FLEX Executive Summary

Medicare Rural Hospital Flexibility (Flex) Program

The Medicare Rural Hospital Flexibility (Flex) Program was established by the Balanced Budget Act (BBA) of 1997 and, at that time, any state with rural hospitals could establish a Flex Program and apply for federal funding. The Flex Program also created Critical Access Hospitals (CAHs). CAH designation allows the hospital to be reimbursed on a ‘reasonable cost basis’ for inpatient and outpatient services including lab and qualifying ambulance services that are provided to Medicare patients and, in some states, Medicaid patients.

Federal Funding for Critical Access Hospitals (CAHs)

The Flex Program grant provides funding to state governments or other designated entities to support CAHs in: quality improvement, quality reporting, performance improvements and benchmarking, designating facilities as CAHs, and the provision of rural Emergency Medical Services (EMS). Only states with CAHs or hospitals eligible to convert to CAH status and a state rural health plan are eligible to participate in the Flex Program.

Enhancing the Health of Rural Communities

Flex funding encourages the development of cooperative systems of care in rural areas, joining together CAHs, providers of EMS services, clinics and health practitioners to increase efficiencies and quality of care. The Flex Program requires states to assess statewide needs and funds their efforts to implement community-level outreach and technical assistance to advance the following goals:

  • Improve the quality of care provided by CAHs
  • Improve the financial and operational outcomes of CAHs
  • Understand the community health and EMS needs of CAHs
  • Enhance the health of rural communities through population health improvement initiatives
  • Improve identification and management of time critical diagnoses and support EMS capacity and performance improvement in rural communities
  • Support the financial and operational transition to value based models of health care payment

Program Areas of the Flex Program

The Flex program is organized into six program areas with goals, objectives and related activities:

  1. CAH Quality Improvement
  2. CAH Operational and Financial Improvement
  3. CAH Population Health Improvement
  4. Rural EMS Improvement
  5. Innovative model Development
  6. CAH Designation

Flex Program Grant Cycles and Application

The Flex Program is administered through the Federal Office of Rural Health Policy (FORHP) at the Health Resources and Services Administration (HRSA) of the US Department of Health and Human Services (HHS). The Flex grant is administered in both competitive and non-competitive grant cycles.
For the current funding cycle of the Medicare Rural Hospital Flexibility (Flex) Program, which runs from fiscal years (FYs) 2019-2023, the primary components of the Flex Program include activities in the following areas:

  • Critical Access Hospital (CAH) Quality Improvement (MBQIP) (required)
  • CAH Operational and Financial Improvement (required)
  • CAH Population Health Improvement (optional)
  • Rural Emergency Medical Services (EMS) Improvement (optional)
  • Innovative Model Development (optional)
  • CAH Designation (required if requested)

The Flex Program continues to encourage the identification of areas for improvement with defined targets and measurable outcomes. A minimum standard of reporting on outcomes is requested for all state Flex Programs.

Federal Office of Rural Health Policy

The Federal Office of Rural Health Policy (FORHP) coordinates activities related to rural health care within the US Department of Health and Human Services (HHS). Part of the Health Resources and Services Administration (HRSA), FORHP has department-wide responsibility for analyzing the possible effects of policy on residents of rural communities. Created by Section 711 of the Social Security Act, FORHP advises the Secretary of HHS on health issues within these communities, including the effects of Medicare and Medicaid on rural citizens’ access to care, the viability of rural hospitals and the availability of physicians and other health professionals.

FORHP Grants Fund State Offices of Rural Health (SORHs) and Rural Hospitals

FORHP administers grant programs designed to build health care capacity at both the local and state levels. These grants provide funds to 50 State Offices of Rural Health (SORHs) to support on-going improvements in care, and to rural hospitals through Flex and SHIP grants in 45 states. Through its Community Based Division, FORHP provides support to community organizations to improve health service delivery and strengthen rural health networks, and encourages collaboration among rural health care providers.

Technical Assistance and Services Center (TASC)

The Technical Assistance and Services Center (TASC) was created in 1999 by the National Rural Health Resource Center (The Center) through funding from FORHP. As a program of The Center, TASC provides technical assistance and resources to the grantees of the Flex Program. This Flex Program Fundamentals guide was developed as part of TASC’s services and is updated on an annual basis. The TASC section of the guide includes information on the tools and resources that can be found on the TASC website, Flex Program Workshops, communication tools, technical assistance and contact information for key TASC staff. State Flex Program contact information can also be found within the State Flex Profiles on the TASC website.

Tips for Flex Coordinators

TASC’s services are essential as the job duties of a Flex Coordinator are broad and far-reaching without step-by-step instructions. Because of the varying tasks associated with the Flex Coordinator position, it is important to remember the following tips:

  • The role of the Flex Coordinator is to be the convener and liaison between local, state and national rural health groups, all the while maintaining a neutral position
  • Partnerships are keys to success
  • Understanding the CAH environment and how to promote financial and operational improvement are vitally important
  • For quality improvement, look at what exists and think creatively about how to improve
  • CAHs need to play a part in a comprehensive system of care
  • Be aware of the resources available to help you be successful

CAH Medicare Conditions of Participation Compliance Surveys

TASC provides tools and resources on topics applicable to the Flex Program including CAH surveys. CAHs are required to be in compliance with Medicare Conditions of Participation (CoP) in order to receive Medicare/Medicaid payment. A CAH survey is used to determine whether a CAH is in compliance with the CoP set forth at 42 Code of Federal Regulations (CFR) Part 485 Subpart F. Certification of CAH compliance with the CoP is accomplished through observations, interviews and document/record reviews. The survey focuses on a CAH’s performance of organizational and patient-focused functions and processes while assessing compliance with federal health, safety and quality standards that will assure that the beneficiary receives safe, quality care and services.

Flex Monitoring Team

TASC maintains relationships with state, national and federal organizations as well as health information technology (HIT) organizations. One organization that TASC works closely with is the Flex Monitoring Team (FMT). FMT is a consortium of the Rural Health Research Centers located at the Universities of Minnesota, North Carolina at Chapel Hill, and Southern Maine. FMT monitors and evaluates the Flex Program and continues to develop relevant quality, financial and community impact performance measures and reporting systems to help state and federal policy makers and rural health care providers understand the impact of the Flex Program. The FMT’s research assesses the impact of the Flex Program on rural hospitals and communities and examines the ability of the Flex grantee to achieve overall Flex Program objectives.

Medicare Beneficiary Quality Improvement Project (MBQIP)

Federal Office of Rural Health Policy (FORHP) created the Medicare Beneficiary Quality Improvement Project (MBQIP) as a Flex Program activity within the core area of quality improvement. The primary goal of this project is for CAHs to implement quality improvement initiatives to improve their patient care and operations. MBQIP uses Flex funding to support CAHs with technical assistance and national benchmarks to improve health care outcomes. Participating CAHs report a specific set of annual and quarterly measures determined by FORHP and engage in quality improvement projects to benefit patient care.

Benefits of participating in MBQIP include:

  • Engagement in quality improvement initiatives
  • Improved patient care across a broad population
  • Improved hospital services, administration, and operations
  • Creation of clear benchmarking and the identification of CAH best practices
  • Receiving technical assistance regarding cutting edge quality improvement tools and models
  • Preparing CAHs for the future when they will likely have to report national standardized measures
  • Fulfilling the quality improvement portion of the Flex grant

Rural Quality Improvement Technical Assistance (RQITA) Cooperative Agreement

To support technical assistance needs of state Flex Programs and participating CAHs, FORHP established the Rural Quality Improvement Technical Assistance (RQITA) cooperative agreement. RQITA works closely with TASC, FMT and FORHP to improve quality and health outcomes in rural communities through technical assistance to beneficiaries of FORHP quality initiatives, including MBQIP and the Small Health Care Provider Quality Improvement (SHCPQI) grantees. To support SHCPQI, RQITA works closely with the Georgia Health Policy Center.

Performance Improvement & Measurement System (PIMS) in HRSA’s EHB

The Performance Improvement & Measurement System (PIMS) module is a data collection tool that is integrated with HRSA’s Electronic Handbook (EHB), which is used for electronic grant submission. PIMS allows FORHP to gather standardized performance data from grantees. With PIMS data, FORHP will track grantee activities with common measures that focus on CAH performance improvement. HRSA’s EHB can be accessed here.

Flex Program Assessment and Evaluation Assistance

State Flex Program Key Resources