Revenue Cycle

Focus on CAHs: 2013 OIG Work Plan

Medicare Update for CAHs, November 28, 2012

The Office of Inspector General (OIG) for the U.S. Department of Health & Human Services (HHS) released on October 2 its annual Work Plan, which highlights 25 projects that examine CMS payments to hospitals under Part A and Part B. Of these projects, 11 of them are new and two of them deal specifically with CAHs.

Work Plan highlights

Some of the new additions to the 2013 OIG work plan include reviews of payments for hospital transfers, DRG payment effect from FY 2008 to 2012, payment for cancelled surgeries, payment for mechanical ventilation, quality improvement organizations, provider-based status, the acquisition of ambulatory surgery centers, and 29 separate projects that deal directly with the Affordable Care Act. In addition, the Work Plan will include an expansion of the review of Recovery Auditors from only working with Medicare providers to state Medicaid programs;

Impact on CAHs

When it comes to critical access hospitals, however, the scope of the entire Work Plan is not directly applicable to them. While some of the aforementioned items are of interest to CAHs, only two items in the Work Plan are directed specifically at CAHs. By focusing in on these projects, CAHs can put themselves in a better position—whether they have a compliance officer or not—when it comes to compliance audits and efforts in general, because though it may appear that these are fairly benign issues for CAHs, there are still risks associated with the regulations that pertain to these two topics, according to Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro, Inc. in Danvers, Mass.

Payment for swing-bed services. The Balanced Budget Act of 1997 created the CAH program to ensure access to healthcare in rural area, and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 allows CAHs to receive Medicare reimbursement equal to 101% of reasonable cost and have up to 25 inpatient beds that could be used for acute care or swing-bed services, with CMS approval. Neither of these has established any length-of-stay limits for swing bed utilization. The OIG will compare reimbursement for swing-bed services at CAHS to the same level of care obtained at the traditional skilled nursing facility to determine whether Medicare could achieve cost savings through a most cost effective payment methodology.

Swing beds do not have an imposed length of stay restriction, but Medicare provides a 100-day benefit period of those patients. So while CAHs are paid cost for their swing bed services, a traditional SNF bed is paid under PPS, thereby creating a cost savings, according to Mackaman.

“Swing beds in CAHs have been the ‘bread and butter’ for many facilities and they should be aware of their overall length of stay as well as where the patient was discharged to (e.g. a PPS SNF bed),” she says. “One can assume that if the OIG is looking at a cost savings through the most effective payment methodology, there may be changes in the wind regarding a LOS restriction and facilities may want to consider the impact that may have on their bottom line in the future.”

Variations in size, services, and distance from other hospitals for critical access hospitals. CAH criteria states that a hospital must be located in a rural area, furnishing 24-hour emergency care, providing no more than 25 inpatient beds, and having an average annual length of stay of 96 hours or less. There are approximately 1,350 CAHs, but information about their structure and services is limited. The OIG will review the number and types of patients that CAHs treat in addition to reviewing them to profile variations in size, services, and distance from other hospitals.

Prior to January 1, 2006, states had the authority to waive the 35-mile relative location requirement by designating a facility as a necessary provider CAH. Since then, CMS has been very strict in making sure that CAHs are 35 miles from the nearest hospitals or 15 miles where there are only secondary roads or in mountainous areas. State surveyors have also been instructed by CMS to monitor the acute care LOS as well as the census for patient who are kept as an outpatient receiving observation services, as this is in an effort to root out hospitals that use outpatient observation as a way to circumvent the 96 annual average LOS and the 25 acute care bed limitation, explains Mackaman.

“Keep in mind that the the services that are provided by a CAH are based on the needs of the community and are not limited by the licensure as a CAH; however, the LOS and bed restrictions may help determine the types of services that are offered to its patients,” she says. “CAHs have been able to fly under the radar for several years; however, this may be coming to an end with more Recovery Auditor activity and now OIG scrutiny. “

View the 2013 OIG Work Plan:

View a HealthLeaders Media summary of the Work Plan:

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