How does Medicare typically pay for services at a Critical Access Hospital?

Medicare typically pays for services at a Critical Access Hospital (CAH) based on reasonable cost reimbursements. This means that the reimbursement reflects the actual costs incurred by the CAH for providing services to Medicare beneficiaries, rather than adhering to a fixed rate or predetermined payment structure. This method is designed to ensure that CAHs, which often serve rural and underserved communities, can remain financially viable while continuing to offer necessary healthcare services.

Reasonable cost reimbursement is particularly important for CAHs because they may have lower patient volumes and, as a result, higher per-patient costs compared to larger hospitals. This reimbursement strategy helps to cover the operational expenses of these facilities, ensuring they can maintain access to care for their communities without facing financial jeopardy due to the inherent cost challenges of operating in rural areas.