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Research Letter
Health Care Reform
January 2014

Critical Access Hospitals and Cost Shifting

Author Affiliations
  • 1Accounting Department, Ross School of Business, University of Michigan, Ann Arbor
  • 2Division of General Medicine, Department of Internal Medicine, Institute for Healthcare Policy and Innovation, University of Michigan, Ann Arbor
  • 3VA Ann Arbor Healthcare System, Ann Arbor, Michigan
JAMA Intern Med. 2014;174(1):143-144. doi:10.1001/jamainternmed.2013.11901

With more than 1300 acute care hospitals, the Critical Access Hospital (CAH) program is the largest Medicare program aimed at maintaining access to health care for rural Americans.1 However, there is debate about how best to support the financial viability of CAHs while limiting rising health care costs. Under Medicaid, almost 2 dozen states have adopted or are considering cost-based reimbursement for CAHs, while other states use alternative payment mechanisms.2 President Barack Obama’s 2014 budget proposal calls for a reduction in CAHs’ Medicare reimbursement from 101% to 100% of costs. Several states have criticized the proposed cuts,3 given the small margins of CAHs.4 In the context of ongoing discussion about CAH reimbursement, it is important to better understand how health care providers currently utilize funds from the CAH Programs.