Critical Access Hospitals

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Medicare Rural Hospital Flexibility Program and Critical Access Hospitals

BACKGROUND
Significant health disparities between rural and urban populations have been a major concern in the United States. One prominent factor contributing to the disparities is lack of access to quality care in rural areas which is closely associated with challenges faced by rural health care providers (National Rural Health Association, 2007). Rural hospitals are the key health care provider in rural areas, offering essential health care services to nearly 54 million people (American Hospital Association, 2006). They face a series of challenges such as workforce shortages, rise in health care costs, difficulty in finding access to capital, difficulty in
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The MPHFP enables certain rural hospitals to be licensed as Critical Access Hospitals (CAHs) that receive cost-based reimbursement from Medicare in return for limiting their services (Rural Assistance Center- CAH Frequently Asked Questions, 2012). Under costbased reimbursement, health care providers receive reimbursement based on actual costs incurred which is a more generous reimbursement method than allowed by the prospective payment system (Gapenski L, 2009). However, only those providers that fall under the following categories are eligible to become CAHs: currently participating Medicare hospitals; hospitals that ceased operation after November 29, 1989; or health clinics or centers (as defined by the State) that previously operated as a hospital before being downsized to a health clinic or center (Department of Health and Human Services, 2013). A Medicare participating hospital that wishes to convert to a CAH, has to meet certain criteria including (Department of Health and Human Services, 2013):        Be located in a state that has established a State rural health plan for the State Flex Program; Be located in a rural area or be treated as rural under a special provision that allows qualified hospital providers in urban areas to be treated as rural for purposes of
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