The Critical Access Hospitals (CAH) program was designed to improve rural health care access and reduce hospital closures. Critical Access Hospitals provide essential services to a community and are reimbursed by Medicare on a "reasonable cost basis" for services provided to Medicare patients.

For a comprehensive FAQ about Critical Access Hospitals, please see this excellent page at the Rural Assistance Center.

For more information, visit CMS' Critical Access Hospitals Center.

History

The Balanced Budget Act of 1997 established the Medicare Rural Hospital Flexibility Program (FLEX), creating the Critical Access Hospital (CAH) as a new Medicare provider type eligible for cost-based reimbursement. The Flex Program provides funding to the States to assist in the designation of Critical Access Hospitals and the development of rural networks to improve access to care.

This program is based on the experiences of demonstration projects from the early 1990s where States developed networks of limited-service hospitals and other providers to improve access to care in rural areas.