Critical Access HospitalsThe following fact sheet has been revised as of April 2009 and is now available in downloadable format:

The Critical Access Hospital Fact Sheet provides information about:

  • Eligible Critical Access Hospital (CAH) providers;
  • CAH designations;
  • CAH payments;
  • Reasonable cost payment principles that do not apply to CAHs;
  • Election of Standard Method or Optional (Elective) Payment Methods;
  • Medicare Rural Pass-Through funding for certain anesthesia services;
  • Health professional shortage area (HPSA) incentive payments;
  • Physician Scarcity Area Bonus payments;
  • Medicare Prescription Drugs;
  • Improvement and Modernization Act of 2003; and
  • Grants to states under the Medicare Rural Hospital Flexibility Program.






About the Critical Access Hospital Program 

The Critical Access Hospital (CAH) Program was included in the Balanced Budget Act of 1997 (BBA). The BBA had a severe financial impact on hospitals around the country.  To help alleviate the impact on small, rural hospitals, the BBA created the Medicare Rural Hospital Flexibility Program, which allows rural hospitals to receive a higher reimbursement rate and have greater flexibility from federal rules and regulations. Across the United States, over 700 rural hospitals have converted to CAH status since 1999.




  • Located in a rural parish;
  • 35 miles from another hospital (15 miles on secondary road) OR designated as “necessary provider” by the State; and
  • Licensed hospital participating in the Medicare program.


Program Requirements


  • May have up to 25 acute and/or swing beds;
  •  96 hours annual length of stay, excluding swing and hospice beds;
  • Offer inpatient and outpatient care services;
  • Emergency care available 24 hours a day with medical staff on-call and available within 30 minutes, staff must be trained or experienced in emergency care;
  • Medical staff must consist of at least one MD or DO and may include mid-level providers;
  • One RN on duty 24 hours a day, can serve in the emergency room, acute and swing-bed units;
  • Patient referral and transfer agreement with a network hospital;
  • Must have available routine and emergency patient transportation; and
  • Credentialing and quality assurance assistance agreement with a hospital or QIO.

Technical Assistance


  • Health system network development services;
  • State-wide CAH quality improvement initiatives; and
  • Performance improvement services (financial, practice management, recruitment).


Benefits of CAH Program

  • 101% Medicare cost-based reimbursement for inpatient, outpatient, and swing bed care;
  • Relief from Federal regulations of full-time coverage of dietary, pharmacy, lab and x-ray;
  • Cost-based reimbursement for CAH ambulance service allowed if 35-mile requirement is met;
  • Allowable on-call coverage cost of the emergency room, includes mid-level providers;
  • Distinct Part Units 10 bed allowance (geri-psych or rehab) effective 10/04;
  •  115% of the Medicare physician fee schedule on physician assigned billing;
  • HUD 242 Mortgage Insurance relaxed qualification;
  • Reduced JCAHO accreditation fees;
  • Technical assistance from the Bureau of Primary Care and Rural Health through the Medicare Rural Hospital Flexibility Grant;
  • January 1, 2006 the State certified "necessary provider” qualification was eliminated; and
  • New CAH conversions after that date will need to meet the 35-mile requirement.


For more information, contact:

Kandi Smith

Program Coordinator

Bureau of Primary Care and Rural Health
Louisiana Department of Health & Hospitals' Office of Public Health

Physical Address: 628 North 4th Street, 8th Floor, Baton Rouge, LA 70802
Mailing Address:    P. O. Box 3118, Baton Rouge, LA 70821-3118
Phone: (225) 342-1233
Fax:      (225) 342-5839



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