Critical Access Hospitals (CAHs)
“Critical Access Hospital” is a designation given to certain rural hospitals by the Centers for Medicare and Medicaid Services (CMS). This designation was created by Congress in the 1997 Balanced Budget Act in response to a string of hospital closures in the 1980s and early 1990s.
The CAH designation is designed to reduce the financial vulnerability of rural hospitals and improve access to healthcare by keeping essential services in rural communities. This is accomplished through cost-based Medicare reimbursement (see What are the benefits of CAH status?).
To ensure that CAHs deliver services to improve access to rural areas that need it most, restrictions exist concerning what types of hospitals are eligible for the CAH designation. The primary eligibility requirements for CAHs are:
- A CAH must have 25 or fewer acute care inpatient beds.
- It must be located more than 35 miles from another hospital (exceptions may apply – see What are the location requirements for CAH status?).
- It must maintain an annual average length of stay of 96 hours or less for acute care patients.
- It must provide 24/7 emergency care services.
The Medicare Rural Hospital Flexibility Program (Flex Program) was also created by the Balanced Budget Act of 1997, with the purpose of supporting new and existing CAHs.
This guide provides resources concerning these CAH-related issues:
- Payment/reimbursement and financial information
- Regulations and information regarding CAH status and the Flex Program
- Key organizations in the field
- Funding opportunities
- Challenges to operation
Frequently Asked Questions
- How many CAHs are there and where are they located?
- What is the Medicare Rural Hospital Flexibility Program and how is it related to the CAH program?
- What are the benefits of CAH status?
- Are all the benefits of CAH status available in every state?
- How do CAHs compare with other types of hospitals?
- What types of facilities are eligible for CAH status?
- What are the location requirements for CAH status?
- Can a CAH add an off-campus, provider-based clinic that does not meet the CAH distance requirements?
- What are the requirements for relocating an existing CAH under the Necessary Provider replacement rules?
- Is there a limit on the length of stay for patients at CAHs?
- How many beds are allowed?
- What is a swing bed?
- What emergency services are CAHs required to provide?
- What kinds of agreements does a CAH need to have with an acute care hospital?
- How do staffing requirements differ for CAHs, compared to general acute care hospitals?
- Are other requirements for CAHs different from those for general acute care hospitals?
- What are the quality assurance and quality improvement options for CAHs?
- What are the meaningful use requirements for Critical Access Hospitals related to Electronic Health Records (EHRs)?
- Does Medicaid provide special reimbursement to CAHs?
- What sources of capital funding exist for CAHs?
- What is the CAH survey process?
- What legislation has affected the Critical Access Hospital program?
- Who can answer questions about CAH status or reimbursement issues?
How many CAHs are there and where are they located?
As of November 12, 2014, there are 1,325 certified Critical Access Hospitals located throughout the United States. The Flex Monitoring Team maintains a list of Critical Access Hospitals which includes the hospital name, city, state, zip code and effective date of CAH status.
The following map shows the locations of Critical Access Hospitals across the United States. State level healthcare facility maps are also available.
What is the Medicare Rural Hospital Flexibility Program and how is it related to the CAH program?
The Medicare Rural Hospital Flexibility Program (Flex Program) was created by the Balanced Budget Act of 1997 and encourages states to take a holistic approach to strengthening rural healthcare. A major requirement for participation in the Flex Program is the creation of a state rural health plan. The Flex Program provides federal grants to each state which are used to implement a Critical Access Hospital program with the following goals:
- Support for CAH quality improvement efforts
- Improve the financial and operational performance of CAHs
- Support for health system development and community engagement
These aims are revised each grant cycle to best reflect the needs of CAHs.
National infrastructure to support the Flex Program includes:
- Federal Office of Rural Health Policy (FORHP) – Administers the Flex Program and its associated grants to states. Located within the Health Resources and Services Administration.
- Technical Assistance and Services Center (TASC) – Provides information and technical assistance to State Flex Programs and Critical Access Hospitals. Located at the National Rural Health Resource Center.
- Flex Monitoring Team – A consortium of researchers who evaluate the impact of the Flex Program.
What are the benefits of CAH status?
Some benefits of CAH status include:
- Cost-based reimbursement from Medicare, which has the potential to increase revenues. As of January 1, 2004, CAHs are eligible for allowable cost plus 1% reimbursement.
- CAHs must network with an acute care hospital, which can provide support to the CAH and receive transfers of more acute patients.
- Flexible staffing and services, to the extent that state licensure laws permit.
- Capital improvement costs included in allowable costs for determining Medicare reimbursement.
- Access to Flex Program educational resources, technical assistance and/or grants.
For more information about CAH reimbursement and payment benefits, see Rural Health Fact Sheet Series: Critical Access Hospital from CMS and Critical Access Hospital Finance 101 Manual from TASC. Furthermore, the Joint Commission highlights the benefits of accreditation.
Are all the benefits of CAH status available in every state?
No. Not all CAHs may take advantage of the more flexible Medicare Conditions of Participation (CoP) for CAHs and the related cost savings. In states that license CAHs under the same licensure rules as other hospitals, CAHs must comply with those licensure rules. If those rules are stricter than the CAH CoP, the CAH is unable to benefit from the Medicare flexibility. In addition, five states – Connecticut, Delaware, Maryland, New Jersey and Rhode Island – do not have any hospitals with CAH status and, therefore, do not participate in the Flex Program.
How do CAHs compare with other types of hospitals?
Different provider types are available to meet the varied needs of hospitals and the communities they serve. Critical Access Hospital (CAH) status does not guarantee a better financial situation. Some hospitals will find the cost-based reimbursement advantageous, and some will not. Each hospital must perform its own financial analysis to determine if being a Prospective Payment System (PPS) hospital or a CAH would result in a better financial return. For financially distressed hospitals, even if CAH status leads to increased reimbursement, it may not put the hospital "in the black." In fact, some CAHs have closed since they originally converted to the CAH status. The Flex Monitoring Team releases an annual CAH Financial Indicators Report that can be helpful in understanding financial performance of CAHs.
CAH status should be considered or maintained only if it is appropriate for the community need and hospital service area. In particular, consideration should be given to the bed limit for CAHs and whether that is a good match for community need.
CAH status does not mean fewer services offered. Services offered by a CAH should be aimed to meet the community’s unique needs. Therefore, the number and type of services offered in one community may be different than in another community.
See A Comparison of Rural Hospitals with Special Medicare Payment Provisions to Urban and Rural Hospitals Paid Under Prospective Payment, which compares the following designations:
- Critical Access Hospital (CAH)
- Sole Community Hospital (SCH)
- Medicare-Dependent Hospital (MDH)
- Rural Referral Center (RRC)
What types of facilities are eligible for CAH status?
Facilities applying to become Critical Access Hospitals must have a current status as a licensed acute care hospital. Hospitals closed after 11/29/89 and hospitals that have downsized to health clinic or health center status also may qualify for CAH status if they meet all of the CAH Conditions of Participation.
What are the location requirements for CAH status?
Critical Access Hospitals must be located in rural areas and must meet one of the following criteria:
- They must be over 35 miles from another hospital, or
- They must be 15 miles from another hospital in mountainous terrain or areas with only secondary roads. See Critical Access Hospitals (CAHs): Distance from Other Providers and Relocation of CAHs with a Necessary Provider Designation for definitions.
CAHs designated as “necessary providers” by their State prior to January 1, 2006 are exempt from these distance requirements.
Can a CAH add an off-campus, provider-based clinic that does not meet the CAH distance requirements?
As of January 1, 2008, all CAHs, including necessary provider CAHs that create or acquire an off-campus, provider-based facility such as a clinic or a psychiatric or rehabilitation distinct part unit, must meet the CAH distance requirement of a 35-mile drive to the nearest hospital or CAH (or 15 miles in the case of mountainous terrain or secondary roads). This provision excludes Rural Health Clinics, as defined under 405.2401(b), from the list of provider-based facilities that must comply with this requirement. Details about this requirement are available in a Final Rule published in the November 27, 2007 issue of the Federal Register as part of the Medicare Program: Changes to the Hospital Outpatient Prospective Payment System and CY 2008 Payment Rates. See Section XVIII. Changes Affecting Critical Access Hospitals (CAHs) and Hospital Conditions of Participation (CoPs), starting on page 66877.
What are the requirements for relocating an existing CAH under the Necessary Provider replacement rules?
Critical Access Hospitals that have been granted Necessary Provider status and choose to rebuild in a new location that does not meet the distance requirements of the 35-mile rule are treated in the same manner as if they were building a replacement facility at the previous location. The new CAH facility must:
- Meet the same criteria that led to its original state designation
- Serve at least 75% of the same service area
- Offer 75% of the same services
- Utilize at least 75% of the same staff in its new location
See the September 7, 2007 letter from CMS to State Survey Agency Directors titled Critical Access Hospitals (CAHs): Distance from Other Providers and Relocation of CAHs with a Necessary Provider Designation for more detailed information.
Is there a limit on the length of stay for patients at CAHs?
Critical Access Hospitals must maintain an annual average length of stay of 96 hours or less for their acute care patients. Swing bed patients have no length of stay limit.
How many beds are allowed?
CAHs may have a maximum of 25 acute care inpatient beds. For CAHs with swing bed agreements, any of its beds can be used for inpatient acute care or for swing bed services. Any hospital-type bed which is located in, or adjacent to, any location where the hospital bed could be used for inpatient care counts toward the 25 bed limit.
Certain beds do not count toward the 25 bed limit, including examination or procedure beds, stretchers, operating room tables, and others. For a complete list of beds that do not count toward the 25 bed limit, please see Section C-0211, §485.620(a) Standard: Number of Beds: Interpretive Guidelines of the CMS State Operations Manual: Appendix W.
What is a swing bed?
A swing bed is a bed that can be used for either acute care or care that is equivalent to Skilled Nursing Facility (SNF) care. The Centers for Medicare and Medicaid Services approves CAHs, and other hospitals, to furnish swing beds, which gives the facility flexibility to meet unpredictable demands for acute care and SNF care.
Swing beds offer an alternative to a long-term care facility. This option is particularly useful in rural areas, which are less likely to have a stand-alone long-term care facility. In addition, the population in rural areas are older, and swing beds are very useful in treating health problems typically seen in aging patients. The most commonly reported need was for aging patients who need rehabilitation following their hospital stay, according to Why Use Swing Beds? Conversation with Hospital Administrators and Staff. Furthermore, swing beds help stabilize healthcare facilities census and provide financial benefits due to their cost-based reimbursement.
For these reasons, swing bed post-acute care is common in rural healthcare facilities. According to Trends in Skilled Nursing Facility and Swing Bed Use in Rural Areas Following the Medicare Modernization Act of 2003, swing bed post-acute care is available in most rural counties. This same report found that the swing bed program has grown in rural areas, largely due to hospitals having converted to CAHs after the Medicare Modernization Act of 2003 (the number of CAHs increased from 686 in 2003 to 1,040 in 2006).
For more details about the swing bed program, see the CMS fact sheet Swing Bed Services.
What emergency services are CAHs required to provide?
CAHs must provide 24-hour emergency services, with medical staff on-site, or on-call and available on-site within 30 minutes, 60 minutes if certain frontier area criteria are met.
The staff on-site or on-call must meet state licensure requirements, but Medicare Conditions of Participation specify the coverage can be a doctor of medicine or a doctor of osteopathy, a physician assistant, a nurse practitioner, or a clinical nurse specialist with experience and training in emergency care. In certain very limited circumstances, the coverage could be provided temporarily by a registered nurse.
As of October 1, 2007, CMS requires that any hospital, including a CAH, that does not have a physician on site 24 hours per day, 7 days per week, provide a notice to all patients upon admission. The notice must address how emergency services are provided when a physician is not on site. For more information, please see page 47413 of the August 22, 2007 Federal Register notice, Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2008 Rates; Final Rule.
This rule has since been changed to provide more flexibility to CAHs. On June 7, 2013 CMS released a memorandum stating that under CAH CoPs, an MD or DO is not required to be available in addition to a non-physician practitioner.
What kinds of agreements does a CAH need to have with an acute care hospital?
A CAH must develop agreements with an acute care hospital related to patient referral and transfer, communication, emergency and non-emergency patient transportation. The CAH may also have an agreement with their referral hospital for quality improvement or choose to have that agreement with another organization. State networking requirements vary. For more information on quality assurance options, see What are the quality assurance and quality improvement options for CAHs?
How do staffing requirements differ for CAHs, compared to general acute care hospitals?
There are two main ways that staffing requirements are more flexible for CAHs under the Medicare Conditions of Participation (CoP):
A Critical Access Hospital must have at least one physician, but that person is not required to be on-site. Midlevel practitioners can be an independent part of the medical staff and can provide direct service to patients, including emergency services.
General acute care hospitals are required to have a registered nurse on-site 24/7. Critical Access Hospitals have more flexibility regarding staffing levels for nurses. Federal requirements allow for CAHs to close (and so have no RN on staff) if the facility is empty. State requirements vary. Some states may offer flexibility by allowing an LPN to cover a shift in place of an RN when there are no acute patients, for example. Contact your state survey agency for details.
CAHs must continue to meet their state licensure laws if those are stricter than the Medicare CoP.
Are other requirements for CAHs different from those for general acute care hospitals?
Except for the staffing flexibility mentioned above, requirements are very similar for CAHs and general acute care hospitals. CAHs must meet the requirements for the services they choose to provide. So, for example, if a CAH provides surgical services, it must meet the relevant surgery requirements just as a general acute care hospital would.
Some issues may vary from state to state based on state licensure laws and other factors, and interpretation of the federal requirements is not always straightforward. To find out more about your state's requirements, begin by contacting your State Rural Hospital Flexibility Program Contact.
What are the quality assurance and quality improvement options for CAHs?
Critical Access Hospitals (CAHs) must have arrangements with respect to quality assurance, either with a hospital that is part of a network, with another CAH, or a private organization or through a credentialing body like The Joint Commission or the Healthcare Facilities Accreditation Program.
In addition to quality assurance, quality improvement is important to CAHs. The Medicare Beneficiary Quality Improvement Project (MBQIP), under the Medicare Rural Hospital Flexibility (Flex) grant program, aims to improve quality of care in small and rural CAHs by encouraging self-reported quality data, which are analyzed and used to inform activities at the facility. According to the August 2014 MBQIP Monthly, 94% of CAHs nationwide participate in the MBQIP program. In fact, 27 states report 100% participation of CAHs in their respective states.
What are the meaningful use requirements for Critical Access Hospitals related to Electronic Health Records (EHRs)?
Critical Access Hospital (CAH) are eligible for Electronic Health Record (EHR) incentive payments and can receive payments like all other hospitals, but some limitations do exist. For example, although a CAH can receive EHR incentive payments beginning any year from FY 2011 to FY 2015, a CAH cannot receive an EHR incentive payment for more than four years. For information on and requirements of meaningful use of EHRs and Critical Access Hospitals, see the CMS website on Meaningful Use.
Does Medicaid provide special reimbursement to CAHs?
States decide if they will provide special reimbursement to Critical Access Hospitals for Medicaid services. Consult your State Rural Hospital Flexibility Program Contact for information about your state's policies.
What sources of capital funding exist for CAHs?
Critical Access Hospitals (CAHs) qualify for a variety of capital funding opportunities, such as grants and loans. Two primary programs that exist to assist with capital funding are:
- USDA Community Facilities Loan and Grant Program – provides funding to construct, expand, or improve healthcare facilities located in rural areas such as CAHs.
- HUD Section 242: Hospital Mortgage Insurance Program – helps rural healthcare facilities finance new construction, refinance debt, or purchase new equipment such as hospital beds and office machines.
What is the CAH survey process?
A facility interested in CAH status should contact its state survey agency to request application materials. The state agency will review and forward the application to a CMS regional office. The CMS regional office will authorize a survey, and the state agency will then contact the facility to arrange a survey date. The survey will verify that the CAH meets the federal facility requirements. Details about the survey process are available in Appendix W of the CMS State Operations Manual.
A facility will also need to be recertified by the state survey agency on a schedule consistent with the accreditation interval of the accreditation organization, which occurs, on average, every 12 months and at least once every 15 months. A facility may be decertified if something presents immediate jeopardy and is not fixed quickly. Details about the recertification process are in Chapter 2 of the CMS State Operations Manual.
What legislation has affected the Critical Access Hospital program?
Since the Balanced Budget Act of 1997, several pieces of legislation have made modifications to the critical access hospital (CAH) program, according to the American Hospital Association. The key pieces of legislation in the creation of and modification of the CAH program are:
Balanced Budget Act (BBA) of 1997
Created the CAH program outlining all details of the program including eligibility and operational regulations.
Balanced Budget Refinement Act (BBRA) of 1999
Corrected unanticipated adverse payment and regulatory consequences of the BBA of 1997.
Medicare, Medicaid, SCHIP Benefits Improvement and Protection Act (BIPA) of 2000
Provided further exemptions and reimbursement improvements to CAHs which strengthen the overall program.
Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003
Enhanced CAH payments, expanded bed-size flexibility, provided continued funding for the Medicare Rural Hospital Flexibility (FLEX) Program grants, and increased Medicare payments to 101% of reasonable costs. It also created a sunset on states’ ability to designate necessary provider status for January 1, 2006.
The Medicare Improvements to the Patients and Providers Act (MIPPA) of 2008
Further expanded FLEX grants and allowable for 101% reimbursement rate of reasonable costs for clinical lab services provided to Medicare beneficiaries.
American Recovery and Reinvestment Act
Included the creation of IT grants and loans program for CAHs to help investment in new technologies.
Affordable Care Act
Improved access to care through efforts aimed to increase workforce shortages, such as expanding Area Health Education Centers (AHECs) and further investing in National Health Service Corps, among other initiatives. It also allowed CAHs to participate in the 340B program, making sold-at-cost pharmaceuticals accessible in rural communities.
RACs Rural Health Policy guide provides more information on policies and legislation affecting rural healthcare today.
Who can answer questions about CAH status or reimbursement issues?
Your State Rural Hospital Flexibility Program Contact can provide ongoing guidance about CAH issues. Other important contacts include:
- CMS Regional Rural Representatives, for questions about CMS regulations
- State Survey Agency, for survey and certification questions
- National Rural Health Resource Center's Technical Assistance and Services Center (TASC), for technical assistance, information and other resources