Rural Health Fund Should Prioritize Preserving Hospital Care

When Congress established a new Rural Health Transformation Program (RHTP) as part of its budget reconciliation package, the intent was clear: Stop rural hospitals from closing.

The $50 billion fund – to be distributed over the next five years – was a key concession to secure the votes of senators who worried Medicaid payment cuts included in the legislation would shutter rural hospitals in their states. To participate, states must submit a rural health transformation plan to the Centers for Medicare & Medicaid Services (CMS) this year. Half of the funding will be distributed evenly among participating states; the rest will be up to CMS Administrator Mehmet Oz’s discretion.

In a fact sheet, Senate Finance Committee leaders described the program as a way to “give rural hospitals the tools to stabilize their finances in the short term and offer states the opportunity to create a long-term plan.” The committee also noted that “the RHTP can serve as a bridge to shore up rural hospitals and prevent gaps in care.”

Pennsylvania has an opportunity through the RHTP to help protect the stability of rural hospitals so they can continue to serve their communities – a major priority for Gov. Josh Shapiro and bipartisan leaders in the General Assembly. But only if we focus on the right investments.

I’ve written previously about the significant challenges rural hospitals face and the critical role they play in our commonwealth’s economic future. To be clear, the RHTP is not a silver bullet that will save rural hospitals. The short-term funding will not erase the permanent Medicaid payment cut – estimated at more than $1 billion to Pennsylvania rural hospitals over the next decade – or offset the significant rise in uncompensated care that’s expected as rural residents lose health care coverage. And to truly change the trajectory for Pennsylvania’s rural hospitals, we must address the structural challenges that threaten their stability. Foremost among those stressors is that one of rural hospitals’ largest payors, Medicaid, reimburses them only 74 cents on the dollar for care (an amount that will decrease as cuts take effect and costs rise).

But what the RHTP can – and should – be is an opportunity to invest now in steps that will help rural hospitals weather these challenges. The fund provides an upfront infusion of funding that, if targeted correctly, can help rural hospitals transform care and improve their ability to serve their communities in the long term.

Some key considerations for policymakers as work begins to shape Pennsylvania’s transformation plan:

• Rural hospitals cannot care for our communities without a robust and highly trained workforce of doctors, nurses, and allied health care professionals. RHTP investments can supercharge initiatives to develop, attract, and keep providers in our rural communities.
• Targeted financial support will help rural hospitals take action now to improve their future stability. Infrastructure improvements to modernize facilities and implement technology that supports innovations like telehealth and virtual nursing will help hospitals transform care delivery and streamline operations.
• Investments through the RHTP will only be successful in transforming rural health care if they’re combined with the necessary regulatory flexibility and updates that empower rural hospitals to innovate. While work is ongoing to overhaul Pennsylvania’s hospital licensure regulations in their entirety for the first time since at least the 1980s, the commonwealth can remove some barriers now so rural hospitals can safely adapt to meet their communities’ needs.

Rural hospitals serve a crucial role in Pennsylvania’s rural health care continuum. In communities where other care settings are limited, hospitals are access points, not just for emergency and inpatient services, but also primary and preventative care. They treat stroke patients, offer diagnostic testing, and host appointments for patients to manage diabetes all under one roof. They’re regional hubs for maternal care and behavioral health services.

Beyond health care, rural hospitals are often the top job creators and economic anchors in their communities. They enable vibrant communities where people want to live and where businesses can grow.

With so much at stake for our rural communities, policymakers must prioritize investments through the RHTP that keep rural hospitals intact and protect the vital role they play.

At the federal level, we need CMS to ensure its guidance to states on the RHTP aligns with Congress’ intent: That the program provide critical bridge funding to help rural hospitals keep their doors open as they make changes to improve their resilience.

At the state level, we need leaders to focus the commonwealth’s plan to do just that. When funding for the RHTP runs out in five years, rural hospitals will still need to shoulder permanent payment cuts. We must ensure the program promotes their future sustainability through short-term investments and resist the temptation to build new initiatives that will only be successful with ongoing support.

We have an opportunity to take meaningful steps towards supporting the health and competitiveness of our rural communities. Pennsylvania’s hospital community stands ready to partner with our state and federal leaders to seize it.