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AHA Supports Rural Hospital Protection Act

Alexandra Wilson Pecci, for HealthLeaders Media, April 13, 2011

The American Hospital Association is throwing its weight behind the Rural Hospital Protection Act, legislation that would ensure that critical access hospitals continue to be reimbursed for provider taxes they pay to states.

As it currently stands, CAHs are allowed to include provider taxes in their Medicare cost reports as long as they relate to "costs actually incurred" for the "reasonable and necessary cost of providing patient care." However, a "clarification" in the 2011 final Hospital Inpatient Prospective Payment System (IPPS) rule calls for Medicare contractors to determine on a case-by-case basis whether the provider taxes are allowable.

Although the Centers for Medicare & Medicaid Services says this is simply a clarification of a longstanding rule, the AHA counters that reimbursements for provider taxes should always be allowed.

"It's a regular old tax. It's our position that, as any other tax, you should be able to claim that on your cost report and be reimbursed for the Medicare portion," Joanna Kim, AHA senior associate director of policy, said in an interview with HealthLeaders Media.

Although CMS says the clarification would have "no financial impact" on CAHs, AHA said in AHA News Now that "the agency's policy is jeopardizing the financial sustainability of CAHs." Kim maintains that the clarification would have a significant financial impact on CAHs, potentially reducing their revenues by as much as 5%.

"When you're a really small hospital that has such limited cash flow you don't have a lot of ability to absorb those kinds of cuts," she says. "Even though CMS said they will review the specific circumstances, we don't feel that under any circumstances should they not be allowed to be claimed."

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