The Medicare Rural Hospital Flexibility (Flex) Program, established by the Balanced Budget Act of 1997 (Public Law 105-33), is available to all 50 states. Its intent is to allow rural communities to preserve access to primary care and emergency health care services, provide health care services that meet community needs, and help assure the financial viability of small, rural hospitals. The Flex Program enables certain rural hospitals to be classified as Critical Access Hospitals. A Critical Access Hospital (CAH) is able to improve its financial stability through enhanced Medicare reimbursement and reduced operating costs. In Oregon the process of designation is coordinated by the Oregon Office of Rural Health, and is called the Critical Access Hospital Program. To qualify as a CAH, the hospital must meet/agree to the following requirements:
- Be a for-profit, non-profit, or public hospital that is open and operating. Hospitals that have either closed or downsized to health centers or clinics in the past 10 years (from November 29, 1999) are also eligible for CAH designation;
- Be located more than a 35-mile drive (or, in the case of mountainous terrain or in areas with only secondary roads available, a 15-mile drive) from a hospital or another CAH, or before January 1, 2006, the CAH is certified by the State as being a necessary provider of health care services to residents in the area. A CAH that is designated as a necessary provider as of December 31, 2005, will maintain its necessary provider designation after January 1, 2006;
- Be located in a rural area or classified by the Secretary as rural in an urban county if located in a census tract that is considered rural under the most recent update of the Goldsmith Modification; or located in an area designated by State law or regulation as a rural area or designated by the state as rural providers; or meets other criteria as specified by the Secretary;
- May maintain beds that are used solely for the provision of observation services without having these beds count toward the statutory maximum of 25 CAH inpatient beds. State Survey/Licensure Agencies, however, must examine carefully CAH provision of outpatient observation services to ensure they are consistent with the statutory limit of 25 CAH inpatient beds having an annual average length of stay which does not exceed 96 hours per patient;
- Have an annual average length of stay of less than 96 hours;
- Make available 24 hour emergency services and nursing services but need not meet all the staffing and service requirements that apply to other hospitals;
- Participate in a rural health network, which is defined as an organization consisting of at least one CAH and at least one non-CAH hospital where participants have entered into specific agreements regarding patient referral and transfer, communication, and
- Establish credentialing and quality assurance agreements with at least one network partner hospital, a Quality Improvement Organization or equivalent, or another entity identified in the rural health plan of the state.
Potential benefits of being a Critical Access Hospital include the following:
- Reimbursed at 101% of reasonable costs for inpatient, outpatient and laboratory services.
- Extends cost-based reimbursement to additional on-call emergency care providers.
- Ability to bill under the all-inclusive rate structure (this allows the hospital to bill for both the hospital and patient services).
- Reasonable cost-based reimbursement for ambulance services provided to Medicare beneficiaries if the ambulance service is owned and operated by the CAH and is the only service within 35-miles of the CAH.
- Opportunity to receive period interim payments, as is currently the case for eligible hospitals, skilled nursing facilities, and hospices.
- A mid-level practitioner (physician assistant or nurse practitioner) may provide inpatient care under remote supervision of a physician.
- Permission to establish psychiatric and rehabilitation distinct part units.
- Opportunity to collaborate, access programs and funding through the Oregon Office of Rural Health Flex Program.
Hospitals that are potentially eligible for designation as CAHs, and the communities in which they are located, are able to receive free technical assistance in the following areas:
- integration of emergency medical services
- quality improvement programs
- community health planning
- network development
For more information about the Flex Program, please contact Shellye Dant, Community Grants Coordinator, (503) 494-4450.