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The Medicare Rural Hospital Flexibility/Critical Access Hospital Program (Flex)

“The Flex Program” refers to the Medicare Rural Hospital Flexibility Program, which was created by Congress in 1997.  It allows small hospitals to be certified as Critical Access Hospitals (CAHs) and offers grants to States to help implement initiatives to strengthen the rural health care infrastructure.  The grant program is administered by the Health Resources Service Administration’s Federal Office of Rural Health Policy. HRSA is a division of the U.S. Department of Health and Human Services.

The Flex program focuses on four core areas:

  1. Support for Quality Improvement
  2. Support for Operational and Financial Improvement
  3. Support for Population Health Mangement and Emergency Medical Services Integration
  4. Conversion of Small Rural Hospitals to Critical Access Hospital (CAH) status

Participating states (currently 45 of 50) are required to develop a rural health care plan that:

  • provides for the creation of one or more rural health networks;
  • promotes regionalization of rural health services in the state; and
  • improves the quality and accessibility of hospital and other health services for rural residents of the state.

A Critical Access Hospital (CAH) is a hospital that has met certain requirements and has been certified by Medicare. Some of the requirements for CAH certification include: having no more than 25 inpatient beds; maintaining an annual average length of stay of no more than 96 hours for acute inpatient care; offering 24-hour, 7 day a week emergency care; and being located in a rural area (at least 35 miles drive away from any other hospital or CAH). The smaller hospital size and short stay length allows CAHs to focus on providing care for more common conditions and outpatient care, while referring other conditions to larger hospitals. Certification allows CAHs to receive cost-based reimbursement from Medicare, instead of standard fixed reimbursement rates. This reimbursement has been shown to enhance the financial performance of small rural hospitals that were losing money prior to CAH conversion and thus reduce hospital closures (HRSA, 2015).  This type of reimbursement also helps to ensure that rural populations are able to access essential health care services.