Critical Access Hospital (CAH)

Critical Access Hospitals (CAHs) are Medicare-certified hospitals that receive cost-based reimbursement rather than the standard prospective payment system rates. This reimbursement model is designed to improve the financial performance of rural hospitals and reduce closures in underserved areas. CAHs must meet specific criteria, including location in a rural area and compliance with Medicare conditions of participation for CAHs.

For 340B eligibility, CAHs must have a DSH adjustment percentage of at least 8% (lower than the 11.75% threshold required for DSHs, children’s hospitals, and CANs). CAHs are eligible for 340B participation and are not subject to the GPO Prohibition. They are subject to the orphan drug exclusion.

CAHs were added to the list of 340B-eligible entity types by the Affordable Care Act in 2010. They typically serve rural communities with limited access to health care resources, and 340B savings are important for maintaining pharmacy services and comprehensive care in these settings.