Phoenix, Arizona
children's health
insurance; behavioral health
(NOW: appropriation; AHCCCS;
critical access hospitals)
Purpose
Appropriates $800,000 from the state general fund and $900,000 of federal matching monies in FYs 2001-2002 and 2002-2003 to the Arizona Health Care Cost Containment System (AHCCCS) to increase reimbursement for certain rural hospitals.
Background
In 1997, Congress established the Medicare Rural Hospital Flexibility Program to sustain access for rural residents to primary care services; improve emergency medical care and establish linkages between larger, tertiary care facilities and rural health delivery networks. Within this program, Congress also created a new category of limited service hospital, called critical access hospitals (CAHs), which, on designation, are eligible for Medicare reimbursement, giving small rural facilities the opportunity to remain financially viable while continuing to meet community needs.
In order to qualify for CAH designation, the rural, nonprofit or public hospital must:
1. have an acute care bed limit of 15 beds.
2. have an additional swing-bed limit of 10 beds.
3. have an average length of stay that does not exceed 96 hours.
4. have available 24-hour emergency care.
5. be part of a network that includes a tertiary facility and an emergency medical services provider.
6. participate in the Medicare reimbursement program.
7. be located more than 35 miles from another hospital or designated by the state as a necessary provider.
According to the Rural Health Office at the University of Arizona, seven hospitals are eligible for and considering CAH designation – Hopi Health Care Center, Northern Cochise Community Hospital, Page Hospital, Sage Memorial Hospital, Southeast Arizona Medical Center, White Mountain Communities Hospital and Wickenburg Medical Center.
Currently, the federal Health Care Financing Administration (HCFA) reimburses hospitals on a formula-based prospective payment system (PPS). Under the federal Medicare Rural Hospital Flexibility Program, on designation as a CAH facility, HCFA will reimburse the CAH on the basis of a reasonable cost of providing care instead of the PPS formula. State Medicaid agencies may also provide to CAH designated facilities reasonable cost-based reimbursement, which is based on actual costs, and is more favorable than the typical Medicaid payment, which, in Arizona is based on tiered per diem rates. According to the North Carolina Rural Health Research Program, University of North Carolina at Chapel Hill, as of January 1, 2001, there are 303 certified CAHs in this country and 45 states have approved plans.
S.B. 1079 increases reimbursement for AHCCCS services to CAH designated hospitals on a cost-based formula by appropriating a total of $1.7 million in FYs 2001-2002 and 2002-2003 to AHCCCS. The appropriation represents $800,000 from the state general fund and $900,000 of federal matching monies in each year.
Provisions
1. Appropriates $800,000 from the state general fund and $900,000 of federal matching monies in FYs 2001-2002 and 2002-2003 to AHCCCS to facilitate increased reimbursement for small rural hospitals designated as CAHs.
2. Provides for a general effective date.
Amendments
Adopted by Committee
The strike everything amendment was adopted.
Senate Action
HEALTH 2/6/01 DPA/SE 7-0-1
3rd Read 3/14/01 23-6-1
Prepared by Senate Staff
April 16, 2001