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Being a Critical Access Hospital Has Its Advantages: 8 Special Medicare Rules & Advantages for CAHs

As a Critical Access Hospital, or CAH, you understand the vital role that you play in the health and economy of your community. On a daily basis, you are faced with numerous challenges due to your size, access to resources, the move to value-based care and budget cuts. Despite these challenges, a number of revenue focused opportunities exist to help ease the burdens that threaten your financial health.

The Benefits of Being a CAH

Being classified as a CAH comes with some distinct rules and benefits, some of which apply to other rural facilities, and others of which are completely unique to CAHs. The following is a sample of the special Medicare guidelines available and how you can ensure that your facility is optimizing these advantages.

  1. Cost Reimbursed at 101%.

One of the first and most important benefits for CAHs is that your reimbursement rate is at 101% of calculated costs. While receiving cost report reimbursement at 101% is an advantage, it is important to remember that only allowable costs are counted toward that percentage. This leaves a number of other costs on the table. Be sure that your facility looks at other sources of revenue, including a review of your payer contract commercial rates.

  1. Swing Bed Services

An advantage that CAHs have compared to other facilities is the swing bed services reimbursement. Swing bed services allow your patients to transition from an acute care patient to a swing bed patient without leaving your hospital, allowing the people in your community to remain in your community. Swing bed services are reimbursed at calculated cost.

  1. 340B Pharmacy Benefit Eligibility

A significant cost savings related to 340B pharmacy benefits is available for CAHs. Be sure to confirm that you are utilizing contract pharmacy revenue as well, as this can be used to supplement your revenue.

  1. Excluded from some of the Provider-Based Rule Changes
  2. Rural Health Clinics (RHC)

Although recent changes have impacted some of the grandfathered RHCs, disallowing these clinics for full cost reimbursement, there is still an advantage. Don’t forget to also consider the Medicaid reimbursement impact.

  1. Professional Provider Opportunities

By the nature of CAHs being located in rural areas they have a number of options available to them related to professional providers. These include Option 2 billing, HPSA add on payments, A-8-2 limit exemptions, RHC reimbursement and more. It would benefit your facility to ensure you are eligible and receiving these other professional provider reimbursement opportunities.

  1. Flexible Staffing Requirements

Guidelines allow for CAHs to have more flexibility in staffing over other facilities. This includes the use of non-physician providers in the hospital’s clinics and Emergency Department. This can be an advantage to your facility in your recruitment efforts as staffing has become a challenge across the country.

  1. Additional Capital Funding Resources and Options Available

As a CAH, you have a number of additional resources available to assist in funding your facility. This includes USDA loans, Flex Grant programs, HRSA grants, and others. It is important that you take the time to investigate the options available for your facility and ensure that you are taking advantage of the numerous revenue resources.

Next Steps

Critical Access Hospitals are a vital part of the healthcare system and are designed to provide care in those communities where access to care is limited. Though you face several unique challenges from other larger facilities, it is important that you ensure you are benefiting from your classification through the numerous cost-saving opportunities and additional flexibilities not available to other provider types.

If you have any questions or would like more information about the benefits of CAHs, please contact our Rural Health Care Reimbursement Manager, Caren Puvalowski at

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