Fact sheet

Frontier Community Health Integration Project (FCHIP) Demonstration
Fact Sheet

Frontier Community Health Integration Project (FCHIP) Demonstration

Ten CAHs are participating in the Frontier Community Health Integration Project (FCHIP) Demonstration, which aims to test new models of health care delivery in the most sparsely populated rural counties with the goal of improving health outcomes and reducing Medicare expenditures.  The Centers for Medicare & Medicaid Services (CMS) received applications representing critical access hospitals (CAHs) in Montana, Nevada, and North Dakota (though eligible to apply, CAHs in Alaska and Wyoming did not apply).  This Demonstration is for three years and it began on August 1, 2016.  

The FCHIP Demonstration is a result of a partnership between CMS and the Federal Office of Rural Health Policy (FORHP), located in the Health Resources and Services Administration.  CMS and FORHP have collaborated on the development of delivery models and on outreach to providers and other stakeholders, and they will continue to coordinate on monitoring, technical assistance, and evaluation activities.

The FCHIP Demonstration is another example of how the Administration is working to ensure that Americans receive better care, we spend our health care dollars more wisely, and we have healthier people.


CAHs often serve as the hubs for health care in the most sparsely populated areas, where essential services may not be financially viable given low patient volumes.  The goal of the FCHIP Demonstration is to test whether enhanced payments for certain services will enhance access to care for patients, increase the integration and coordination of care among providers within the community, and reduce avoidable hospitalizations, admissions, and transfers, therefore improving the quality of care for Medicare beneficiaries and lowering costs. A specific objective is to support the CAH and local delivery system in keeping patients within the community who might otherwise be transferred to distant providers.  As required by the authorizing legislation, the Demonstration is projected to be budget neutral.

Legislative Authority

The FCHIP Demonstration is authorized under section 123 of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), as amended by section 3126 of the Affordable Care Act.  The statute authorizes a three-year Demonstration “to develop and test new models for the delivery of health care services in eligible counties for the purpose of improving access to, and better integrating the delivery of, acute care, extended care, and other essential health care services to Medicare beneficiaries.”

The authorizing legislation limits the eligible entities under the Demonstration.  The eligible entities are defined by section 123 of MIPPA as:

        1. Is a Rural Hospital Flexibility Program grantee under section 1820(g) of the Social Security Act (42 U.S.C. 
            1395i-4(g)); and
        2. Is located in a State in which at least sixty-five percent of the counties in the State are counties that have six or 
            less residents per square mile.

Based on the legislative criteria, only CAHs located in Alaska, Montana, Nevada, North Dakota, and Wyoming were eligible to apply to participate in this Demonstration, but the legislation authorized CMS to select CAHs from no more than four States.


In January 2014, CMS released a Request for Applications (RFA) for the FCHIP Demonstration.    The RFA solicited CAHs in these five eligible States to participate in the Demonstration, and identified the four possible interventions, each with an associated waiver to Medicare payment rules.  The proposed waivers cover the following service categories: 1) Skilled Nursing Facility (SNF) / Nursing Facility (NF) beds within the CAH, 2) telehealth, 3) ambulance, and 4) Home Health.

Skilled Nursing Facility (SNF)/Nursing Facility (NF) Beds:

CAHs are currently required to maintain no more than twenty-five inpatient beds, which can be used to provide acute or swing bed services. The FCHIP Demonstration will allow selected CAHs to maintain up to thirty-five inpatient beds. The ten additional inpatient beds can only be used to provide SNF or NF level of care. Medicare services shall be paid according to the standard Medicare payment rules for CAHs.

Telehealth Services:

Under current Medicare payment policy, a CAH serving as the originating site for a telehealth encounter is paid a fixed facility fee. The distant site practitioner is paid “an amount equal to the amount that such practitioner would have been under this title had such services been furnished without the use of a telecommunications system.” The FCHIP Demonstration will pay participating CAH originating sites at 101 percent of cost for overhead, salaries, fringe benefits, and the depreciation value of the telehealth equipment instead of the physician fee schedule fixed fee. Medicare payment to distant site practitioners for telehealth services will not change under the Demonstration.

Ambulance Services:

Currently, Medicare requires that in order for a CAH or a CAH-owned and operated entity to be paid 101 percent of its reasonable costs of furnishing ambulance services, there can be no other provider or supplier of ambulance services located within a thirty-five mile drive of the CAH. The FCHIP Demonstration allows the selected CAHs to be paid 101 percent of reasonable costs of furnishing ambulance services irrespective of other providers or suppliers of ambulance services located within a thirty-five mile drive of the CAH. All other rules affecting the provision of ambulance services still apply.

Home Health:

The FCHIP Demonstration considered an enhanced payment under Part B for Home Health Agency travel mileage while providing services for home health beneficiaries receiving home health care benefits within a Home Health Prospective Payment System.  This intervention will not be implemented because no applicants proposing this intervention were chosen for participation in this project.

To apply, CAHs were required to meet the eligibility requirements in the authorizing legislation, and, in addition, to submit a proposal to enhance health-related services that would complement those currently provided by the CAH and better serve the community’s needs.  A CAH could choose any combination of the interventions for its proposal. 

CMS selected ten CAHs located in the States of Montana, Nevada, and North Dakota. The applicant CAHs were selected based on the feasibility of delivery system proposals and potential impact on Medicare expenditures and quality of care. Of the applicants selected, none proposed the home health intervention.

The following CAHs and interventions have been selected for the Demonstration:

Project Sites (CAHs)


Dahl Memorial Healthcare Association

Ekalaka, MT


McCone County Health Center

Circle, MT

SNF/NF Beds, Telehealth

Roosevelt Medical Center

Culbertson, MT

SNF/NF Beds, Ambulance, Telehealth

Battle Mountain General Hospital

Battle Mountain, NV


Grover C. Dils Medical Center

Caliente, NV


Mt. Grant General Hospital

Hawthorne, NV


Pershing General Hospital

Lovelock, NV


Jacobson Memorial Hospital Care Center

Elgin, ND


McKenzie County Healthcare Systems

Watford City, ND


Southwest Healthcare Services

Bowman, ND



The Medicare payment changes for these CAHs went into effect on August 1, 2016.  CMS will monitor payments under the Demonstration to ensure budget neutrality, as well as the impact on quality of care to beneficiaries and Medicare expenditures for other providers. 

Under a cooperative agreement funded by FORHP, the Montana Health Education and Research Foundation is providing technical assistance to the participating CAHs to assist in achieving the goals of the Demonstration, including creating linkages with tertiary providers, supporting strategic planning to integrate and coordinate services, and lowering overall costs while maintaining or improving quality of care.


The authorizing legislation requires FORHP, in coordination with CMS, to submit two reports to Congress: 1) an interim report due within two years of the start of the Demonstration, and 2) a final report due within one year of the end of the Demonstration.  FORHP’s effort will be supported by an evaluation sponsored by CMS, which will examine the effects of the Demonstration on access to care and other community outcomes, coordination and integration of services, and cost and quality of health care.

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