The Rural Health Transformation Fund: One Year Later

00;00;00;08 - 00;00;20;01
Tom Haederle
Welcome to Advancing Health. It's now been one year since Congress allocated $50 billion aimed at upgrading and expanding access to health care in America's rural communities. So, is the funding making a difference? What can rural residents expect? We explore these questions and more in today's podcast.

00;00;20;04 - 00;00;38;13
Shannon Wu
Hi everyone! My name is Shannon Wu. I am a director of payment policy here at the American Hospital Association. On this episode, we're going to talk about something very near and dear to my heart, the Rural Health Transformation Program Fund. As of this taping in June 2026, we are a little bit more than halfway through the first year,

00;00;38;18 - 00;01;02;25
Shannon Wu
where about $10 billion will be awarded to all 50 states. We thought it'd be a good time to talk about how the program is going, and what policymakers can do to further support rural communities. So with that, I'm really happy to introduce my fellow podcaster, Maya Sandalow from the Bipartisan Policy Center, joining me today to talk about everything Rural Health Transformation Fund related.

00;01;02;26 - 00;01;22;21
Shannon Wu
Maya is an associate director for BPC’s Health Program, where she leads work on health innovation policy. Her portfolio includes digital health, artificial intelligence, rural health, behavioral health, and nutrition. So with that, Maya, would you mind just describing a little bit more about the center and the work that you all do there?

00;01;22;23 - 00;01;44;24
Maya Sandalow
Thanks so much, Shannon. It's great to be with you today, and I'm so glad to be talking about the Rural Health Transformation Program. As you mentioned, I work at the Bipartisan Policy Center, and we're a nonprofit that's been around since the start of the 2000s, founded by former Senate majority leaders. And we work across the full political spectrum on domestic policy issues.

00;01;44;24 - 00;02;08;07
Maya Sandalow
So we aim to bring together diverse perspectives to craft solutions focused on lowering the everyday cost of living for families, expanding opportunities and strengthening the American economy. And we have a pretty robust health program that focuses on a range of topics, including rural health care, which is an area that we focused on for years, because one in five Americans live in rural areas.

00;02;08;07 - 00;02;12;27
Maya Sandalow
And so therefore, it's important to make sure that they can access the care that they need.

00;02;13;00 - 00;02;40;09
Shannon Wu
So we're really happy to have you here. Before I let you describe some of the key initiatives each of the 50 states are undertaking — I know you all have done a lot of work in that in the past couple of months — I'm just going to briefly describe the basic structure of the Fund for our listeners. So the basic structure of the Fund is that all 50 states had to apply for this funding, of which half of that $50 billion will be equally given to every state that applies.

00;02;40;09 - 00;03;02;24
Shannon Wu
And the other half is based on an application process the states went through at the end of last year in 2025. The program will run for five years, and the application process, as I mentioned, began at the end of last year. And the Centers for Medicare and Medicaid Services, which is the agency tasked for administering the fund, announced those awards the end of the year in 2025.

00;03;02;26 - 00;03;23;14
Shannon Wu
The Bipartisan Policy Center and the AHA have put out excellent primers on the notice of funding opportunity, if our listeners want to learn a little bit more about that application process, and you can find both of those primers on our websites. So, that's kind of the basic structure of the Fund. We’re into year one of the program now.

00;03;23;16 - 00;03;46;00
Shannon Wu
So Maya, I know the Center has done a lot of work in analyzing the applications, the key initiatives and projects that states have applied for. Do you want to talk a little bit more about, you know, kind of the broad programs each of the states have applied for, and then one or two key programs that you and the Center is focused on diving into a little bit further.

00;03;46;02 - 00;04;16;19
Maya Sandalow
Yeah, absolutely. And just to pick up on kind of the broad overview of the Fund, I think that it's important to note that CMS has a stated goal for the use of these funds to really transform healthcare delivery, right. So this $50 billion program was included in last year's reconciliation package, largely in response to concerns about federal Medicaid funding cuts in the years ahead and the impact on rural areas.

00;04;16;19 - 00;05;02;12
Maya Sandalow
But the Fund itself isn't necessarily intended or designed to directly replace those funding cuts to providers. Rather, it's focused on broader healthcare transformation. So CMS has a variety of strategic goals, including addressing the root causes of disease, investing in technology innovation, workforce development, value-based care. They really outline several strategic goals. And so what my organization BPC did was we reviewed all 50 state plans, state proposals, that they put together as part of their application process in the fall, to try to pull out some common themes and look at really across these strategic priorities that CMS has outlined.

00;05;02;14 - 00;05;32;15
Maya Sandalow
Where are states really committed to investments? The level of detail varied widely in their state applications. But that said, we were able to discern that every single state plans to invest in technology and workforce in some way. So those are really two of the biggest themes that we picked up on. And we outlined specific categories of how they plan to invest in technology and workforce in several publications.

00;05;32;15 - 00;05;35;16
Maya Sandalow
So I'm happy to walk through the details of those, if helpful.

00;05;35;19 - 00;06;05;16
Shannon Wu
That'd be great. I know on the topic of workforce, especially, for example, you know, the AHA believes that the needs of rural providers and rural communities and rural hospitals are really fundamental, and one key initiative and support that we're really looking for is a workforce development, both in recruitment and retention of current workforce, but also really building that pipeline out to make sure that access to care in rural communities is maintained and even expanded.

00;06;05;16 - 00;06;18;17
Shannon Wu
And so we really strongly believe that the funds should really prioritize these fundamental priorities in rural communities. So I would love to hear from you, the workforce type of initiatives that you are seeing in these state applications.

00;06;18;23 - 00;06;41;09
Maya Sandalow
Yeah, absolutely. Workforce is a central priority of the states, and to your point, it's no surprise, right? Because the rural areas have long suffered from workforce shortages and providers who are fantastic but really stretched thin. So we identified broadly three ways in which states are planning to invest in workforce development and workforce issues. The first is training and bringing along new providers.

00;06;41;09 - 00;07;13;26
Maya Sandalow
So the pipeline piece that you mentioned, and that's from a pretty young age, we see some states investing in healthcare training at the high school level. We see some states investing in medical school. So Delaware, for example, is proposing the state's first ever four-year medical program. Also, investments in new rural residency programs. And then many states focused on how can we retain those new providers through things like housing bonuses and incentive structures?

00;07;13;27 - 00;07;43;21
Maya Sandalow
That whole bucket a lot of that is subject to a five-year service requirement. So every investment that's tied to an individual and leads to a credential or a degree of some type, based on CMS's requirement, those individuals are required to stay in that rural area for a minimum of five years. The second category that we kind of pulled out is upskilling and building the infrastructure needed to sustain the existing workforce, right?

00;07;43;22 - 00;08;14;19
Maya Sandalow
So that's everything from training providers who are stretched thin. They may not have the time or the resources to really ensure that they're kind of practicing at the top of their license. So investing in training for those providers, things like how to use telehealth, or like robotics and surgery, right. So various types of training initiatives. Also, states focused on closing the data gap so that they have the information that they need to know where are their workforce shortages, so that they can kind of allocate resources efficiently.

00;08;14;19 - 00;08;43;12
Maya Sandalow
And then also lots of focus on non-clinician workers right. So community health workers, peer support specialists. These really important workers making sure that they're reimbursed adequately. And I'll just say the third theme that we pulled out relates to policy actions. So through the Rural Health Transformation Program, states received points in the potential for more funding if they commit to certain types of policy actions. Two with a lot of relevance for workforce are interstate licensure.

00;08;43;17 - 00;09;06;00
Maya Sandalow
By default, providers have to be licensed in the state that the patient is, in order to deliver care, but states can join what are called interstate licensure compacts, which makes it easier for providers to practice in other states. And so states are incentivized and some states are committing to joining interstate licensure compacts through the Rural Health Transformation Program.

00;09;06;01 - 00;09;25;15
Maya Sandalow
And then the second policy piece is scope of practice. right? So that relates to what healthcare workers are allowed to do based on their state medical licensing board requirements. So some states are proposing to, for example, expand what pharmacists or nurse practitioners or physician assistants can do with their funds.

00;09;25;15 - 00;09;51;21
Shannon Wu
And I know another piece of some key programs and initiatives that I think all 50 states applied for, as well is related to technology, whether it's AI, whether it's telehealth. I also know that the Center has put out some great primers on the projects and initiatives states have applied for in that regard. Do you want to talk a little bit about what you all are seeing across the states, in some key themes that are coming out from that bucket of funding?

00;09;51;27 - 00;10;26;00
Maya Sandalow
Yeah, technology investment is a really big focus across all 50 states. We identified four broad categories. So the first is states investing in the foundational health IT infrastructure that's needed as kind of a prerequisite for broader transformation. And that's really important, right? So modern healthcare really runs on data, but right now rural facilities might not necessarily have the resources that they need to make sure that the data of a patient is moving with them when they, for example, see a specialist in another town.

00;10;26;00 - 00;10;49;29
Maya Sandalow
And that can lead to duplicative tests and unnecessary care. So states are investing in that foundational infrastructure. Also in that category, cybersecurity readiness. We know that rural healthcare facilities have been subject to cyberattacks in recent years. So states are investing in kind of ensuring that healthcare facilities are prepared for potential cyber. That first bucket is really foundational.

00;10;49;29 - 00;11;11;26
Maya Sandalow
We also see states investing in expanding access to digital health, things like telehealth and remote patient monitoring. Patients in rural areas tend to live pretty far from providers, have to travel really long to get the care that they need. So you can imagine this telehealth and patient monitoring being really valuable for patients, but rural areas tend to have less access.

00;11;11;26 - 00;11;44;07
Maya Sandalow
So states are focused on closing that gap. One story that really illustrates the potential here. I talked to a patient named David last year, and he's in his mid-80s and he lives in rural North Carolina. And he really credits his remote patient monitoring program with keeping him out of the hospital consistently. Like every morning he checks his blood pressure, he uses a weight scale, and his data is automatically sent to a remote healthcare provider who, if there's something out of range, can call him, adjust his medications.

00;11;44;07 - 00;12;12;28
Maya Sandalow
So there's really a lot of potential here for it to help patients health and also save money. The third bucket is artificial intelligence, which everybody is talking about right now. Same story here. Rural areas tend to have less access to AI. You know, AI is long been used in areas like medical imaging. Increasingly it's used a ton in clinical documentation, which can help to reduce burnout and kind of administrative burden on rural areas.

00;12;13;04 - 00;12;39;07
Maya Sandalow
Then the fourth and final category that we pulled out are something called rural technology catalyst funds. And these are created by the Rural Health Transformation Program. States are allowed to invest up to 10% of their money into this. And it's really meant to be a catalyst for innovation. So states partner with external entities. So maybe a startup incubator to vet technology proposals.

00;12;39;07 - 00;12;51;25
Maya Sandalow
And then those external entities can also bring in outside capital, so it's a way to combine public investment with private investment. So that fourth bucket is definitely something to keep an eye out for.

00;12;51;27 - 00;13;16;06
Shannon Wu
That really runs the spectrum of kind of the core infrastructure needs of setting up health IT. You know, for us, we tend to think of kind of the broadband needs of rural communities, right, kind of having that initial infrastructure. But now you also describe the fourth bucket in terms of really innovative care using drones, etc. So this will be a really interesting, I think, bucket of funding to see what states do.

00;13;16;09 - 00;13;56;27
Shannon Wu
Well, I know that, you know, with this funding, as we said before it's a five-year program. The AHA and BPC have suggested to policymakers other initiatives and models of care for rural communities. You know, that this funding could use, but also beyond the scope of this Transformation Fund, right? So for us, for the AHA we publish our Rural Advocacy Agenda every year at the beginning of the year, which our listeners can find on our website. For this year, in addition to understanding and seeing where the progress of this Transformation Fund is going, one of our main focus is also holding commercial insurer actions accountable so that patients have timely access to care.

00;13;56;27 - 00;14;23;22
Shannon Wu
And these actions include prior authorization denials for patient care, delayed payments to providers, among other actions used by commercial insurers. I'm curious, does the BPC have any particular recommendations or policy that you are thinking about now or in the future, that's really aimed at ensuring that access to care in rural communities is maintained or expanded on? We would love to hear kind of what you all are thinking in this space as well.

00;14;23;25 - 00;14;51;20
Maya Sandalow
Yeah, absolutely critically important, and we are focused on a lot of the same areas that AHA is. We're coming out with an issue brief in the next month that will really elevate federal bipartisan policy priorities to bolster rural healthcare. And that will include really re-upping recommendations that have existed for a long time, as well as some new ones, to help to kind of sustain and maximize the investments of the Rural Health Transformation Program.

00;14;51;22 - 00;15;15;07
Maya Sandalow
There's going to be a lot of recommendations in that. I'll highlight two. Both relate to Medicare funding, because Medicare is really a primary payer for many rural hospitals and rural health care facilities. So the first one that I'll talk about is something called Medicare rural hospital designations. Those are extra funds that are given to hospitals with low volume in geographically-isolated areas.

00;15;15;07 - 00;15;40;25
Maya Sandalow
And there's a really strong track record for a lot of these programs and incentive designations. Yet, several of them lack permanent authorization. And so Congress has extended them year after year. And that makes it harder for providers to really have the security to be able to invest in kind of supports for their hospital and know that there's going to be financial stability over time,

00;15;40;25 - 00;16;11;09
Maya Sandalow
so we think that those should be made permanent. And then another thing that we think should be made permanent is access to telehealth and telehealth funding through Medicare, right? Telehealth is a fixture in the U.S. healthcare system at this point, yet Medicare payment for most of telehealth relies on temporary extensions. And we saw the repercussions of that this fall when there was a government shutdown, actually. Authority for Medicare financing for telehealth lapsed,

00;16;11;10 - 00;16;23;08
Maya Sandalow
right? And so this is a big barrier to long-term investment in the telehealth infrastructure is the need for these temporary extensions. So we call for permanency on that as well.

00;16;23;11 - 00;16;47;15
Shannon Wu
We really appreciate those recommendations. We support all that and especially on the Medicare-dependent designations and low volume, I think that's been a long -standing AHA policy as well, making those permanent, because we do hear from our members that having that security in payments, in these really geographically-isolated and Medicare-dependent hospitals, it really makes a big difference.

00;16;47;15 - 00;17;12;14
Shannon Wu
So we appreciate all the work that you all are doing to spearhead all that as well. Maya, we really appreciate you, appreciate your time and coming on to the podcast and of course, efforts from the Center and supporting rural communities. I know you all are hosting a virtual event coming up this month, right on the Transformation Fund? So do you want to give our listeners a little bit of detail on how to sign up for that, and what you guys will be talking about during that virtual event?

00;17;12;19 - 00;17;40;26
Maya Sandalow
Yeah, absolutely. Thank you for highlighting that. So BPC will be hosting a webinar on June 30th. You can go to our Events page at bipartisanpolicy.org to sign up. And we're going to bring in some experts that represent different state perspectives and can kind of speak to implementation, transparency, sustainability, some of the key questions that experts are raising when it comes to the Rural Health Transformation Program.

00;17;40;26 - 00;17;59;23
Maya Sandalow
And then we'll also outline some of the key themes that we've picked up as we reviewed all the state plans and give a preview to some of those federal policy recommendations, that are important for sustaining access to rural healthcare. So definitely tune in. We've got lots of great experts joining that event.

00;17;59;28 - 00;18;24;20
Shannon Wu
That's great. I'll definitely be tuning in. I know we're really looking forward into how that transparency piece is going to play out for the Fund and knowing where the funds are going, how they're being awarded, where they're being used. We really are looking into that as well. So, as the Fund continues into years two through three through four through five, we'd love to have you back on other episode of the podcast.

00;18;24;21 - 00;18;43;06
Shannon Wu
Just discuss how things are going, how progress is doing, what other programs and models of care that you all are suggesting to policymakers at the Bipartisan Policy Center as well. So again, we really appreciate you coming and joining us on this episode of this podcast, and we look forward to having you back. Thanks very much.

00;18;43;08 - 00;18;48;10
Maya Sandalow
Yeah, thank you so much for having me. Look forward to coming back in the years ahead.

00;18;48;13 - 00;18;57;03
Tom Haederle
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