The Medicare Rural Hospital Flexibility Program Overview
The Medicare Rural Hospital Flexibility Program (Flex Program) was authorized by section 4201 of the Balanced Budget Act of 1997 (BBA), Public Law 105-33. The Flex Program provides funding to States for the designation of critical access hospitals (CAHs) in rural communities and the development of networks to improve access to care in these communities. Under the program, hospitals certified as CAHs can receive cost-based reimbursement from Medicare.
The Flex Program is based on two programs from the early 1990s: the Essential Access Community Hospital and Rural Primary Care Hospital (EACH/RPCH) program and the Montana Medical Assistance Facility (MAF) demonstration project. These programs successfully showed that States, working with their rural communities and providers, could develop networks of limited-service hospitals and other providers, expand the supply of practitioners, improve the financial position of rural hospitals, and foster the integration of services to improve continuity and avoid duplication.