Critical Access and Rural Equity (CARE) Act of 2016 (H.R. 4553)

Dayton Benway, Healthcare Consulting Principal
March 2016

On February 12, 2016 Congressmen Harper (R-MS) and Loebsack (D-IA) introduced the Critical Access and Rural Equity (CARE) Act (H.R. 4553) with the intention of eliminating several of the perceived inconsistencies that exist between Medicare Administrative Contractors (MACs). For years hospitals have voiced concern over apparent discrepancies in the manner certain issues are treated by MACs in different regions. The CARE Act aims to uniformly define allowable critical access hospital (CAH) costs, thus preventing regional differences. A more thorough definition of allowable costs will allow CAHs to better understand and comply with Medicare regulations while seeking reimbursement for services provided to Medicare beneficiaries.

The Care Act seeks to provide clarity when considering the Medicare allowable cost of physician related expenses for the emergency department including associated surgical on-call and standby costs, diagnostic laboratory tests, standby and on-call costs for CRNAs, preventative health service costs, and costs of off-campus provider-based entities regardless of the distance from the CAH or the distance from another CAH. More precise parameters defining the allowable nature of these costs will allow CAHs to operate in a more stable environment while recovering much needed Medicare reimbursement. Removing the distance requirement for provider-based clinics owned by a CAH could increase access to care in many rural areas.

The final component of the CARE Act pertains to the allowable nature of healthcare tax expenses incurred by a CAH. Presently, the Centers for Medicare and Medicaid Services (CMS) has allowed MACs discretion in deciding if the provider tax for any given State is an allowable Medicare cost. MACs have applied adjustments in various situations; however, most typically, the provider tax expense is offset against any revenue the MAC deems associated to the cost. How and when revenue is considered associated to a provider tax has not been consistent among MACs.

If enacted, the Care Act would prevent the MACs from offsetting the provider tax on cost reports prior to the effective date of the Care Act. Going forward, the MACs would perform a calculation based on Medicaid utilization to determine the allowable portion of the provider tax.

We will keep you informed as the CARE Act gains momentum and moves through Congress. If you have any questions regarding the Care Act, please contact us at 1.800.244.7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.