Critical Access Hospitals: Why are they hard to negotiate with?

What are Critical Access Hospitals?

Critical Access hospitals are medical facilities that:

  • Are located in a State that has established a State Medicare Rural Hospital Flexibility Program;
  • Be designated by the State as a Critical Access Hospital;
  • Be located in a rural area or an area that is treated as rural;
  • Be located either more than 35-miles from the nearest hospital or Critical Access Hospital or more than 15 miles in areas with mountainous terrain or only secondary roads; OR prior to January 1, 2006, were certified as a Critical Access Hospital based on State designation as a “necessary provider” of health care services to residents in the area.
  • Maintain no more than 25 inpatient beds that can be used for either inpatient or swing-bed services;
    • Swing Bed Services are beds at the hospital that can be used as nursing home level services or hospital beds
  • Maintain an annual average length of stay of 96 hours or less per patient for acute inpatient care (excluding swing-bed services and beds that are within distinct part units);
  • Demonstrate compliance with the Critical Access Hospital’s Conditions of Participation found in 42 CFR Part 485 subpart F; and
  • Furnish 24-hour emergency care services 7 days a week;

Why are Critical Access Hospitals hard to negotiate with?

When we look for reimbursement from a compliance standpoint, we turn to CMS or Medicare for the standard. The default rules under Medicare allow reimbursement at 101% of reasonable costs of care.

If they opt for the non-default rules, they get 100% of the reasonable costs, plus 115% (limiting charge) of all professional fees. In this setting, the providers must refuse to bill their services themselves and reassign the debt to the facility. (there are exceptions on this, but this is generalized)

Also, any normal bundling rules that would normally apply are also not allowed. That means the facility gets to charge for additional procedures at a critical access hospital that would normally be included in the cost for care at a traditional acute care hospital.

Commercial health insurance companies negotiate a discount with the hospital for services rendered, somewhere around 20-30% or so in our experience.

This is likely why a lot of these hospitals are for profit.

How can you protect yourself?

You can protect yourself primarily by knowing what facility type you are going to , and whenever possible, getting the most comprehensive insurance you can afford, preferably on a flat copay basis, what they call a POS (Point of Service) plan that is in network with this provider.

If you can get the service at an office based provider, it is often cheaper to do so, such as an independent imaging center for X-Rays or an independent laboratory for blood and urine tests.

Weigh the cost of care vs traveling to get the care. For standard uncomplicated care, you may be well off at a CAH or a rural health clinic. For more specialized treatment, it may be necessary to travel to get that care and save some money.

If you do find yourself at a CAH for an emergency, enforce the No Surprises Act. You can find more here