rural hospital flexibility program

DPHHS Rural Hospital Flexibility Program

Background/history

The design of the Medicare Rural hospital Flexibility (Flex) Program was in part based on a Medical Assistance Facility (MAF) demonstration project concept by the Director of the Montana Department of Health and Environmental Services (DHES) in late 1985 along with the formation of a MT Rural Health Task Force by DHES in 1986. 

MAFs were initially developed through a joint venture between the Quality Assurance Division (QAD) and the Montana Health Research and Education Foundation (MHREF), a subdivision of the Montana Hospital Association, through a demonstration project grant received by MHREF in 1987. Medicare waivers were received in 1990.

The Flex Program was established by the Balanced Budget Act of 1997. Any state with rural hospitals and a state rural health plan may establish a Flex Program and apply for federal funding.  DPHHS is the designated Flex Program awardee and by appointment of the Governor, QAD manages the Flex award.

Flex legislation also created critical access hospitals (CAHs) as a Medicare provider type. Montana currently has 49 CAH-designated facilities.  There are minimum reporting requirements for the Medicare Beneficiary Quality Improvement Project (MBQIP) for CAHs to participate in Flex Program.

Montana received its first Flex award in September 1999 and continues this 20-year joint venture with MHREF.

The Flex Program requires states to develop rural health plans and funds their efforts to implement community-level outreach in the following program areas:

  1. CAH Quality Improvement (required)
  2. CAH Operational and Financial Improvement (required)
  3. CAH Population Health Improvement (optional)
  4. Rural Emergency Medical Services (EMS) Improvement (optional)
  5. Rural Innovative Model Development (optional)
  6. CAH Designation (required if requested)

“This program is supported by the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) as part of an award totaling $806,474 with zero percentage financed with nongovernmental sources. The contents are those of the author(s) and do not necessarily represent the official views of, nor an endorsement, by HRSA, HHS or the U.S. Government.”