How Do Medicaid Programs Pay CAHs For Inpatient Care?
CAHs are entitled to receive cost-based reimbursement for all inpatient Medicare claims. While there is no such guarantee for Medicaid inpatient reimbursement, many states have created or had pre-existing, alternative Medicaid inpatient payment methodologies targeted to CAHs and/or rural hospitals. Of the 42 states studied, 17 (40%) have created differential Medicaid inpatient reimbursement policies for CAHs. Forty-eight percent of all CAHs are located in these 17 states. In 11 of the 17 states, the special payment policy is a cost-based methodology achieved through annual cost settlement. Other approaches, described below, create the opportunity for some CAHs to receive more than cost, depending on the individual institutions cost structure: • Minnesota: CAHs receive a 20% add-on to the diagnosis-related group (DRG) calculation. • Oklahoma: CAHs receive a 38% enhancement to the per diem payment. • Kentucky: CAHs are given nearly a 100% enhancement to the per diem rate paid to other ho
