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OIG Urges Decertification of 849 Medicare Critical Access Hospitals




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August 18, 2013 | 2,259 views | Post a comment

About two-thirds of the more than 1,300 Critical Access Hospitals (CAHs) providing healthcare services to rural Medicare beneficiaries would lose their enhanced Medicare funding if a proposal by the Health & Human Services Department's Office of Inspector General (OIG) becomes federal policy.

In a just-released report, the OIG presses the Centers for Medicare & Medicaid Services (CMS) to ask Congress for statutory authority to decertify some 849 hospitals as CAHs, a move OIG contends would annually save the government hundreds of millions of dollars.

Here's How the Certification Works

The CAH certification is used as a tool to ensure rural Medicare beneficiaries are able to access hospital services. Medicare reimburses CAHs at 101% of their reasonable costs, rather than at the rates set by prospective payment systems or fee schedules.

Current CMS policy permits hospitals to be certified as CAHs if they meet several requirements, including being located at least a certain driving distance from other hospitals (including other CAHs) and being located in rural areas. These two requirements are known as the "distance requirement” and the "rural requirement,” respectively. Prior to 2006, states could exempt CAHs from the distance requirement simply by designating them as "necessary provider” (NP) CAHs, thus rendering them permanently exempt from the requirement.

Obama Plants the Seed of an Idea

President Obama in September 2011 published his Plan for Economic Growth and Deficit Reduction, which included a proposal to reduce CAH reimbursements to 100% percent of reasonable costs and eliminating the critical access certification for CAHs fewer than 10 miles from another hospital.

The president's proposed budget for FY 2014 made the same recommendations and estimated the savings over 10 years to be $1.4 billion from reducing reimbursement to 100% of reasonable costs (from 101%) and $690 million from eliminating the critical access certifications of CAHs located fewer than 10 miles from another hospital.

Targeted CAHs Serve 1.2 Million Beneficiaries

In OIG's just-released report, analysts found nearly two-thirds of CAHs -- collectively providing healthcare services to about 1.2 million Medicare beneficiaries -- would not meet the location requirements if required to re-enroll in the CAH program. The vast majority of these CAHs would not meet the distance requirement.

CMS does not have the authority to decertify most of these CAHs, as most of them are NP CAHs. However, if Congress authorized CMS to reassess whether all CAHs should maintain their certifications and CMS ultimately concluded that some should be decertified, the Medicare program and its beneficiaries would realize substantial savings, the OIG says.

For example, if CMS had decertified CAHs which were 15 or fewer miles from their nearest hospitals in 2011, Medicare and beneficiaries would have saved $449 million in co-payment charges, OIG says.

To access the OIG report, go to www.cdpublications.com/docs/7075 and click on the provided link.
 
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