Critical Access Hospitals
Critical Access Hospitals are hospitals certified to receive cost-based reimbursement from Medicare. This reimbursement is intended to improve their financial performance and reduce hospital closures. Each hospital is responsible for reviewing its own situation to determine if CAH status would be advantageous. Critical Access Hospitals are certified under a different set of Medicare Conditions of Participation that are more flexible than the acute care hospital conditions of participation.
For further information on cost-based reimbursement, please see States’ Use of Cost-Based Reimbursement for Medicaid Services at Critical Access Hospitals, North Carolina Rural Health Research Analysis Center, April 2010.
As of June 30, 2014, there are 1,326 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.
A list of CAHs and their addresses is available from the HRSA Geospatial Data Warehouse. Scroll down to Hospitals and select 'Critical Access Hospitals.'
The Medicare Rural Hospital Flexibility Program (Flex Program) was created by the Balanced Budget Act of 1997 and is intended to strengthen rural health care by encouraging states to take a holistic approach. A major requirement for participation in the Flex Program is the creation of a state rural health plan. The Flex Program provides grants to each state which are used to implement a Critical Access Hospital program, to encourage the development of rural health networks, to assist with quality improvement efforts, and improve rural emergency medical services. The Flex Program promotes a process for improving rural health care, using the Critical Access Hospital (CAH) program as one method of promoting strength and longevity through CAH conversion for appropriate facilities.
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.
Critical Access Hospitals must be located in rural areas and must meet one of the following criteria:
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). 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.
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, it must serve at least 75% of the same service area, offer 75% of the same services, as well as 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.
Some benefits of conversion to CAH status include:
No. Not all CAHs may take advantage of the more flexible Medicare Conditions of Participation (CoP) 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 participate in the Flex Program and therefore hospitals in those states are not eligible for CAH status.
No. Some hospitals will find the cost-based reimbursement advantageous, and some will not. Each hospital must perform its own financial analysis to determine if CAH conversion would result in a better financial return. For financially distressed hospitals, even if CAH conversion results in increased reimbursement, it may not put the hospital "in the black." Some hospitals that have converted to CAH have since closed.
No. The CAH program is a reimbursement status, and in some states CAH status allows more flexible staffing and services. It will not address organizational problems such as problems within the organization's culture, leadership, community issues, and so on.
A hospital should convert to CAH status 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.
No, since CAH is a change in provider designation, and not a downgrade. Conversion to Critical Access Hospital status does not mean losing services. In some instances, hospitals that have converted to CAH status may choose to expand their range of services to better meet their community's needs.
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.
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.
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.
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.
There are two main ways that staffing requirements are more flexible for CAHs under the Medicare Conditions of Participation (CoP):
However, CAHs must continue to meet their state licensure laws if those are stricter than the Medicare CoP.
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.
You may want to consult several sources to address questions you have about CAH requirements. 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 Office of Rural Health.
Each state decides if it 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.
Contact your State Rural Hospital Flexibility Program Contact for guidance in evaluating whether CAH conversion is the right choice for your facility. A financial analysis is necessary to determine whether cost-based reimbursement will be advantageous.
It is very important to keep the hospital staff and community informed about what CAH conversion means and how it will impact them. The hospital's CEO should learn the basics about CAH and transfer that knowledge to the medical staff and board of directors. This group will then share information about the CAH conversion with the hospital staff and the community.
Your State Rural Hospital Flexibility Program Contact can help you plan your approach.
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.
Critical Access Hospitals 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.
While many provisions in the Medicare Prescription Drug Improvement and Modernization Act (MMA) impact CAH operations, several provisions in Section 405 of the MMA specifically related to CAHs. The provisions:
Your State Rural Hospital Flexibility Program Contact can provide ongoing guidance about CAH issues. Other important contacts include:
For information on meaningful use of EHRs and Critical Access Hospitals, see the CMS website on Meaningful Use.
Last Reviewed: 9/24/2013