Hospital administrators are saying recent recommendations from the Office of Inspector General regarding critical access hospital certification will result in hospital closures.
In August, the OIG released a report of its examination of CAH certification requirements and discovered that two-thirds of CAHs would not meet the current Centers for Medicare & Medicaid Services location requirements if they were forced to re-enroll today.
[See also: OIG pressures CMS on home health agency sanctions]
Under current rules, to be certified as a CAH, a hospital must meet a distance requirement (located 15 miles or more from any other hospital) and a rural requirement (must be located in a rural area).
The OIG looked at more than 1,300 critical access hospitals and discovered that 846 were located fewer than 35 miles from another hospital, while 71 were fewer than 10 miles from another facility.
OIG concluded that if in 2011, CMS had decertified those CAHs located 15 miles or less from their nearest hospitals, Medicare and beneficiaries would have saved $449 million.
OIG recommended that CMS seek legislative authority to revise CAH conditions of participation to include other location-relation requirements and remove non-profit CAHs' permanent exemption from the distance requirement, which would allow a reassessment of all CAHs.
[See also: OIG questions use of Part D rebates]
CMS Administrator Marilyn Tavenner wrote in a response to the OIG report that the agency is in favor of asking Congress to give it the power to decertify state-granted critical-access status, but disagrees with the OIG's recommendation to establish revised location criteria because it could be time-consuming and affect hospitals' payment status.
"The existing location and distance criteria already represent a uniform standard to which all CAHs certified since January 2006 have been subjected," Tavenner said in written statement. "We believe a facility's Medicare certification as a CAH versus a hospital should not be tied to rapidly fluctuating criteria."
Since the report was published, executives at CAHs around the country have vocalized why they believe OIG's recommendation would be detrimental to many CAHs, including the possibility of numerous hospital closures.
"There's a lot being piled on for these hospitals," Tim Size, executive director of the Rural Wisconsin Health Cooperative in Sauk City, Wis. "I don't think the OIG recommendation considers all of these issues. Hospitals are under a lot of financial pressure and this couldn't come at a worse time."
John Russell, president and CEO of Columbus Community Hospital in Columbus, Wis., equates the possible CAH reassessment to how CAHs were faring prior to the Balanced Budget Act of 1997 when CAHs were first designated and the program was initially created.
"I was working as a certified public accountant involved in reimbursement consulting and I saw the positive impact the CAH status had on struggling critical access hospitals," said Russell. "Rural hospitals had a disproportionate Medicare volume prior to the Balanced Budget Act and they just started to die off. Some barely had any cash flow and rode on their savings – if they even had any. I think these hospitals would go through the same process as they did before [if the reassessment were to occur]. We'd see massive closures."
The sort of reassessment the OIG is recommending would be detrimental to CAHs said Wayne Printy, CFO at St. Andrews Hospital, a CAH in Boothbay Harbor, Maine, and would potentially add to beneficiary costs.
"The rural requirement considers the time it takes to get to a hospital and the geography. In Maine, there are many communities located on small peninsulas along the rocky coastline. So the physical distance between one hospital to the next is rather arbitrary because when it comes to driving there, it actually takes a lot longer," said Printy. "The additional cost to beneficiaries when it comes to the travel costs to further hospitals could be significant, which should be a consideration."
[See also: OIG recommends CMS implement iced surety bond rule for home health agencies]