Using grant funding for innovative projects

As part of the Balanced Budget Act of 1997, Congress created the Medicare Rural Hospital Flexibility Program for limited-service hospitals. The program is intended to bolster fragile rural service through network development. As part of the program, states may create a program to convert hospitals to critical access hospital (CAH) status. CAH designation gives very small, rural hospitals staffing flexibility for providing emergency, outpatient, and short-stay inpatient services and Medicare reimbursement on a reasonable cost basis. Michigan now has 14 critical access hospitals.