The Centers for Medicare and Medicaid Services (CMS) has signaled its intent to increase enforcement of the location requirements for critical access hospitals (CAHs).  CMS created the CAH certification program to provide additional reimbursement for hospitals in rural areas that are located more than 35 miles from another hospital, or more than 15 miles from another hospital if the area has mountainous terrain.

Prior to 2006, states could designate certain hospitals as “necessary providers” that did not have to meet the location requirements.  Many of these “necessary provider” CAHs would not meet the current locations standards for the CAH designation.

A recent report from the Department of Health and Human Services (HHS) found that CMS would have saved $449 million in 2011 if it had decertified all CAHs that were 15 or fewer miles from their nearest hospitals.   In order to take advantage of these potential savings, CMS has stated that it will seek legislative authority to remove the “necessary provider” exemption, and require all CAHs to meet the location requirements.

In addition to removing the exemption, CMS has also agreed to pursue other changes to the CAH program, including:  (1) periodically reassess CAHs for compliance with all location-related requirements; and (2) apply a uniform definition of “mountainous terrain” to all CAHs.

It is important to note that these changes would require legislative action by Congress and currently there is no such legislation to take action on these recommendations.  Nevertheless, CAHs should keep a close eye on these potential changes as they could have a huge impact on the reimbursement levels of CAHs that do not currently meet the location requirements.  Please contact Don Black or Casey Moriarty for more information.