the
hospitals to sustain and maintain the needs of the population
in rural communities.
Written-only proponent testimony was provided by U.S.
Senator Jerry Moran and representatives of the Kansas
Association of Counties, Kansas Association of Osteopathic
Medicine, Kansas Bankers Association, Kansas Farm
Bureau, Kansas Medical Society, League of Kansas
Municipalities, and United Methodist Health Ministry Fund.
No other testimony was provided.

Fiscal Information
According to the fiscal note prepared by the Division of
the Budget, KDHE estimates passage of the bill would require
additional expenditures of $183,680 from the State General
Fund and 2.00 FTE positions in FY 2022. The amount
includes $129,000 for salary and wages ($64,500 for each
position); $40,600 for two vehicles; $10,000 for travel; $2,520
for computers and data; and $1,560 for communications. One
position would be needed to develop state licensure
regulations and collaborate with the federal Centers for
Medicare and Medicaid Services. The other position would
conduct the initial licensure surveys of Rural Emergency
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Hospitals. This would require travel to facilities; conducting
observations, interviews and record reviews; writing reports;
and following up with facilities found not in compliance. KDHE
indicates it is possible a portion of the expenditures could be
paid with federal funds, but the amount or percentage is
currently unknown. Additionally, no estimate is available at
this time for revenues, as licensure fees have not been
determined.
The Kansas Association of Counties and the League of
Kansas Municipalities note allowing certain hospitals to
receive federal reimbursement as Rural Emergency Hospitals
could result in improvements to rural healthcare that would
benefit cities and counties. However, the fiscal effect on local
governments is unknown.
Any fiscal effect associated with the bill is not reflected
in The FY 2022 Governor’s Budget Report.
Health; hospitals and health-related facilities; rural emergency hospitals; Rural
Emergency Hospital Act; rules and regulations; licensure; Kansas Medical Facilities
Survey and Construction Act


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Statutes affected:
As introduced: 65-425, 65-431