After months of inter-party negotiations, in early July the Republican Congress passed and President Trump signed into law The One Big Beautiful Bill Act. The 870-page law was passed under the Senate’s budget reconciliation rules and includes a mix of policy initiatives supported by President Trump, including a permanent extension of most of the individual income tax provisions included in Trump’s 2017 tax law, foreign policy, border security, and energy policies. Although not focused on healthcare, the bill does include 115-pages of healthcare provisions, most of which are focused on reducing future Medicaid spending as a mechanism to reduce the overall budgetary impact of the bill. In total, the law contains 24 new Medicaid policy changes that according to the Congressional Budget Office (CBO) are projected to contribute to a nearly $1 trillion overall reduction in federal Medicaid spending (compared to the previous baseline) over the next 10 years. While the law was being debated, Republicans in both the House and Senate raised concerns about how these Medicaid changes might impact rural hospitals and other safety net providers. In response, a $50 billion “Rural Health Transformation Program” was added to the law to alleviate some of these concerns. The law creates this new “Rural Health Transformation Program” and provides it with $10 billion in annual funding from 2026–2030. The funds will be distributed from the Centers for Medicare and Medicaid Services (CMS) directly to the states with half of the $10 billion in annual funds to be distributed “equally among all States with an approved application” and half to be distributed at the discretion of CMS based on application responses. The application process will require each state to create and submit a “Rural Health Transformation Plan” to CMS by December 31, 2025. The plan must detail specific funding requests and how states will improve access to care, patient outcomes, and the long-term financial viability of rural hospitals and other providers. CMS must approve or deny state applications by December 31, 2025, with an intention for the funds to start flowing to states (and subsequently providers) in early 2026. Notably, the law also includes a “One-Time Application” provision regarding the application and approval process which is intended to ensure that if a state’s application is approved for 2026, it wouldn’t have to be revised and/or refiled in future years. Despite some members of Congress and the media labeling the program as a “Rural Hospital Fund”, these funds are not restricted to hospitals, or even necessarily to rural areas. The law specifically includes community health centers and Certified Community Behavioral Health Clinics (CCBHCs) as providers eligible for program funds. Additionally, the law offers CMS broad discretion to approve state applications that would use the funds for a variety of purposes, including:
