Almost two-thirds of critical access hospitals (CAHs) would not meet Medicare CAH location requirements if they were required to re-enroll today, according to the OIG. Many of these rural hospitals were permanently exempted from CAH distance requirements under previous authority of states to designate “necessary provider” (NP) CAHs. Medicare reimburses CAHs at 101% of their reasonable costs; if CMS had the authority to decertify CAHs that were 15 or fewer miles from their nearest hospitals in 2011, the OIG estimates that Medicare would have saved $449 million. The OIG recommends that CMS take several steps to “ensure that the only CAHs to remain certified would be those that serve beneficiaries who would otherwise be unable to reasonably access hospital services.” For instance, the OIG recommends that CMS seek legislative authority to remove NP CAHs’ permanent exemption from the distance requirement; CMS notes that the President’s proposed FY 2014 budget would decertify any CAHs located fewer than 10 miles from another hospital or CAH (and reduce payment to all remaining CAHs to 100% of reasonable cost). CMS also discusses steps it has already taken to implement OIG recommendations to periodically reassess CAHs for compliance with all location-related requirements and to ensure that CMS applies a uniform definition of “mountainous terrain” to all CAHs. CMS disagreed with an OIG recommendation to seek legislative authority to revise the CAH Conditions of Participation to include alternative location-related requirements.