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Critical Access Hospitals Frequently Asked Questions


What is a Critical Access Hospital?

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.


How many CAHs are there and where are they located?

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.'


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 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.


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:


Can a CAH add an off-campus provider based entity 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). 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, 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.


What are the benefits of CAH status?

Some benefits of conversion to CAH status include:

  • Cost-based reimbursement from Medicare, which has the potential to increase revenues. As of January 1, 2004, CAHs are eligible for cost plus 1% reimbursement.
  • Focus on community needs.
  • CAH network with an acute care hospital for support.
  • 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 grant money.

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) 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.


Will CAH conversion guarantee a better financial return?

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.


Will CAH conversion solve all the problems at a hospital?

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.  


Is CAH conversion a downgrade for a facility?

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.


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 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.


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.


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):

  • Medical Staff
    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. CAHs are also required to provide guidance by a physician, but the provisions are very liberal. This can be useful in communities that have had difficulty recruiting physicians.
  • Nursing Staff
    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.

However, 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.

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.


Does Medicaid provide special reimbursement to CAHs?

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.


How can a hospital decide if CAH conversion is the right choice?

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.


How can staff and a community be involved in the CAH conversion process?

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.


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.


What are the quality assurance options for CAHs?

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.


How do provisions in the Medicare Prescription Drug Improvement and Modernization Act (MMA) impact Critical Access Hospitals (CAHs)?

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:

  • Increase CAH reimbursement to cost plus 1%;
  • Provide cost-based reimbursement for emergency room physician assistants, nurse practitioners and clinical nurse specialists who are on-call;
  • Reinstate the Periodic Interim Payments (PIPs);
  • Expand eligibility for the Method Two/All-Inclusive payment for outpatient services (which provides payments of physician fee schedule plus 15%) to any practitioner in the CAH who assigns billing rights to the hospital;
  • Flexibility to designate up to 25 beds as acute care inpatient beds;
  • Permit CAHs to operate Psychiatric and/or Rehabilitation Distinct Part Units (DPUs) of up to 10 beds; and
  • Eliminate the state authority to waive the 35-mile rule (effective January 1, 2006).

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:


What are the requirements for financial incentives for meaningful use of EHRs and CAHs?

For information on meaningful use of EHRs and Critical Access Hospitals, see the CMS website on Meaningful Use.