Dec. 23—Small rural hospitals that were paid extra Medicare funds to expand access for beneficiaries provided less inpatient care to those elderly patients than other types of hospitals, a government watchdog agency concluded.

Only 12 percent of the Medicare patients treated by critical access hospitals (CAH) received inpatient care, compared with 19 to 31 percent of Medicare patients treated by other types of acute care hospitals, according to a report from the Office of Inspector General (OIG).

The report, which is the latest in an ongoing OIG examination of CAH facilities, compared hospital data for 2011. Previous OIG findings that many CAH are close to other hospitals led the agency to recommend stripping many of the 1,329 CAH facilities of that designation.

The CAH designation, which was created by the Balanced Budget Act of 1997, aimed to ensure hospital care was accessible to Medicare beneficiaries in rural communities. Nearly 40 percent of CAHs were located in seven states: Illinois, Iowa, Kansas, Minnesota, Nebraska, Texas, and Wisconsin. They served 2.3 million, or about 5 percent, of Medicare’s 49 million beneficiaries in 2011.

Hospitals that receive the CAH designation are paid 101 percent of their "reasonable costs" by Medicare for most services provided.

The OIG report also found that the outpatient services CAHs provided to Medicare beneficiaries were similar to those provided by acute care hospitals.

Among the requirements for a CAH designation is that their average length of patient stay does not exceed 96 hours, which is also known as the four-day requirement.

"Most CAHs' annual average lengths of stays fell within the statutory four-day requirement, although the average length of stay at a few CAHs appears to have exceeded four days," according to the report.

Differences Identified

Additionally, emergency department visits and instances where beneficiaries needed urgent care accounted for approximately 74 percent of CAHs’ inpatient admissions, while elective admissions accounted for the other 26 percent of admissions. The rate of elective admissions was slightly less for other types of acute care hospitals.

The findings of the report could be used to inform future cuts to CAHs. The Obama administration proposed a 2011 deficit reduction plan that would have reduced CAH reimbursements to 100 percent of reasonable costs and barred hospitals located fewer than 10 miles from another hospital. Those changes, also proposed in Obama’s FY14 budget would reduce Medicare spending by $2 billion over 10 years.

In August, OIG recommended the administration seek legislative authority to reassess CAH designated facilities after concluding 64 percent would not meet the program’s original requirements.

Publication Date: Monday, December 23, 2013