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42 U.S. Code § 1395i-4. Medicare rural hospital flexibility program
(a) Establishment
Any State that submits an application in accordance with subsection (b) may establish a medicare rural hospital flexibility program described in subsection (c).
(b) ApplicationA State may establish a medicare rural hospital flexibility program described in subsection (c) if the State submits to the Secretary at such time and in such form as the Secretary may require an application containing—
(1) assurances that the State—
(A) has developed, or is in the process of developing, a State rural health care plan that—
(i)
provides for the creation of 1 or more rural health networks (as defined in subsection (d)) in the State;
(ii)
promotes regionalization of rural health services in the State; and
(iii)
improves access to hospital and other health services for rural residents of the State; and
(B)
has developed the rural health care plan described in subparagraph (A) in consultation with the hospital association of the State, rural hospitals located in the State, and the State Office of Rural Health (or, in the case of a State in the process of developing such plan, that assures the Secretary that the State will consult with its State hospital association, rural hospitals located in the State, and the State Office of Rural Health in developing such plan);
(2)
assurances that the State has designated (consistent with the rural health care plan described in paragraph (1)(A)), or is in the process of so designating, rural nonprofit or public hospitals or facilities located in the State as critical access hospitals; and
(3)
such other information and assurances as the Secretary may require.
(c) Medicare rural hospital flexibility program described
(1) In generalA State that has submitted an application in accordance with subsection (b), may establish a medicare rural hospital flexibility program that provides that—
(A)
the State shall develop at least 1 rural health network (as defined in subsection (d)) in the State; and
(B)
at least 1 facility in the State shall be designated as a critical access hospital in accordance with paragraph (2).
(2) State designation of facilities
(A) In general
A State may designate 1 or more facilities as a critical access hospital in accordance with subparagraphs (B), (C), and (D).
(B) Criteria for designation as critical access hospitalA State may designate a facility as a critical access hospital if the facility—
(i) is a hospital that is located in a county (or equivalent unit of local government) in a rural area (as defined in section 1395ww(d)(2)(D) of this title) or is treated as being located in a rural area pursuant to section 1395ww(d)(8)(E) of this title, and that—
(I)
is located more than a 35-mile drive (or, in the case of mountainous terrain or in areas with only secondary roads available, a 15-mile drive) from a hospital, or another facility described in this subsection; or
(II)
is certified before January 1, 2006, by the State as being a necessary provider of health care services to residents in the area;
(ii)
makes available 24-hour emergency care services that a State determines are necessary for ensuring access to emergency care services in each area served by a critical access hospital;
(iii)
provides not more than 25 acute care inpatient beds (meeting such standards as the Secretary may establish) for providing inpatient care for a period that does not exceed, as determined on an annual, average basis, 96 hours per patient;
(iv) meets such staffing requirements as would apply under section 1395x(e) of this title to a hospital located in a rural area, except that—
(I)
the facility need not meet hospital standards relating to the number of hours during a day, or days during a week, in which the facility must be open and fully staffed, except insofar as the facility is required to make available emergency care services as determined under clause (ii) and must have nursing services available on a 24-hour basis, but need not otherwise staff the facility except when an inpatient is present;
(II)
the facility may provide any services otherwise required to be provided by a full-time, on site dietitian, pharmacist, laboratory technician, medical technologist, and radiological technologist on a part-time, off site basis under arrangements as defined in section 1395x(w)(1) of this title; and
(III)
the inpatient care described in clause (iii) may be provided by a physician assistant, nurse practitioner, or clinical nurse specialist subject to the oversight of a physician who need not be present in the facility; and
(v)
meets the requirements of section 1395x(aa)(2)(I) of this title.
(C) Recently closed facilitiesA State may designate a facility as a critical access hospital if the facility—
(i)
was a hospital that ceased operations on or after the date that is 10 years before November 29, 1999; and
(ii)
as of the effective date of such designation, meets the criteria for designation under subparagraph (B).
(D) Downsized facilitiesA State may designate a health clinic or a health center (as defined by the State) as a critical access hospital if such clinic or center—
(i)
is licensed by the State as a health clinic or a health center;
(ii)
was a hospital that was downsized to a health clinic or health center; and
(iii)
as of the effective date of such designation, meets the criteria for designation under subparagraph (B).
(E) Authority to establish psychiatric and rehabilitation distinct part units
(i) In generalSubject to the succeeding provisions of this subparagraph, a critical access hospital may establish—
(I)
a psychiatric unit of the hospital that is a distinct part of the hospital; and
(II)
a rehabilitation unit of the hospital that is a distinct part of the hospital,
if the distinct part meets the requirements (including conditions of participation) that would otherwise apply to the distinct part if the distinct part were established by a subsection (d) hospital in accordance with the matter following clause (v) [1] of section 1395ww(d)(1)(B) of this title, including any regulations adopted by the Secretary under such section.
(ii) Limitation on number of beds
The total number of beds that may be established under clause (i) for a distinct part unit may not exceed 10.
(iii) Exclusion of beds from bed count
In determining the number of beds of a critical access hospital for purposes of applying the bed limitations referred to in subparagraph (B)(iii) and subsection (f), the Secretary shall not take into account any bed established under clause (i).
(iv) Effect of failure to meet requirements
If a psychiatric or rehabilitation unit established under clause (i) does not meet the requirements described in such clause with respect to a cost reporting period, no payment may be made under this subchapter to the hospital for services furnished in such unit during such period. Payment to the hospital for services furnished in the unit may resume only after the hospital has demonstrated to the Secretary that the unit meets such requirements.