Implications for Beneficiary Travel Time if Financially-Vulnerable Critical Access Hospitals Close

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Background

Policy makers have recently focused on the relative locations of Critical Access Hospitals (CAHs), whether changes are needed to current mileage requirements and the impact changes would have on how Medicare pays for services in smaller, low-volume hospitals. CAHs can have no more than 25 beds and must be 1) at least 15 miles by secondary road or mountainous terrain OR 2) 35 miles by primary road from the nearest hospital OR 3) declared a “necessary provider” by the state’s governor. Unlike traditional hospitals that are paid under the Prospective Payment System (PPS), Medicare pays CAHs based on each hospital’s reported costs. Each CAH receives 101%1 of its Medicare allowable costs for outpatient, inpatient, laboratory and therapy services and post-acute care in the hospital’s swing beds. In the course of these policy discussions, policy makers should consider the possible impact on beneficiary access and travel time. Major changes in the CAH program could impact the viability of some rural hospitals and increase the risk for hospital closure. If a hospital closes, where can patients served by that hospital get needed care? To measure the potential impact of hospital closure on health care beneficiaries, we examine three questions: 1) how far is it to the new nearest hospital, 2) what kind of hospital is it, and 3) where is the new nearest hospital located? METHODS We identified 93 financially-vulnerable CAHs2 that might close due to change in eligibility or reimbursement.

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