With $50 billion set to movement to states over the subsequent 5 years, CMS’ new Rural Health Transformation Program represents one of many largest federal investments in rural healthcare in many years. Nevertheless, specialists imagine that it’s going to fall in need of addressing the continued vulnerabilities that maintain rural hospitals and clinics in such dire monetary circumstances.
CMS’ new fund is a part of the One Big Beautiful Bill Act, which was signed into regulation in July. Final month, the company introduced how the fund will work and invited states to use.
This system will distribute $50 billion to states between fiscal yr 2026 and financial yr 2030, with $10 billion launched every year. That represents roughly a 50% increase in federal spending on rural healthcare, which at present totals about $19 billion per yr by means of Medicaid.
To qualify for funding, states should submit an in depth plan outlining how they intend to make use of the cash to enhance rural healthcare. All 50 states have already filed their intent to use for the funding, with grant functions due by November 5 and funding to be allotted by the tip of this yr.
Simply how dire is the state of rural healthcare? About a third of rural hospitals are at present susceptible to closure. Most rural suppliers struggle with low affected person volumes, excessive mounted prices, heightened workforce shortages and heavy reliance on Medicaid and Medicare reimbursement.
CMS desires to “right-size” the agricultural healthcare system
CMS Administrator Dr. Mehmet Oz framed the fund as a “grand experiment” throughout a chat final week at Sanford Health’s Annual Summit on the Future of Rural Health Care. He mentioned it’s time to rethink the agricultural care mannequin, prioritizing sustainability and high quality.
“We wish transformative, massive concepts that can dramatically change our expectations of the agricultural healthcare system,” Dr. Oz declared.
CMS’ new fund doesn’t search to easily pay payments or patch over issues — quite, this system goals to “right-size” and modernize healthcare supply in rural communities, he defined.
As a part of that effort, CMS will reevaluate the quantity and varieties of rural hospitals and clinics wanted in every area. Dr. Oz additionally mentioned that the company will encourage partnerships between giant well being programs and smaller rural services. Bigger hospitals might assist maintain native suppliers by providing providers like telehealth and specialty care.
Dr. Oz added that this system additionally goals to strengthen the agricultural workforce by means of funding for regional coaching packages for nurses and physicians, in addition to by probably increasing the function of present suppliers. For instance, pharmacists might play a larger function in addressing routine points — similar to prescribing treatment refills or diagnosing strep throat by way of telehealth consultations — to enhance sufferers’ entry and cut back their pointless journey.
Political repair or structural resolution?
Though Dr. Oz is adamant that CMS’ new fund isn’t designed to simply apply fast fixes, one healthcare skilled mentioned the undertaking dangers repeating the identical dependency issues created by non permanent Inexpensive Care Act subsidies.
Michael Abrams, managing associate of Numerof & Associates, warned that whereas this new funding may also help hospitals and states launch necessary initiatives, lots of these packages might utterly crumble after this five-year fund runs out.
“An terrible lot of individuals in healthcare are usually not enterprise folks, in order that they don’t perceive one thing as simple as this: If you happen to construct a program that continually spends greater than it makes, and it solely will get by due to a particular occasion like this bailout fund, when the bailout fund stops, this system both finds one other supply or it collapses,” Abrams declared.
He known as CMS’ fund as a “band-aid resolution” pushed extra by political compromise than by a real effort to resolve rural healthcare’s structural issues.
Abrams famous that the fund was launched into the One Massive Lovely Invoice Act as a gesture for hospitals and rural lawmakers in mild of the Trump administration’s funds plan — which incorporates greater than $911 billion in Medicaid cuts that disproportionately harm rural communities.
“If this bailout fund weren’t wanted to get the One Massive Lovely Invoice [Act] by means of Congress, this wouldn’t have occurred — no person would give any thought to the precarious standing of rural well being care in any respect. I feel that’s the disgrace of all of it — 60 million Individuals, 20% of our inhabitants, reside in areas which can be designated as rural,” he remarked.
Abrams mentioned these Individuals “have a proper to anticipate” that the federal authorities would take a extra thought-out strategy to making sure they’ve entry to an emergency division with out touring 30 to 50 miles.
He thinks a extra sustainable resolution would require lawmakers to confront the underlying economics of healthcare in rural America. This might contain aligning reimbursement with the true price of care, in addition to incentivizing operational effectivity quite than perpetuating dependence on non permanent federal help.
The fund helps — however not sufficient
Like Abrams, rural hospitals have additionally raised considerations that CMS’ program, whereas vital, can not by itself stabilize rural suppliers’ funds, particularly within the wake of devastating Medicaid cuts.
“With out continued insurance policies that assure sustainable reimbursement, rural hospitals and clinics will stay in danger. This program is a crucial step ahead, but it surely have to be paired with sturdy reforms that guarantee rural Individuals have dependable entry to look after years to come back,” the National Rural Health Association (NRHA) mentioned in a statement launched the day the fund was introduced.
In an interview this week, NRHA CEO Alan Morgan emphasised that CMS’ rural well being fund and the Trump administration’s Medicaid cuts needs to be mentioned individually.
He thinks the fund shouldn’t be dismissed or neglected just because it’s a lot smaller than the Trump administration’s Medicaid cuts.
“Clearly the Medicaid cuts must be repealed going ahead. That simply has to occur. I feel each side acknowledge that the cuts simply are usually not sustainable for the agricultural healthcare system. That receives a lot of the eye that this transformation fund hasn’t obtained sufficient dialogue,” Morgan acknowledged.
Studying what works
In Morgan’s eyes, there are two methods the CMS’ program might play out over the subsequent 5 years.
In the perfect case, states will use the funds to construct rural well being networks — which encompass hospitals and clinics collaborating to enhance rural suppliers’ workforce improvement, knowledge sharing and AI integration, Morgan defined. Within the worst case, funds may very well be diverted to giant city suppliers, leaving rural areas with out assist.
Morgan careworn the significance of guaranteeing that funding reaches rural communities instantly.
Though the states will technically be those submitting the grant functions to CMS, states sometimes depend on enter and proposals from the hospitals and well being programs inside their borders. Bigger, well-resourced well being programs — that will have their headquarters in city areas but in addition have a presence in some rural communities — can sometimes write stronger, extra polished grant proposals than small rural hospitals or clinics.
Unbiased rural suppliers often have restricted administrative capability and may battle to completely leverage the applying, Morgan famous.
The deadline for state functions, rapidly approaching on November 5, can also be a serious problem, he added.
“It’s an extremely tight utility deadline, and now you throw on high of that the federal authorities is shut down. That raises points and considerations about how states are in a position to receive the solutions they want from the federal authorities about particulars on this utility,” Morgan defined.
For him, the success of this system hinges on whether or not the funds will really attain the agricultural suppliers that want them most.
Total, Morgan doesn’t view the agricultural well being fund as a band-aid resolution. As a substitute, he sees it as a brief, innovation-focused program that goals to check numerous approaches over the subsequent 5 years.
“You’re going to have quite a lot of innovation hubs. Actually, every one among these states [is] are going to be attempting new approaches to sustainability and innovation,” Morgan remarked. “Let’s be taught from these subsequent 5 years after which replicate what works.”
Innovators ought to deal with initiatives similar to rural residency packages, higher workforce pipelines, sooner know-how integration and the introduction of extra different fee fashions, he mentioned.
He cautioned in opposition to over-reliance on know-how, saying that it may be helpful however just isn’t a whole resolution to rural suppliers’ woes — and famous that fee reforms will all the time be a very powerful piece of guaranteeing the long-term sustainability of rural hospitals.
This system is way from a silver bullet, and rural suppliers will nonetheless face challenges as soon as the five-year funding window closes, however Morgan mentioned it has the potential to set a blueprint for making rural healthcare extra resilient.
Photograph: Petri Oeschger, Getty Pictures
