The Cost-Based Question Surrounding Critical Access Hospitals

Critical access hospitals have been in the spotlight a lot this year, and a recent article in JAMA Internal Medicine took aim at health systems that also happen to own a CAH.

Researchers at the University of Michigan in Ann Arbor conducted a study to see how systems use cost-based reimbursement at their CAHs. CAHs are different from other general acute-care hospitals because Medicare pays them 101 percent of their allowable costs instead of a prospective payment.

Looking at 94 health systems with 302 CAHs, researchers analyzed how systems allocated administrative and general costs, like IT and management services, to its member CAHs. Medicare allows systems to allocate costs based on a member's share of inpatient days.

The study found systems were "strategically changing their accounting methods to maximize cost-based reimbursement under the CAH program," resulting in $150 million of additional payments every year. In other words, systems appeared to increase the CAH's proportion of administrative and general costs to receive more reimbursement under Medicare's CAH guidelines.

The American Hospital Association criticized the study, saying it did not factor in why the cost shifting was occurring.

More Articles on Critical Access Hospitals:
5 Traits of Hospitals Awarded EHR Incentive Payments in 2012
Allen County Regional Hospital Opens Critical Access Hospital
Rural Healthcare Amidst Reform: Are Critical Access Hospitals Endangered?

Copyright © 2023 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Whitepapers

Featured Webinars