Understanding Critical Access Hospitals


In 1997 legislation was enacted as part of the Balanced Budget Act that authorized each state to establish a State Medicare Rural Hospital Flexibility Program (aka Flex Program) under which certain facilities that participated in the Medicare program could become Critical Access Hospitals (CAHs). These were current hospitals with Medicare participation; hospitals that stopped operating after November 29, 1989 or health clinics or centers (as defined by the state) that ceased operation as a hospital but now operate as a health clinic or center.

The program began in response to a growing concern about access to care for Americans living in rural areas. There was fear that without financial assistance rural hospitals would close and people in these areas would not have access to quality care.

The Flex program provided grants to each state to implement a CAH program. Every state except Connecticut, Delaware, Rhode Island, Maryland and New Jersey has a State Flex Program.


CAHs are certified under a different set of Medicare Conditions of Participation that are more flexible than acute care hospital Conditions of Participation. This designation allows them to become certified to receive cost-based reimbursement from Medicare. This special reimbursement that CAHs receive is intended to improve their financial performance and thereby maintain access to basic health care in rural areas by providing rural health networks and rural emergency medical services.

CAH Requirements:
To be eligible as a CAH today the following requirements must be met:

  • The facility must be licensed as an acute care hospital.
  • Be located in a rural area (or be treated as rural)
  • Demonstrate compliance with the Conditions of Participation as outlined in the Federal Register.
  • Provide (24) hour emergency services (7) days per week using staff on-site or on call. If they are on-call they must be able to get onsite within either 30 or 60 minutes. This requirement varies by state.
  • The staff on call or on-site must meet their state licensure requirements, but the Medicare Conditions of Participation specify that the coverage could be performed by a medical doctor (MD) or doctor of Osteopathy (DO), a physician assistant (PA), a nurse practitioner (NP) or clinical nurse specialist (CNS) with documented training or experience in emergency care
  • Have no more than (25) inpatient beds that can be used for either inpatient care or swing bed services.
  • It may also operate as a distinct part rehabilitation or psychiatric unit.
  • The average length of stay must be no more than (96) hours for inpatient acute care. This excludes the swing beds and beds that are within the distinct part units.
  • They must link to other hospitals to foster quality improvement.
  • Be over a (35) mile distance from another hospital, or (15) miles from another hospital in mountainous terrain or areas with only secondary roads or be certified as a CAH prior to January 1, 2006 and designated by the state as a necessary provider.


The benefits of CAH status include:

  • Cost-based reimbursement from Medicare, which has the potential to increase revenue. As of January 1, 2004, CAHs are eligible for cost plus 1% reimbursement.
  • A specific focus on the local rural communities needs.
  • The network support of an acute care hospital. This is often done through telemedicine.
  • Flexible staffing and services, to the extent that state licensure laws permit them. Each state has different rules and regulations for licensure.
  • Capital improvement costs are included in allowable costs for determining Medicare reimbursement.
  • Access to their State’s Flex Program grants.

Number of CAHs:

As of September 30, 2012, there are 1,330 certified Critical Access Hospitals located throughout the United States. This represents more than 25 percent of all US hospitals.

The Flex monitoring team keeps a comprehensive list of all Critical Access Hospitals along with their name, address, city, state, zip code and the start date for their CAH status.

Key Abbreviations to Remember:

Critical Access Hospital = CAH
Conditions of Participation = CoP

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