Medicare: Modest Eligibility Expansion for Critical Access Hospital Program Should Be Considered

GAO-03-948 Published: Sep 19, 2003. Publicly Released: Sep 19, 2003.
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Highlights

Critical Access Hospitals (CAHs) are small rural hospitals that receive payment for their reasonable costs of providing inpatient and outpatient services to Medicare beneficiaries, rather than being paid fixed amounts under Medicare's prospective payment systems. Between fiscal years 1997 and 2002, 681 hospitals have become CAHs. In the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000, GAO was directed to examine requirements for CAH eligibility, including the ban on inpatient psychiatric or rehabilitation distinct part units (DPUs) and limit on patient census, and to make recommendations on related program changes.

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Recommendations

Matter for Congressional Consideration

Matter Status Comments
Congress may wish to consider allowing hospitals with DPUs to convert to CAH status while making allowances for DPU beds, patients, and lengths-of-stay when determining CAH eligibility, and that CAH-affiliated DPUs be paid under the same formulas as other inpatient psychiatric or rehabilitation providers.
Closed – Implemented
In December 2003, as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Congress provided the authority in the Critical Access Hospital Program to establish psychiatric and rehabilitation DPUs and that the beds for the DPUs (no more than 10) would be excluded from the determining the bed limitations for critical access hospitals--25 acute care or swing beds in use on any given day. Further, the Congress required that CAH-affiliated DPUs be paid under the same formulas as other inpatient psychiatric or rehabilitation providers.
Congress may wish to consider changing the CAH limit on acute care patient census from an absolute limit of 15 acute care patients to an annual average of 15 to give CAHs greater flexibility in the management of their patient census.
Closed – Implemented
In December 2003, as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Congress revised the bed limitation for critical access hospitals from 15 to 25 beds and thus, removed the eligibility limitation of no more than 15 acute care patients on any given day. This change permits CAHs to operate up to 25 swing beds or acute care beds and accounts for the seasonal increase in patient census that pushed the 129 potential CAHs over the limit of 15 acute care patients per day for some portion of the year.

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