The North Dakota State Rural Hospital Flexibility Program

 

 

Critical Access Hospitals

 

The Balanced Budget Act (BBA) of 1997 created the Medicare State Rural Hospital Flexibility (SRHF) Program. This program establishes the Critical Access Hospital (CAH) as an alternative service hospital. The program design combines potentially improved (cost-based) reimbursement with potential cost savings resulting from relaxed operating requirements to help ensure the financial viability of participating hospitals. Modifications to the program have resulted from the enactment of the Balanced Budget Refinement Act (BBRA) of 1999, the Benefits Improvement and Protection Act (BIPA) of 2000, and the Medicare Prescription Drug Improvement and Modernization Act (MMA) of 2003. These changes have been incorporated into the information presented below.

 

Criteria for CAH Certification

A rural hospital may be designated as a CAH if the following criteria are met:

•  Owned by a public or non-profit entity
•  Located in a participating SRHF state
•  One or more of the following is true:
  •  More than 35 miles from any other CAH or hospital,
  •  More than 15 miles from another hospital or CAH in mountainous terrain or in areas with only secondary roads, or
  • Designated a necessary provider under criteria published in the N.D. State CAH Plan (State authority for this designation expires 1/1/06 - previous designations are grandfathered).
•  Offers 24-hour emergency care.
•  Provides no more than 25 beds for acute care.
•  May operate distinct part units of up to 10 beds for psychiatric or rehabilitation services.
•  Keeps inpatients no more than an average of 96 hours except during inclement weather or other emergencies.
•  Meets staffing and other requirements established in General Acute Hospital or Primary Care Hospital licensing and the State Plan for CAHs
•  Must have a formal agreement for participation as part of a rural health network. Rural health network defined as an organization of at least one CAH and one acute hospital.

                                                                                                                                                           

 

Frequently Asked Questions (FAQs) Concerning CAH Participation in North Dakota

 

• Why should my rural community hospital consider seeking CAH designation and certification?
  • The primary reasons are:
    • Enhanced (cost + 1%) reimbursement,
    •  Cost based reimbursement for ER physician assistants, nurse practitioners or clinical nurse specialists (on call) and;
    •  Potential cost savings achieved through more flexible professional staffing requirements (medical/nursing).

 

• Do the hospital board and medical staff need to be involved in the CAH designation process?
  •  Emphatically, yes! While there is no specific regulatory requirement, several dynamics drive the need for involvement of both the board and the medical staff. The board is required to provide oversight for the operation of the hospital, which makes early involvement an imperative. Medical staff is potentially affected in a material way by the manner in which a CAH is operated. Support from the medical staff is absolutely necessary to the success of the venture. In addition, an annual follow-up evaluation of the way in which a CAH, its network and service affiliates address the needs of the community is required. A committee including a member of the medical staff, a community representative, a network representative and a board representative should conduct the evaluation. The Office of Community Assistance (OCA) within the State Department of Health, the Center for Rural Health (CRH) within the University of North Dakota School of Medicine and the North Dakota Healthcare Association (NDHA) are co-recipients of a grant to assist rural communities and hospitals in this process. The above e-mail links will provide access to information about these services. Additional information concerning CAH designation and certification may be found on the American Hospital Association (AHA) and the Rural Assistance Center (UND) web sites.

 

• To what extent should the community be involved in preparations to become a CAH?
  •  Involvement of the community in a need assessment and planning effort is essential if the conversion to a CAH is to be supported by the community and ultimately be successful. Networking with all community service delivery resources is vital to successfully address the health needs of rural citizens and to ensure the survival of the rural healthcare infrastructure. Again, the Office of Community Assistance, the Center for Rural Health and the North Dakota Healthcare Association are prepared to assist rural communities and hospitals in this process.

 

• How will the hospital�s license be affected?
  •  The hospital has the option of remaining licensed as a general acute hospital. However, this would not allow the full staffing flexibility provided by the federal program. Effective Aug. 1, 1999, licensure as a primary care hospital in North Dakota will allow the facility to take full advantage of the staffing flexibility allowed under the federal program.

 

• Do I need to negotiate a new agreement with North Dakota Health Care Review Inc. (the QIO)?
  •  No, effective November 29, 1999, a new agreement is not required. However, it is recommended that the QIO be contacted concerning the intent to operate as a Critical access Hospital.

 

• How does the 96-hour average length of stay limit affect Medicare patients in a CAH?
  •  The fiscal intermediary, Noridian, is the agency designated to monitor the 96-hour average length of stay for Medicare patients. It is recommended that a utilization review process be established for all cases with a length of stay exceeding 96 hours. This process may involve the network acute hospital, or it may be completed under contract with the QIO.

 

• How does the 96-hour average length of stay limit affect the non-Medicare patient in a CAH?
  •  All patients are subject to the 96-hour average length of stay limit. For non-Medicare patients, two options exist. The CAH may conduct an internal utilization review at the 96-hour limit. This review should involve appropriate personnel from the network acute hospital. The second alternative is to contract for the service with the QIO.

 

• What is the difference between designation and certification?
  •  Designation is a state function based upon a hospital�s meeting the conditions and requirements set forth in the State Rural Health Access and Critical Access Hospital Plan. Certification is a federal function based upon meeting the requirements for participation in the Medicare Program.

 

• How long does certification take?
  •  Once a facility is prepared and has requested to be surveyed, a survey will be scheduled (generally within four to six weeks). This is an announced survey with times and dates to be coordinated with the facility. Processing of HCFA�s notice of certification, following full compliance with requirements for participation, will take two to four weeks.

 

• How is billing processed following the survey and certification?
  •  A new provider number will be issued by Noridian. Billings may be held for up to a month, following HCFA�s notice of certification, while the transition to the new provider payment system is processed.

 

• What changes in reimbursement for CAH facilities have taken place since the beginning of the program?
  •  The Benefits Improvement and Protection Act of 2000, which was enacted in December of 2000, contains several provisions beneficial to CAH facilities. These include:
    •  Effective with the enactment of the Balance Budget Reconciliation Act of 1999 (BBRA99), Medicare beneficiaries are not held liable for any coinsurance, deductible, co-payment or other cost sharing with respect to clinical diagnostic laboratory services furnished as an outpatient CAH service.
    •  Effective with enactment of BBRA99, CAH facilities are reimbursed on a reasonable cost basis for outpatient clinical diagnostic laboratory services.
    •  Effective April 1, 2001, Medicare will pay CAH facilities for outpatient services based on reasonable costs, or at the election of the facility, will pay a facility fee based on reasonable costs plus an amount based on 115% of Medicare's fee schedule for professional services.
    •  Effective December 19, 2000, CAH swing bed services are paid on a reasonable cost basis.
    •  Effective December 19, 2000, CAH operated ambulance services are reimbursed on a reasonable cost basis if they are the only ambulance service within a 35-mile drive of the CAH.
    •  Effective for cost reporting periods on or after October 1, 2001, CAH facilities will receive payment for emergency room on-call physicians who are not on the CAH�s premises.
  • The Medicare Prescription Drug Improvement and Modernization Act of 2003 makes several additional changes. These include:
    •  Increase reimbursement to cost plus 1%,
    •  Cost based reimbursement for ER on-call physician assistants, nurse practitioners and clinical nurse specialists,
    •  Designation of up to 25 beds for acute care,
    •  Permit operation of up to 10 bed distinct part units for psychiatric or rehab services,
    •  Reinstatement of periodic interim payments, and
    •  Expands eligibility for the all-inclusive payment for outpatient services to any practitioner assigning billing rights to the CAH (provides fee schedule + 15%).

 

• What assistance is available to my facility or community in preparing to become a CAH facility?
  •  As noted above, the Office of Community Assistance, the Office of Rural Health, and the North Dakota Healthcare Association are recipients of a federal grant to provide such assistance. This assistance may involve community or service area surveys, reports regarding facility performance and market share, technical assistance in complying with program requirements, or grants in aid for planning and implementation of activities necessary to becoming a CAH.

 

• How may I obtain more information concerning the CAH program?
  •  Licensure and Certification packets may be obtained from Bridget Weidner of the Division of Health Facilities, North Dakota Department of Health. These packets contain the Medicare Interpretive Guidelines currently in effect. General information or assistance in preparing for the survey process may be obtained from Gary Garland of the Office of Community Assistance.

                                                                                                                                                             

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Last Updated: 03/17/2008