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FAQ

Critical Access Hospital FAQs

5/4/2012

Payment for services provided by Critical Access Hospitals (CAHs) as defined by the Centers for Medicare and Medicaid Services (CMS) are reimbursed under the Reasonable Cost Method. TriWest Healthcare Alliance compiled the following frequently asked questions (FAQs) regarding the payment for services of CAHs.

What is reimbursed under the reasonable cost method? The Reasonable Cost Method applies to inpatient admissions, swing bed admissions, outpatient services, ambulatory surgery, ambulance services, authorized Partial Hospitalization Programs (PHPs) and clinical diagnostic laboratory test meeting the requirements.
Are there exceptions to the Reasonable Cost Methodology Reimbursement? Yes, reimbursement for admissions into a Medicare-certified skilled nursing facility (SNF), psychiatric unit or rehabilitation unit of a CAH is not subject to the Reasonable Cost Method. They are reimbursed using SNF PPS, behavioral health per diem or billed charges.
What is Reasonable Cost Methodology? Reasonable cost is based on the actual cost of providing services and excludes any costs that are unnecessary in the efficient delivery of services covered by the program.
How is Reasonable Cost Methodology Calculated? TMA calculates an overall inpatient and outpatient Cost-to-Charge Ratio (CCR) obtained from data on the hospital's most recently filed Medicare cost report as of July 1 of each year.
- The inpatient and outpatient CCRs are calculated using Medicare charges. For example, Medicare costs for outpatient services are derived by multiplying an overall hospital outpatient CCR (by department or cost center) by Medicare charges in the same category.
- For Fiscal Year (FY) 2012 (10/01/2011 - 09/30/2012), TRICARE will pay the lesser of 2.46 (which is the FY cap) multiplied by the billed charges or 101% of costs (using the hospital's CCR and billed charges) for inpatient services and the lesser of 1.32 (FY cap) multiplied by the billed charges or 101% of costs for outpatient services
What are the Billing and Coding Requirements?

Type of Service	Bill Type
Inpatient services	Bill type 11X
All outpatient services including services approved as Ambulatory Surgery Center (ASC) services	Bill type 85X
Ancillary/ambulance services	Bill type 12X
Non-patient diagnostic service	Bill type 14X
Swing bed services	Bill type 18X
Ambulance services furnished by CAHs that are exempt from the allowable charge methodology	B2 condition code B2 must be reported within the first five condition code fields in order to pay at the Reasonable Cost Method.

Where can I find a list of CAHs? TRICARE Management Activity (TMA) provides a list of CAHs and their corresponding inpatient and outpatient CCRs on its website. It is updated quarterly based on information from CMS.

For more information about CAHs, refer to TRICARE.mil/.