Grass Roots needed to pursue Critical Access Designation for PPS Hospitals

Given:

Critical Access Hospitals, as a designation, began in 1997
- Congress created the Critical Access Hospital (CAH) designation through the Balanced Budget Act of 1997 (Public Law 105-33) in response to a string of rural hospital closures during the 1980s and early 1990s.
Georgia had more than thirty rural hospitals to apply at that time; they were granted the designation at that time
Their purpose was to offer reimbursement rates that were better than the PPS rates in an effort to save these rural hospitals. Hospital losses were rampant.
- The newly created 30 plus Critical Access Hospitals were paid at 101% of cost versus the 85.6% of cost that was currently being paid in Georgia at the time
- However, because they were mandatorily paid at cost only, they could not be paid above cost. This created occasional payment problems that required the newly created Critical Access Hospitals to be paid only at cost and no more. This created a new method of managing these hospitals where the driver was the cost to charge ratio. Most CAH hospitals have learned how to manage this phenomenon; but, it has occasionally caused some problems in cash flow.