Critical access hospitals could face significant reduction in reimbursement rates

Department of Health and Human Services, Office of the Inspector General ( OIG)  recently published its report: Medicare Could Have Saved Billions at Critical Access Hospitals If Swing-Bed Services Were Reimbursed Using the Skilled Nursing Facility Prospective Payment System Rates.  In the report OIG proposed reimbursing such care at the lower skilled nursing facility (SNF) rates rather than at the higher critical access hospitals (CAHs) rates. 

Due to the significant increase in swing-bed usage at CAHs from 2005 to 2010 and the attendant rise in Medicare spending for swing-bed services at CAHs at almost four times the cost of similar services at alternative facilities, OIG is recommending that CMS seek legislation to adjust CAH swing-bed reimbursement rates to the lower SNF PPS rates paid for similar services at alternative facilities.  OIG found that 90 percent of the CAHs in 1200 swing-bed services sampled could have been provided at alternative facilities within 35 miles of the CAHs during CY 2010, thus resulting in savings estimated at “$4.1 billion over a 6-year period if payments for swing-bed services at CAHs were made using skilled nursing facility prospective payment system (SNF PPS) rates.”  OIG argues that the lower SNF prospective rate for CAH swing-bed services results in huge savings without any resultant reduction in care.

This latest report by OIG is consistent with other site-neutral payment policies recommended by OIG and Medicare Payment Advisory Commission. While CMS agreed with OIG’s finding that CAHs' swing-bed utilization has increased, it disagreed with OIG’s recommendation because of concerns with availability of skilled nursing services at nearby alternative facilities and OIG’s calculation of savings (failure to appropriately account for level of care, transportation fees, etc.). CMS “concurs that changes should be made to CAH designation and payment systems that balance beneficiary access to care while promoting payment efficiency.”

View the full OIG report >