Summary of the Rural Community Hospital Assistance Act

The Rural Community Hospital Assistance Act (RCHAA) has a number of facets. It strengthens the Critical Access Hospital (CAH)

program by enhancing CAH reimbursement and permitting some needed changes in their operations. It also creates a new hospital payment status called Rural Community Hospital (RCH) and establishes reimbursement mechanisms that will allow these small hospitals to continue to serve the needs of their communities.

The following summarizes the current status of CAH criteria and reimbursement, describes the changes affecting CAHs under the RCHAA and describes the new RCH created by the bill.

The changes under the RCHAA are in bold and the bill’s section numbers are in [brackets].

Where the reimbursement system is more favorable to CAHs than to RCHs, those areas are highlighted.

Criteria for designation Certification status Reimbursement for inpatient acute care services Reimbursement for outpatient acute care services Reimbursement for ambulance services Reimbursement for home health services Reimbursement for swing bed services Reimbursement for skilled nursing services provided in a skilled nursing unit Additional reimbursement for technology and infrastructure needs Permitting distinct part psychiatric and rehabilitation units Reimbursement for distinct part psychiatric and rehabilitation units Reimbursement for Medicare bad debts Reimbursement provisions specific to CAHs

Area of Impact	Critical Access Hospital	Rural Community Hospital

Criteria for designation	15 or fewer acute care beds Up to 25 beds if the facility is certified for swing beds (which can be used interchangeably for acute or skilled level care), provided no more than 15 beds are used at any one time for acute care patients Must be classified as a rural hospital Located in a state that has established a state rural health plan Makes available 24 hour emergency services Located 35 miles or more from any other hospital or CAH (or, in mountainous terrain or areas with only secondary roads, 15 miles) or is certified by the state as a necessary provider No more than 96-hour average length of stay limitation	Must have 50 or fewer acute care beds as reported on the cost report Must be classified as a rural hospital Makes available 24 hour emergency services Is an existing hospital at time of enactment Requests designation as a RCH [Sec. 2.(a)]

Certification status	CAH is a Medicare certification status A hospital applying for CAH status must be surveyed and certified as a CAH Medicare conditions of participation for CAHs are much more flexible than they are for hospitals	RCH is a payment status No change in certification status occurs RCHs must continue to meet all hospital conditions of participation

Reimbursement for inpatient acute care services	CAHs are reimbursed for inpatient services through a cost based methodology rather than the Inpatient Prospective Payment System (PPS) which is based on Diagnosis Related Groups (DRGs)	The same cost based payment methodology would be available RCHs [Sec. 2.(b)(1)]

Reimbursement for outpatient acute care services	CAHs are reimbursed for outpatient services through a cost based methodology rather than the Outpatient PPS which is based on Ambulatory Payment Classifications (APCs) Patient coinsurance is generally 20% of charges (except for lab services) which simplifies CAH billing	The same cost based payment methodology would be available to RCHs [Sec. 2.(b)(2)] Patient coinsurance liability will be the same as under the APC system [Sec. 2.(c)]

Reimbursement for ambulance services	CAH ambulance reimbursement is presently a cost based system (subject to limits) which is rapidly transitioning to the new ambulance fee schedule If no other ambulance service within 35 miles the CAH is exempt from the limits and new fee schedule and is reimbursed under a fully cost based methodology The bill would remove the 35 mile test and allow all CAH ambulance services to be fully cost reimbursed [Sec. 4.(e)]	RCHs would be reimbursed for ambulance services under the same cost based methodology [Sec. 2.(d)(2)(B)]

Reimbursement for home health services	CAHs are presently paid for Home Health (HH) services under the HH PPS The bill permits a CAH to make a one time election to opt out of the HH PPS and be reimbursed on a cost based methodology [Sec. 4.(b)] (The CAH does not have to meet the isolated agency criteria)	Permits the RCH to make a one time election to opt out of the HH PPS and be reimbursed on a cost based methodology The above option is only available to the RCHs that meet specific criteria as an isolated home health agency [Sec. 2.(b)(3)]

Reimbursement for swing bed services	CAHs are paid for swing bed services under a cost based reimbursement methodology	RCHs will be paid for swing bed services under the Skilled Nursing PPS applicable to other hospitals

Reimbursement for skilled nursing services provided in a skilled nursing unit	CAHs are presently paid for these services under the Skilled Nursing PPS The bill would exempt CAHs from the Skilled Nursing PPS and they would be paid under a cost based methodology [Sec. 4.(c)]	RCHs will be paid for skilled nursing services under the Skilled Nursing PPS applicable to other hospitals

Additional reimbursement for technology and infrastructure needs	The bill provides for payments in excess of cost reimbursement to assist in improving technology and infrastructure Formula is based on existing return on equity rules [Sec. 4.(f)]	The bill provides for payments in excess of cost reimbursement to assist in improving technology and infrastructure Formula is based on existing return on equity rules [Sec. 2.(b)(4)]

Permitting distinct part psychiatric and rehabilitation units	CAHs may not presently have distinct part psychiatric or rehabilitation units (DPUs) due to the statutory requirement that these units must be part of a hospital paid under the Inpatient PPS The bill removes the above barrier and allows CAHs to have up to 10 such beds [Sec. 3. and 4.(a)]	RCHs may have distinct part psychiatric and rehabilitation units [Sec. 3.]

Reimbursement for distinct part psychiatric and rehabilitation units	CAHs will be reimbursed for DPU psychiatric and rehabilitation services under the same cost based reimbursement methodology that they are paid for other services [Sec. 4.(d)]	RCHs will be paid for these services under the same limitations and PPS systems that apply to other hospitals

Reimbursement for Medicare bad debts	CAHs are presently exempt from the 30% reduction in reimbursement of Medicare hospital bad debts CMS issued a proposed rule Feb. 10, 2003 to extend the 30% reduction to all providers, including CAHs	The bill exempts RCHs from the 30% reduction in reimbursement for Medicare bad debts [Sec. 2.(b)(5)]

Reimbursement provisions specific to CAHs	CAHs enjoy certain reimbursement benefits that were never available to other hospitals such as the ability to claim ER physician on-call cost as an allowable cost.	The bill does not provide RCHs any of the specific reimbursement advantages CAHs enjoy, except as specifically provided for in the bill

Home Join IRHA Links Student RHA Privacy Policy Site Map

Webmasters

Tina Elliott

Hicham Rahmouni