What Is a Critical Access Hospital?

The Medicare Rural Hospital Flexibility Program (Flex) was borne out of the 1997 Balanced Budget Act as a safety net device, to assure Medicare beneficiaries access to health care services in rural areas. The Flex Program created the critical access hospital (CAH) as a new Medicare provider type, eligible for cost-based reimbursement. CAHs provide essential services to the community and are an important factor in developing and supporting collaborative rural delivery systems in all grantee states. A CAH must meet the following criteria:
  • It must be a rural public or nonprofit hospital located in a state that has established a Medicare Rural Hospital Flexibility Program.
  • It should be located more than a 35-mile drive from any other hospital or CAH (in mountainous terrain or in areas with only secondary roads available, the mileage criteria is 15 miles), or certified by the state as being a necessary provider of health care services to residents in the area.
  • It must make available 24-hour emergency care services.
  • It may have a maximum of 25 beds. For those CAHs with swing-bed agreements, beds may be used for either inpatient acute care or swing-bed services. Any hospital-type bed located in or adjacent to any location where the bed could be used for inpatient care counts. Beds that don’t count include examination/procedure beds, stretchers or tables.
  • It must keep each inpatient for an annual average of 96 hours per patient, unless a longer period is required because of inclement weather or other emergency conditions, or a Quality Improvement Organization or other equivalent entity, on request, waives the 96-hour time limit.
Note: An exception has been made by the Centers for Medicare & Medicaid Services (CMS) for hospice admissions to a CAH.  The hospice may contract with a CAH to provide the hospice hospital benefit. Reimbursement from Medicare is made to the hospice. The CAH may dedicate beds to the hospice but the beds must be counted as part of the allowable number of CAH beds. The hospice patient does not contribute to the 96-hour annual average length-of-stay computation. The hospice patient can be admitted to the CAH for any care involved in his or her treatment plan or for respite care. The CAH negotiates reimbursement through an agreement with the hospice.