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South Dakota's first Rural Emergency Hospital: what it means for your Medicare coverage

A hospital didn't close. It just quietly stopped being able to keep you overnight — and that difference changes what Medicare will and won't pay for.

Big Sioux Benefits Data Desk

Published August 28, 2026 · 21 min read · Sourced from CMS.gov

When a small-town hospital converts to a Rural Emergency Hospital, it keeps its emergency room but legally loses the ability to admit you overnight — and that one change ripples into what Medicare will pay, whether a nursing-home stay afterward gets covered, and what your Medicare Advantage plan owes you. South Dakota has exactly one hospital that's made this switch so far: Landmann-Jungman Memorial in Scotland, about an hour southwest of Sioux Falls in Bon Homme County. It won't be the last. This guide walks through what a Rural Emergency Hospital actually is, why South Dakota hospitals are converting, and what it means for your Medicare coverage if it happens to a hospital your family relies on.

Every figure below traces to a document fetched directly from CMS.gov, Medicare.gov, the Chartis Center for Rural Health, or the University of North Carolina's Cecil G. Sheps Center this week — CMS's own REH payment fact sheet, CMS's REH provider-type page, Chartis's 2026 rural hospital vulnerability report, and the Sheps Center's live REH conversion tracker. No invented numbers.

What a Rural Emergency Hospital actually is

A Rural Emergency Hospital, or REH, is a Medicare provider type Congress created in the Consolidated Appropriations Act, 2021, signed into law December 27, 2020. CMS finalized the rules on November 23, 2022, and the provider type went live January 1, 2023. The idea is straightforward: give a small rural hospital that's financially struggling a way to keep its emergency room and outpatient services running, in exchange for giving up inpatient beds.

To be eligible, a hospital had to be a Critical Access Hospital, or a rural hospital with 50 beds or fewer, as of December 27, 2020. Converting doesn't require a brand-new Medicare application — a facility files a change-of-information application (Form CMS-855A) rather than starting over. Once converted, an REH must keep a staffed emergency department 24 hours a day, 7 days a week, maintain a transfer agreement with a Level I or Level II trauma center, and meet the same general staffing standard as a Critical Access Hospital.

Source: CMS — Rural Emergency Hospitals (page last reviewed March 2026); CMS Medicare Learning Network — Rural Emergency Hospitals fact sheet (MLN2259384), December 2025.

The trade-off is the part that matters most for your Medicare coverage: an REH is barred from providing acute inpatient hospital services, with one narrow exception for post-hospital extended care furnished in a distinct-part unit specifically licensed as a skilled nursing facility. Emergency department visits and observation care are capped at an annual per-patient average length of stay of 24 hours. This isn't a hospital operating at reduced capacity — it's a different, federally defined category of facility with a hard structural limit built into the rule itself.

Why South Dakota hospitals are converting now

South Dakota's rural hospitals are under real financial pressure, and the numbers moved sharply in a single year. The Chartis Center for Rural Health's 2026 State of the State report, published February 10, 2026, rates 42% of South Dakota's rural hospitals as vulnerable to closure for 2026 — up from 28% in 2025, a 14-percentage-point jump in twelve months.

Source: Chartis Center for Rural Health — 2026 Rural Health State of the State, published February 10, 2026. Chartis rates vulnerability using a multilevel logistic regression model weighing more than a dozen factors — case mix index, average daily census, years operating at a loss, occupancy, and Medicaid expansion status among them.

The same 2026 Chartis report notes South Dakota was among the states where a hospital's inpatient care "disappeared" during 2025 — a description that matches Landmann-Jungman's own conversion almost exactly. Converting to REH status isn't a hospital's first choice. It's a way to keep the doors open, the emergency room staffed, and the community's closest ambulance destination intact, when the alternative on the table is closing entirely.

Zoom out to the national picture and the same pattern holds. More than 1,500 Critical Access Hospitals and small rural hospitals are eligible to convert to REH status, per Catholic Health World's reporting on the program, yet only 53 have actually done it nationwide as of this writing, per the Sheps Center tracker. That gap between "eligible" and "converted" tells you something: most hospitals are holding out, converting only once the financial pressure leaves no better option. South Dakota's 42% vulnerability rate suggests more of that pressure is coming, not less.

South Dakota's first Rural Emergency Hospital

Landmann-Jungman Memorial Hospital in Scotland, South Dakota converted from Critical Access Hospital to REH status on July 1, 2025 — the first, and as of this writing the only, Rural Emergency Hospital in the state. The hospital has been managed by Avera Health since 1999 and sits in Bon Homme County, serving a town of 851 people, per the Census Bureau's most recent estimate.

Sources: UNC Cecil G. Sheps Center for Health Services Research — Rural Emergency Hospitals tracker (live conversion tracker, confirms the July 1, 2025 date and CAH-to-REH transition); Mitchell Republic — “Scotland facility to become South Dakota's first Rural Emergency Hospital”; Catholic Health World — “With switch to rural emergency designation, two small hospitals gain new footing”; U.S. Census Bureau, American Community Survey 2024 5-Year Estimates (via Census Reporter).

According to local reporting, the hospital was averaging fewer than one inpatient a day before the switch — a volume that made the inpatient side of the operation a drag on the budget rather than a service reaching many people. CEO Melissa Gale told the Mitchell Republic the board ran an "extensive analysis from various perspectives, including operations, finances, and patient needs" before deciding the REH model would keep the maximum amount of service in the community while stabilizing revenue. The hospital kept its emergency department, outpatient clinic, observation beds, and all staff positions; it discontinued acute inpatient and swing-bed services. A March 2026 follow-up from Catholic Health World reported the hospital "running at a healthy positive margin" since the conversion — a genuinely better financial footing than the alternative most rural hospitals in this position face.

Big Sioux Benefits' own county data confirms the same hospital by name: Landmann-Jungman Memorial Hospital Corporation appears in CMS's own hospital records for Bon Homme County, alongside St. Michael's Hospital in nearby Tyndall.

What changes at the hospital itself

The emergency room doesn't close. The ambulance still goes there. What disappears is the ability to keep you as an admitted inpatient overnight for ongoing hospital-level care — and a few service lines that depend on that inpatient status.

Source: CMS Medicare Learning Network — Rural Emergency Hospitals fact sheet (MLN2259384), December 2025.

If your family's local hospital converts, care requiring an overnight inpatient stay routes to the nearest hospital that still offers it — for Bon Homme County, that generally means Yankton, Mitchell, or Sioux Falls, depending on the specific need. That's precisely why the transfer-agreement requirement with a Level I or Level II trauma center is built into the REH rule: the facility that converts is explicitly designed to stabilize and route you onward, not to be your hospital-stay destination.

How Medicare pays a Rural Emergency Hospital

Medicare pays REH outpatient services at the standard Hospital Outpatient Prospective Payment System (OPPS) rate, plus an additional 5%. Your coinsurance, though, is calculated on the base rate before that 5% add-on — so the extra payment goes to the hospital, not onto your bill. CMS's own worked example: a $100 service becomes a $105 allowed amount, but your 20% coinsurance is still calculated on the original $100, coming to $20, not $21.

Source: CMS Medicare Learning Network — Rural Emergency Hospitals fact sheet (MLN2259384), December 2025 (added the CY2026 payment amount per CMS Change Request 14334).

On top of the outpatient payment structure, every REH — regardless of size or revenue — receives the same additional monthly facility payment, paid in 12 installments and intended to cover fixed operating costs the facility can no longer spread across inpatient revenue. That figure rises each year by the hospital market basket percentage increase: $285,625.90 a month in 2025, $295,051.54 a month in 2026. It's the same for every REH in the country, whether it's in South Dakota or Texas — CMS doesn't scale it to the facility's size or how much revenue it brings in.

The nursing-home rule collision

This is the gap that catches families off guard. Medicare's skilled nursing facility benefit only kicks in after a medically necessary inpatient hospital stay of at least 3 consecutive days — not counting the day of discharge, and not counting time spent in the emergency room or under observation, per Medicare.gov's own coverage rules. An REH cannot furnish acute inpatient hospital care at all, which means, structurally, no stay at an REH can ever satisfy that 3-day qualifying requirement — not a long one, not a complicated one, none of them.

Source: Medicare.gov — Skilled Nursing Facility Care Coverage.

In practical terms, this is exactly why the transfer agreement built into the REH rule matters. If a Scotland-area patient needs true inpatient-level care, the REH's job is to stabilize and transfer — to Yankton, Mitchell, or Sioux Falls — where the inpatient clock can actually start. Knowing that ahead of time, rather than learning it while a discharge planner is explaining why a nursing-home stay isn't covered, is the entire reason this section exists.

If you live in Sioux Falls with rural family

Most Big Sioux Benefits readers live in or near Sioux Falls, and Sioux Falls itself has no Rural Emergency Hospital — Sanford USD Medical Center and Avera McKennan both remain full acute-care hospitals. The reason this topic still matters here is family: a parent, an aunt, an in-law in Scotland, Tyndall, or any of South Dakota's smaller towns where the next REH conversion could happen.

A few things are worth knowing if that describes your situation:

• Emergency care is protected regardless of network. Under eCFR — 42 CFR § 422.113, emergency and urgently needed services, every Medicare Advantage plan is financially responsible for emergency and urgently needed care nationwide, in-network or not. An REH's emergency department visit falls squarely under that rule.
• Ambulance coverage doesn't change. Ground ambulance transport — including a transfer from an REH to a full-service hospital — is billed under the standard Medicare Part B ambulance benefit, the same as any other ambulance ride. Our full ambulance coverage guide walks through the coinsurance math.
• Planned, non-emergency care is a different story. If your relative is on a Medicare Advantage plan and wants a scheduled outpatient procedure at the REH, normal network and referral rules can still apply — confirm with the plan directly before assuming it's automatically covered.
• Original Medicare plus Medigap removes the network question entirely. Because Medigap has no network, a Scotland-area beneficiary on Original Medicare with a Medigap supplement can see any provider that accepts Medicare, REH or otherwise, with no network approval required.

We covered the broader Sanford-versus-Avera network question that shapes most Sioux Falls Medicare decisions in a separate guide — worth reading if network access, not just premium, is what's driving your own plan choice.

The Medicare plan landscape around Scotland

Bon Homme County — home to Scotland and Landmann-Jungman Memorial — had 1,678 Medicare beneficiaries as of 2025. For plan year 2026, the county has 6 standard Medicare Advantage PPOs, 5 of them at a $0 premium, plus 8 Medica Cost plans — a different structure entirely, since Cost plans let you use any Medicare provider outside the network at no extra plan charge.

Source: CMS Medicare Advantage / Part D Landscape (PY2026), Bon Homme County, plan year 2026.

Bon Homme County also has 8 Medica Cost plans, a genuinely different product worth naming individually rather than folding into a single line:

Source: CMS Medicare Advantage / Part D Landscape (PY2026), Bon Homme County Medica Cost plans, plan year 2026.

None of this data reflects Landmann-Jungman's REH status directly — CMS's landscape file tracks plan premiums and networks, not which hospital in a county is or isn't an REH. What it does show is that Bon Homme County beneficiaries have real plan choice, including a Cost-plan structure that sidesteps the network question altogether, which matters more in a county now served by one hospital with a narrower scope of service than it had two years ago.

The hospital didn't close. It just quietly stopped being able to keep you overnight — and that one change is the whole story.

A worked example

Say a Scotland-area Medicare beneficiary falls at home and breaks a hip. An ambulance takes her to Landmann-Jungman Memorial's emergency department — that part is unchanged, covered the same as it always was, and her Medicare Advantage plan owes it regardless of network under the emergency-care protection above. The ER stabilizes her and, because surgical repair and any inpatient recovery require care an REH cannot legally provide, she's transferred by a second ambulance to a full-service hospital in Sioux Falls or Yankton.

That receiving hospital admits her as an inpatient. If she stays 3 or more consecutive days there — not at Landmann-Jungman, which structurally can't count — she clears Medicare's SNF qualifying-stay rule and can move to a skilled nursing facility for rehabilitation with Medicare Part A picking up days 1–20 in full and a $217-a-day coinsurance for days 21–100, per CMS — 2026 Medicare Parts A & B Premiums and Deductibles. If her total inpatient stay at the receiving hospital had come in under 3 days, none of the follow-up nursing care would qualify under Original Medicare's standard rule, and the family would be looking at private-pay skilled nursing costs or a Medicaid application instead. The REH visit itself never determined that outcome one way or the other — the receiving hospital's inpatient stay did, and where the family understood that division of labor made all the difference in how the aftermath unfolded.

Common mistakes

• Assuming "hospital" on the sign means full inpatient service. An REH keeps the word "hospital" in its name and its emergency room; the inpatient capability is what's gone.
• Assuming a rural hospital stay automatically satisfies the SNF 3-day rule. If the hospital is an REH, it structurally can't — verify where the 3-day clock actually needs to run before discharge planning starts.
• Assuming Medicare Advantage won't cover an REH visit at all. Emergency care is protected nationwide by federal rule; it's planned, non-emergency care where network rules can still apply.
• Confusing "closed" with "converted." A hospital that becomes an REH is often in a stronger financial position than one heading toward closure — the emergency room staying open is the point of the program.
• Not asking ahead of time. If a parent or relative lives near a small rural hospital, asking now what services it currently offers costs nothing and beats learning the answer during an emergency.

How we help

Most of what's in this guide is public information anyone can look up. Where a local advisor tends to help is connecting the dots for your specific situation — checking whether a plan you're considering has any network wrinkle tied to a rural hospital's REH status, walking through the Cost-plan option if you or a family member lives outside Sioux Falls, and making sure the person planning a discharge from any hospital understands whether the 3-day SNF rule is actually satisfied. We compare the plans we offer against your specific doctors, hospitals, and situation, at no cost to you.

What to watch

1. Watch for more South Dakota REH conversions. With 42% of the state's rural hospitals now rated vulnerable to closure, Landmann-Jungman is unlikely to remain the only one for long.
2. Ask any small rural hospital directly about its current status — Critical Access Hospital, REH, or something else — rather than assuming based on the building or the sign.
3. If a hospital near family converts, confirm the new transfer-hospital relationship — where does that REH send patients who need real inpatient care, and how far is it.
4. Watch CMS's annual REH facility payment update each December; it moves with the hospital market basket index every year, most recently to $295,051.54 a month for 2026.
5. If you or a family member is comparing plans in a rural South Dakota county, don't skip the Cost-plan option — it can sidestep network questions that matter more now than they did two years ago.

How we know all this: Big Sioux Benefits runs every article through a data desk that cross-references CMS's own REH rulemaking and payment fact sheets, Medicare.gov's coverage rules, the Chartis Center for Rural Health's published research, the UNC Sheps Center's live conversion tracker, and the CMS PY2026 plan landscape — built by Strategic AI Architects. Every figure here traces to a public source fetched directly from CMS.gov, Medicare.gov, Chartis, or the Sheps Center this week. This is education, not advice; confirm your own coverage, a specific hospital's current status, and any plan's rules with the plan directly or a licensed agent. We take no payment from any carrier to feature a plan.