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Rural Hospital Flexibility Program


The mission of the Rural Hospital Flexibility Program is to work closely with rural hospitals to strengthen rural health infrastructure. A major goal is to increase effectiveness and efficiency of local and rural health programs.


The Rural Hospital Flexibility program allows small hospitals the flexibility to reconfigure operations and be licensed as Critical Access Hospitals (CAHs). The program supports cost-based reimbursement for Medicare acute inpatient and outpatient services. The program also encourages the development of rural health networks and implements broader initiatives to strengthen the rural health care infrastructure.

The new provisions in the Medicare Prescription Drug, Improvement and ModerZnization Act of 2003 allows even greater flexibility by letting CAHs to have up to 25 beds (versus 15 beds) designated as either acute care beds or swing beds for post-acute care. This Medicare law further increases the payment for both inpatient and outpatient services rendered to Medicare beneficiaries by CAHs from 100 to 101 percent of resonable costs. The new Medicare law is intended to increase the viability of health care services in rural areas.


  • Engage in Rural Health Planning
  • Designate and Support Critical Access Hospitals (CAHs)
  • Develop and Implement Rural Health Networks
  • Improve and Integrate Emergency Medical Services
  • Improve Quality of Care


  • Support and sustain existing networks and assist with the development of new networks.
  • Support development and implementation of Hospital Quality Improvement Measurements.
  • Assist compacted, tribally administered Indian Health Service Hospitals to assess the benefits of
  • Critical Access Hospital designation and implement performance improvement measures.
  • Develop strategy-focused state rural health plan with measurable targets related to Flex program values and Healthy Alaskans/Health People 2010 indicators.
  • Support program evaluation activities and initiatives.
  • Enhance rural Emergency Medical Services capacity and quality through the continued implementation of the Alaska Code Blue Project.
  • Develop and implement strategies to improve quality of care that can be implemented and maintained by Critical Access Hospitals.
  • Improve the quality of rural Emergency Medical Services and hospital trauma care through implementing quality improvement measures.
  • Support rural workforce development in collaboration with multiple statewide agencies by devising and implementing strategies for provider recruitment and training.
  • Engage all levels of the rural health care infrastructure in strategic planning.

Critical Access Hospital Designation Process

Critical Access Hospital designation under the Medicare Rural Hospital Flexibility Program requires that a hospital first be designated and then licensed by the State and certified by the federal government.

The Process

  • A provider requests certification
  • An on-site survey is conducted by Health Facilities Licensing and Certification staff to determine if the facility meets applicable State and Federal law and regulations
  • If requirements are met, the facility is licensed and certified to provide health care services
  • The State Rural Hospital Flexibility Program requires a designation that the hospital is eligible to participate in the program and convert to a Critical Access Hospital


Application for CAH Designation

A hospital that wishes to be designated as a CAH is required to submit an application to Health Facilities Licensing and Certification. Application forms are provided to hospitals that have expressed interest in CAH conversion, either formally (e.g., submission of a letter of inter) or informally (e.g., a telephone call). The application form is available at .



George Ives

phone: (907) 269-3445
fax: (907) 269-5236