Running a Critical Access Hospital (CAH) comes with constant challenges: tight budgets, staffing pressures, and the shift to value-based care. But, within these constraints often lie underutilized opportunities such as revenue streams and regulatory flexibilities that, when fully leveraged, can strengthen your financial performance and help your facility thrive. Understanding and acting on these advantages is key to sustaining operations and optimizing reimbursement.

Key Medicare Benefits for CAHs

Critical Access Hospitals have access to a number of benefits that can directly impact revenue and operational efficiency. While some advantages are shared with other rural providers, others are unique to CAHs. Here are eight areas where your facility can optimize financial opportunities:

1. Cost Reimbursement of 101%: One of the first and most important benefits for CAHs is that they receive cost report reimbursement at 101% of allowable costs, providing a strong revenue foundation. However, it’s important to remember that only Medicare allowable costs are included in this calculation, leaving potential revenue opportunities untapped. To fully optimize reimbursement, CAHs should review payer contracts, commercial rates and other non-Medicare revenue streams.  Additionally, conducting a thorough cost report analysis can help identify overlooked expenses, ensure all eligible costs are captured, and uncover opportunities to supplement reimbursement, ultimately strengthening the hospital’s financial position.
2. Swing Bed Services: Swing bed services allow patients to transition from acute care to post-acute care without leaving the hospital, keeping care local. These services are reimbursed at calculated cost, adding a flexible revenue source. Offering swing bed services also helps improve patient satisfaction and continuity of care, while maximizing the use of hospital resources.
3. 340B Pharmacy Benefits: CAHs may qualify for significant 340B pharmacy savings, which can provide meaningful cost reductions on outpatient medications. In addition to purchasing savings, many CAHs can participate in contract pharmacy arrangements, allowing the hospital to dispense medications through third-party pharmacies while still capturing 340B program benefits. By fully leveraging these programs, CAHs can not only reduce pharmacy costs but also generate supplemental revenue.
4. Exemption from Certain Provider-Based Rules: CAHs are excluded from some provider-based regulations, which can simplify operations and billing compared to larger hospitals. This flexibility allows CAHs to structure outpatient clinics, services, and billing practices in ways that reduce administrative burden and maximize reimbursement. By understanding which rules do and do not apply, CAHs can strategically design service lines, optimize revenue capture, and focus resources on patient care rather than navigating complex compliance requirements.
5. Rural Health Clinics (RHCs): While some grandfathered provider based RHCs have experienced changes to reimbursement rules, CAHs continue to benefit from potentially additional cost-based and enhanced Medicaid reimbursement opportunities. It’s important to carefully assess the financial impact of these programs and evaluate eligibility regularly to ensure your clinic is capturing all available revenue, optimizing reimbursement, and strengthening overall financial performance.
6. Professional Provider Reimbursement Opportunities: By the nature of CAHs being located in rural areas, they have a number of options available to them related to professional providers.  These include access to Option 2 billing, HPSA add-on payments, A-8-2 limit exemptions, and RHC provider reimbursement. Ensuring eligibility for these programs can enhance revenue for professional services.
7. Flexible Staffing Rules: Guidelines allow for CAHs to have more flexibility in staffing over other facilities. This includes allowing CAHs to use non-physician providers in the hospital’s clinics and emergency departments. This can be an advantage to your facility in your recruitment efforts as staffing continues to be a challenge across the country.
8. Additional Capital Funding Options: CAHs can access a variety of additional funding resources, including USDA loans, Flex Grant programs, HRSA grants, and other financial support options. These resources can help fund capital improvements and operational initiatives, so it’s essential to explore all available opportunities and ensure your facility is taking advantage of the numerous potential revenue resources.

Next Steps

While running a CAH comes with unique pressures, leveraging these Medicare benefits and funding opportunities can significantly improve financial performance and sustainability. Taking a proactive approach ensures your facility is optimizing revenue, strengthening internal processes, and supporting the communities you serve.

For more information on how your CAH can take full advantage of these opportunities, contact your RubinBrown team.

Published: 12/09/2025

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