Health systems in rural America are struggling.

Many are losing money.

And over the past decade, more than 100 have closed.

During the debate over the one big, beautiful budget bill, some lawmakers expressed concern that Medicaid cuts would threaten rural health systems, which rely on those payments to keep their doors open.

Rural providers, especially our rural hospitals and nursing homes, are under great financial strain right now.

When these facilities close their doors, the people they serve are often left behind without access to health care.

To address those Medicaid shortfalls, Congress approved one of the single biggest investments in rural health, a $50 billion rural health transformation fund.

Applications for the fund were due this week.

Alli Rogan spoke with Carrie Cochran Mlan, chief policy officer for the National Rural Health Association, about how states hope to use the money.

Carrie, welcome to the program.

First, can you remind us why this rural health fund was included in this budget bill?

Well, when we first started talking about the changes to Medicaid that would have significant impact on the not only coverage of individuals living across the country, but the providers who care for them.

So, as the analysis and the debate continued in Congress, we realized that rural hospitals would be disproportionately impacted.

Given that about half, if not a little more, of the rural hospitals in this country operate with negative margins, they really don't have the room to take additional cuts that were being proposed in the Medicaid changes.

So, Congress developed the rural health transformation program, which was really initially discussed as a way to offset some of the reductions in funding and reimbursement that these rural hospitals were intending or will be receiving.

So this funding is $50 billion over five years.

Half of that funding is distributed evenly among the states.

The other half is open to these applications.

I want to play for you what Centers for Medicare and Medicaid Director Mett Oz said recently about what he's hoping to see in these applications.

We're not talking about paying bills and, you know, rounding the edges.

We want transformative big ideas that will dramatically change our expectations of the rural health care system.

So, how does that match up with the challenges that the rural health care system is facing and where the money would best help that system?

We really have decades of minimal margins, not a lot of funding that has kept rural America from moving forward with some of the other transformation we're seeing in the healthcare system.

This funding is an amazing once in a-lifetime opportunity to kind of even that playing field and help rural America move forward in addressing a lot of those really tough challenges we see in our health outcomes and life expecties.

However, our concern is while this money is great and a very important step forward, we still need the dayto-day reimbursement to be able to pay these providers for the services they're giving.

And to that point about reimbursements, many of the lawmakers when they were debating this bill, including Republicans, Susan Collins of Maine, Josh Holly of Missouri, they said that they were worried that if these Medicaid reimbursements were to diminish for doctors and providers, that it might force some rural hospitals to to close their doors.

And yet, in the final version of this bill, the amount of money that these systems can take to go to payments caps out at 15%.

That seems like a bit of a discrepancy there between the problem and this proposed solution.

Yeah, I think it's definitely a different conversation that h than what happened during the congressional discussions and some of that is in statute and some of that is the direction that the administration has taken with the funding.

They are not wrong that I think ultimately we want to get to this place where we are focused on value and outcome and that we are not worried about paying for widgets but in order to get there we still have to sustain the providers who are providing care for the individuals in the communities.

What sort of programs are you seeing states propose in order to take advantage of these funds?

So the funds are focused in five strategic areas.

Those being shoring up a healthcare workforce to take care of individuals.

Helping to support the MA agenda.

So dealing with chronic disease and food insecurity and other things in rural areas.

Helping sustain rural hospitals.

So helping rural hospitals run more efficiently and help them build kind of volumes and economies of scale.

And then the other two areas really focus on innovation.

So moving towards value and quality and then also figuring out how do we bring technology innovations like AI and remote patient monitoring into the rural context.

So states are putting per forward um proposals that address any and all of those things.

The Centers for Medicare and Medicaid released the instructions to apply for this funding just in midepptember and then the deadline for these applications was just this week.

Yeah, it's not a lot of time to come up with these gamechanging proposals.

Yes.

So, the way that the law was written, the funds had to be distributed by the end of this calendar year, which meant a scramble for everybody involved.

And one of the challenges is that, you know, these problems we've had on in rural healthcare, they're not new.

So states are asked in six weeks to come up with a plan to totally transform their rural health care system to make sure it's a plan that they can actually implement and is actionable because if it's not, they may have some of that money pulled back or they may not have money moving forward.

So again, it's going to be CMS as they review these and get the final decisions out.

It's going to be really important to make sure that we are holding the funding accountable to going to rural providers, rural patients, rural communities.

We want to make sure that this really ends up moving the needle in rural America.

Carrie Cochran MLAN, thank you so much.

Thanks for having me.

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