Critical Access Hospitals for Indian Health Services (Rev. 1040, 09-11-06)

by  Jared Staheli
June 25th, 2015

All IHS hospitals that elect CAH status, and are certified as such, are reimbursed under the reasonable cost method of reimbursement. The all inclusive inpatient per diem rate, the all inclusive outpatient per visit rate, and the all inclusive inpatient ancillary per diem rate are calculated based upon the individual CAH’s cost report filed with the FI. These rates are facility specific rates and are not to be confused with the AIRs published in the Federal Register by the IHS for each calendar year. A CAH cost report is subject to audit by its FI. The FI can disallow costs if those costs did not comply with the Principles of Cost Reimbursement published in the Provider Reimbursement Manual 15-1. Any costs disallowed are subject to appeal by the CAH. There is also a final settlement of an IHS CAH cost report. A final settlement necessitates the issuance of a Notice of Program Reimbursement (NPR) by the FI. The NPR advises the CAH if a balance is due the hospital or the program is due repayment. The NPR also advises the CAH of any cost disallowance, its appeal and reopening rights. It should be noted that an IHS hospital that is not a CAH does not receive an NPR and does not have a final settlement.

Effective for cost reporting periods beginning on or after January 1, 2004, payment for inpatient services, other than a distinct part unit, is 101 percent of the reasonable costs.

Effective for cost reporting periods beginning on or after January 1, 2004, payment for outpatient services is 101 percent of the reasonable costs. For a detailed explanation concerning payments to CAHs, see 42 CFR, §413.70. For cost reimbursement principles see 42 CFR Part 413 and Provider Reimbursement Manual 15-1. For Cost Reports see the Provider Reimbursement Manual 15-II, the chapter on hospital cost reports.


Critical Access Hospitals for Indian Health Services (Rev. 1040, 09-11-06). (2015, June 25). Find-A-Code Articles. Retrieved from

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