Provision of Observation Services in Critical Access Hospitals (CAHs)
A CAH may maintain beds used solely for outpatient observation services without counting these beds toward the statutory CAH
maximum of 25 inpatient beds. However, State Survey Agencies (SAs) must examine CAH provision of outpatient observation services
carefully to assure they are consistent with the statutory limit of 25 inpatient beds that have an annual average length of
stay that does not exceed 96 hours per patient. An advance copy of revised portions of the State Operations Manual (SOM) CAH
Appendix W, addressing the assessment of observation bed services in CAHs, is attached to this memorandum.