CMS Proposed Rule Would Require Some Critical Access Hospitals to Reclass to Rural to Retain Their "CAH" Status

Recently, the Centers for Medicare and Medicaid Services (CMS) released its Proposed 2015 IPPS regulations. These regulations are also used to update the Critical Access Hospital program. The proposed regulations contain a provision on geographical classification that may have important implications for some critical access hospitals.

On February 28, 2013, the Office of Management and Budget (OMB) issued Bulletin No. 13-01, which updated the metropolitan, micropolitan and combined statistical areas. This update was based on the 2010 Census of Population and Housing data. CMS uses the OMB definitions to set urban and rural definitions for the Medicare program. As a result of the updated census data, in the OMB data some counties that were urban have become rural, some rural counties have become urban, and some shifts have occurred within the urban classifications. Per the Proposed 2015 Rule, 105 counties and 81 hospitals will change classification from rural to urban under the OMB delineations.

Per the CMS regulations on critical access hospitals, a CAH must be designated rural in order to qualify for the CAH program. This means that for those counties where rural counties are becoming urban counties, the CAHs would need to reclass to rural in order to maintain their Conditions of Participation as a CAH if the proposed rule is adopted. CMS gives a hospital the opportunity to change geographic classification provided the hospital meets certain rules through a process known as geographic reclassification.

The final rule is expected in early August. We recommend that Critical Access Hospitals in affected counties stay tuned for the development of these rules to determine next steps. Should the rule become final, an affected critical access hospital that would like to remain critical access would need to file for a reclass to rural by September 1, 2014, with the Medicare Geographic Classification Review Board.

Click here to read a list of the counties that are set to be reclassified as "urban."