By Steph Quinn
Rural communities have fewer than one-fifth as many OB-GYNs per capita, and hospital care is more than twice as far away as in urban and suburban Missouri. Over the last decade, 12 rural hospitals have closed and more than half of those still operating are losing money.
To address these challenges, the Missouri Department of Social Services hopes to use a piece of a $50 billion federal program to empower rural communities to set their own health care priorities and overhaul the state’s Medicaid payment system.
Part of the One Big Beautiful Bill passed by Congress this summer, U.S. lawmakers touted the Rural Health Transformation Program as a counterweight to the law’s deep cuts to Medicaid and as a boon to struggling rural hospitals.
Local and national experts praised the federal investment in long-term solutions for rural health care access and affordability. But they warned the funds will not make up for the revenue rural providers will lose as more patients become uninsured thanks to the federal law.
It’s unclear what Missouri’s share of the federal funding will be, though the Missouri Hospital Associationestimated the state could receive between $1 billion to $1.25 billion. The U.S. Centers for Medicaid and Medicare Services is expected to announce state award amounts by Dec. 31.
“This money in any other time is super transformative,” said Heidi Lucas, executive director of the Missouri Rural Health Association. “This is the type of money that we…in rural health have been asking for for decades.”
But Lucas said that “most likely, none of this is going to help keep hospitals from closing or rural health clinics from shutting their doors.”
That’s because the federal law will narrow Medicaid eligibility by adding work requirements and twice-yearly eligibility recertifications beginning in 2027. By one estimate from Princeton University, 130,000of the 1.25 million Missourians currently on Medicaid could lose coverage over the next decade. The expiration on Dec. 31 of enhanced premium subsidies enacted during the COVID-19 pandemic could lead more Missourians to go without insurance.
“Life happens,” Lucas said. “You could be in a car accident. You could fall down the stairs…. You’re still going to go to the hospital, and they’re still going to be required to give you care whether you can pay or not.”
Jess Bax, director of the state social services department, said Missouri’s plan can help sustain existing rural health facilities while expanding access and investing in long-term changes to how the state compensates health care providers.
“When you look at Missouri’s rural health plan, it is really focusing on all the aspects that affect that,” Bax told The Independent. “How do we get access today? How do we have the workforce for that access? What technology could we utilize to expand that access? And then, how do we build a payment model to make sure that access stays in place?”
But experts and health care professionals said the federal funding wasn’t designed to offset providers’ anticipated losses from increases in uncompensated care.
Toniann Richard, CEO of HCC Network, a group of Missouri clinics that uses federal grants to fund care for people with high deductibles or no insurance, said that when the federal program was first announced, she hoped the funding could be used to cover those losses.
But states can only spend 15% of their awards each year on provider payments, and only for services that can’t already be compensated.
“It became clear really early that that wasn’t the intent of it,” Richard said. “It was to improve the system so that over time, the unit cost of health care in rural communities would be driven down.”
Carrie Cochran-McClain, chief policy officer of the National Rural Health Association, said providers across the country are feeling the tension between federal investment in rural health care innovation and policies that will cause massive reductions in the payments that allow them to operate.
“We want to be able to invest in our future and enhance quality of life in rural areas,” Cochran-McClain said. “But we still need adequate reimbursement day to day to be able to make ends meet in our facilities and provide the services we need to our populations.”
Hubs and spokes
With its plan, Missouri wants to expand a pilot program that sought to center local medical providers and community organizations in identifying health care priorities — and transform how the state compensates providers to support those goals.
“The primary goal of Missouri’s plan is to revamp the Medicaid payment system to guarantee the effective use of taxpayer dollars,” said Baylee Watts, spokesperson for the social services department, in an email to The Independent.
The pilot, ToRCH, or Transformation of Rural Community Health, was launched in 2022 and put rural hospitals in six counties in charge of “hubs” to coordinate care among medical providers and community organizations. The state obtained a waiver from the Centers for Medicare and Medicaid Services allowing reimbursement for services that Medicaid doesn’t usually cover but that enable people to be healthy, such as housing modifications or pest removal.
Lori Wightman, CEO of Bothwell Regional Health Center in Sedalia, which is one of the six hubs, said the pilot has helped keep people out of the emergency room.
Wightman gave the example of a man who was in the emergency room 40 to 50 times in one year due to flare-ups of his chronic illness. The heating and air conditioning in his home were broken, leading him to rely on electric heaters and window units. His electric bills had gotten so expensive, Wightman said, that he couldn’t afford his medications, which caused the flare-ups.
Using the pilot program, Wightman said, the hospital bought him a new HVAC unit through Medicaid.
“It’s now been six months, and he hasn’t needed to be back in the emergency department at all,” Wightman said.
The state’s application for federal funding proposes to establish 30 community hubs across 104 counties, with staff at the regional and state levels to coordinate partnerships and track outcomes. Each hub would include medical providers and community organizations offering services that keep people healthy, like food assistance or transportation.
Communities would be able to identify local needs such as medical transportation, Bax said, and request funding.
“They can say, ‘That’s a gap for us, and we think we could have an impact on health outcomes if we’re able to provide this,” Bax said.
Lucas said this plan “has a lot of upside.”
“If you’re offering wraparound services, figuring out how they can get nutritious food into their homes, how they get transportation to their appointments, that’s going to raise health outcomes,” Lucas said.
Alternative payment models, which pay providers based on the quality rather than the volume of services, would ensure the sustainability of these measures under Missouri’s plan.
Richard said alternative payment models have been part of conversations about how to sustain struggling rural hospitals and clinics for at least a decade. But getting payors and providers to agree on a model is complicated.
Keith Mueller, director of the Rural Policy Research Institute, said the infusion of federal funding could help.
“The excitement about the transformation fund is, ‘We have five years now with some support to really get this thing out there,” Mueller said.
Cochran-McClain said the federal program is “a once-in-a-lifetime, Blue Moon…opportunity to get at some of the longstanding challenges we’ve had in terms of underfunding in rural areas.”
Alternative payment models, Cochran-McClain said, could help “level the playing field” for rural providers who have high fixed costs like their urban counterparts but see fewer patients. Patients in rural areas are also more likely to rely on Medicaid or Medicare.
Bax said the state would seek to incentivize effective care, rather than a larger quantity of more expensive services, with the new payment models.
She gave the example of home-delivered, medically tailored meals to allow someone to be discharged earlier from the hospital.
“They’re keeping people healthier, allowing them to be successful staying at home with just some hot meals delivered,” Bax said.
Richard said she thinks the federal funding will give Missouri “an opportunity to be innovative around what [alternative payment models] might look like.”
Cautious optimism
But Richard and others said it’s unclear when rural providers will begin to feel relief from the long-term investments the federal funding was designed to support.
Bax said the “biggest piece of the funding” the state requested is for “provider transformation,” which includes renovations of existing facilities and investments in technology to help providers share medical records and referrals.
But other parts of the application, like alternative payment models, will take time to show results.
“We’re not going to see that return on investment in five years,” Richard said, “but if we continue to work beyond the fund, in theory it will drive down that unit cost.”
Wightman said she hopes some federal funding will be available to help Bothwell address pressing infrastructural needs. The roof leaks, she said, so the hospital has to shut down the operating room when there’s heavy rain.
Wightman said the hospital’s collaboration with the state’s social services department during the pilot has been successful. The only thing she worries about in the state’s application is the allocation of 100 full-time equivalent positions to work in state, regional and local offices.
“Only the people on the ground can identify partners and coordinate, not hub program coordinators,” Wightman said. “That’s not a roof over my operating room.”
Mueller said “the trick” will be for states to sustain key rural health providers during federal and state changes.
“Can you move those things fast enough that you’ve got the changes in delivery and in new payment methodology that make it possible to operate even with the cuts in Medicaid revenue?”
Despite the challenges, Lucas said she is “cautiously optimistic” about what the state can achieve with the funding.
“The health care system is broken,” Lucas said. “We all know that. So if we’re better able to support our communities, we are grateful for this money to be able to do that, because that’s never been a possibility like this.”
“Everybody wants it to work.”
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