Critical Access Hospitals (CAHs) are a specific category of rural hospital designated by the federal government to ensure healthcare access in remote and underserved areas. This designation was developed to maintain a local source of medical care in communities where a traditional hospital may not be financially viable. The CAH program provides essential services to these populations, helping to stabilize the healthcare network across the country’s vast rural geography.
The Current National Count
As of early 2025, there are approximately 1,377 to 1,386 Critical Access Hospitals operating across the United States, according to data from sources like the Flex Monitoring Team and the Centers for Medicare & Medicaid Services (CMS). This total number fluctuates slightly but represents nearly one-quarter of all acute care hospitals nationwide. CAHs are located in 45 states; Connecticut, Delaware, Maryland, New Jersey, and Rhode Island are the only states without them due to higher population density.
The distribution of these hospitals is heavily concentrated in less populated, geographically larger states. Texas leads the nation with the highest number of CAHs, followed closely by Iowa and Kansas, which have significant rural populations relying on these facilities for local care. The states in the Midwest region account for the largest share of the national total.
Requirements for Critical Access Hospital Status
The Critical Access Hospital designation was established by the Balanced Budget Act of 1997 (BBA) in response to rural hospital closures. To qualify for this status, hospitals must meet specific statutory and regulatory criteria set forth by the Centers for Medicare & Medicaid Services (CMS). A fundamental requirement is that the facility must be located in a rural area or an area treated as rural under federal guidelines.
A designated CAH is limited to maintaining no more than 25 acute care inpatient beds, which can be used interchangeably for acute care or swing-bed services. These hospitals must maintain an annual average length of stay for acute care patients of 96 hours or less, reinforcing their role as short-term care facilities. Every CAH must also furnish 24-hour emergency care services seven days a week.
A location-based criterion requires the hospital to be situated more than a 35-mile drive from any other hospital or CAH when using primary roads. This distance is reduced to more than a 15-mile drive in areas characterized by mountainous terrain or only secondary roads. Prior to January 1, 2006, a hospital could also be designated as a CAH if the state certified it as a “necessary provider,” allowing some facilities to bypass the distance requirements.
Importance in the Rural Healthcare Landscape
The Critical Access Hospital program was created to reduce the financial vulnerability of small rural hospitals and prevent them from closing. By receiving the CAH designation, these facilities stabilize their operations and continue serving their communities, often acting as the sole source of local medical care. The designation ensures that residents in remote areas do not face excessive travel distances to reach a hospital, which is important for time-sensitive emergency care.
The primary mechanism that makes CAHs financially viable is a change in how they are reimbursed by Medicare. Unlike traditional hospitals, which are paid under a prospective payment system (PPS) based on fixed rates, CAHs receive cost-based reimbursement, typically 101% of their allowable costs for most inpatient and outpatient services. This cost-based model helps shield these smaller facilities from the financial strain of low patient volumes and high fixed operating costs.
Beyond financial stability, the program encourages states to strengthen their rural healthcare delivery system through the Medicare Rural Hospital Flexibility Program, or Flex Program. This program supports CAHs by providing resources and grants focused on improving quality of care, financial performance, and emergency medical services. Stabilizing these local hospitals helps maintain a comprehensive safety net, which is important for the elderly population and Medicare beneficiaries living in rural America.