Critical Access Designation
Taos Health Systems (THS) has gotten the ok to pursue with due diligence in researching the conversion of Holy Cross Hospital into a Critical Access Hospital (CAH). THS and CEO Bill Patten wants to make sure that all questions are answered and that the community is given the same education and opportunity to ask questions as the internal stakeholders when it comes to converting the hospital.
What Does the Critical Access Conversion Mean?
We have created a short video to help you understand what the conversion means and to answer many of the big questions regarding the change.
Other Videos on the Critical Access Conversions
In an effort to help educate the community and keep the public involved in the conversation Bill Patten has hosted multiple public forums as well as meetings with local organizations. Here is a video of one of the forums and here is the powerpoint presentation that goes along with the video.
Bill Patten also reviews some of the issues regarding the CAH designation in his January board review video from January 25th, 2017. These videos are made available to the public monthly and can be found here.
This is Bill's update after the February 22nd, 2017 board meeting, in the middle of his update he gives some more information regarding the conversion to a Critical Access facility.
What does the Critical Access Designation Mean?
CAHs are a class of Medicare providers, introduced through the Medicare Rural Hospital Flexibility Program (Flex Program) as part of the Balanced Budget Act (BBA) of 1997. Recognizing that many of the smallest rural hospitals were finding it difficult to recover their Medicare costs through the prospective payment system (PPS) rates, policymakers created the new designation of CAH, under which small, isolated facilities could meet Medicare’s conditions of participation as a hospital with slightly different conditions of participation requirements, and could receive cost-based reimbursement for inpatient and outpatient services delivered to Medicare beneficiaries. Under cost-based reimbursement, these facilities would be paid an interim rate throughout the year, based on each hospital’s expected costs per inpatient day or the allowable outpatient cost-to-charge ratio. After the close of their fiscal year (FY) they would receive retrospective settlements from the Medicare Program for the difference between interim payments received and total allowable cost as documented on the Medicare Cost Report.
THS, led by CEO Bill Patten, has been considering this option for well over a year. He states, “The numbers just make sense right now and if we look at Holy Cross Hospital right, we are operating as a Critical Access Hospital already under the current federal requirements. Why not take advantage of the reimbursements that are available?”
CAH status has proven to be a very popular option among qualifying hospitals. By the end of 2001, 545 hospitals in 43 States had received this designation—1 of every 9 non-Federal, acute care hospitals in the Medicare Program. By the end of 2002 this number had risen to 723, or about 1 of every 7 hospitals, and nearly 1 of every 3 hospitals located in non-metropolitan areas, today there are 1326 certified CAH facilities. Although the number of CAH conversions has grown more rapidly than may have been expected by lawmakers, the participants are, by design, among the smallest hospitals in the country. In 1998 the converting facilities profiled in this article accounted for no more than 2 percent of the acute care bed complement and 1 percent of Medicare-covered acute days of care.
CAH status is voluntary, and the advantages are chiefly reimbursement related. From the pool of small, isolated hospitals that are potentially eligible as CAHs, the program incentives are such that conversion is likely to be most attractive to hospitals with higher per patient costs due to the lower volumes they experience. Because of the small size of the CAH participants, the resulting changes in Medicare payments will have little impact on the overall national Medicare budget, but the program alters the reimbursement incentives for a substantial portion of rural providers. This could have a strong influence on rural hospital management and finances.
Taos Health Systems will host a number of forums and will also be visiting special interest groups to answer any questions or concerns that the public may have. THS has been on several site visits to other CAHs with the hospitalists, administration, billing, risk management and compliance teams from THS. Upon returning from these site visits, a second round of internal presentations took place with the staff and administrators of THS. Everyone internally is on the same page and does not see a single reason why THS should not take the steps to convert. On December 7, 2016 The Board of Directors for THS received public comment from community members during its monthly board meeting. CEO Bill Patten also addressed the board with comments addressing the concerns raised as well as other CAH information. The Board then voted to move forward with the due diligence process.
Facts About Critical Access Hospitals
- There are 1,326 certified CAHs located in the US.
- CAHs have a maximum of 25 acute care inpatient beds for the Medical/Surgical; Intensive Care; and Obstetrics. CAH was designed strictly to improve access to rural health care.
- CAH conversion does NOT mean a downgrade for the facility! It is only a change in provider designation and reimbursement and not a downgrade.
- CAH does NOT mean losing services. THS will continue to operate as it does today providing the same continuum of care it currently delivers including all of its inpatient services, surgeries, outpatient services, (including lab and imaging), and its 24/7 emergency department.
- CAH designation will not limit THS ability to care for its patients. In many cases, hospitals that have converted have expanded their range of services.
- CAHs must maintain an annual AVERAGE length of stay of 96 hours (four days) or less for their acute care patients. THS currently operates at an average of 13 or 14-bed occupancy and have never exceeded 25-bed occupancy in the past 4 years
- The Swing bed patients, observation patient and healthy newborns are not counted in the 25 bed maximum.
- THS has plans to remodel existing space to add 5 more observations beds in the Emergency Department to to further expand capacity.
- CAH status will have a dramatic effect on hospital profitability.
- THS will see an additional reimbursement from CMS (Medicare) of around $1 million dollars in the first year after conversion.
- THS will continue to have access to a larger number of providers.
- THS will have access to hi-tech Information Technology.