In N.C., the $50 billion federal Rural Health Transformation Program won't eliminate health care deserts

North Carolina plans to use its RHTP money on hospitals
and clinics that are open. (KFF photo)

The $50 billion Rural Health Transformation Program Congress created in 2025 to ensure the passage of President Donald Trump's One Big Beautiful Bill Act may sound like it's made to help closed rural hospitals or hospitals on the brink of shuttering, but in reality, the act strictly limits the amount of RHTP grant money struggling hospitals can use to stay afloat.

The RHTP funding restrictions haven't stopped midterm-stumping politicians in North Carolina from touting the program as a salve for rural hospitals in financial straits, report Sarah Jane Tribble and Amanda Seitz of KFF Health News. "Republican candidates in competitive midterm elections are casting the fund as a lifeline that will shore up critical rural health services across America."

In Martin County, N.C., where lawmakers face competitive midterm elections, some residents believe RHTP funds will help reopen their shuttered hospital, Tribble and Seitz report. "Martin County won’t get direct relief from Trump’s rural health fund — because its hospital isn’t open." The state plans to use its $213 million in RHTP funds on "existing health and social service organizations."

Without rural hospitals, residents in states like North Carolina, where most citizens live in rural counties, are especially vulnerable. During a medical emergency, when every second counts, rural residents must survive the travel distance to get medical care. Some don't make it. Tribble and Seitz explain, "Martin County does not have paramedics on its ambulances, and it can be 20 miles or more to the closest — and often overcrowded — emergency rooms."

Brian Floyd, the chief operating officer for ECU Health, which operates out of Greenville, N.C., told KFF, "It’s a real healthcare crisis that has already proven itself to have lost lives that perhaps didn’t have to be lost. They just want to not die because there’s nowhere to go when you have an emergency."

Opinion: The Rural Health Transformation Program challenges states to build and overhaul systems

R.J. Marse

When the Centers for Medicare & Medicaid Services announced $50 billion in funding for the Rural Health Transformation Program, many Americans may have assumed the money would help struggling rural hospitals shore up their finances and stay open. 

But RHTP program dollars aren't meant to prop up declining systems by helping them maintain the status quo of rural health care, writes R.J. Marse, General Counsel at Sprinter Health, in his opinion for Healthcare IT Today. "At $50 billion over five years. . . the amount is significant, but more noteworthy is the program’s intent."

The program aims to change how rural health care is approached and practiced by incentivizing innovation, technology and successful outcomes across a system.

RHTP challenges rural health systems to go beyond traditional health care infrastructure by designing and launching treatment that includes "telehealth and remote monitoring. . . technology-enabled solutions that allow providers to practice at the top of their license," Marse writes. "It even allows states to invest in early-stage healthcare companies, a signal that the ultimate goal is innovation."

Marse explains, "Funding is conditioned on outcomes, so while the aim is to reach more rural patients in more rural communities, interventions will need to do so in ways that measurably improve health and lower long-term costs."

RHTP structural demands push rural health care systems to combine modern medical treatment models with the inherent challenges of working with a rural population. Marse writes, "RHTP demands confronting the fact that many rural patients will not engage with care unless it comes to them – or, at least, closer to them. . . . Rural care transformation must, by necessity, be hybrid. It should deliver care virtually when appropriate, and physically when and where it’s needed."

"Rural health doesn’t need another bailout. It needs fundamentally different operating models that can endure when federal dollars dissipate," Marse explains. "Five years from now, RHTP will be judged not by how much money was spent, but by what was built." 

Lawmakers and health groups pushback on Rural Health Transformation Program plans and limits

Nebraska State Capitol in Lincoln
(Photo by Pieter van de Sande, Unsplash)

The excitement and energy that was first attached to millions of federal dollars in awards to states for the Rural Health Transformation Program has already started to fade. Some legislatures and health groups are resisting their state's proposals and pushing for more input on how the money is spent, report Arielle Zionts and Sarah Jane Tribble of KFF Health News.

The awards, which are funded through the Centers for Medicare & Medicaid Services, impose strict timelines and rules on the use and implementation of millions of dollars. Lawmakers, who must work quickly to pass bills needed to use the funds, and rural health groups are finding themselves at odds with award restrictions.

Much of the disconnect stems from what many lawmakers thought they could use RHTP money for, based on how the program was marketed, versus what CMS will allow.

The White House promoted RHTP awards as a way to "shore up rural health care," but their use isn't aimed at saving struggling rural hospitals. Instead, the funds are to be used for "seeding innovative projects and technologies," Zionts and Tribble explain. "States can use only up to 15% of their funding to pay providers for patient care."

Some state Republican lawmakers — especially those representing more rural regions — as well as rural hospital advocates, "are upset that the political rhetoric doesn’t match what they see," KFF reports. "They’re also lobbing criticisms at specific aspects of their states’ plans, including the proposed projects, what’s not included, and the spending approval process."

State lawmakers from Wyoming, Ohio, North Dakota, Michigan, North Carolina, Nebraska and Colorado all face conflicts and competing needs to get the work done so their states can spend the money and then decide who gets it, KFF reports.

Jed Hansen, executive director of the Nebraska Rural Health Association, told KFF, "Rural Health Transformation will not save a single hospital in our state. I don’t think it will save a hospital nationally.”

Wyoming officials aim to keep the state's Rural Health Transformation Program award going in 'perpetuity'

Wyoming is the most sparsely populated state in
the U.S. (Photo by Karsten Koehn, Unsplash)

As Wyoming's rural hospitals struggle to make ends meet and hire enough medical providers, state officials have hatched a plan using money from its Rural Health Transformation Program funds to buffer losses, create more robust provider training and incentives, while using investments to help the money stretch for decades, reports Arial Zionts of KFF Health News.

If Wyoming's plan receives federal approval to invest a substantial portion of its $205 million award, the state's "Rural Health Transformation Perpetuity fund could provide $28.5 million for the state to spend every year," Zionts explains. "Wyoming would spend the money on scholarships for health students and incentive payments to help keep small hospitals and rural ambulance services afloat."

The federal RHTP program requires states to spend their awards by established deadlines, or the money will be shelled out to other states. The question is, will the Centers for Medicare & Medicaid Services, which manages RHTP, see placing the money in an investment account as "spending it."

Stefan Johansson, the director of Wyoming’s health department, thinks it will. "He said that CMS called in December to specifically ask questions about the fund and that he believes the agency has formally approved it," Zionts reports. "But 'the devil’s always in the details,' he said, as the state works with CMS during the budget review period."

CMA has already told some states that RHTP grants "cannot be used to 'generate income.'" Zionts adds. "Wyoming officials wrote in the state’s application that the perpetuity fund won’t be making or keeping any profit. . . .Other states proposed funds in their applications, but Wyoming’s appears unique, according to a KFF Health News review of state applications."

A rural hospital in California closes after federal officials strip 'critical access' designation it has held since 2000

Glenn Medical Center in Willows, California 
(Glenn Medical Center photo)

After more than 70 years of serving its rural community in Willows, California, Glenn Medical Center closed its doors following the loss of its "critical access" designation, which had allowed the hospital to receive higher federal reimbursements that helped it remain open.

To qualify as a "critical access" hospital, a medical center needs to be at least 35 miles from the next closest hospital. Glenn Medical Center was 32 miles from "the nearest neighboring hospital under a route mapped by federal officials," reports Jessica Garrison of the L.A. Times. "Though that distance hasn’t changed, the federal government has now decided to enforce its rules." The hospital was awarded its critical access status in 2000.

The loss of Glenn Medical Center leaves the surrounding farming community without emergency care, "eliminates 150 jobs and puts rural residents at risk of preventable deaths," Garrison writes.

Rural hospitals across the state are already at risk of closure. Peggy Wheeler, vice president of policy of the California Hospital Association, told Garrison, "It’s like the beginning of a tidal wave. I’m concerned we will lose several rural hospitals, and then the whole system may be at risk.”

Before Glenn Medical Center's designation was stripped, Glenn County officials and hospital administrators worked for months to persuade federal officials to grant an exception.

Now that the hospital is closed, many community members fear what will happen to older residents in need of immediate care, injured farm workers or victims of car accidents along nearby Interstate 5. Glenn County Supervisor Monica Rossman told Garrison, "People are going to die."

Fixing the rural physician shortage can begin with adding more federal and state funded residency slots

When residency slots increase, the number of
rural physicians can increase. (UICOMP photo)

By any measure, rural America is hurting for physicians, but more broadly, the nation doesn't have enough doctors. While U.S. medical schools have increased their enrollments, hospitals have yet to increase their number of residency slots, reports Brenna Miller of the Lown Institute, a nonpartisan health think tank.

"Medical school enrollment has been consistently growing, but funding for residency slots hasn't caught up. For every medical school graduate looking for a resident position, there have been between 0.8 and 0.85 slots available in recent years. This a problem as states require at least one year of hospital residency as a licensing requirement."

Without intervention, rural physicians will become increasingly scarce. "Rural areas face the brunt of this shortage as urban areas have higher densities of primary care physicians and specialists," Miller writes. "Patients in rural areas tend to be older, poorer, and sicker, especially with chronic conditions. With fewer doctors around, they have to travel further for both preventative and emergency care, putting them at greater risk for poor health outcomes and mortality."

If rural areas want more doctors in the future, there must be fundamental changes to residency funding and slot offerings. Miller explains, "The mismatch between medical school enrollment, residency slots, and the need for physicians in the workforce has resulted in a lose-lose situation where perfectly competent physicians face barriers to working while simultaneously, entire regions of the country are without sufficient access to physicians."

Some changes need to begin at the federal level. Residency slots are primarily funded by the Centers for Medicare & Medicaid Services, meaning that "they need action by the federal government for expansion. This also means that no significant action had been taken for over 20 years (Congress had actually capped the number of residents) until the Covid-19 relief bill was passed," Miller reports. "The  bill opened the door for 1,000 new residency slots, 10% of which must be in rural areas. Another similar bill has been introduced in Congress that would allocate funding for an additional 2,000 residency slots every year for seven years starting in 2025."

State funding is an additional option. Miller reports, "The majority of doctors stay in the states where they completed their residency. Both California and Texas – where the shortage is predicted to be the worst – approved multimillion-dollar expansions in funding, resulting in increased retention of physicians in underserved, local areas."

Proposed new rules for nursing homes have sparked warnings and fear; rural residents are the most vulnerable

National Cancer Institute photo, Unsplash

The Centers for Medicare and Medicaid's new staffing mandates were met with alarm and fear, with descriptions including 'a disaster,' 'insanity', and 'catastrophic.' The Biden Administration's "proposed federal staffing mandate will be impossible for the nation's nursing homes to meet, limiting access to care for our seniors," reports The American Health Care Association. "CMS released the one-size-fits-all mandate earlier this year, despite its own study finding no level of staffing guarantees quality of care."

The angry reaction and warnings are particularly problematic for rural Americans. "As nursing home closures continue across the country, 'nursing home deserts' are expanding, and the proposed federal staffing mandate is expected to exacerbate the problem," reports Amy Stulick of Skilled Nursing News. "This is despite attempts to make the potential policy change easier for providers in rural markets, which are especially vulnerable to access issues. Operators in these areas point to the 24-hour RN requirement as being especially devastating."

Finding nurses, let alone 24-hour nurses, is impossible in certain areas. Nate Schema, CEO of the Evangelical Lutheran Good Samaritan Society, "says the organization's facilities located in 'deep rural communities' will struggle the most with the 24-hour RN rule," Stulick writes. "In communities like Bloomfield, Nebraska, pop. 1,000, or Miller, South Dakota, pop. 1, 300, Schema isn't sure where Good Samaritan will find even six RNs; the Miller facility hasn't had a night nurse for upward of three years."

"The ability to have a nursing home open in a small town is getting more difficult because of the disparity between Medicaid reimbursement and overall costs, says Accura HealthCare CEO Ted LeNeave," Stulick reports. "Accura operates 34 communities across Iowa, Minnesota, Nebraska and South Dakota." LeNeave told Stulick: "The provider relief fund helped to mask how bad those problems were. Once that cash dried up, buildings started closing. This concept of a nursing home desert is an area where residents need nursing home care, but there's no access to them. Then they have to drive 45 minutes to an hour to be somewhere else."

Michael Beal, CEO of Care Initiatives, told Stulick, "It doesn't matter if it's 5, 10 or 15 years, if there's no additional reimbursement, it's just a timing question on when that will affect [rural operators]; it just kicks the can down the road." Stulick reports: "Beal added that the suggested rule of 'adding that an arbitrary number of staff hours per resident day without a reimbursement mechanism, and the ability to actually hire staff puts rural operators in an 'untenable situation.'"

How rural hospitals are fighting Medicare Advantage

Medicare Advantage plans may offer more benefits but also
have rules that can limit patients' choices. (Anthem website)

St. Charles Health System in central Oregon has "threatened to cut ties with all Medicare Advantage plans next year, a move that would leave an estimated 26,000 local beneficiaries without access to a hospital less than 100 miles away," reports Nona Tepper for Modern Healthcare.

"A program intended to promote seamless and higher quality care has instead become a fragmented patchwork of administrative delays, denials and frustrations," St. Charles CEO Steve Gordon said in a news release last month.

Tepper reports, "Health systems nationwide appear to share Gordon's consternation, especially those similarly located in rural areas. Rural healthcare providers tend to be disproportionately affected by factors such as reimbursement cuts or denied and delayed payments from Medicare Advantage plans because Medicare enrollees make up most of their patient populations. Cutting off Medicare Advantage plans, or at least declaring that to be a possibility, is a response to the growing market power these carriers have, especially over rural providers.

According to Tepper, "Rural Medicare Advantage enrollment is growing faster than overall enrollment: Since 2010, the share of rural beneficiaries who choose private plans over the traditional program has more than quadrupled, to 40% from 11%, according to KFF survey results published this month.

"Among the 58 publicly known contract disputes between insurers and providers this year, 35—more than half—involved Medicare Advantage carriers, according to data compiled by FTI Consulting. 

"Most conflicts center on how health insurance companies do business more than on reimbursements, said FTI Consulting Managing Director Adam Broder."

Tepper reports: "At Aspirus Health, some Medicare Advantage insurers deny as many as 35% of claims, said Matthew Heywood, CEO of the Wausau, Wisconsin-based nonprofit health system. In response, the 17-hospital chain is renegotiating contracts to include provisions regarding prior authorizations and claims processing times, he said."

Few hospitals have complied with law requiring them to post prices online; is your closest hospital one of them?

Starting Jan. 1, 2021, a new law required U.S. hospitals to post on their websites the prices for services negotiated with insurers, as well as the discounts offered to patients who pay with cash, in an easily readable format. It's meant to lower medical costs and empower Americans to shop around for services, but over a year and a half later, few hospitals have complied. Is your nearest hospital one of them?

As of this month, only 319 of the 2,000 hospitals reviewed had complied with the law, according to a new report from nonprofit PatientRightsAdvocate.org. And though 793 of the hospitals reviewed had posted negotiated prices on their websites, 407 of them weren't compliant because most of their pricing data was missing or incomplete.

A recent ad from a patient-advocacy nonprofit claims that the government isn't enforcing the new law. But that's not true: "Turns out there is some enforcement, although the process is more complicated and slower-moving than some observers would like," Julie Appleby reports for Kaiser Health News and PolitiFact. Regulators hadn't fined any hospitals when the ad began running in mid-April, but in early June the Centers for Medicare & Medicaid Services fined the owner of two Atlanta-area hospitals about $1.1 million.

"As of late July, the agency had sent 368 warning notices to hospitals and issued 188 corrective action plan requests to hospitals that had previously received warning notices but had not yet corrected deficiencies," Appleby reports. "But enforcement is neither a quick nor an easy proposition. Each step in the process gives both sides time to work out the details."

Representatives from CMS and the American Hospital Association told Appleby compliance is taking longer because regulators and hospitals both face a learning curve in implementing the new law. However, the slow pace "means hospitals feel little pressure to comply despite fines that could reach $5,500 a day, patient advocates say," Ken Alltucker reports for USA Today.

In the meantime, CMS enforcement is driven mostly by complaints filed on its hospital price transparency website, Alltucker reports, with priority given to the most flagrant violators of the law.