Rural Medicare Provider Types and Payment Provisions. Emily Jane Cook McDermott Will & Emery LLP Los Angeles, CA

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1 Rural Medicare Provider Types and Payment Provisions Emily Jane Cook McDermott Will & Emery LLP Los Angeles, CA I. What is Rural?- Common Rural Definitions for Medicare Reimbursement Provisions A. Outside of Metropolitan Statistical Area ( non-msa ) (42 C.F.R (C)) 1. Office of Management and Budget ( 2. General default rule for rural status under Medicare payment provisions B. In MSA, but treated as non-msa (Geographic Reclassification) ( ) 1. Goldsmith Modification/Rural-Urban Commuting Area (RUCA) (ftp://ftp.hrsa.gov/ruralhealth/eligibility2005.pdf) 2. Rural under state definition or state designation as a rural hospital 3. Would otherwise classify as Sole Community Hospital or Rural Referral Center 4. Must submit application to CMS Regional Office in order to be reclassified for Medicare hospital payment purposes, but some other payment adjustments do not require application (e.g., ambulance payment adjustment for rural areas) 5. Providers in non-msas can also apply to reclassify to an MSA for Medicare hospital payment purposes. C. Outside of urbanized area ( 491.5(c)) 1. US Census Bureau ( 2. Generally city and surrounding area have population of less than 50, Definition used for eligibility for Rural Health Clinics (RHCs) 4. An urban cluster is not considered urbanized for hospital swing beds or Rural Health Center rural location determinations

2 D. Super Rural ( (c)(5)) 1. Lowest 25% of rural population as determined by population density 2. Definition used for ambulance payment add-on II. Medicare Rural Hospital Payment Provisions A. Low Volume Hospital **Expires 3/31/2014** 1. Eligibility (SSA 1886(d)(12)(C); (2)) a. FY and 4/1/2014 forward Fewer than 200 total discharges (Medicare and non- Medicare) More than 25 road miles from the nearest subsection (d) hospital (i.e., hospital paid under IPPS pursuant to SSA 1886(d)) b. FY /31/2014 Fewer than 1,600 Medicare discharges (includes all discharges where patient was eligible for Medicare Part A, even if the stay was not covered by Part A) More than 15 road miles from nearest subsection (d) hospital 2. Payment (SSA 1886(d)(12)(B), (D); (c)) a. FY and 4/1/2014 forward- 25% payment add-on to otherwise applicable rate b. FY /31/2014 For hospitals with 200 or fewer discharges- 25% payment add-on to otherwise applicable rate For hospitals with 201-1,599 discharges- Payment add-on in amount determined by the formula: (4/14)-(Medicare discharges/5600) B. Medicare Dependent Hospital (MDH) **Expires 3/31/2014** - 2 -

3 1. Eligibility (SSA 1886(d)(G); ) a. Cost reporting periods 4/1/ /1/1994 and discharges 10/1/1997-3/31/2014 b. 100 or fewer beds (as defined in ) c. Located outside of an MSA (and outside of certain New England counties deemed to be urban) or reclassified as rural under d. Not a Sole Community Hospital e. At least 60 percent of acute care inpatient days or discharges were attributable Medicare Part A stays during: The cost reporting ending on or after 9/30/1987 and before 9/20/1988; If the hospital does not have a cost report as above, then the cost report beginning on or after 10/1/1986, and before 10/1/1987; or At least two of the last three most recent audited cost reporting periods for which there is a settled cost report The cost reporting periods used must be 12 months or longer 2. Payment (SSA 1886(d)(G),; (c)) a. Payment designation is for inpatient payments only b. Rate is based on the otherwise applicable payment under the Medicare Inpatient Prospective Payment System (as set forth in 412 Subpart D), plus: Cost reporting periods beginning between 4/1/1990-3/31/1993, 100% of the difference between the otherwise applicable rate and the updated hospitalspecific rate for: (1) FY 1982 (per ); or (2) FY 1987 (per ) Discharges during a subsequent full or partial cost reporting period and before 10/1/1994 and discharges between 10/1/1997 and 10/1/2006, 100% - 3 -

4 of the difference between the otherwise applicable rate and the updated hospital-specific rate for: (1) FY 1982 (per ); or (2) FY 1987 (per ) (c) Discharges between 10/1/2006 and 10/1/2012, 75% of the difference between the otherwise applicable rate and the updated hospital-specific rate for: (1) FY 1982 (per ); (2) FY 1987 (per ); or (3) FY 2002 (per ) c. Payments for significant decrease in volume (SSA 1886(d)(G); (d)) (v) More than 5% decrease in total inpatient discharges compared to immediately preceding cost reporting period (adjusted to 12-month period if cost reporting period is not 12 months) Must request additional payment no later than 180 days after the date of the Notice of Program Reimbursement (NPR) for the applicable cost reporting period Decrease in volume must be due to circumstances beyond the control of the hospital Payment is a lump sum not to result in a total payment received that is greater than actual inpatient operating costs Exact amount determined by the hospital s Medicare administrative contractor based on: (c) hospital's needs and circumstances, including the reasonable cost of maintaining necessary core staff and services; hospital's fixed (and semi-fixed) costs; length of time the hospital has experienced a decrease in utilization

5 d. Preferential treatment for Disproportionate Share Hospital (DSH) payments- Not subject to cap on DSH payments (SSA 1886(d)(F)(xiv); (d)(2)(D)) C. Rural Referral Center (RRC) 1. Eligibility (SSA 1886(d)(5)(C); ) a. Cost reporting periods beginning 10/1/1983-present, meets either of the following: Option 1: Located outside of an MSA (and outside of certain New England counties deemed to be urban) or reclassified as rural under Number of beds, as determined under the provisions of available for use: (1) Discharges before 4/1/ or more (2) 4/1/1988-present- 275 or more beds during most recent cost report (unless submits written documentation with application that its bed count changed since close of cost report for one or more of the following reasons: i) Merger of two or more hospitals ii) iii) iv) Reopening of acute care beds previously closed for renovation Transfer of beds previously classified as part of a PPS-excluded unit Expansion of acute care beds available for use and permanently maintained for lodging inpatients, excluding beds in corridors and other temporary beds - 5 -

6 Option 2: (c) At least 50 percent of Medicare patients are referred from other hospitals or from physicians not on the staff of the hospital; At least 60 percent of Medicare patients live more than 25 miles from the hospital; and At least 60 percent of all the services furnished to Medicare beneficiaries are furnished to beneficiaries who live more than 25 miles from the hospital b. 10/1/1985-present, hospital may also qualify if: Located outside of an MSA (and outside of certain New England counties deemed to be urban) or reclassified as rural under ; Case Mix For applicants in cost reporting periods beginning 10/1/1985-9/30/1986, the hospital s case mix is grater than or equal to the national or regional casemix index value; or, For applicants in cost reporting periods beginning on or after 10/1/1986, the hospital s case mix is greater than or equal to either the national case-mix index value or the median case-mix index value for urban hospitals located in the hospital s region Discharges For applicants in cost reporting periods beginning between 10/1/1986-9/30/1986, the number of discharges is greater than or equal to the national or regional median; For applicants on or after 10/1/1986, at least either: (1) 5,000 discharges; or (2) The median number of discharges for urban hospitals located the hospital s region - 6 -

7 (c) For osteopathic hospital applicants on or after 1/1/1986, at least 3,000 discharges At least one of the following: More than 50 percent of the hospital's active medical staff are specialists who meet one of the following conditions: (1) Certified as specialists by one of the Member Boards of the American Board of Medical Specialties or the Advisory Board of Osteopathic Specialists; (2) Have completed the current training requirements for admission to the certification examination of one of the Member Boards of the American Board of Medical Specialties or the Advisory Board of Osteopathic Specialists; (3) Have successfully completed a residency program in a medical specialty accredited by the Accreditation Council of Graduate Medical Education or the American Osteopathic Association (c) At least 60 percent of all its discharges are for inpatients who reside more than 25 miles from the hospital; or At least 40 percent of all inpatients treated at the hospital are referred from other hospitals or from physicians not on the hospital's staff c. RRCs designated as of FY 1991 maintain RRC status even if no longer meet eligibility criteria 2. Payment (SSA 1886(d)(5)(C); (d)) a. 4/1/1998-9/30/1994- Inpatient operating costs paid at other urban payment rate b. Preferential treatment for Disproportionate Share Hospital (DSH) payments- Not subject to cap on DSH payments (SSA 1886(d)(5)(F)(xiv) (d)(2)(C)); - 7 -

8 c. Preferential treatment for geographic reclassification from rural to urban- Exempt from proximity and wage requirements ( (3), (d)(3)) D. Sole Community Hospital (SCH) 1. Eligibility (SSA 1886(d)(5)(D); ) a. Location More than 35 miles from other like hospitals b. Located outside of an MSA (and outside of certain New England counties deemed to be urban) or reclassified as rural under and meets one of the following criteria: miles from other like hospitals (short-term, acute care hospitals, excluding CAHs) and meets one of the following criteria: (c) No more than 25% of residents of the hospital s service area who become hospital inpatients or no more than 25% of Medicare beneficiaries in the service area (lowest number of zip code from which the hospital draws 75% of its patients) who become hospital inpatients are admitted to other like hospitals located within a 35-mile radius of the hospital (or within the service area, if the service area is larger than a 35-mile radius); Less than 50 beds and the hospital s MAC certifies that the hospital would have met the criteria in above if some beneficiaries or residents were not forced to seek care outside the service area due to the unavailability of necessary specialty services at the hospital; or Because of local topography or periods of prolonged severe weather conditions, the other like hospitals are inaccessible for at least 30 days in each 2 out of 3 years miles from other like hospitals, but because of local topography or periods of prolonged severe weather conditions, the other like hospitals are inaccessible for at least 30 days in each 2 out of 3 years

9 Because of distance, posted speed limits, and predictable weather conditions, the travel time between the hospital and the nearest like hospital is at least 45 minutes. 2. Payment (SSA 1886(d)(5)(D); (d)) a. Payment designation is for inpatient payments only. b. Cost reporting periods beginning 4/1/1990-9/30/2000, the higher of: The otherwise applicable payment under the Medicare Inpatient Prospective Payment System (as set forth in 412 Subpart D) The updated hospital-specific rate for FY 1982 (per ); or The updated hospital-specific rate for FY 1987 (per ) c. Cost reporting periods beginning 10/1/ /31/2008, the higher of the above - or the updated hospital-specific rate for FY 1996 (per ), subject to the following transition: FY 2001, 75% of the otherwise applicable rate (greatest of the IPPS rate or updated hospital-specific rates) plus 25% of the updated hospital-specific rate for FY 1996; FY 2002, 50% of the otherwise applicable rate (greatest of the IPPS rate or updated hospital-specific rates) plus 50% of the updated hospital-specific rate for FY 1996; FY 2003, 25% of the otherwise applicable rate (greatest of the IPPS rate or updated hospital-specific rates) plus 75% of the updated hospital-specific rate for FY 1996; and FY 2004, 100% of the updated hospital-specific rate for FY 1996 d. Cost reporting periods beginning 1/1/2009, the higher of the above - and (c), or the updated hospital-specific rate for FY 2006 (per ) e. Payments for significant decrease in volume (SSA 1886(d)(5)(D); (e)) - 9 -

10 (v) More than 5% decrease in total inpatient discharges compared to immediately preceding cost reporting period (adjusted to 12-month period if cost reporting period is not 12 months) Must request additional payment no later than 180 days after the date of the Notice of Program Reimbursement (NPR) for the applicable cost reporting period Decrease in volume must be due to circumstances beyond the control of the hospital Payment is a lump sum not to result in a total payment received that is greater than actual inpatient operating costs Exact amount determined by the hospital s MAC based on: (c) hospital's needs and circumstances, including the reasonable cost of maintaining necessary core staff and services; hospital's fixed (and semi-fixed) costs; length of time the hospital has experienced a decrease in utilization f. Preferential treatment for geographic reclassification from rural to urban- Exempt from proximity requirements ( (3)). g. For SCHs receiving the IPPS rate and that qualify for DSH payments, DSH adjustment is capped at 12%, rather than the 5.25% applied to other rural hospitals (SSA 1886(d)(5(F)(x)) E. Hold Harmless Payments (aka Transitional Outpatient Payments (TOPs)) **Expired 12/31/2012** 1. Eligibility (SSA 1833(t)(3)(7)(D); (d)) a. Sole Community Hospital; and Prior to 1/1/2010, 100 or fewer beds On or after 1/1/2010, no bed limit; or b. Located in rural area ( ) or reclassified as rural ( ) and 100 or fewer beds

11 2. Payment (SSA 1833(t)(3)(7)(D); (d)) a. Additional payments for outpatient services based on the difference between payment that would have been received prior to the implementation of the Outpatient Prospective Payment System (OPPS) ( pre-bba amount ) and the amount of payment under OPPS b. Rural Hospital (non-sole Community Hospital) (v) Pre-1/1/ % of difference between OPPS rate and pre-bba amount; 1/1/ /31/ % of the difference; 1/1/ /31/ % of the difference; 1/1/ /31/ % of the difference; Effective 1/1/2013- no longer eligible. c. Sole Community Hospital (SCH) 1/1/ /31/ % of difference; 1/1/ /31/ % of the difference; Effective 3/1/2012- SCHs with greater than 100 beds are no longer eligible for TOPs payments; Effective 1/1/2013- no longer eligible. F. Health Professional Shortage Area (HPSA) Bonus Payment 1. Eligibility (SSA 1833(m); ) a. Services must be furnished in an area that is a: Geographic Primary Care HPSA (all physicians) Geographic Mental Health HPSA (psychiatrists only) b. Area must be designated as of December 31 of the prior year c. Determined Annually

12 2. Payment (SSA 1833(m); ) a. 10% based on the amount paid for professional services furnished by the physician b. Paid either automatically or if the AQ modifier is on the claim c. Automatic Payment Zip code of where the service is furnished must fall entirely within the designated area Must be designated by the date the list of zip codes for automatic payment was created d. AQ Modifier Only use if the area was in a geographic primary care (or mental health) HPSA as of December 31 of the prior year Post-payment review and recoupment if used incorrectly III. Medicare Rural Provider Types A. Critical Access Hospital (CAH) 1. Medicare Eligibility (Social Security Act (SSA) 1820(c)(2)(B); 42 C.F.R. 485 Subpart F) a. Must be located in a state that is participating in the Medicare Rural Hospital Flexibility ( Flex ) Program (all states except NJ, RI, MD, DE and CT) b. Hospital Status ( ) Currently a hospital participating in Medicare; A facility that downsized from a hospital to a state-licensed health center or health clinic that meets certain criteria In other words, cannot open a new facility as a CAH c. Rural Location ( ) Located outside of an MSA or treated as being outside of an MSA under ; or Not reclassified for treatment as an urban hospital for purposes of Medicare reimbursement

13 d. Location Relative to Hospitals and other CAHs ( (c)) 35 mile drive from any hospital or other CAH ; or 15 mile drive from any hospital or other CAH in areas with only mountainous terrain or secondary roads On or before 12/31/2005, states had the authority to designate a facility as a necessary provider of health care services to residents in the area.in lieu of meeting the above distance criteria. CAHs there were designated by the State as a necessary provider prior to January 1, 2006 were grandfathered. e. Provision of Services ( ) Must furnish acute inpatient care services f. Number of Beds ( ) 25 beds or less used for inpatient or swing bed services 10/1/2004- present, CAH may operate inpatient rehabilitation and psychiatric distinct part units (DPUs) of up to 10 beds each that are not counted toward the 25 bed limit g. Average length of stay (calculated annually) for inpatient admissions must be less than or equal to 96 hours ( ) h. Emergency Services ( ) CAHs must provide 24-hour emergency services Must have an Medical Doctor (MD), Doctor of Osteopathy (DO), Nurse Practitioner, Physician Assistant or clinical nurse specialist, with training or experience in emergency care, available by telephone or radio, and available on-site within 30-min (60 min for CAHs in frontier areas that meet certain conditions) whenever an individual comes to the emergency department for treatment/evaluation. Must have an MD or DO immediately available by telephone or radio contact on a 24-hours a day basis to receive emergency calls, provide information on treatment of emergency patients, and refer patients

14 2. Payment (SSA 1814(l)(1), 1833, 1834(g), (l)(8), 1861(v); 42 C.F.R ) a. Inpatient Services ( ) Prior to 1/1/ % of Medicare allowable cost 1/1/2004 to present- 101% of Medicare allowable cost Beginning Federal Fiscal Year (FY) Incrementally reduced to 100% by FY 2017 if not a meaningful EHR user (as defined at and ), unless CAH is new, demonstrates hardship or is located in an area with insufficient internet access Physician must certify that patient admitted as an inpatient is expected to be discharged or transferred within 96 hours of admission. ( ) b. Distinct Part Rehabilitation and Psychiatric Units ( (e)) Prior to 1/1/2005- Cost-based payment under /1/2005-present- Payment under applicable prospective payment system (42 C.F.R. Part 412 Subparts N (psychiatric units) and P (rehabilitation units)) c. Outpatient Services ( ) Method I (default method) Prior to 1/1/ % of Medicare allowable cost 1/1/2004 to present- 101% of Medicare allowable cost Method II (CAH may elect Method II) (c) Prior to 1/1/ % of Medicare allowable cost; plus 115% of fee schedule amount for services paid under the physician fee schedule 1/1/2004 to present- 101% of Medicare allowable cost; plus 115% of fee schedule amount for services paid under the physician fee schedule Additional 15% for physician fee schedule services only available for practitioners reassigning billing rights to CAH and attesting in writing that they will

15 not bill Medicare for services furnished to CAH outpatients (d) Effective 7/1/2004 (effective 7/1/2001 for CAHs electing Method II prior to 11/1/2003)- CAH not required to have all physicians performing services at CAH reassign billing rights to CAH in order for CAH to elect Method II d. On-call emergency department providers ( (4)) Beginning 10/1/ % of Medicare allowable cost for reasonable compensation and related costs (as determined under (2) and other applicable sections of Part 413) for on-call physicians not physically present on the premises of the CAH and providing services under a written agreement that requires coming to the CAH when presence is medically required Beginning 1/1/ % of Medicare allowable costs for on-call services also available for physician assistants, nurse practitioners and clinical nurse specialists Beginning 1/1/2005- On-call means immediately available by telephone or radio and available onsite within 30 minutes (or 60 minutes if in frontier area and State makes and documents determination that longer response time is necessary) e. Ambulance Services ( (5)) 12/1/ /31/ % of Medicare allowable cost if ambulance service owned and operated by CAH or an entity that is owned and operated by the CAH is only entity furnishing ambulance services within a 35 mile drive of the CAH or other entity 1/1/2004-9/30/ % of Medicare allowable costs if ambulance service owned and operated by CAH or an entity that is owned and operated by the CAH is only entity furnishing ambulance services within a 35 mile drive of the CAH or other entity 10/1/2011-present- 101% of Medicare allowable costs If ambulance service owned and operated by CAH or an entity that is owned and operated by the CAH

16 is only entity furnishing ambulance services within a 35 mile drive of the CAH; or If there is no other entity furnishing ambulance services within a 35 drive of the CAH and there is an entity that is owned and operated by the CAH that is more than a 35 mile drive from the CAH, if the entity owned and operated by the CAH is the closest provider or supplier of ambulance services f. Clinical Laboratory Tests ( (7)) Prior to 7/1/ % of Medicare allowable costs, if patient: Is an outpatient of the CAH; and Is physically present in the CAH at the time the specimen is collected 7/1/2009-present- 101% of Medicare allowable cost if patient: Is an outpatient of the CAH; and If not physically present, is: (1) Receiving outpatient services at the CAH on the same day the specimen is collected; (2) The specimen is collected by an employee of the CAH; and (3) Not in a Part A-covered Skilled Nursing Facility (SNF) stay g. Non-Physician Anesthetist Pass-Through ( (3)) Non-physician anesthetists must be employed by the CAH or CAH obtains services under arrangement Prior to 1/1/1989- Reasonable cost 1/1/1989-present Reasonable cost, if: Located outside of a Metropolitan Statistical Area (MSA) and not designated as urban under (3) (effective 12/2/2010, may also qualify if reclassified as rural under )

17 (c) (d) (e) (f) Employed or contracted with a non-physician anesthetists as of 1/1/1988 Total hours of services furnished by anesthetists is not greater than 2,080 per year During 1987 and the year prior to election of passthrough payments, volume of surgical procedures (inpatient and outpatient) requiring anesthesia services did not exceed 800 Must demonstrate prior to 1/1 of each year that during the prior year the volume of surgical procedures requiring anesthesia did not exceed 800 (calculated by annualizing procedures performed 1/1-9/30) Each non-physician anesthetist agreed in writing not to bill Medicare for services provided at the CAH h. Electronic Health Record System ( (5)) FY 2010-FY Medicare allowable cost B. Federally Qualified Health Centers (FQHCs) 1. Eligibility (Public Health Service Act (PHSA) 330(1); 42 USC 254b, 405)) a. Agreement Entity must enter into an agreement with CMS to meet Medicare program requirements under 42 CFR Part 405 Subpart X and Part 491, as described in b. Additional requirements Must be awarded a grant under section 329, 330, or 340 of the PHSA, or receive funding from such a grant under a contract with the recipient of such a grant and meet the requirements to receive a grant or Is receiving funding under a contract with the recipient of a Section 330 grant, and meets the requirements to receive a grant under 330 of the PHS Act; or Is an FQHC Look-Alike, i.e., the Health Resources and Services Administration (HRSA), has notified the facility it

18 has been determined to meet the requirements for receiving a Section 330 grant, even though it is not actually receiving such a grant; or (v) Was treated by CMS as a comprehensive federally funded health center as of January 1, 1990; or Is an outpatient health program or facility operated by a tribe or tribal organization under the Indian Self- Determination Act or by an Urban Indian organization receiving funds under title V of the Indian Health Care Improvement Act. c. Population served Medically underserved, or a special medically underserved population comprised of migratory and seasonal agricultural workers, the homeless, and residents of public housing, by providing, All residents of the area served by the center d. Services Primary health services As may be appropriate for particular centers, additional health services necessary for the adequate support of the primary health services required 2. Governance (PHSA 330(l)(3)(H)) a. Composition Majority of board members must be served by the center and, as a group, represent the individuals being served by the center b. Exception In the case of an entity operated by an Indian tribe or tribal or Indian organization under the Indian Self-Determination Act or an urban Indian organization under the Indian Health Care Improvement Act (25 U.S.C et seq.) 3. Payment (SSA 1861(aa)(4); )

19 a. All-inclusive payment based on reasonable costs, subject to pervisit cap Must be a face-to-face visit with a qualified provider of medical nutrition therapy services qualified provider of outpatient diabetes self-management training services, a physician, physician assistant, nurse practitioner, nurse midwife, or a visiting nurse, a clinical psychologist, clinical social worker, or other health professional for mental health services For health center visits, Medicare will pay 80 percent of the all-inclusive rate FQHC Medicare all-inclusive rate for rural FQHCs for 2014 is $ b. Supplemental Payment For FQHCs contracted with Medicare Advantage organizations are eligible for payments for covered services furnished to MA enrollees to cover the difference, if any, between their payments from the MA plan and what they would receive under the cost-based system c. As required by of the Patient Protection and Affordable Care Act of 2010, FQHCs will transition to a prospective payment system (PPS) for Medicare payment effective 10/1/2014. See proposed rule at: 23/pdf/ pdf C. Rural Health Clinic (RHC) 1. Eligibility (SSA 1861(aa)(2); 491(Note- Published regulations do not accurately reflect some statutory requirements)) a. Location Outside of an urbanized area (as defined by Census Bureau, central city of 50,000 or more and its adjacent suburbs). Note: An urban cluster is not considered urbanized for hospital swing beds or Rural Health Center rural location determinations Designated as a Medically Underserved Area (MUA), Primary Care Health Professional Shortage Area (HPSA) (geographic or population), or governor-designated shortage area

20 b. Services Physician and mid-level provider (nurse practitioner, physician assistant, certified nurse midwife, clinical psychologist or clinical social worker services); Services and supplies incident to physician and mid-level provider services; Visiting nurse services in certain areas with shortage of home health agencies; Certain preventive services c. Staffing (v) (vi) One or more physicians; One or more physician assistants or nurse practitioners; RHC must employ a nurse practitioner or physician assistant; A physician assistant, nurse practitioner or certified nurse midwife must be present at least 50% of the time the RHC operates; Physician, nurse practitioner, physician assistant, nursemidwife, clinical social worker, or clinical psychologist is available to furnish patient care services at all times RHC is open Physician medical director who is present on site at least once every two weeks (Note- CMS has proposed to remove this requirement and replace it with a requirement that a physician be present as appropriate and necessary given the services provided at the RHC. See 78 F.R (Feb. 7, 2013)) d. Able to perform six specified CLIA-waivered laboratory tests onsite e. Able to provide first response emergency services f. Has arrangements in place with other providers to provide inpatient hospital services, physician services, and additional diagnostic and laboratory tests to RHC patients

21 g. Annual evaluation program h. May not be an RHC if facility is a rehabilitation agency, primarily treats mental illness or is an FQHC 2. Payment (SSA 1833(f); (Note- Regulations are not current)) a. All-inclusive payment based on reasonable costs, subject to pervisit cap and productivity standards Must be a face-to-face visit with a physician, physician assistant, nurse practitioner, nurse midwife, visiting nurse, clinical psychologist, or clinical social worker RHCs that are provider-based to a hospital with less than 50 beds are exempt from the cap D. Swing Bed Hospital b. RHC Medicare per-visit cap for 2014 is $ Eligibility (SSA 1883; , ) a. Facility is a Critical Access hospital, or meets all of the following requirements: Less than 100 hospital beds, excluding newborn and intensive care beds Not located in an urbanized area Does not have in effect a 24-hour nursing waiver (under (c)) Has not had a swing-bed approval terminated within the two years previous to application b. In compliance with the following skilled nursing facility conditions of participation: Resident rights ( (3), (4), (5), (6), (d), (e), (h),, (j)(1)(vii), (j)(1)(viii), (l), and (m)); Admission, transfer, and discharge rights ( (1), (2), (3), (4), (5), (6), and (7)); Resident behavior and facility practices ( );

22 (v) (vi) (vii) Patient activities ( (f)); Social services ( (g)); Discharge planning ( (e)); Specialized rehabilitative services ( ); and (viii) Dental services ( ) 2. Payment (SSA 1883(3), 1888(e)(7); , (c)) a. CAH providers of swing-bed services are paid at 101% of reasonable cost b. Swing-bed services furnished in all other facilities are paid under the Skilled Nursing Facility Prospective Payments System (413 Subpart J) IV. Medicare Demonstrations A. Frontier Extended Stay Clinic (FESC) 1. Authorization a. PHSA 330A (42 U.S.C. 254c(e)) b. Medicare Modernization Act of 2003 (MMA) authorized a demonstration in which FESCs would be treated as Medicare providers 2. Purpose a. Explore development of new provider type, that would enable reimbursement of extended stay services, previously not reimbursed by Medicare, Medicaid or other third-party payers 3. Eligibility a. Under MMA, FESCs are defined as clinics that are: Located in communities that are at least 75 miles away from the closest hospital or are inaccessible by public road, and Designed to address the needs of patients who are unable to be transferred to an acute care facility because of adverse weather conditions or who need monitoring and observation for a limited period of time

23 4. Current Status: The demonstration ended in April The statute requires that CMS provide a report to Congress within one year of the end of the demonstration. The report is currently under internal review. B. Frontier Community Health Integration Project (F-CHIP) 1. Authorization a. 123 of P.L (Medicare Improvements for Patients and Providers Act of 2008) as amended by 3126 of the Affordable Care Act. 2. Purpose a. Develop and test new models for delivery of health care services in frontier areas b. Explore ways to better integrate the delivery of payments for acute care, extended care, and other essential health care services provided under the Medicare and Medicaid programs in frontier areas c. Evaluate regulatory challenges facing frontier providers and communities they serve 3. Eligibility a. Adhering to the requirements of the Rural Hospital Flexibility Program under section 1830(g) of the Social Security Act (42 U.S.C. 1395i-4(g)); b. Describe intent in meeting community health needs in areas of telemedicine, nursing facility care, home health services and ambulance services; c. Located in a State with at least 65 percent of the counties have six or fewer residents per square mile; d. Limited to CAHs in Alaska, Montana, Nevada, North Dakota and Wyoming