Flex Program

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.

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.

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. 

To evaluate the impact of the Flex Program, FORHP also supports the Flex Monitoring Team (FMT). The FMT is a consortium of three university-based rural health research centers in Minnesota, North Carolina, and Maine. The FMT aims to improve the accessibility, viability, and quality of health care for rural residents and communities through their evaluation. Resources available include analysis summaries, state- and national-level CAH data, a national database of CAHs, presentations, findings, and policy briefs on the program areas of the Flex Program.

Specific explanation of the Flex Program funding guidance provides a further dive into the Program’s components and desired outcomes. Contacts for each state Flex Program can be found on the State Flex Program Profile page for each state. Annually, TASC updates the Flex Program Fundamentals guide to serve as a resource guide to those intimately involved with state Flex Program administration. TASC also maintains and supports a secure, web-based message forum for use by the state Flex Programs called the Flex Program Forum.


For more information, please contact Tracy Morton at (218) 216-7027 or tmorton@ruralcenter.org.

This project is/was supported by the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) under grant number UB1RH24206, Information Services to Rural Hospital Flexibility Program Grantees, $1,560,000 (0% financed with nongovernmental sources). This information or content and conclusions are those of the author and should not be construed as the official position or policy of, nor should any endorsements be inferred by HRSA, HHS or the U.S. Government.