(1) The Cabinet for Health and Family Services shall make application to the Secretary of the United States Department of Health and Human Services to establish a Medicare Rural Hospital Flexibility Program in accordance with 42 U.S.C. sec. 1395i-4, as amended by the Balanced Budget Act of 1997, Pub. L. 105-33.
(2) The cabinet shall develop and submit as part of its application a rural health plan that:
(a) Provides for the creation of one (1) or more rural health networks;
(b) Promotes regionalization of rural health services in the state;
(c) Improves access to hospital and other health services for rural residents of the state; and (d) Designates rural hospitals as critical access hospitals.
(3) The secretary shall designate as a critical access hospital any facility which complies with the provisions of KRS 216.380.