States can begin applying Monday for their share of a $50 billion fund for rural health providers under the GOP’s tax and spending law, but they need to move quickly.
The Trump administration has officially launched the window for states to submit a detailed application for the first tranche of the five-year fund created to help rural providers offset the cuts to Medicaid and other health programs contained in the tax cut law.
States only have a few weeks to apply. The application period will close Nov. 5, with award decisions being made by Dec. 31.
During a call with reporters, Centers for Medicare and Medicaid Services (CMS) Administrator Mehmet Oz described the program as a way for rural providers to “catalyze innovation.”
“We believe we can use this as an opportunity to pivot from the crisis that we are currently living in to the comeback that America expects from us,” Oz told reporters. “If we’re going to be able to invest these monies wisely, we won’t just have health care systems barely hanging on in rural America — they’ll start to thrive.”
Under the program, $25 billion will be allocated to all states equally, meaning each state with an approved application would receive the same amount regardless of the size of its rural population.
The other $25 billion will be awarded based on the discretion of Oz. The law gives Oz broad discretion on what he can approve, and there is no specific requirement for states to direct funds to rural hospitals or the CMS to approve only funding for rural districts.
The CMS said it will consider individual state metrics as well as “applications that reflect the greatest potential for and scale of impact on the health of rural communities.”
Application denials can’t be appealed, nor can any administration decision to withhold funds over compliance concerns.
Program funds received for a fiscal year will be available to spend until the end of the following fiscal year. But the CMS can take back money before the program ends.
“If states don’t perform, we have the ability to claw back some of that money and reallocate the states that are performing,” Oz said. “This is not punitive. This is a very clever decision by the crafters of the law” to motivate governors not to regress on performance metrics.
The agency outlined several approved uses for the funds, which include prevention and chronic disease management; payments to health care providers; hiring new workers with commitments to serve rural communities for a minimum of five years; and more.
“It’s not designed to pay back old bills or pay operating expenses,” Oz said. “It’s designed very specifically to transform the health care system.”
The program ends after just five years, which Oz said was a deliberately short period of time. It’s meant to jump-start rural health, and then let states do the rest.
“Part of the purpose of this being big but limited is, we don’t want to create a new pathway for people to get money sent into systems that are not viable as they are,” Oz said.
The law cuts about $1 trillion from Medicaid, primarily through stringent work requirements as well as reductions to how states can fund their Medicaid programs through provider taxes and state-directed payments.
Rural hospitals rely heavily on Medicaid funding because many of the patients they care for are low income. But the Trump administration has noted that rural hospitals only account for 7 percent of overall Medicaid spending.
According to a KFF analysis, federal Medicaid spending in rural areas is estimated to decline by $155 billion over a decade because of the law.
