The Basics of Critical Access Hospitals (CAHs)

A reader inquired about Critical Access Hospitals (CAH), so we have put together a few items that pertain to the intricacies of CAHs and how they differ from the Hospital Outpatient/Inpatient Departments. 

 

CAH are located in rural areas of a State that has established a Medicare rural hospital flexibility program, or located in a Metropolitan Statistical Area (MSA) that is treated as being located in a rural area based on law or regulation of the State. It is required to be more than a 35-mile drive from any other hospital or “necessary provider”. If located in mountainous terrain or areas with only secondary roads, the CAH is only required to be 15 miles from another necessary provider. Additional eligibility criteria include: 

• Must provide 24-hour emergency care

• No more than 25 beds for acute inpatient care or skilled nursing facility swing beds

• Maintain an annual average length of stay of no longer than 96 hours

• Must be certified by CMS and required to meet the conditions of participations for CAH

   

The first call out pertaining to CAH, is they are not reimbursed utilizing the inpatient prospective payment system (IPPS) or the outpatient prospective payment system (OPPS). The following reimbursement rules do not apply:

• The lesser of cost or charges rule

• Ceilings on hospital operating costs

• The reasonable compensation equivalent limits for physician services to hospitals 

• 1- and 3- day payment window provisions. In other words, outpatient services provided within the 1- and 3- day payment window will continue to be paid as an outpatient service rather than bundled on the inpatient claim.

 

Inpatient payment is based upon 101% of reasonable cost or some MACs may pay on a per diem rate. Outpatient payment can be made using one of two methods. Method I (standard option) in which professional services are billed to Part B and reimbursement is 101% of reasonable cost less the deductible and coinsurance amounts. CAHs have the option to elect an alternative payment method or Method II (optional) when professional services are billed to Part A. Payment is the sum of the 101% of the reasonable cost of the facility services and 115% of the Medicare Physician Fee Schedule (MPFS) for professional services, less any deductible or coinsurance. Refer to the respective MAC regarding billing guidance. 

 

CAH, while generally 340B eligible, are not required to report the TB or JG modifiers as we have discussed in a previous newsletter. CAH are not subject to regulations of the HOPPS; thus, regardless of payment methods chosen, they are not subject to the ASP reduction. 

 

Shout Outs!

1. Health systems big or small should understand the differences and regulations when billing CAH from other hospital or physician departments. 

 

Our goal is simple; we’re taking complex information and making it practical. 

Until our next edition, this is Maxie Friemel and Agatha Nolen providing you with tips for increasing your Pharmacy Revenue.