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Critical Access Hospital (CAH) Services

Revised: 04-26-2017

  • Outpatient Payment
  • Inpatient Payment
  • Professional Services
  • CRNA Services
  • Exhausted Medicare Benefits
  • Home Health Services
  • CD Services
  • Ambulance Services
  • Definitions
  • Legal References
  • Hospital Services Home Page
    Hospital In-reach Service Coordination (IRSC)

    Inpatient Hospital Authorization

    Inpatient Hospital Services

    Outpatient Hospital Services

    Throughout this section, “you” refers to a critical access hospital (CAH). A CAH is a hospital that is designated a CAH under Minnesota Statutes, section 144.1483.

    Payment for outpatient, emergency and ambulatory surgery services you provide are made on a reasonable cost basis under the cost finding and allowable costs determined under the Medicare program according to Minnesota Statutes, section 256B.75 (b).

    Outpatient Payments

    CAH outpatient services will no longer be paid at actual cost. Instead MHCP will determine a payment rate for each hospital using the cost-to-charge ratios from Worksheet C on each hospital’s As-Filed Medicare Cost-Report.

    The previous method paid initial claims at an interim rate at the time the services were billed. A cost settlement process was then used to determine the hospital’s actual costs for providing the service and reconcile the interim payments to the actual costs.

    Payments Through Fiscal Year Ending in 2016

    Interim payment for outpatient services will be at the Medicare Part B interim payment rate expressed as a percentage to be applied to covered charges subject to legislative decreases and increases. The intent of the interim payment is to approximate the actual cost as closely as possible to minimize the retroactive adjustment that MHCP makes.

    Retroactive adjustments
    A retroactive adjustment due to an underpayment will appear on the remittance advice (RA).

    A retroactive adjustment due to an overpayment will be recovered from payments for future services until fully repaid. Each payment credited against the overpayment will be noted on the RA.

    Payments Beginning With Your Fiscal Year Ending in 2017

    Beginning with your fiscal year ending (FYE) in 2017, outpatient payments will no longer be settled to actual costs. (See Effective dates for new rates chart.) Instead, MHCP will determine a payment rate for each hospital using the cost-to-charge ratios from Worksheet C on each hospital’s As-Filed Medicare Cost Report. The elimination of cost settlements was codified in the 2015 legislative session.

    MHCP will calculate the new 2017 FYE payment rates using information from Worksheet C of each hospital’s 2015 As-Filed Medicare Cost Report. The new outpatient rate will be the MHCP allowable charges multiplied by the result of the following calculation:

  • • Ancillary services costs plus outpatient services costs (excluding costs related to rural health clinics and federally qualified health centers) divided by the ancillary services charges plus outpatient services charges (excluding charges related to rural health clinics and federally qualified health centers).
  • Costs and charges that are related to rural health clinics and federally qualified health centers are excluded from the rate calculation because these clinic services are reimbursed using an alternate method. These costs and charges were also excluded from the previous cost settlement payment method.

    MHCP will use the same process and the same data sources to determine rates for 2018. The outpatient payment rates for the hospital’s fiscal year ending in 2018 will be based on the same Worksheet C information taken from each hospital’s 2016 As-Filed Medicare Cost Report.

    Legislatively mandated increases and reductions to the outpatient rate will continue to apply.

    Effective dates for new rates

    If your fiscal year ending date in 2017 is:

    New rate is effective for services delivered on or after:

    February 28

    March 1, 2016

    March 31

    April 1, 2016

    April 30

    May 1, 2016

    May 31

    June 1, 2016

    June 30

    July 1, 2016

    September 30

    October 1, 2016

    December 31

    January 1, 2017

    Critical Access Outpatient Billing

    For CAH outpatient services, valid types of bills (TOBs) are 851, 852, 853, 854 and 857. TOB 131 is not valid for CAH outpatient billing.

    Requirements for Healthcare Common Procedure Coding System (HCPCS) procedure coding and revenue code reporting follow Medicare guidelines. The following revenue codes require a HCPCS code:

  • • 0250
  • • 0260
  • • 0274
  • • 0300-0369
  • • 0400-0449
  • • 0460-0499
  • • 0530-0549
  • • 0610-0619
  • • 0636
  • • 0730-0759
  • • 0771
  • • 0920-0929
  • • 0940
  • • 0942
  • • 0964 (if qualified under the CRNA billing exemption under Medicare Part B)
  • Inpatient Payment

    Payment for inpatient hospital services has moved to a tiered per diem payment effective for discharges on or after July 1, 2015.

    Cost-Based Inpatient Payment Methodology for CAH

    New hospital-specific per diem inpatient payment rates are now designed to pay a percentage of costs within these three reimbursement tiers:

  • • Hospitals with base year payments at or below 80 percent of base year costs will have a per diem payment rate set so that aggregate annual reimbursement equals 85 percent of the hospital’s base year costs.
  • • Hospitals with base year payments greater than 80 percent and up to 90 percent of base year costs will have a per diem payment rate set so that aggregate annual reimbursement equals 95 percent of the hospital’s base year costs.
  • • Hospitals with base year payments at or above 100 percent of base year costs will have a per diem payment rate set so that aggregate annual reimbursement equals 100 percent of the hospital’s base year costs.
  • • The base year for payments from July 1, 2015, through June 30, 2017 is 2012.
  • The per diem payment rates were inflated on July 1, 2016, using the Centers for Medicare & Medicaid Services (CMS) Inpatient Hospital Market Basket index.

    Effective for discharges on or after July 1, 2015, critical access hospitals are no longer eligible to receive disproportionate share hospital payment adjustments.

    Refer to Critical Access Hospital Rates – Fee For Service (DHS-3786) (PDF) for 2015–2017 rate information.

    Inpatient payment rates will be rebased using 2014 costs on July 1, 2017.

    If you admit a recipient as an inpatient from one of your outpatient departments (for example, emergency department, ambulatory surgical center, observation status whether or not a bed is used), you must include charges from the outpatient services in the inpatient hospital billing. Effective for admissions prior to October 1, 2015, the date of admission you submit is the date outpatient services began. Effective for discharges on or after October 1, 2015, the date of admission is the actual admission date.

    Professional Services

    Bill for outpatient professional services using the 837P (professional) claim format. This claim format requirement does not affect Medicare crossover claims.

    CRNA Services

    Inpatient CRNA

    Hospitals must exclude certified registered nurse anesthetist (CRNA) charges from inpatient rates.

    Bill separately on the 837P for MHCP-enrolled CRNA services provided in an inpatient hospital setting by any of the following:

  • • A CRNA independent or employed by a physician
  • • A CRNA employed by a hospital
  • • An entity or group not enrolled as a hospital that is billing CRNA services
  • • All critical access hospital (CAH).
  • Refer to the MN–ITS User Guide for more detailed information on billing for CRNAs who are employees or independent CRNAs. Remove CRNA costs from the operating payment rate for inpatient rates.

    Outpatient CRNA

    For requirements for certified registered nurse anesthetist (CRNA) services, refer to the following:

  • • You must bill for outpatient CRNA services according to Medicare guidelines.
  • • If you have applied and qualified for the CRNA billing exemption under Medicare Part B, MHCP will pay for the services on a reasonable-cost basis. Bill for cost-based CRNA services using the 837I format using revenue code 0964 and the appropriate HCPCS procedure code.
  • • Send CRNA CMS Exemption letters to DHS.PSDRATES@STATE.MN.US
  • • If you do not qualify for the CRNA billing exemption under Medicare Part B, MHCP will pay you according to the MHCP fee schedule. Bill for the services using the 837P format using the appropriate HCPCS code(s). Refer to the “MHCP Enrolled CRNA” subsection in the Anesthesia Services section of the Provider Manual.
  • • The Medicare CRNA payment method may be different from the method you elected for inpatient services under MHCP. That is, you may have elected to remove CRNA costs from your MHCP inpatient rates under Minnesota Rules, part 9500.1105, subpart 1A(s), and have separate payment under the MHCP fee schedule.
  • Exhausted Medicare Benefits

    If you submit an MHCP inpatient claim because a recipient has exhausted Medicare Part A benefits but has Medicare Part B, use TOB 13X rather than 85X to submit for Medicare Part B payment. The Part B services will be paid as a Medicare crossover under Outpatient Prospective Payment System (OPPS) and offset against the MHCP inpatient payment.

    Home Health Services

    Home health services you provide are not paid based on a reasonable-cost basis. Home health services continue to be paid under the MHCP fee schedule using TOB 34X.

    CD Services

    Outpatient hospital services you bill under the Consolidated Chemical Dependency Treatment Fund (CCDTF) must use TOB 85X. Payment will be made according to CCDTF rates and not on the reasonable-cost basis.

    Ambulance Services

    Ambulance services you provide or that an entity you own and operate provides are not paid on the reasonable-cost basis. Ambulance services continue to be paid under the MHCP fee schedule.

    Definitions

    Refer to the Definitions section of the Provider Manual’s Hospital Services home page.

    Legal References

    Minnesota Statutes, section 256B.75(b) (Hospital Outpatient Reimbursement)
    Minnesota Rules, part 9500.1105, subp. 1A(s)
    (Basis of Payment for Inpatient Hospital Services)
    Minnesota Statutes, 2014 section 256.969, subd. 2b
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    © 2017 Minnesota Department of Human Services Updated: 8/24/17 2:49 PM | Accessibility | Terms/Policy | Contact DHS | Top of Page | Updated: 8/24/17 2:49 PM