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Rural Community Hospital Demonstration

This funding record is inactive. Please see the program website or contact the program sponsor to determine if this program is currently accepting applications or will open again in the future.

Centers for Medicare and Medicaid Services
May 17, 2017

Siddhartha Mazumdar


The Rural Community Hospital Demonstration is a CMS program to test the feasibility of alternative, cost-based reimbursement models for small rural hospitals that are too large to be Critical Access Hospitals. Evaluation of the program will assess the financial impact on participating hospitals and the effects of healthcare on the populations served.

The goal of the program is to increase the capability of the selected rural community hospitals to meet the healthcare needs of Medicare beneficiaries in their service areas, and to promote access to high quality and efficient healthcare delivery.

Participating hospitals will receive payment based on the following methodology:

  • During the first cost reporting period, reasonable costs for providing covered inpatient services will be paid. This will establish a baseline for reasonable cost-based reimbursement at the facility.
  • For discharges during the second and subsequent cost reporting periods, facilities will be paid the lesser of their costs or a target amount. The target amount will be determined by the reasonable costs from the previous reporting period, plus the Inpatient Prospective Payment System (IPPS) update factor for the particular reporting period.

An applicant may be a hospital in any state that:

  • Is located in a rural area as defined in section 1886(d)(2)(D) of the Social Security Act. Using the Am I Rural? Tool, look for the Core Based Statistical Areas (CBSAs) designation.
  • Has less than 51 acute care inpatient beds, as reported in the most recent cost report, not including beds in a psychiatric or rehabilitation unit which is a distinct part of the hospital
  • Provides 24-hour emergency services
  • Is not eligible for Critical Access Hospital (CAH) designation, or has not been designated a CAH under section 1820 of the Social Security Act

Hospitals that were participating in the demonstration as of the last day of the initial 5-year period, or as of December 30, 2014, and decide to continue participation, do not need to reapply.

Geographic coverage
Amount of funding

Participating hospitals will be reimbursed based on the demonstration payment methodology described in the application instructions.

Application process

Links to additional guidance and the application instructions are available on the program website.

Submit completed applications by email to

Applicants may, but are not required to, submit 6 hard copies to assure that each review panelist receives the application in the intended format. Hard copies may be mailed to:

Centers for Medicare & Medicaid Services
ATTN: Siddhartha Mazumdar, Rural Community Hospital Demonstration
Seamless Care Models Group
Mail Stop WB-10-01
7500 Security Boulevard
Baltimore, MD 21244

Tagged as
Access · Healthcare business and finance · Healthcare quality · Hospitals · Medicaid · Medicare · Reimbursement and payment models

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