Science1 publisher3 min readPublished
Federal rules recast the $50 billion rural health fund as program grants, hospital leaders say
The $50 billion Congress attached to its Medicaid cuts is being spent on records systems, drones and workforce pilots. Averaged across its five years it puts out about a tenth of what the cuts take out each year.
The Scientist · Science desk
What happened
- Republicans added a $50 billion, five-year rural health fund before passing their tax-cut law, meant to help providers prepare for the $1 trillion in Medicaid cuts planned over the next decade.
- By the time federal health officials wrote the rules, the money came with spending caps, a chronic disease and diet priority drawn from Make America Healthy Again, and heavy expectations for artificial intelligence.
- Announced projects include drone-based drug deliveries and AI image diagnosis in Alaska, expanded remote patient monitoring in West Virginia, equipment upgrades in North Dakota and prenatal services in Indiana.
- Maine's first releases are $30 million for electronic health records infrastructure, $12 million for the community health workforce and $30 million of investment aimed at rural hospitals' financial footing.
- Some hospital leaders have told state officials they do not want the fund as it stands, doubting they will have the capital to keep programs running after the grants build them.
Compiled by The ScientistSomething wrong?How this is made
Why it matters
- constraint The fund ends after five years while the Medicaid reductions run ten, so anything stood up with grant money has to be carried on operating revenue in the years when there is least of it.
- cost The cash leaders asked for would have covered care Medicaid stops paying for and expanded charity care; the grants do not, so that gap stays on hospital budgets.
- decision Systems ranking facilities and services for closure cannot book this money as revenue for uncovered care, so those lists are unlikely to get shorter because of the fund.
- contradiction Maine did direct $30 million toward hospitals' financial footing, so the shift away from operating support is not uniform state to state and depends on how a proposal was written.
Two timelines do not line up. The fund pays out over five years; the Medicaid reductions run ten [1][2]. Averaged across their terms, that is $10 billion a year of fund against $100 billion a year of cuts, roughly a tenth while the money flows and nothing in years six through ten [17]. STAT puts the fund at 5% of the cut over the decade [3], and reports that it changed in size as well as scope by the time it was implemented. STAT did not give a revised total [19].
What the fund now does is pay for new programs to rethink rural health instead of filling financial gaps [5]. "An infusion of cash to sustain operations was going to be critical, and that was the intent of the $50 billion," said Lisa Harvey-McPherson, vice president of government relations at Northern Light Health [4]. Randy Clark, a senior vice president at the same system who leads three of its hospitals, put the position more bluntly. Clark said it is hard to think about transformation when you are thinking about survival [10].
Maine, which STAT describes as a bellwether for rural care nationally [20], has aimed about 42% of the $72 million released there so far at rural hospitals' financial footing [18]. States had to submit proposals to get the money, and a Bipartisan Policy Center review found many prioritised building a rural clinical workforce and investing in technology to make care more efficient and accessible [7]. So a state that wants some of this to reach a balance sheet can write that in.
Providers in Maine told STAT that traditional payment models are not working, and that technology or other innovation could make rural care more accessible and higher quality even if the fund does not directly pay for uncompensated care [15]. These grants will report deployment counts for drones flown, images read and monitors installed [8]. I would not expect any of them to yield a figure for uncompensated care, which is the gap the leaders said the money was meant to close [22].
The ideas themselves are serious. Thomas Judge, founding executive director of LifeFlight of Maine, said the system needs to be "reengineered" [12]. Damian Flowers, an emergency room doctor at MDI Health, said the money could help fund a more centralised system for transferring patients between facilities [13]. Lori Dwyer, president and CEO of Penobscot Community Health Care, suggested part of it could make care such as dentistry, which has never been profitable, more sustainable [14]. They are being drawn up while many system leaders decide which facilities or services to close in the coming years [16].
What to watch
- Whether states publish outcome measures for funded projects, such as transfer times or cost per patient, that would test the transformation claims.
- Whether federal health officials loosen the spending caps enough to let any of the money cover uncompensated care.
- How many other states copy Maine's $30 million financial-footing tranche instead of spending their whole allocation on pilots and technology.