Critical Access Hospitals (CAH)

The Balanced Budget Act of 1997 (BBA) established the Medicare Rural Hospital Flexibility Program, which effectively replaced the Essential Access Community Hospital/Rural Primary Care Hospital (EACH/RPCH) program and established the "Critical Access Hospital" (CAH) designation.  Any state may establish a rural hospital flexibility program if it submits assurances that the state has developed a state rural hospital flexibility plan that provides for the creation of the rural health networks, promotes regionalization of rural health services, and improves access to hospitals and other services for rural residents.  Hospitals that ultimately qualify for CAH designation will be reimbursed on a "reasonable cost basis" for inpatient and outpatient services (including lab) provided to Medicare patients.