The Balanced Budget Act of 1997 established the Medicare Rural Hospital Flexibility Grant Program with the intent to assist rural hospitals and improve access through critical access hospital (CAH) designation. The Flex program provides funding to States for the designation of Critical Access Hospitals (CAHs) in rural communities. Medicare reimburses CAHS on a reasonable cost basis for inpatient and outpatient services (including lab and qualifying ambulance services) provided to Medicare patients.
With the vast majority of CAHs having been converted, the Flex program has evolved into a program that assists CAHs through providing funding to state governments to spur quality and performance improvement activities; stabilize rural hospital finance; and integrate emergency medical services (EMS) into their health care systems. Only States with CAHs or potential CAHs are eligible for the Flex program.
Flex funding encourages the development of cooperative systems of care in rural areas -- joining together CAHs, EMS providers, clinics, and health practitioners to increase efficiencies and quality of care.
The Flex program focuses on four core areas:
The Flex Program has also begun a new special project, the Medicare Beneficiary Quality Improvement Project (MBQIP) focused on Medicare Beneficiary Health Status improvement.
Section 1820(j) of the Social Security Act (42 U.S.C. 1395) as reauthorized in the Medicare Improvements for Patients and Providers Act of 2008