Critical Access Hospital Overview

Medicare law allows establishment of a Medicare rural hospital flexibility program by any state that has submitted the necessary assurances and complies with the statutory requirements for designation of hospitals as critical access hospitals (CAHs). 

To Be Eligible as a CAH, a Facility Must Be a:

• Participating Medicare hospital
• Hospital that ceased operations on or after November 29, 1989 or 
• Health clinic or health center that previously operated as a hospital before being downsized to a health clinic or health center 

The Facility Must Be Located in a:

• Rural area of a state that has established a Medicare rural hospital flexibility program or 
• Metropolitan Statistical Area (MSA) of such a state and be treated as being located in a rural area based on a law or regulation of the state 
• Located more than a 35-mile drive from any other hospital or CAH unless it is designated by the state, prior to January 1, 2006, to be a necessary provider
• Mountainous terrain or areas with only secondary roads available, mileage criterion is 15 miles 

In addition, the facility must make available 24-hour emergency care services, provide not more than 25 beds for acute (hospital level) inpatient care, or in the case of a CAH with a swing bed agreement, swing beds used for skilled nursing facility (SNF)-level care. 

The CAH maintains a length of stay, as determined on an annual average basis of no longer than 96 hours. 

An exception to the 25-bed requirement is swing bed facilities. This exception applies to facilities permitted to have up to 25 inpatient beds used interchangeably for acute or SNF level care as long as there are no more than 25 beds used at any one time for acute care. 

The facility is required to meet the conditions of participation for CAHs (42 CFR Part 485, Subpart F). The facility must be certified, as a CAH, by CMS. Designation by the state is not sufficient for CAH status.

Billing

All charges submitted by a CAH will appear under one of the following types of bill (TOBs). 

The third digit of the TOB is the bill frequency. This digit shows the nature or intent of the bill submitted. Below is a list of possible third digits (this is not an all- inclusive list). 

Method I: Standard Method

Method I reimbursement for outpatient CAH services is 101% of the reasonable cost less applicable Part B deductible and coinsurance amounts. 

Payment for professional medical services furnished in a CAH to CAH outpatients is based on the fee schedule, billed charge or other fee, as would apply if the services had been furnished in a hospital outpatient department. 

For purposes of CAH payment, professional medical services are services provided by a physician or non-physician practitioner (i.e., physician assistant or nurse practitioner), which could be billed directly to the Part B MAC.

In general, payment for professional medical services under the cost-based CAH plus professional services method should be made on the same basis as would apply if the services had been furnished in the outpatient department of a hospital. 

Report all outpatient services with TOB 85X, including ASC services. 

Report referenced diagnostic services (non-patients) with TOB 14X.

Method II: Elective or Optional Method

The Benefits, Improvement & Protection Act of 2000 (BIPA) legislation included payment for professional services, under method II, as 115% of what would otherwise be paid under the fee schedule.

A CAH may elect payment for outpatient services in any cost-reporting period under this method by filing a written election with the contractor on an annual basis at least 30 days before the start of the cost-reporting period to which the election applies. 

The Medicare Prescription Drug, Improvement and Modernization Act (MMA) of 2003 changed the requirement that each practitioner rendering a service at a CAH, electing this optional method, must reassign their billing rights to that CAH. This provision allows each practitioner to choose whether to reassign billing rights to the CAH or file claims for professional services through the Part B MAC.

The method chosen will remain in effect for as long as the facility wishes to use this method. The individual practitioner must complete and submit the CMS-855I form to reassign their billing rights. The CAH must forward a copy of the CMS-855I to the Part B MAC. The practitioner must sign an attestation that clearly states the practitioner will not bill the Part B MAC for any services rendered at the CAH once reassigned to the CAH. The attestation will remain at the CAH. 

Under this election, a CAH will receive payment from the Part A MAC for professional services furnished in their outpatient department. Professional services are those furnished by all licensed professionals who otherwise would be entitled to bill the Part B MAC.

Split Billing Requirements

Outpatient Requirements 

All Part B providers must split their outpatient bills for calendar year-end and fiscal year-end (FYE). This will assist in proper cost-reporting information and correct calculations of Part B deductible amounts on the patient’s statements.

Inpatient Requirements 

Non-PPS providers and providers reimbursed through periodic interim payments (PIPs) split their bills at FYE; days allocated to the year in which they occurred. When services span a non-PPS provider's FYE for inpatient bills, submit two claims. The first claim reflects the admission date to the FYE using TOB 112 and patient/discharge status code 30 (still patient). The second claim reflects the first day of the new fiscal year to discharge using TOB 114 and the appropriate patient/discharge status code. 

The requirement of splitting bills for FYE does not apply to no-payment bills. In no-payment situations, you submit monthly no pay or admit-to-discharge bills upon death, discharge or change in level of care from skilled to non-covered.

For additional information, please review our article on split billing.  

Part A CAH CRNA Pass-Through Exemption

If a CAH that meets the criteria for a pass-through exemption is interested in selecting the Method II option, it can choose this option for all outpatient professionals, except certified registered nurse anesthetist (CRNA) and retain the approved CRNA exemption for both inpatient and outpatient professional services of CRNAs. 

With an approved exemption, the CAH can choose to give up its exemption for both inpatient and outpatient professional services of CRNAs in order to include its CRNA outpatient professional services along with those of all other professional services under the Method II option. 

By choosing to include the CRNAs under Method II for outpatient services, the CAH loses its CRNA pass-through exemption for not only the outpatient CRNA services, but also the inpatient CRNA services. In this case, the CAH would have to bill the Part B MAC for the CRNA inpatient professional services. All payments for CRNA services are subject to cost settlement. 

If a CAH that meets the criteria for a pass-through exemption is not interested in selecting the Method II option, the CAH can still receive the CRNA pass-through under Method I.

For additional information, please review our article on Election of Cost Reimbursement for CRNA Services.

CRNA Accepts Pass-Through Exemption

Method I 

Method II 

CRNA Declines Pass-Through Exemption

Method II 

References

• Critical access hospitals 
• CMS IOM, Pub.100-04 Claims Processing Manual, Chapter 4 section 250