According to a report released on August 15, 2013 by the HHS Office of Inspector General (OIG), almost two-thirds (64 percent) of all critical access hospitals (CAHs) could not meet the location requirements if required to re-enroll. Because most of the non-qualifying CAHs (88 percent) are designated “necessary provider” (NP) CAHs, CMS does not have the authority to decertify them. If CMS were authorized, and had decertified all CAHs that were 15 or fewer miles from their nearest hospitals in 2011, OIG estimates that CMS would have saved $268 million and beneficiaries would have saved $181 million in 2011.

In order to be certified as a CAH, a provider must be located in a rural area and must be more than 35 miles’ driving distance from other hospitals and CAHs (or more than 15 miles in areas of mountainous terrain or where only secondary roads are available). NP CAHs are permanently exempt from meeting this distance requirement. OIG recommends that CMS should do the following:

  1. seek legislative authority to remove NP CAHs’ permanent exemption from the distance requirement;  
  2. seek legislative authority to revise the CAH Conditions of Participation to include alternative location-related requirements (e.g., allow CAHs to keep their certifications if they serve communities with high poverty rates);  
  3. periodically reassess CAHs for compliance with all location-related requirements; and  
  4. apply its uniform definition of “mountainous terrain” to all CAHs.

CMS concurred with recommendations 1, 3, and 4, but did not concur with recommendation 2, which originally recommended “additional location-related requirements.” OIG has revised recommendation 2, above, to better reflect its intent and to acknowledge CMS’s stated concern that CAH Conditions of Participation should be tied to stable characteristics and not to rapidly fluctuating criteria (like the types of services offered).

A copy of the report is available on the OIG website by clicking here.