CMS Excludes CAHs from Medicaid Incentives

by Louis Wenzlow on January 1, 2010

CMS Proposed Rule Excludes CAHs from Medicaid Incentives

On December 30th, CMS released its proposed rule for the ARRA electronic health record incentive program. Among the issues in the proposed rule that will impact rural providers is that CMS has decided to exclude critical access hospitals (CAHs) from participating in the Medicaid portion of the incentive program.

Numerous studies have indicated that CAHs have significantly lower EHR adoption rates than general hospitals, as well as greater barriers to EHR implementation (including lack of capital, minimal HIT staffing levels, and reduced EHR system ROI). CAHs with high Medicaid utilization rates are likely to face even greater challenges than other CAHs, let alone general hospitals.

So how and why did CMS exclude CAHs?

ARRA states that eligible Medicaid providers include (1) children’s hospitals, and (2) acute care hospitals that have at least 10% Medicaid volume.

According to CMS, “Acute care hospitals … are not currently defined in the Medicaid regulations. Consequently, we propose to define this term…

“Acute care” is defined as the necessary treatment of a disease or injury for only a short period of time in which a patient is treated for a brief but severe episode of illness. Many hospitals can be considered acute care facilities if they provide both inpatient and outpatient services with the goal of discharging the patient as soon as the patient is deemed stable, with appropriate discharge instructions…

“We are proposing that for purposes of Medicaid incentive payments, an ‘acute care hospital’ is defined as: a health care facility where the average length of patient stay is 25 days or fewer.  For purposes of participation in the Medicaid EHR incentive program, this proposed definition ensures that hospitals are designated as acute care hospitals based on the level and nature of care they provide.”

So far so good: the above definition of acute care hospitals would include CAHs, as well as general hospitals, and is consistent with the meaning of “acute care.” Acute care is commonly understood as the treatment for a disease for a short period of time for a brief but severe episode of illness.

CAHs have always thought of themselves as acute care hospitals. After all, their inpatient services are for acute care, although limited (per the 1997 Social Security Act) to “25 acute care beds.”

The Wyoming Department of Health defines CAHs as “small acute care facilities that provide outpatient, emergency and limited inpatient services.”  Wisconsin’s Department of Health Services defines CAHs as “acute care facilities providing 24 hour emergency services, acute inpatient and swing bed care.”

Even MedPAC, an independent Congressional agency established to advise Congress on issues affecting the Medicare program, has referred to CAHs as acute care hospitals. In MedPAC’s Critical Access Hospital Payment System document (from October, 2009), MedPAC indicates that “Medicare pays for the same services from CAHs as it does from other acute care hospitals.”

For all these reasons CAH and rural provider representatives expected that CAHs would qualify for the Medicaid incentives.

However, CMS dispelled that expectation with the following: “Short-stay general hospitals receive CCNs whose number range is 0001-through 0879. The 11 cancer hospitals in the United Stated also are issued CCNs within that number range. To allow some flexibility for hospital participation in the Medicaid EHR incentive program, we are proposing to define acute care hospitals for purposes of this Medicaid EHR incentive program as those with an average patient length of stay of 25 days or fewer and with a CCN that has the last four digits in the series 0001 through 0879 (that is, short-term general hospitals and the 11 cancer hospitals in the United States).”

Although they are short-stay hospitals, CAHs have CCNs in the 1300+ range, and so they don’t qualify for the Medicaid incentive based on this CMS definition.

CMS’s rationale for excluding CAHs is unclear. While CMS spends significant time explaining why they excluded long term care facilities, they never address the issue of why they excluded, in the words of MedPAC, “other acute care hospitals” (i.e. CAHs) in their definition of “acute care hospital.”

To speculate, the best possible spin for CMS is that they believe it was not the intent of Congress to include CAHs.

But why would Congress use specific designations (“CAHs” and “subsection d hospitals” are specifically named) in the Medicare portion of ARRA, and a term (per CMS) “not currently defined in the Medicaid regulations” in the Medicaid portion, if Congress did not intend for the term “acute care hospital” to cover all hospitals that provide short-term (acute) inpatient care? I would argue that by excluding CAHs, the CMS definition may in fact be subverting the intent of Congress.

The reason this is so important is that critical access hospitals are already in many ways disadvantaged by ARRA (see http://www.worh.org/hit/arra-history/ and http://www.worh.org/hit/2009/11/why-the-digital-divide-is-likely-to-expand-under-arra/), even as they are the hospitals farthest behind and need the most help. If HHS, ONC and CMS are serious in their desire not to expand the digital divide between the EHR haves and have-nots, rule-making needs to acknowledge and take into account the particular needs of small and rural hospitals.

By arbitrarily excluding the most disadvantaged rural hospitals (high Medicaid utilization CAHs) from funding, CMS is instead showing that it doesn’t care whether disadvantaged hospitals succeed or fail in their HIT adoption efforts.

More on rural provider treatment in the CMS proposed rule in future entries.

{ 1 comment… read it below or add one }

Tim Size January 4, 2010 at 5:56 am

Very disappointing as is more of the same that we first saw in ARRA. Thanks for raising this issue and the excellent analysis. We need to get the word out.

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