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© Rural Hospital Group 2019  |  4770 N Belleview Ave, Ste 205  |  Kansas City, MO 64116

Critical Access Hospitals 

Unlike hospitals that are paid under the Prospective Payment System, Medicare pays CAHs for patient services based on each hospital’s costs of providing care. Under this cost-based payment system, Medicare payments (and in many states Medicaid payments) to CAHs are based on the “covered costs” of furnishing Medicare-covered services to beneficiaries. 

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Generally speaking, covered costs include “all necessary and proper costs associated with furnishing the services” plus 1%. Some examples of covered costs are:

  • General & Administrative

  • Housekeeping & Laundry

  • Dietary & Cafeteria

  • Nursing Administration

  • Medical/Surgical

  • Emergency Room

  • Cardiology

  • Pharmacy

  • Speech & Respiratory Therapies

  • Provider-Based Clinics  

  • Maintenance & Repair

  • Medical Records

  • Salary and Benefits

  • Physical & Occupational Therapies

  • Operating Room

  • Laboratory

  • Radiology

  • Medical Supplies

Also included as “covered costs” are those costs associated with the property, plant, and equipment used in providing Medicare services, thus providing to CAHs a methodology by which they can once again invest in capital assets through reimbursement of interest expense and depreciation.