SESSION OF 2021
SUPPLEMENTAL NOTE ON SENATE BILL NO. 175
As Amended by House Committee on Health
and Human Services

Brief*
SB 175, as amended, 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
establish the Rural Hospital Innovation Grant Program
(Program) and the Rural Hospital Innovation Grant Fund
(Fund). The bill would also appropriate $10.0 million from the
State General Fund (SGF) to the Fund on July 1, 2021.
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
____________________
*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
consideration to the requirements for receipt of federal
reimbursement for the particular type of medical care facility.

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
health care programs as a rural emergency
hospital; and
● “Rural emergency hospital services” would mean
the following services, provided by a rural
emergency hospital, that do not require in excess
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 of an annual per-patient average of 24 hours in
such rural emergency hospital:
○ 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 health care services. The bill would
declare the State’s 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 a 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:
● Each individual and group policy of accident and
sickness insurance;

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 ● Each contract issued by a health maintenance
organization; and
● All 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.
Rural Hospital Innovation Grant Program and Fund (New
Section 9)
Definitions
The bill would define the following terms:
● “Eligible county” would mean a county in Kansas
other than Douglas, Johnson, Sedgwick, Shawnee,
or Wyandotte county;
● “Hospital” would mean the same as in KSA 65-425,
in the Kansas Medical Facilities Survey and
Construction Act; and
● “Transitional assistance” would mean any
assistance related to changing a hospital’s current
health care delivery model to a model more
appropriate for the community the hospital serves,
including, but not limited to:


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 ○ Conducting a market study of health care
services needed and provided in the
community;
○ Acquiring and implementing new
technological tools and infrastructure,
including, but not limited to, telemedicine
delivery methods; and
○ Acquiring the services of appropriate
personnel, including, but not limited to,
additional medical residents or individuals
trained to be needed health care
professionals.
Rural Hospital Innovation Grant Program
The bill would establish the Program, which would be
administered by the Secretary, for the purpose of
strengthening and improving the health care system and
increasing access to health care services in eligible counties,
helping communities in those counties achieve and maintain
optimal health by providing transitional assistance to
hospitals. The Secretary could award a Rural Hospital
Innovation Grant (grant) to a county that applies in
accordance with the provisions of the bill.
The board of county commissioners of an eligible
county, or the board’s designee, could apply to the Secretary
for a grant in the form and manner determined by the
Secretary. The bill would require the application to include:
● A description of the hospital for which the money
would be expended, including the name and
location of the hospital;
● The amount of money requested;
● A description of the needs of the hospital, the type
of transitional assistance the grant would fund, and

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 how the grant would support the hospital in
meeting its needs; and
● Any other information the Secretary deems
necessary.
The bill would require that, before grant moneys are
awarded, the Secretary would enter into a written agreement
with the county, requiring the county to:
● Expend the grant moneys to provide transitional
assistance to a hospital, as approved by the
Secretary;
● Report to the Secretary within one year after the
grant moneys are awarded, detailing the effect of
the grant on the health and other outcomes in the
county and affected community;
● Repay all awarded grant moneys to the Secretary if
the county fails to satisfy any term or condition of
the grant agreement; and
● Any other terms and conditions the Secretary
deems necessary.
The bill would allow any eligible county to enter into
memorandums of understanding and other necessary
agreements with private stakeholders and other eligible
counties.
Private Stakeholders
The bill would allow the Secretary to award a grant only
if the state moneys to be awarded in the grant have been
matched by private stakeholders, including hospital
foundations or other organizations, on a basis of $2 of private
stakeholder moneys for every $1 of state moneys.


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 Under the bill, the Secretary could receive moneys by
bequest, donation, or gift to fulfill the public-private match of
moneys required by the bill. Any received moneys would be
remitted to the State Treasurer and deposited in the State
Treasury to the credit of the Fund.
The bill would allow a private stakeholder to certify to the
Secretary that an amount of money is dedicated to the
Program, but allow the certified dedicated moneys to remain
with the private stakeholder until the grant is awarded. The
bill would require the Secretary to count such moneys to fulfill
the public-private match required by the bill.
In addition, the bill would allow a private stakeholder to
specify a certain county to receive a grant using the private
stakeholder’s moneys. If the Secretary does not award a
grant to the specified county in the same fiscal year as the
request, the bill would require the Secretary to return the
amount of contributed moneys to the private stakeholder, and
the certification would lapse.
Rural Hospital Innovation Grant Fund; Appropriation
The bill would establish the Fund, which would be
administered by the Secretary. The bill would require moneys
credited to the Fund to be used only for purposes related to
the Program, and all expenditures from the Fund would be
made in accordance with appropriation acts upon warrants of
the Director of Accounts and Reports pursuant to vouchers
approved by the Secretary, or the Secretary’s designee.
The bill would require the Director of Accounts and
Reports to transfer $10.0 million from the SGF to the Fund on
July 1, 2021.
Rules and Regulations
The Secretary would be required to adopt rules and
regulations as necessary to implement the Program.
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Reporting Requirements
The bill would require, on or before October 1 of each
year, a county to prepare and submit a report to the Secretary
on each grant awarded, describing the amount and purposes
of any grant moneys, the fulfillment of the terms and
conditions of the grant agreement, and the transitional
assistance upon which the moneys have been spent.
The bill would also require, on or before February 1 of
each year, the Secretary to compile the information received
and submit a report to the Governor and Legislature,
including the received information and a description of and
reasoning for any grant applications that were denied.
Sunset
The Program would sunset July 1, 2025, at which time:
● All moneys in the Fund would be transferred to the
SGF;
● All liabilities of the Fund would be transferred to
and imposed on the SGF; and
● The Fund would be abolished.
Kansas Medical Facilities Survey and Construction Act
(Sections 10 and 11)
The bill would define “rural emergency hospital” in
Section 10 by referencing the definition in Section 2 of the bill.
Rules and Regulations (Section 11)
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

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medical care facilities to be licensed under such act, KDHE
would be required to give due consideration to the
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
SB 175 was introduced by the Senate Committee on
Public Health and Welfare at the request of the Kansas
Hospital Association (KHA). As amended by the House
Committee on Health and Human Services, SB 175 also
contains the language of HB 2174.
[Note: A companion bill to SB 175, HB 2261, was
introduced in the House but was stricken from the House
Calendar on March 5, 2021, by House Rule 1507.]

SB 175 (Rural Emergency Hospitals)
Senate Committee on Public Health and Welfare
In the Senate Committee hearing on SB 175,
proponent testimony was provided by representatives of
KHA and representatives of Lindsborg Community Hospital
and Wilson Medical Center.
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