Medicare Rural Hospital Flexibility (Flex) Program


The State Office of Rural Health, part of the Bureau of Community Health Systems (BCHS) in the Kansas Department of Health and Environment (KDHE) is the recipient of the FLEX program in Kansas. The Office of Rural Health uses Flex resources for performance management activities, training programs, needs assessments, and network building.

Balanced Budget Act (BBA)

The Medicare Rural Hospital Flexibility (Flex) Program was established by the Balanced Budget Act (BBA) of 1997. Any state with rural hospitals may establish a Flex Program and apply for federal funding that provides for the creation of rural health networks, promotes regionalization of rural health services and improves access to hospitals and other services for rural residents. The Federal Office of Rural Health Policy (FORHP) funds the Flex Program.

Critical Access Hospitals

The BBA of 1997 also created critical access hospitals (CAHs). CAH designation allows the hospital to be reimbursed on a reasonable cost basis for inpatient and outpatient services provided to Medicare patients (including lab and qualifying ambulance services) and, in some states, Medicaid patients.

Program Areas

Flex funding encourages the development of cooperative systems of care in rural areas, joining together CAHs, emergency medical service (EMS) providers, clinics, and health practitioners to increase efficiencies and quality of care. The Flex Program requires states to develop rural health plans and funds their efforts to implement community-level outreach. The Flex Program includes support for the following five program areas:

  • CAH Quality Improvement (required)
  • CAH Operational and Financial Improvement (required)
  • CAH Population Health Improvement (optional)
  • Rural Emergency Medical Services (EMS) Improvement (optional)
  • Rural Innovative Model Development (optional)
  • CAH Designation (required if requested)


The design of the Flex Program was based on the experiences of the Medical Assistance Facility (MAF) Demonstration Project and the Rural Primary Care Hospital (RPCH) Project. MAFs were initially developed through a demonstration project of the Montana Health Research and Education Foundation (MHREF) in 1987 and received Medicare waivers in 1990.

Medicare Beneficiary Quality Improvement Project (MBQIP)

The Medicare Beneficiary Quality Improvement Project (MBQIP) is a quality improvement activity under the Medicare Rural Hospital Flexibility (Flex) grant program of the Health Resources and Services Administration's Federal Office of Rural Health Policy (FORHP).

The goal of MBQIP is to improve the quality of care provided in critical access hospitals (CAHs), by increasing quality data reporting by CAHs and then driving quality improvement activities based on the data. This project provides an opportunity for individual hospitals to look at their own data, measure their outcomes against other CAHs and partner with other hospitals in the state around quality improvement initiatives to improve outcomes and provide the highest quality care to each and every one of their patients.

KDHE has contracted with KRHOP to administer this program. KRHOP offers technical support, information, networking opportunities, funding and other resources to Critical Access Hospitals and other rural providers.

MBQIP Resources & Information for Hospitals

Critical Access Hospital (CAHs)

A Medicare-participating hospital can become certified and remain certified as a CAH by meeting the following regulatory requirements (this list is not all-inclusive but indicates some of the basic criteria):

  • Located in a state that established a rural health plan for MRHFPs (as of February 2018, only Connecticut, Delaware, Maryland, New Jersey, and Rhode Island have not established MRHFP State Rural Plans).
  • Located in a rural area or an area treated as rural under a special provision that allows treating qualified hospital providers in urban areas as rural (refer to 42 CFR 412.103 regulations). A CAH has a 2-year transition period to reclassify as rural if its location changes to an urban area due to changes in Office of Management and Budget (OMB) designation.
  • Furnishes 24-hour emergency services, 7 days a week, using either on-site or on-call staff, with specific on-site, on-call staff response times.
  • Does not exceed 25 inpatient beds also used for swing bed services. It may operate a distinct part rehabilitation and/or psychiatric unit, each with up to 10 beds. CAHs with distinct part units (DPUs) must follow all hospital CoP and CAH CoP.
  • Report an annual average acute care inpatient length of stay (LOS) of 96 hours or less (excluding swing bed services and DPU beds). Medicare does not assess this requirement on initial certification and only applies after CAH certification.
  • A CAH that has not been designated by a state as a necessary provider prior to December 31, 2005, must 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 any other CAH or hospital.

For More Information about the CMS Critical Access Hospital Program:

Kansas Rural Health Options Project

The Kansas Rural Health Options Program (KRHOP) is a public/private partnership of not-for-profit and governmental organizations formed in the early 1990s to address serious challenges to Kansas's rural health system. Today, KRHOP continues to offer technical support, funding, networking opportunities, and other resources to rural providers, through the administration of the Medicare Rural Hospital Flexibility (FLEX) Program.

Visit the Kansas Rural Health Options Project website.