CMS releases guidance on CAH designation, conversion, billing

Wednesday, March 29, 2023

CMS released updated requirements for critical access hospitals (CAH) in the latest edition of its MLN Connects® newsletter. The guidance provided new information on the proper billing practices, designations, and conversion processes for this type of facility.

Medicare-participating hospitals must meet several conditions to become and remain a CAH. CMS updated the location requirement for CAHs, specifying that they must be more than a 35-mile drive on primary roads from any other CAH or hospital.

A primary road is a numbered federal or state highway with two or more lanes each way, according to the guidance. CAHs in areas with only secondary roads available or mountainous terrain must be a 15-mile drive from other hospitals.

To establish a process for overseeing and resolving patient grievances, CAHs are now required to inform each patient of their rights before starting or ending care. In addition, CAHs must now have a unified and integrated quality assessment and performance improvement program if they are part of a multi-hospital health system.

The updated guidance also detailed the optional payment method for CAHs. “Under the optional payment method, the CAH bills facility and professional outpatient services only when physicians or practitioners have reassigned their billing rights to them,” said CMS. After physicians and practitioners reassign their billing rights to a CAH, they can’t bill for professional services.

For those who elect the optional payment method, a CAH must forward a completed application to their Medicare Administrative Contractor (MAC) to reassign their benefits.

Finally, CMS included information on its newest provider type, rural emergency hospitals (REH). “REHs allow for emergency services, observation care, and additional medical and health outpatient services (if the REH elects to provide them) that don’t exceed an annual per-patient average of 24 hours,” said CMS.

REHs generally convert from a CAH or rural hospital with no more than 50 beds and don’t provide acute inpatient services, according to CMS. To convert to an REH, CAHs should submit a change of information application.

CAHs, REHs, and rural facilities should all take note of these updated CMS guidelines. Revenue integrity professionals supporting these facility types should review the most recent guidance from CMS and ensure their organization is in compliance. If a facility is considering converting to an REH, carefully review the financial implications and the potential impact on the community the facility serves. Specific questions may be addressed to the facility’s MAC.

Editor’s note: Find more NAHRI coverage of CAHs here.

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