CAH Optional Method Election for Outpatient Services

A critical access hospital (CAH) can be paid for outpatient services using either the standard method (method I) or the optional method (method II). Under the standard method, the physician(s)/practitioner(s) is paid under the physician fee schedule for the professional service by the carrier or A/B MAC. Under the optional method, the physician(s)/practitioner(s) is paid 115 percent of the physician fee schedule amount for the professional service by the fiscal intermediary (FI) or Medicare Administrative Contractor (MAC).

Prior to the regulation change reflected in the August 16, 2010 Federal Register (see pages 50359 to 50361), if a CAH chose to be paid under the optional method it was required to make its election on an annual basis. With the regulation change, a CAH need no longer make an annual election for cost reporting periods beginning on or after October 1, 2010. If a CAH chose the optional method in its most recent cost reporting period beginning before October 1, 2010 or chooses to elect the optional method for an upcoming cost reporting period, the election will remain in place until the CAH submits a termination request to its FI or MAC. The termination request must be submitted to the FI or MAC at least 30 days prior to the start of the next cost reporting period.

Page Last Updated: Thursday, 15-Dec-2011 15:08:13 CST