What is the Medicare Rural Hospital Flexibility Program?

what-is-the-medicare-rural-hospital-flexibility-programThe Medicare Rural Hospital Flexibility Program is also called the Flex Program. It’s a federal fund-granting program that reimburses rural hospitals for critical care for Medicare and Medicaid patients. It’s offered through the Health Resources Services Administration, a division of the U.S. Department of Health and Human Services. Congress created the Flex Program when it passed the Balanced Budget Act of 1997. Since then, 45 states have adopted the funding program.

Hospital Eligibility

The funds are intended to improve:

  • hospital quality
  • performance
  • reporting
  • benchmarks

In order to receive money from the program, a hospital must be classified as a Critical Access Hospital, or CAH. Not all rural hospitals are CAHs, even if there are no other hospitals nearby, but many rural hospitals have converted their facilities to meet the CAH requirements.

To be considered a CAH, a hospital must be located in a rural area at least 35 miles from another hospital. It must be certified by the state as a necessary healthcare services provider. Twenty-four hour emergency care services must be provided by the hospital, and the state must determine that the services are necessary for the area. State verification ensures that Flex Program funds only go to hospitals that perform necessary services in rural areas. The services performed include outpatient care, such as:

  • lab analysis
  • emergency services
  • limited inpatient care

The Purpose of the Flex Program

To be considered a CAH, a hospital can have no more than 25 acute care beds and an average length of patient care of no more than 96 hours. These restrictions ensure that CAHs provide critical care for the largest number of patients possible. Hospitals that aren’t classified as CAHs can convert their facilities using state funds and then apply for the Medicare Rural Hospital Flexibility program the next year. To participate in the program, states must operate at least one rural healthcare network and work towards regionalization of rural healthcare throughout the state. Additionally, quality and accessibility of healthcare services for rural residents must be a state priority.

The Flex Program is based on state healthcare legislation from the 1990s, including the Rural Primary Care Hospital program and the Essential Access Community Hospital program. The law is also based on Montana’s Medical Assistance Facility project. The project encouraged states to work with hospitals to provide emergency care and other limited services to people in rural areas. Like the Flex program, these earlier laws were intended to improve hospital quality and performance as well as reporting and benchmarks, but they were only available in a few states. The Flex Program is national and offers more than $22 million in funding for rural healthcare providers. Each hospital is eligible for up to $750,000 per year in reasonable reimbursement for critical patient care. The funding is distributed through state governments.

One of the most important goals of the program is to improve hospital records of Time Critical Diagnoses so that rural patients receive prompt treatment for serious illnesses. Another important outcome is to improve Emergency Medical Services efficiency and performance in rural areas.

Healthcare is one of the most important and fastest-growing sectors of the economy. Why? Because modern medical technology has the ability to increase the length and quality of people’s lives. The federal government offers the Medicare Rural Hospital Flexibility Program to ensure that rural Americans get the same healthcare services as urban residents.