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Overcoming the Financial Challenges Facing Critical Access Hospitals

Critical access hospitals (CAHs) play a crucial role in providing healthcare services to America’s rural communities. These facilities are designated by the Centers for Medicare and Medicaid Services (CMS) to ensure that residents living in remote areas of the country have reliable access to medical care. As of April 2023, there are 1,361 CAHs across the nation that serve as the first - and sometimes only - point of access to healthcare services.

To qualify as a CAH, all of the following criteria must be met:

Size: Have 25 or fewer acute care inpatient beds

Location: Be located more than 35 miles away from another hospital (sometimes closer in areas with more rugged or mountainous terrain)

Length of Stay: Maintain an annual average of 96 hours or less for acute care patient stays

Emergency Services: Provide 24/7 emergency care services

Despite their smaller size and remote locations, these facilities are prepared to handle a variety of health conditions, from performing simple surgical procedures to fielding more complex emergency cases. However, resources at CAHs are often more scarce and must be stretched farther to meet the needs of their communities.

Being designated as a CAH provides a significant financial advantage, as these facilities receive cost-based reimbursement from Medicare at 101% of the cost of services provided, rather than the standard Medicare reimbursement rates. This model safeguards the financial viability of CAHs to ensure they can continue to operate and serve rural communities. Even with this enhanced reimbursement structure, these facilities must remain strategic about managing their revenue cycle operations, as there are several factors that pose a threat to their financial wellbeing.

Smaller Patient Volumes: When operating in rural areas with smaller populations, CAHs typically experience smaller patient volumes. They must also balance this with the 25 bed cap imposed by CMS guidelines. With less patients being seen and less beds available to provide services, this puts limitations on how much revenue these facilities are able to generate.

Payment Delays: CMS’ Rural Health Strategy reports that rural Americans are more likely to be uninsured or underinsured. This can cause delays during the revenue cycle process when collecting payment on outstanding patient balances.

Workforce: Workforce shortages in healthcare have also impacted the financial success of CAHs. Attracting and retaining talent in rural areas has proven increasingly difficult as more healthcare workers opt to work in urban areas with better access to resources like schools, shopping, and entertainment. These shortages extend beyond the frontlines of care delivery, impacting administrative departments such as medical coding and business offices. Staffing limitations in these areas consequently creates delays in claims processing, which can negatively impact a CAH’s bottom line.

Staying Competitive: Staying on top of upgrades to infrastructure and technology is crucial to the success of any healthcare organization. Financial constraints at CAHs can dictate what specialized services they offer. When facilities are forced to reduce their specialty service offerings, it eliminates a source of income. Moreover, this can impact their patient base when patients opt to seek care at other facilities where their specialty care is available. One specialty area in particular that is rapidly disappearing from CAHs is labor and delivery departments, due to smaller populations and limited obstetrics staffing in these rural communities.

How Signature Helps Relieve the Burden:

These identified factors underscore the importance of CAH revenue cycle management teams capturing the full value of each processed claim. Signature Performance offers a variety of healthcare administrative solutions that help our clients maximize their financial success.

Our experienced team of experts partner directly with administrators and medical staff to provide services tailored specifically to their needs. Karina McHugh, CBO Operations Lead for SPHC Revenue Cycle Management, leads a team that provides revenue cycle services for critical access hospitals and rural health clinics. Her team has helped one of their critical access facilities increase insurance collections by 103% since 2019. Karina shared how her team is making a difference:

“Our team provides most of the revenue cycle services for our rural health clients, including medical coding, claims processing, billing, and account resolution. It is a privilege to serve these facilities that are making a great impact in rural communities. We are truly living and fulfilling our mission of making the lives of those we work with better.”

To hear more about Karina’s impact, check out her Signature Story here.

Signature Performance is on a mission to reduce administrative burden in healthcare and help organizations, including critical access facilities, reshape the landscape of healthcare. Our team of subject-matter experts will help you leverage the latest technology to optimize your revenue cycle processes. If you are ready to take the next step towards increasing your organization’s financial stability, contact us today for more information about our solutions.


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