Financial Impact of Reimbursing Critical Access Hospital Swing Bed Days Using the Skilled Nursing Facility Prospective Payment System

Purpose: Critical Access Hospitals (CAH) utilize swing beds for inpatient and post-acute care. For services provided in swing beds, CAHs are reimbursed by Medicare based on reasonable costs incurred while providing care. Post-acute care that occurs outside of CAHs is reimbursed based on the Skilled Nursing Facility Prospective Payment System (SNF PPS), which pays less than cost-based reimbursement. Policymakers have considered changing CAH swing bed reimbursement to the SNF PPS in recent years to decrease Medicare spending. This study aims to measure the impact of this change in reimbursement on CAHs.Methods: This study uses cost report data from 2015-2017 to estimate the change in operating margin that CAHs would have experienced if this change in reimbursement occurred. Multivariate regression analysis is conducted to determine if certain CAHs are disproportionately impacted based on certain characteristics. Lastly, community characteristics were analyzed for the CAHs most and least affected by the change.Results: The median change in operating margin for all CAHs in 2016 is estimated to be -2.16 percentage points. The vast majority of CAHs would experience a negative change in operating margin. The change would disproportionately impact CAHs that are smaller, more rural, located in the South, and rely more heavily on swing beds. Additionally, the CAHs more adversely impacted serve communities with higher percentages of racial/ethnic minorities and poorer overall health outcomes. Discussion: Changing Medicare CAH swing bed reimbursement would have a significant impact on CAH financial viability. Considering the rising number of rural hospital closures in the past decade, this change could put more financial stress on hospitals that are already struggling. Policymakers should consider these impacts when designing reimbursement models.Bachelor of Science in Public Healt