State Agencies | Online Services

Critical Access Hospitals Frequently Asked Questions

1.  Can Critical Access Hospitals (CAHs) operate a Distinct Part Unit (DPU)?

Effective Oct. 1, 2004, CAHs are granted the authority to have psychiatric and rehabilitation DPUs.  DPUs may not exceed 10 beds and do not count toward the CAH bed limit.

2.  Can CAHs operate a Skilled Nursing Facility (SNF)?

Yes, CAHs may operate an SNF.

3.  Some facilities have observation beds.  Do these beds count toward the 25-bed limit?

Observation beds do not count as inpatient beds.  However, this answer applies only if the beds are actually used for observation.  CAHs should be aware that the policies on coverage of observation services in hospitals (Hospital Manual section 239.6E) also apply to them.  Services that could be covered under Part A, such as medically appropriate inpatient care, will not be covered as outpatient observation.  Beds which are described as observation that are actually used for acute inpatient care will be counted toward the bed size limit.

4.  Does an observation day count in the annual 96-hour average limit?

No, the time a patient spends in an observation bed within that facility does not count in the annual 96-hour average.  The use of an observation bed is not to be substituted for inpatient care.  The intermediaries can and will deny payment for medically unnecessary outpatient observation.

  If a CAH has same-day surgery patients, are recovery loungers counted toward the 25-bed limit? 

Same-day surgery services are considered an ambulatory, outpatient service. Recovery loungers or beds used for recovery would not be included in the 25-bed limit.  Any beds (or recovery loungers) actually used for acute inpatient care will be counted toward this limit.

6.  What if a hospital exceeds the number of acute care patients allowed or exceeds the annual 96-hour average length of stay? 

If either situation were identified to have occurred upon survey without appropriate documentation, the CAH would be cited. 

7.  Would bed limit regulations be waived during an emergency?

The Centers for Medicare & Medicaid Services (CMS) is permitted to waive the Critical Access Bed requirements under the 1135 waiver, which is invoked upon the U.S. Department of Health and Human Services secretary's declaration of a public health emergency.  During a declared public health emergency, CMS will not count any bed use that exceeds the 25-bed or 96-hour average length of stay limits, if this result is clearly identified as relating to the disaster. CAHs must clearly indicate in the medical record where an admission is made or length of stay extended to meet the demands of the crisis.

8.  If a hospital is certified in the Medicare program as a CAH, can it revert back to a non-CAH status if it so chooses?

Yes, it can.  However, this conversion will require the hospital to submit a new application and to undergo a new survey by either an accrediting organization or the Ohio Department of Health to determine compliance with the hospital Medicare Conditions of Participation.

  Are Medicare managed care organizations required to pay CAHs on a cost basis?

No, the method of payment is negotiated between the managed care organization and the CAH.

10.  Are CAHs reimbursed for both capital and operating expenses?

Yes, as long as there are no signs of program abuse.

  How long must the cost reporting period be?

One year.   

12.  What if a CAH enters the program without swing-bed services and decides to add them later?  Would a survey be required?

It would be necessary to survey for compliance with the swing-bed requirements, as the CAH would be providing new services.

13.  Do the Medicare requirements that govern hospitals under 42 CFR 482 apply to CAHs?

No, the Medicare requirements that govern hospitals under 42 CFR 482 do not apply to CAHs. The Medicare requirements that govern CAHs can be found at 42 CFR 485.

Last Updated:  6/19/2017

                      Rural Hospital Flexibility Program Page / Small Rural Hospital Improvement Program Page
  Primary Care and Rural Health Main Page