Critical Access Hospital Swing Bed Audits: Level-of-Care Documentation and OIG Payment Findings

Critical access hospitals (CAHs) are small rural hospitals with no more than 25 inpatient beds. Many CAHs operate swing beds, which allow the same bed to be used for either acute hospital care or skilled nursing facility (SNF)-level care. Swing beds help rural patients recover close to home after a hospital stay, and they are an important source of revenue for many CAHs because Medicare pays CAHs for swing bed services based on reasonable cost.

Swing beds have also drawn attention from oversight bodies. The HHS Office of Inspector General (OIG) has issued two reports, in 2015 and 2025, concluding that Medicare could save billions if CAH swing bed payments were similar to the rates paid for skilled nursing care in other settings. Separately, CAH swing bed claims are subject to the same skilled level-of-care coverage rules as SNF claims, and Medicare contractors review them.

This article explains how swing bed coverage and payment work, OIG's findings, the level-of-care rules, the conditions of participation, common audit findings, and how CAHs can strengthen documentation. It is educational and does not replace legal or professional advice.

How Swing Beds Work

The Legal Basis

Section 1883 of the Social Security Act allows certain small rural hospitals and CAHs to enter into swing bed agreements, under which they can use beds to furnish post-hospital extended care services. Medicare covers swing bed services only when they would be covered as post-hospital extended care services if furnished by a SNF. CAH swing bed requirements are at 42 CFR 485.645, and CAH conditions of participation are in 42 CFR Part 485, Subpart F.

Patients of the Hospital

Swing bed patients in a CAH receive a SNF level of care, but they remain patients of the CAH. The CAH must meet both the CAH conditions of participation and the swing bed requirements, which incorporate specified SNF requirements.

Payment

CAHs are paid for swing bed services based on 101 percent of reasonable cost, determined through the Medicare cost report. Non-CAH rural hospitals with swing beds are generally paid under the SNF prospective payment system. Because CAH payment is cost-based, cost allocation and cost reporting accuracy matter, and Medicare's per-day spending on CAH swing beds is often higher than SNF rates.

OIG's Findings

The 2015 Report

In 2015, OIG reported that swing bed usage at CAHs significantly increased from calendar years 2005 through 2010 and that Medicare spending on CAH swing bed services rose to, on average, almost four times the cost of similar services at alternative facilities. OIG estimated that Medicare could have saved billions if swing bed services had been paid at SNF prospective payment system rates and recommended that CMS seek legislative authority to change the payment method.

The 2025 Report

In a report posted in January 2025 (A-05-21-00018), OIG found that:

• Medicare could have saved up to $7.7 billion over a six-year period if CAH swing bed payments had used SNF prospective payment system rates.

• From calendar years 2015 through 2020, swing bed utilization for skilled nursing services increased 2.8 percent, while average daily reimbursement increased 16.6 percent.

• 87 of 100 sampled CAHs were within a 35-mile driving distance of an alternative facility that provided skilled nursing care.

• OIG estimated that 1,128 of 1,297 CAHs in its sampling frame had an alternative facility within 35 miles that could have provided care in calendar year 2020.

OIG recommended that CMS seek legislation allowing it to reimburse CAHs for swing bed services at rates aligned with alternative facilities when similar care is available. CMS did not concur, and OIG has noted that its 2015 recommendation remains open.

What the Findings Mean for CAHs

OIG's reports focus on payment policy rather than on individual CAH compliance. Changing CAH swing bed payment would require legislation. However, the reports keep swing beds visible to policymakers and oversight bodies, and they highlight the importance of using swing beds appropriately and documenting medical necessity. Rural hospital associations have disputed OIG's methodology and emphasized the role of swing beds in rural access, so the policy debate is ongoing.

The Level-of-Care Rules

Because swing bed services must meet SNF coverage requirements, the same rules apply as for SNF claims:

Qualifying Hospital Stay

The patient must generally have a qualifying inpatient hospital stay of at least three consecutive days, not counting the discharge day, and be admitted to the swing bed within 30 days of hospital discharge, with limited exceptions. The qualifying stay can be in the same CAH or another hospital. Observation days do not count toward the three days.

Daily Skilled Services

Under 42 CFR 409.31 through 409.35, the patient must need skilled nursing services seven days a week or skilled rehabilitation services at least five days a week, the services must, as a practical matter, only be provided on an inpatient basis, and the services must be for a condition treated during the qualifying stay or that arose during swing bed care for such a condition.

Skilled Services

Skilled services include direct skilled nursing services, management and evaluation of the care plan, observation and assessment of an unstable condition, patient education, and skilled therapy, including maintenance therapy when the patient's condition requires a therapist's skills, consistent with the Jimmo settlement.

Physician Certification

Under 42 CFR 424.20, a physician or allowed practitioner must certify the need for SNF-level care at the time of admission or as soon thereafter as reasonable and practicable, with recertification by day 14 and at least every 30 days thereafter.

The Transition From Acute to Swing Bed

When a patient moves from acute status to swing bed status, the record must clearly show the change: an acute care discharge order and discharge summary, a separate admission order to swing bed status, and documentation that the patient's needs changed from acute to skilled. The patient's stay in acute status must be medically necessary on its own.

Conditions of Participation

Under 42 CFR 485.645, CAHs providing swing bed services must meet specified SNF requirements, including requirements related to:

• Resident rights.

• Admission, transfer, and discharge rights.

• Freedom from abuse, neglect, and exploitation.

• Social services.

• Comprehensive assessment and care planning, including discharge planning.

• Specialized rehabilitative services.

• Dental services.

Surveyors review swing bed compliance during CAH surveys using CMS's State Operations Manual guidance for CAHs and swing beds. Swing bed patients must receive the protections and services required, even though they are hospital patients.

Common Audit Findings

Level-of-Care Findings

• Swing bed stays where the patient did not need daily skilled services, such as patients awaiting nursing home placement.

• Documentation describing custodial care without skilled elements.

• Therapy fewer than five days a week without daily skilled nursing.

• Extended swing bed stays without documentation of ongoing skilled need.

Qualifying Stay Findings

• Fewer than three inpatient days, often because some days were observation.

• Missing documentation of the inpatient admission order or dates.

Certification Findings

• Missing or late certifications and recertifications.

• Certifications missing required content.

Transition Findings

• No clear discharge from acute care and admission to swing bed status.

• Acute stays that were not medically necessary, created to establish a qualifying stay.

Billing and Cost Report Findings

• Swing bed days billed as acute days or vice versa.

• Incorrect billing of services excluded from swing bed payment.

• Cost allocation errors affecting reasonable cost.

Documentation Practices

At Admission to Swing Bed

• An acute care discharge order and summary.

• A swing bed admission order.

• A physician certification with required content.

• An admission assessment describing skilled needs.

• An initial care plan with skilled goals.

During the Stay

• Daily skilled nursing notes describing skilled services in the patient's specific terms.

• Therapy evaluations, plans of care, daily notes, and progress reports.

• Physician progress notes and recertifications by day 14 and every 30 days.

• Weekly interdisciplinary review of skilled need and discharge plans.

At Discharge

• A discharge summary.

• Beneficiary notices when skilled coverage ends, such as the Notice of Medicare Non-Coverage.

• Documentation of discharge planning.

Building a Swing Bed Compliance Program

• Adopt written swing bed admission criteria based on SNF coverage rules.

• Use a swing bed admission checklist covering the qualifying stay, orders, certification, and skilled needs.

• Train nursing and therapy staff on skilled documentation.

• Hold weekly utilization review of every swing bed patient.

• Track certification and recertification deadlines.

• Audit a sample of swing bed charts monthly.

• Review swing bed billing and cost report allocations annually.

• Maintain compliance with swing bed conditions of participation, including resident rights and discharge planning.

Responding to Audits

When a contractor requests swing bed records:

• Calendar the deadline.

• Include the qualifying stay records, the acute discharge and swing bed admission orders, certifications, and complete nursing and therapy documentation.

• Include a cover letter explaining the patient's skilled needs.

• Appeal unfavorable decisions through the Medicare appeals process, submitting all evidence by the reconsideration level.

A Hypothetical Example

A CAH's internal audit of 20 swing bed stays finds that several patients remained in swing beds for weeks after therapy ended while awaiting nursing home placement, with nursing notes describing only assistance with daily activities. Several qualifying stays included observation days. The CAH adopts swing bed admission criteria, trains staff on skilled documentation, adds weekly utilization review, verifies inpatient days before swing bed admission, issues notices promptly when skilled care ends, and refunds identified overpayments. A follow-up audit shows stronger documentation and appropriate lengths of stay.

Why Swing Bed Documentation Is Often Weaker

CAHs are small hospitals with lean staffing. The same nurses may care for acute patients, swing bed patients, and emergency patients on a single shift, and hospital documentation systems are often designed for acute care rather than SNF-level care. As a result, swing bed documentation can look like acute care documentation without the skilled-care elements reviewers expect, or like nursing home documentation focused on activities of daily living. CAHs can address this by adding swing bed-specific documentation prompts to their electronic health record, such as fields for the skilled service provided each day, the reason the service required skilled personnel, and progress toward skilled goals.

Appropriate Use of Swing Beds

Swing beds are intended for patients who need SNF-level care after a hospital stay. They are not intended to serve as a holding area for patients awaiting long-term care placement who no longer need skilled services, and they should not be used to extend stays beyond the point of skilled need. When skilled need ends, the CAH should issue required notices and arrange discharge or transition to an appropriate setting. If the patient remains in the CAH, the days are generally not covered by Medicare Part A, and the CAH should follow notice and billing rules.

CAHs should also avoid creating unnecessary acute stays to establish a qualifying stay. Each acute day must be medically necessary on its own. Reviewers may examine whether the acute admission was appropriate, especially when acute stays are consistently three days followed by swing bed admission.

Cost Reporting Considerations

Because CAH swing bed payment is based on reasonable cost, accurate cost reporting is part of swing bed compliance. CAHs should ensure that swing bed days are recorded correctly, that costs are allocated appropriately between acute and swing bed services, and that cost report preparers understand swing bed rules. Errors in day counts or allocations can affect payment and may be identified in cost report audits.

Medicaid and Other Payers

Swing beds also serve Medicaid and other payers, and state rules may limit swing bed use or set specific payment rates for Medicaid swing bed days. Some states, for example, limit the number of swing bed days for certain hospitals or pay Medicaid swing bed days at a statewide average nursing facility rate. CAHs should know their state's rules and document medical necessity consistently across payers.

Common Myths About Swing Beds

Myth: Swing Bed Patients Do Not Need SNF-Level Documentation

Swing bed services must meet SNF coverage requirements, so documentation must show daily skilled need.

Myth: The OIG Reports Mean Payment Has Changed

OIG recommended legislative changes, and CMS did not concur. CAH swing bed payment remains cost-based unless Congress changes the law.

Myth: Patients Can Stay as Long as They Need

There is no fixed day limit beyond the SNF benefit period limits, but coverage continues only while skilled need is documented.

Myth: Observation Days Count Toward the Qualifying Stay

Only inpatient days count. Observation days do not.

Questions Leadership Should Ask

• Do we verify the qualifying inpatient stay before every swing bed admission?

• Are acute discharge and swing bed admission orders documented for every transition?

• Are certifications and recertifications timely?

• Do nursing notes describe daily skilled services?

• Do we conduct weekly utilization review of swing bed patients?

• How often do we audit swing bed charts and billing?

• Are swing bed days and costs reported accurately on the cost report?

Key Takeaways

• CAH swing beds provide SNF-level care to rural patients and are paid at 101 percent of reasonable cost.

• OIG found Medicare could have saved up to $7.7 billion over six years, but payment changes would require legislation.

• Swing bed claims must meet SNF coverage requirements, including the qualifying stay, daily skilled need, and certification.

• Clear transitions, skilled documentation, utilization review, and audits reduce risk.

Survey Readiness for Swing Beds

State survey agencies evaluate swing bed compliance as part of CAH surveys, using CMS's State Operations Manual. Surveyors may review swing bed patients' records for resident rights notices, comprehensive assessments, care plans, discharge planning, social services, and the availability of specialized rehabilitation and dental services. They may also interview patients about their rights and care. CAHs should prepare by:

• Maintaining swing bed policies that reflect the incorporated SNF requirements.

• Providing swing bed patients with required rights information at admission.

• Completing comprehensive assessments and care plans within required time frames.

• Documenting discharge planning and patient involvement.

• Training staff on abuse prevention and reporting.

• Conducting mock surveys of swing bed records.

Survey findings and payment audits often reflect the same weakness: swing bed patients treated as if they were simply acute patients in a longer stay. Building a distinct swing bed workflow addresses both.

Appeals of Swing Bed Denials

Swing bed denials are appealed through the same Medicare appeals process as SNF denials. A strong appeal shows the qualifying stay, the acute-to-swing transition, timely certifications, and daily skilled services, using the same arguments that succeed in SNF appeals, such as management and evaluation, observation and assessment, patient teaching, and skilled maintenance therapy under Jimmo. A clinical summary written by a nurse or physician, with page citations, helps reviewers see the skilled need. CAHs should submit all evidence by the reconsideration level and file within the deadlines that limit recoupment. Because many CAHs have small staffs, a simple appeals log with deadlines and outcomes can prevent missed filing dates.

Monitoring Policy Developments

Because OIG has twice recommended changing CAH swing bed payment, CAH leaders should monitor congressional and CMS activity related to rural hospital payment. Any legislative change to swing bed reimbursement would have major financial effects, and CAHs that understand their swing bed volume, costs, and patient outcomes will be better able to respond. Tracking data such as swing bed days, average length of stay, discharge destinations, readmissions, and patient satisfaction also helps CAHs demonstrate the value of their programs to policymakers, payers, and their communities. Strong documentation supports both compliance and the case for swing bed programs.

Training Priorities

Swing bed training should be practical and brief. Nurses need to know how to describe the skilled service provided each day and why it required a nurse. Therapists need to document skilled interventions and progress. Physicians need to know certification timing and content. Case managers need to verify inpatient days and coordinate timely discharge.

Frequently Asked Questions

How are CAHs paid for swing bed services?

At 101 percent of reasonable cost, determined through the cost report.

What did OIG find in 2025?

That Medicare could have saved up to $7.7 billion over six years if CAH swing bed payments had used SNF rates, and that most sampled CAHs had alternative skilled nursing facilities within 35 miles.

Does the three-day qualifying stay apply to swing beds?

Yes, swing bed services must meet SNF coverage requirements, including the qualifying stay, unless a waiver applies.

Are swing bed patients SNF residents?

No. They receive SNF-level care but remain patients of the CAH, which must meet both CAH and swing bed requirements.

What is the most common swing bed audit finding?

Stays where documentation does not support daily skilled services, especially patients awaiting placement.

Conclusion

Swing beds serve rural patients, and OIG's reports keep them under policy scrutiny. For individual CAHs, the main audit risk is documentation that does not support SNF-level care. CAHs that verify qualifying stays, document transitions and certifications, describe daily skilled services, conduct utilization review, and audit regularly will protect their swing bed programs.

How HealthBridge Can Help

HealthBridge is a healthcare management consulting firm that helps CAHs build swing bed compliance programs, develop admission criteria and checklists, audit documentation and billing, train staff, respond to audits, and support appeals. If your CAH wants to strengthen its swing bed program, please get in touch with us. We will be happy to help you with this topic.

References

• U.S. Department of Health and Human Services, Office of Inspector General. Medicare Could Save Billions With Comparable Access for Enrollees if Critical Access Hospital Payments for Swing-Bed Services Were Similar to Those of the Fee-for-Service Prospective Payment System (A-05-21-00018). https://oig.hhs.gov/reports/all/2025/medicare-could-save-billions-with-comparable-access-for-enrollees-if-critical-access-hospital-payments-for-swing-bed-services-were-similar-to-those-of-the-fee-for-service-prospective-payment-system

• U.S. Department of Health and Human Services, Office of Inspector General. Medicare Could Have Saved Billions at Critical Access Hospitals If Swing-Bed Services Were Reimbursed Using the Skilled Nursing Facility Prospective Payment System Rates (A-05-12-00046). https://oig.hhs.gov/reports/all/2015/medicare-could-have-saved-billions-at-critical-access-hospitals-if-swing-bed-services-were-reimbursed-using-the-skilled-nursing-facility-prospective-payment-system-rates

• U.S. Department of Health and Human Services, Office of Inspector General. Medicare Payments for Swing-Bed Services at Critical Access Hospitals (Podcast). https://oig.hhs.gov/newsroom/oig-podcasts/medicare-payments-swing-bed-services-critical-access-hospitals/

• U.S. Social Security Administration. Social Security Act, Section 1883, Agreements for Use of Hospital Facilities for Extended Care Services. https://www.ssa.gov/OP_Home/ssact/title18/1883.htm

• Electronic Code of Federal Regulations. 42 CFR 485.645, Special Requirements for CAH Providers of Long-Term Care Services (Swing-Beds). https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-G/part-485/subpart-F/section-485.645

• Electronic Code of Federal Regulations. 42 CFR Part 409, Subpart D, Requirements for Coverage of Posthospital SNF Care. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-409/subpart-D

• Electronic Code of Federal Regulations. 42 CFR 424.20, Requirements for Posthospital SNF Care. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-424/subpart-B/section-424.20

• Centers for Medicare & Medicaid Services. Medicare Benefit Policy Manual, Chapter 8, Coverage of Extended Care (SNF) Services Under Hospital Insurance. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/bp102c08.pdf

• Centers for Medicare & Medicaid Services. State Operations Manual, Appendix W, Survey Protocol, Regulations and Interpretive Guidelines for Critical Access Hospitals and Swing-Beds in CAHs. https://www.cms.gov/medicare/provider-enrollment-and-certification/guidanceforlawsandregulations/downloads/som107ap_w_cah.pdf

• Centers for Medicare & Medicaid Services. Jimmo Settlement. https://www.cms.gov/medicare/coverage/jimmo-settlement