The Balanced Budget Act of 1997 established the Medicare Rural Hospital Flexibility Program (Flex Program) which consists of two separate but complementary components:

1. a Medicare reimbursement component that provides approved cost-based reimbursement for certified Critical Access Hospitals (CAHs) and
2. a state grant component administered by the Federal Office of Rural Health Policy (ORHP) to strengthen the rural healthcare infrastructure using CAHs as the hubs of organized systems of care.

This briefing paper focuses on the state grant component of the Flex Program, examining the objectives and project activities proposed by states in their Flex Program grant applications for Fiscal Year 2004 and highlights recent trends in State Flex Program planning, development, and implementation. Both an executive summary document and the full report are available for download below: