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They're Called 'Critical Access Hospitals' for a Reason

By John Commins  
   March 11, 2015

It's staggering to think of the challenges that CAHs face. Now OIG is calling for a re-examination of a program that it says has overpaid CAHs billions of dollars to provide skilled nursing services using hospital swing beds.

They're called "Critical Access Hospitals" for a reason. These tiny healthcare outposts provide "critical access" to people who live in remote areas.

That was the intent of the legislation that created CAHs in 1997 at a time when rural hospitals were shuttering at an alarming rate. Congress understood that rural America needed extra Medicare dollars to keep the doors open at hospitals that serve an older, sicker and poorer patient mix.

It's staggering to think of the challenges that CAHs face:

  • Because of their location and size, CAHs have few economies of scale, little leverage with vendors or payers, or a sufficiently large patient mix or volume of commercial payers to help cover costs.
  • CAHs are often limited in their ability to provide some of the more lucrative services that are cash cows for larger hospitals in urban areas.
  • Recruiting clinicians to rural areas is a slog.
  • And because of all those challenges, it's also more difficult to merge or collaborate with other healthcare providers from such an isolated perch. It's surprising to learn that only 40% of CAHs operate in the red.  

Unfortunately, some people in Washington, DC have short institutional memories.

For the past couple of years, reports from the Office of the Inspector General at the Department of Health and Human Services have made it clear that they believe the CAH designation and funding scheme should be overhauled.

In its latest shot across the bow, OIG this week called for a re-examination of the swing bed program that allows CAHs to provide long-term care. The OIG audit claimed that the federal government has overpaid CAHs $4.1 billion over the past six years for services that could have cost less in relatively nearby skilled nursing and long-term care facilities.

Tavenner Pushes Back
Rural healthcare advocates rallied around the reply to the OIG recommendations from former Centers for Medicare & Medicaid Services Administrator Marilyn Tavenner, who challenged the OIG findings and recommendations in her formal response, and suggested that auditors don't understand healthcare delivery in rural areas.

In that same response to OIG, however, Tavenner said the Obama 2016 budget has called for reducing the Medicare reimbursement that CAHs receive from 101% to 100% of allowable costs, and reassessing and eliminating CAH status for hospitals that are within 10 miles each other.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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