Critical Access Hospitals vs. Acute Care Hospitals

research[1]I’m no expert on the differences between a Critical Access Hospital (CAH) and an Acute Care Hospital (hospital), but I’m learning. Having been an advisor to American Osteopathic Association/Healthcare Facilities Accreditation Program (HFAP) for nearly 3-years now has provided me with an enlightenment that I never expected.

First of all, I learned that CAHs are not hospitals. Well, technically they are not according to CMS, who determines whether a healthcare facility is a CAH or a hospital. If you are ill and need help that a hospital can offer, a CAH healthcare facility will take good care of you and you would not necessarily know the difference. From all appearances, a CAH looks like a hospital, only smaller. Did you know that in 2013, there were 1,332 certified Critical Access Hospitals in the United States, according to reports from CMS? That over 25% of all the acute care hospitals registered in the country.

A new CAH cannot start out by being a CAH. It first must be accredited as a hospital; then it must apply to CMS to become a CAH. There are many qualifying factors that contribute to becoming a CAH, of which this is what I know:

  • CAHs can only have 25 inpatient beds
  • CAH locations have to be more than a 35 mile drive from any other hospital or CAH
  • CAH locations have to be more than a 15 mile drive from any other hospital or CAH in area with mountainous terrain or secondary roads
  • Be located in a rural area
  • Furnish 24-hour emergency care services, 7 days a week
  • Have an average length of stay of 96 hours or less

Why do hospitals want to become a CAH? Mainly for the reimbursement rate that CMS offers to CAHs. Critical Access Hospitals are certified to receive cost-based reimbursement from Medicare. This  reimbursement is intended to improve their financial performance and reduce hospital closures. Each hospital  is responsible for reviewing its own situation to  determine if CAH status would be advantageous. Critical  Access Hospitals are certified under a different set of  Medicare Conditions of Participation that are more  flexible than the acute care hospital conditions of  participation. Since most hospitals (and CAHs) earn the majority of their income from Medicare reimbursements, having the advantage of being a CAH is definitely a benefit. As of January 1, 2004,  CAHs are eligible for cost plus 1% reimbursement, and capital improvement costs are included in allowable costs  for determining Medicare reimbursement. Without the financial advantage of being designated as a CAH, many rural areas in the country would not have healthcare available to them.

There is a story of hospital attempting to become a CAH but they didn’t meet the driving distance from a specialty hospital that did not serve the general public. It took them nearly five years to convince CMS that they qualified as a CAH because the other hospital within their 35 mile radius did not serve the people from that area. Fortunately, CMS finally agreed.

So, you’re wondering why am I telling you all this? Well, Joint Commission recently published the top five findings by surveyors in 2013 for all of the disciplines, CAHs and hospitals alike. Now, from what I understand the same LS surveyors who survey hospitals also survey CAHs. If that is true, then there is one significant difference in the results of those surveys in 2013. Take a look at this:

 Critical Access Hospital

% of Surveys





The critical access hospital maintains fire safety equipment and fire   safety building features.



The critical access hospital manages risks associated with its   utility systems.



The critical access hospital maintains the integrity of the means of   egress.



The critical access hospital reduces the risk of infections   associated with medical equipment, devices, and supplies.



The critical access hospital provides and maintains building features   to protect individuals from the hazards of fire and smoke.


% of Surveys





The hospital maintains the integrity of the means of egress.



The hospital maintains complete and accurate medical records for each   individual patient.



Building and fire protection features are designed and maintained to   minimize the effects of fire, smoke, and heat.



The hospital manages risks associated with its utility systems.



The hospital reduces the risk of infections

The difference that is notable is EC.02.03.05, which is the standard for testing and inspection of fire safety features. For CAHs it is number 1 on the list, cited on 60% of all the surveys. For hospitals it is number 6 on the list and cited on 44% of the surveys. Not sure why there is such a difference, but perhaps it is because CAHs have less resources available to the facility manager to ensure all of the work is actually accomplished.

The rest of the standards are pretty close to being even:

  • EC.02.05.01              54% for CAHs;           47% for hospitals
  • LS.02.01.20              49% for CAHs;           52% for hospitals
  • LS.02.01.30              44% for CAHs;           43% for hospitals

 I think Critical Access Hospitals are neat… especially when you need one out in the rural areas.

Separation of Occupancies

Q: Do different occupancies have to be separated by fire-rated barriers both horizontally as well as vertically? We are considering installing a dialysis unit on the second floor of a medical office building and the CMS interpretive guidelines say it must be separated from other tenants on the same floor by a one-hour fire wall. Shouldn’t a horizontal barrier be required as well?

A: Yes, I would agree. The 1-hour fire rated separation that the Life Safety Code (2000 edition), section requires does include horizontal separations as well as vertical. I agree with you that the interpretive guidelines do not clearly state horizontal separations, but the LSC does make the generic statement that the ambulatory care occupancy must be separated from other occupancies with 1-hour fire rated construction, and does not limit the separation to just vertical barriers.

Conversion from Business Occupancy to Ambulatory Care Occupancy

Q:  We discovered our offsite free standing Dialysis center is in a building that is classified as Business Occupancy, but we were recently told by a consultant that the building has to be classified as Ambulatory Care Occupancy. Is this true? If so, what differences between the two occupancies should we be aware of?

A: It really depends if you are under the authority of CMS or not. If the dialysis center receives Medicare & Medicaid reimbursements, then you must follow CMS’s requirements. In a memo to their state survey agencies (S&C Letter 09-24) dated February 11, 2009, the dialysis unit must be classified as either existing ambulatory care occupancy, or new ambulatory care occupancy. In this memo CMS defines a new occupancy as a dialysis facility that receives their approval for construction on or after February 9, 2009, and they define an existing occupancy which receives approval for construction or renovation prior to February 9, 2009. However, if you are not under the authority of CMS, then the occupancy type is determined by the number of patients in the unit that are incapable of self-preservation. If there are 4 or more patients incapable of self-preservation at any given time, then the unit would have to be considered ambulatory care occupancy. But many authorities having jurisdiction (AHJ) have made the interpretation that all patients on dialysis is incapable of self-preservation, therefore, if you have 4 or more patients in the Dialysis center, then ambulatory care occupancy requirements apply. To be sure, you need to determine how your AHJ interprets the capability of the average dialysis patient to be able to disconnect themself from the machine, arise, and walk out of the unit under their own power, without assistance from anyone. There are differences between ambulatory care and business occupancies. Here is a short-list of ambulatory care occupancy requirements that differ from business occupancy:

  • Construction type: sprinklers required if Type II (000) Type III (000) and Type V (000)
  • Corridor width (44 inches)
  • Two approved exits from the unit
  • Travel distance to the exit cannot exceed 150 feet (200 feet if sprinklered)
  • Minimum door opening is 32 inches
  • A manual fire alarm system
  • Smoke compartment barriers unless the unit is less than 5,000 square feet and protected with smoke detectors, or unless the unit is less than 10,000 square feet and the area is protected with automatic sprinklers
  • A 2-hour fire rated barrier separating the dialysis unit from a healthcare occupancy, or a 1-hour fire rated barrier separating it from any other occupancy

IV Therapy

I recently received a question asking if I thought a free-standing Chemo IV therapy center should be designated as an ambulatory care occupancy or a business occupancy. The reader said she knew that CMS already has specified that all Dialysis centers must be designated as ambulatory care occupancies and wanted to know if Chemo IV therapy centers had to follow suit.

Since there is not a specific directive from CMS concerning Chemo IV therapy centers, then it is perfectly acceptable to fall back on the Life Safety Code designation to determine occupancy designation. For review, I need to say ambulatory care occupancies are those areas (or facilities) that serve their clients as out-patients and do not provide any sleeping accommodations, and have 4 or more individuals incapable of self-preservation. Self-preservation is defined as the ability to stand, disconnect themselves from any equipment, and walk to the exit without any assistance from anyone else. In the case of IV therapy, taking the IV pole and solution is acceptable as well.

Business occupancies are defined as 3 or less patients that are incapable of self-preservation, and do not provide sleeping accommodations. As mentioned, CMS has already declared Dialysis centers and ambulatory surgical centers (regardless if they have less than 3 individuals incapable of self-preservation) as ambulatory care occupancies, so business occupancies are not an option for them. By the way, in case you’re wondering, a sleep-study center can be designated as business occupancy even though the patient is sleeping. The reason is they are constantly monitored and the accommodations are not considered ‘sleeping accommodations’.

So, to answer the reader’s question, it doesn’t matter what I say the Chemo IV therapy center is, it matters what the organization themselves say about it. They need to conduct an assessment of their patients to determine how many are incapable of self-preservation at any given time. I always advise my clients to be very conservative in this regards. Even if there is only a chance of once or twice a year that there would be more than 3 individuals incapable of self-preservation, then I strongly suggest they designate it as ambulatory care occupancy. Whatever decision the organization makes, it will be scrutinized by a surveyor during a survey. If the surveyor questions the decision, the organization will have to provide documentation supporting their decision, so keeping a written risk assessment is very important. I would also suggest having this decision reviewed and approved by the organization’s safety committee and get it in their minutes.

I do not have first-hand experience with Chemo IV therapy centers, so I cannot say what we did in our case. But we did have free-standing Dialysis centers and long before CMS made the decision that they had to be ambulatory care occupancies, our organization chose to designate them as business occupancies. I was never comfortable with that decision as it seemed obvious to me that most of the patients on dialysis were not capable of self-preservation. But the organization I worked for sold all of the dialysis centers to an independent organization, so that responsibility of making those facilities qualify for ambulatory care occupancy fell upon their shoulders.