WASHINGTON — Across the country, states are racing to get its share of a new $50 billion rural health fund. But helping rural hospitals, as originally intendedquickly becomes a fad idea.
Rather, states should submit applications that “redesign and change” the way health care is delivered in rural communities, Centers for Medicare and Medicaid Services spokesman Abe Sutton said late last month during a daylong meeting at the Watergate Hotel in Washington, D.C. An effort to simply change the way the state pays for hospitals failed, Sutton told an audience of more than 40 staffers in governor's offices and heads of state health agencies, some from as far away as Hawaii.
“This is not adding to operating budgets,” said Sutton, CMS’s chief innovation officer. “We've made that very clear.”
Rural hospitals and clinics across the country face looming financial disaster as President Donald Trump's sweeping tax and spending bill is expected to cut federal Medicaid spending on rural health care by $137 billion over 10 years. Congressional Republicans added the one-time, five-year Rural Health Care Transformation Program as a last-minute sweetener to win support from conservative opponents who worried about the bill's financial impact on rural hospitals.
Still, the words used by CMS Administrator Mehmet Oz and his agency leaders to describe the new amount of money are raising tensions between legacy hospital and clinic providers and new technology-driven companies offering new ways to deliver care.
“This is what I would call an incumbent vs. insurgent matchup in rural areas,” said Cody Kinsley, senior policy adviser at the Institute for Policy Solutions at the Johns Hopkins School of Nursing.
Applications are accepted until November 5th. The money will be distributed to states by the end of the year and spread over five years.
Half of the $50 billion would be divided equally among all states that submitted an approved application; the other half will go to the states that score. From second halfThe $12.5 billion would be allocated based on a formula that calculates each state's rural area. The remaining $12.5 billion will go to states that good score about initiatives and policies that reflect the policies of the Trump administration “Let's Make America Healthy Again” goals.
application identifies specific policy goals, such as implementing a presidential fitness test and restrictions on food assistance, as well as broader investment strategies for telecare services, data infrastructure, and consumer-facing technology tools, which CMS has defined as “symptom checkers and artificial intelligence-powered chatbots.”
In September, after CMS officials released the statement, Republican members of Congress from states with Democratic governors called for justiceconcerned that their states might funnel money to urban areas. In a letter to Oz and Health and Human Services Secretary Robert F. Kennedy Jr., they said the money “will serve as a lifeline for rural and at-risk hospitals in our communities that are already struggling to keep their doors open.”
Smaller hospitals fear they'll get a “tiny piece” of each state's share, said Emily Felder, head of the health care practice at Brownstein Hyatt Farber Schreck, a law firm whose clients include rural hospital systems.
“There is a lot of disappointment,” Felder said.
But Kinsley, who previously served as North Carolina's secretary of Health and Human Services, said using that money just to shore up the balance sheet “is really just throwing good money down the drain.” Instead, he said, insurgents such as tech start-ups may offer new strategies.
One of those companies struggling for funding is Home healtha Silicon Valley company that contracts with Medicare managed care insurers. Using artificial intelligence analytics, Homeward helps patients receive care at home and through local providers.
The company manages the health of 100,000 rural Michigan insured patients, according to Homeward co-founder and CEO Jennifer Schneider. The company sponsored the Watergate summit. The company also has ongoing meetings with Oz and his team, Schneider said.
“They do their job, they interact with a lot of people in the ecosystem, and they are very eager to learn from those of us who have been in the system,” Schneider said. “We are one of many who are in this position.”
KFF Health News requested an interview with Alina Chekai, director newly created Office of Rural Health Transformation. CMS spokesman Alex Pons said the agency was “unable to facilitate any interviews.”
Instead, CMS provided an emailed statement from Oz saying the program “will help states and communities reimagine what's possible in rural health care.”
Brock Slabach, chief operating officer of the National Rural Health Association, the largest organization representing rural hospitals and clinics, said money is best used to pay for changes that aren't “sexy” or “revolutionary.”
“If we end up having a wearable device for every rural patient, I don't think it's going to be transformative,” Slabach said, referring to digital health monitors such as fitness-tracking watches.
Slabach, a former small hospital executive and informal adviser to hundreds of rural facilities across the country, named several ideas for raising money, including paying for capital improvements such as electronic health records or equipment, loan repayment programs to help with workforce development and creating “SWAT” teams that rescue rural hospitals on the brink of closure.
More than 150 rural hospitals. closed nationwide since 2010, a statistic cited by CMS's Sutton that is well known among industry watchers. The Sheps Center at the University of North Carolina, which collects data on the closures, also published guide to help states calculate how rural they are for their applications.
State applications will be reviewed by a panel, with some reviewers inside government and others outside, Kate Sapra, acting deputy director of the Office of Rural Health Transformation, said at Watergate.
“We will train them on the evaluation criteria,” Sapra said, adding that the panelists will not come from “your state” and will need to fill out conflict of interest forms. The portion of the money each state receives will be reassessed annually based on the progress it makes toward its goals and priorities. according to CMS.
States are creating stakeholder groups, asking for public comment, and working with their health agencies. Some like Mississippi And New Mexicowe hire consultants.
In Montana, a group of health care providers and associations has proposed a list of ideas for raising money, including creating a loan repayment fund for rural doctors to try to ease the labor shortage.
“It's one-time money, and it's not a lot of money,” said David Mark, a physician who is CEO of One Health, which has clinics scattered throughout eastern Montana and Wyoming. The state could receive a minimum of $100 million a year for five years if applications from all 50 states are approved.
“How can we use this infusion of money to achieve our goals of transforming the healthcare system?” – said Mark.
Neither Montana nor Wyoming—vast, rural states—sent leaders to the Watergate summit, according to a copy of the attendance list. During the afternoon, attendees could rotate between scheduling tables and meet with corporate sponsors such as electronic health records giant Epic and emergency services company Global Medical Response.
Wyoming Department of Health Deputy Director Franz Fuchs confirmed that his state did not send representatives to the event because they were “overwhelmed with other commitments.” Montana, Wyoming and other states submitted additional letter of intent signaling that they will apply for funds. CMS did not respond to questions about how many and which states sent letters.
During Watergate, hints of interstate brewing competition began to emerge.
“I think Arkansas' bid will be better than yours,” veteran political adviser Jack Sisson said with a smile during the morning debate.
The audience laughed. Sisson, who recently left his post as health care adviser to Arkansas Gov. Sarah Sanders, interrupted Michael Hendricks, a policy adviser to another Republican governor, Bill Lee of Tennessee.
“You see, this is the kind of friendly competition CMS hopes for,” Hendricks said. He grinned, thanked Sisson and added, “I look forward to our victory.”
KFF Health News Montana reporter Kathryn Houghton contributed to this report.
