The Medicare Rural Hospital Flexibility Program Reaches Sweet 16

By Sally Buck, CEO

It is an exciting time for the Medicare Rural Hospital Flexibility (Flex) Program state grantees and partners as we recognize the program has reached its sweet 16, which is to say 16 years in existence. The Flex program was born as part of the Balanced Budget Act of 1997 to provide funding to states for the designation of critical access hospitals (CAHs) in rural communities and allows hospitals to be reimbursed on a reasonable cost basis for inpatient and outpatient services provided to Medicare patients. There are now 1,326 CAHs in the Flex program that play an essential role in sustaining rural health care.

The National Rural Health Resource Center (The Center) has the pride of a parent seeing their "child" reach this milestone of 16 years. Terry Hill, former Executive Director of The Center, was involved in the initial development of the Flex Program with the Federal Office of Rural Health Policy (FORHP) to support small rural hospitals in the conversions, development of networks, quality improvement and financial stabilization. Through a contract, The Center established an innovative technical assistance model: Technical Assistance and Services Center (TASC) in 1998 to provide information and education about Flex to the state grantees and their partners. 

In the infancy, TASC supported the states with development of rural health plans and creating "any necessary provider" rules, financial feasibility tools for assessing conversions. Through the toddler years, TASC provided state Flex grantees with education on cost reports, establishing networks for care transitions and quality improvement. It’s hard to imagine, but when we started, we didn’t have webinar technology, and the webpages were often static pages without search functions.

By the 10 year mark, the Flex program had moved into CAHs with swing beds to accommodate post acute care services. The "any necessary provider" rules reached their sunset, and conversions to CAH status dramatically declined. Flex programs and TASC mobilized to support CAHs to trauma designations through emergency medical services (EMS) and CAH training and regional planning. With a decade of experience, TASC, the Flex Monitoring Team (FMT) and state Flex programs worked together to provide CAHs with more data about the financial, quality and community engagement status within their state and nationally. Hospital Compare was launched by the Centers for Medicare & Medicaid Services (CMS), and although CAHs weren't required to report quality, hundreds of performance indicators became more important for all hospitals.

As the Flex program reached the awkward stage of the teenage years, the grantees adapted to new reporting requirements, and outcome-focused work plans. CAHs were watching the transformation of health care payment models evolve without a small volume option. A new initiative, the Medicare Beneficiary Quality Improvement Program (MBQIP) was introduced by FORHP in 2010 to increase quality reporting by CAHs with rural relevant measures and data to spur quality improvement efforts. This was a critical activity as CAHs were experiencing some bullying about their performance. With MBQIP, the Flex program has dramatically increased quality reporting by CAHs and states have implemented  a number of initiatives to improve patient safety, satisfaction and patient outcomes.

Now at 16 years of age, Flex is developing a vision of what it will become in the future as a mature program and what impact Flex, with over 1,300 CAHs, will have on rural health care in the U.S. and the thousands of communities served. With the changes in health care delivery and payment, the Flex Program needs to continue to share best practices, learn from peers and experts to ensure small rural hospitals can continue to improve care and the health of rural communities and reduce costs. Happy Sweet 16 to the Flex Program, and best wishes for many more successful years to come!