Medicare Could Have Saved Billions at Critical Access Hospitals If Swing-Bed Services Were Reimbursed Using the Skilled Nursing Facility Prospective Payment System Rates

Swing-bed usage at critical access hospitals (CAHs) significantly increased from calendar years (CYs) 2005 through 2010; Medicare spending for swing-bed services at CAHs steadily increased to, on average, almost four times the cost of similar services at alternative facilities. Of the 100 CAHs we sampled, 90 had alternative facilities within a 35-mile radius with alternative skilled nursing care available.

On the basis of our sample results, we estimated that swing-bed services provided at 1,080 of the 1,200 (or 90 percent) of the CAHs in our sampling frame could have been provided at alternative facilities within 35 miles of the CAHs during CY 2010. We estimated that Medicare could have saved $4.1 billion over a 6-year period if payments for swing-bed services at CAHs were made using skilled nursing facility prospective payment system (SNF PPS) rates.

We recommended that CMS seek legislation to adjust CAH swing-bed reimbursement rates to the lower SNF PPS rates paid for similar services at alternative facilities. CMS agreed with our finding that CAHs' swing-bed utilization has increased but disagreed with our recommendation because of concerns with our findings on the availability of skilled nursing services at nearby alternative facilities and our calculation of savings.