The federal Rural Health Transformation Program gives $50 billion to the states over five years. Pennsylvania received $193 million this year from the program and is in the implementation stage.
“We will be able to use that money to foster innovation and improve access to essential health services in rural communities. What we're very excited about will be the opportunity to, in the future years, potentially make a case for additional funding to come to Pennsylvania,” said Dr. Val Arkoosh, Secretary of the Pennsylvania Department of Human Services (DHS), which will oversee and administer the program’s federal grant money.
But health care leaders and advocates still have concerns about how far the money will go to solve health systems' financial struggles in rural areas.
“It's not intended to shore up systems, and it's not going to shore up systems,” said Katherine Hempstead, a senior policy advisor at the Robert Wood Johnson Foundation, a philanthropic organization focused on health equity.
“I think that probably everyone is pretty clear-eyed about that, but I don't think states, or rural health systems are in a position where they're able to say, ‘No thanks, we’ll pass on that money,’" Hempstead said. "Because they feel like they need to take whatever they can get, even though, in general, it's not going to help their immediate problems.”
Pennsylvania’s Rural Health Transformation plan
According to a March 31 information session hosted by the state's Department of Human Services, all year-one funds must be obligated by Oct. 30 and spent by Sept. 30, 2027. The state will submit annual and quarterly reports to the Centers for Medicare and Medicaid Services.
Investments will all fall under the state's six program initiatives: aging and access, behavioral health, EMS and transportation, maternal health, technology and infrastructure and workforce.
The department said it will establish Rapid Response Access Stabilization grants to invest in work already underway that is aligned with the state’s Rural Health Transformation Plan.
“If a hospital needed to upgrade some of their IT security systems, in order to align with CMS requirements for digital security, they could apply to this grant for funding for that," Arkoosh said.
"We've talked to entities that want to purchase mobile vans so that they can bring maternal health services and behavioral health services to meet people where they are, instead of requiring those individuals to come into some existing brick and mortar place," she added. "Those would all be examples that entities could apply for an access stabilization grant during this first year."
Brinna Ludwig, the state's director of the Pennsylvania Rural Health Program, said during the information session that year one spending will mostly go towards the rapid response program that will fund near term investments to meet CMS deadlines. Years two through five of the program will fund needs identified by the state's eight Rural Care Collaboratives, or RCCs.
“Each RCC will guide the rural health transformation projects and funding in their region,” Arkoosh said. “These RCCs will consist of local leaders, stakeholders, health care providers, all sorts of entities. The goal here is that by making those decisions regionally and getting the investment of those regional leaders, these projects will be sustainable over time, because the grant money is finite. It's about five and a half years by the time it'll all be spent. Our goal here is to catalyze work across regional communities in the Commonwealth that will be sustainable well into the future.”
The state’s proposal includes workforce development, innovative care models that will increase access and technological innovation that would invest in digital and informational technology infrastructure.
According to the Bipartisan Policy Center, Pennsylvania has four pillars under its technology and infrastructure initiative, including data innovation and information exchange, digital infrastructure and next generation AI to improve access, quality and experience, mobile and digital health that reaches every community and community wellness hubs to improve health and catalyze collaboration.
The state's Department of Human Services said it will host meetings for the collaboratives in the following eight regions: Central, North Central, Northern Tier, Northeast, Northwest, Southern Alleghenies, South Central and Southwest.
The Northeast Pennsylvania Rural Health Summit will be hosted on May 29 at King's College in Wilkes-Barre.
The RCCs will identify the unique needs of each region.
“In the Northeast and the North Central, some of the challenges in those areas may not be replicated in the southwest, and vice versa. So very much a regional approach and to develop teams that were going to be working to address the identified concerns over the year,” said Lisa Davis, the director of the Pennsylvania Office of Rural Health and a board member at the Pennsylvania Rural Health Association.
DHS said the state submitted a budget plan to the Centers for Medicare and Medicaid Services earlier this year. A spokesperson said all funding must still be approved and drawn down from CMS, but that CMS has been very responsive through the process.
A ‘consolation prize’ for Medicaid losses
The Rural Health Transformation Program was a provision in HR-1, commonly known as the One Big Beautiful Bill Act, President Donald Trump’s budget law that was passed by Congress last summer. The budget makes changes to Medicaid, the federal and state program that provides healthcare to low-income Americans, those with disabilities and older adults. The program covers nearly 3 million Pennsylvanians.
The Medicaid changes implement work requirements, with exemptions for certain groups, including pregnant people, individuals with disabilities and caregivers. There will also be more frequent eligibility checks. Most changes will go into effect on Jan. 1, 2027.
KFF Health News found that over 10 years, federal Medicaid spending is expected to be reduced by $911 billion. The changes are estimated to increase the number of uninsured Americans by 7.5 million by 2034. In rural areas, KFF estimates that federal Medicaid spending will decline by $137 billion. In Pennsylvania, that number is estimated to be around $5.5 billion.
“I think the idea was proposed as a bit of a consolation prize to give out some federal money targeted to rural areas in an attempt to partially offset the impact of how the One Big Beautiful Bill Act is anticipated to affect rural hospitals through both the cuts in Medicaid funding through the provider tax provision and state directed payments, but also through the loss of coverage anticipated as a result of the work requirements component,” said Hempstead from the Robert Wood Johnson Foundation.
“The changes in the One Big Beautiful Bill Act are permanent, unless somebody changes policy in the future, whereas this is a one time shot of cash that's not going to last beyond five years,” Hempstead said.
Zachary Adams, executive director of the Center for Rural Pennsylvania, said rural health leaders are already looking beyond the five-year timeline of the program.
“The question in the back of everyone's mind is really, 'What happens after five years?' There's a lot of uncertainty as it relates to federal Medicaid cuts and how that may play out, both in the short term and in the long term. Folks are certainly appreciative and excited about the magnitude of this funding, but there's a lot of concern about what happens when this funding dries up in five years,” Adams said.
Program won’t rescue financially struggling and vulnerable rural hospitals
According to KFF, payments to providers are capped at 15% of a state’s total award.
“This program is really geared at mostly what I would call upstream investments in research and pilot programs to try to improve rural health care delivery in ways that might make it more affordable or cheaper, better quality, increase access by expanding scope of practice, bringing in workers, things like that," Hempstead said. "Whereas I think the concern is that the needs of rural health systems are going to be more downstream and immediate,”
But that’s not stopping rural health leaders from interest in the available money.
The Chartis Center for Rural Health, part of the Chartis Group, found in its annual report that more than 400 hospitals in the country are vulnerable to closure.
“The Rural Health Transformation funding stands to innovate and inject rural health care with much needed capital and investment, but it's a question of how much time will be required and can these hospitals be stabilized in the meantime,” said Michael Topchik, the executive director of the Chartis Center for Rural Health.
Rural health leaders are realistic about the program’s limits.
“Given the enormity of these cuts by the federal government to Pennsylvania's health care system, which will disproportionately impact our rural hospitals, we are very concerned that some of these hospitals are much more likely to close because of HR-1 and the funding from the Rural Health Transformation Plan would not be sufficient to prevent something like that from happening,” Arkoosh said.
The Center for Rural Pennsylvania does not expect that hospitals will see the bulk of this funding.
“From my understanding, the majority of funding is going to go directly to these collaboratives, so there will be community based partners that are able to offer care. And perhaps hospitals will be getting some of that funding in terms of reimbursement for care, but from my understanding, it's really designed to set up these and coordinate efforts around new models of health care access outside of the hospital system,” Adams said.
Rural Health Transformation Program from the eyes of the Trump administration, GOP
Trump administration officials touted the program in Pennsylvania during various visits.
“The amount of money is astonishing. It is a total of 1/3 increase in federal monies to rural health care, historically, a 1/3 increase for the next five years, and it's going to allow these rural systems to save these vital hospitals, which are not just healthcare providers, they're also the centers of culture and economic drivers for those communities,” said U.S. Secretary of Health and Human Services Robert F. Kennedy, Jr. during a visit to Harrisburg to launch the ‘Take Back Your Health’ tour.
Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz called the program “a life rope” during a February visit to Scranton. He said he was not concerned about Medicaid losses because of the opportunities the Rural Health Transformation Program will provide.
“We're optimistic that Pennsylvania would do well, especially with the Rural Health Transformation fund, there will not be meaningful changes for Pennsylvania because of the way the Pennsylvania tax system was created with these provider taxes,” he said.
The Trump administration also said it can claw back awards if states don’t meet the administration’s expectations or don’t fulfill their proposals.
“We didn't want to just give the money out and hope it works. We purposely put strings attached. So if you promise to do certain things and you don't do them, you should be penalized. However, if you do those things, and other states don't do what they promise to do, you're going to get their money. So there's an upside and there's a downside. All we're asking is do what you promised you were going to do,” Oz said during a December visit to Scranton.
Pennsylvania officials aim to meet the administration’s expectations to get full use of the program.
“We were very careful about what we put into this grant. We put in things that we 100% believe we can deliver on, so that we don't have to give a single dollar back," Arkoosh said. "Our goal here is to execute perfectly and set ourselves up to be able to make a very strong argument for why we should be given additional funds that have been redistributed from other states in years two, three, four and five."
U.S. Rep. Rob Bresnahan (R-Luzerne) voted in favor of the One Big Beautiful Bill Act.
“When you think about Northeastern Pennsylvania, clinics and rural hospitals are the backbone of our community,” Bresnahan said to WVIA in a statement. “The targeted investments included in the Rural Health Transformation Program are going to transform rural healthcare for our region, our state and our nation. Pennsylvania has been awarded $193 million just this year, and every single dollar is going to go towards long-term solutions for rural healthcare.”
“From the start, I pushed to guarantee the Rural Health Transformation Fund was included in the Working Families Tax Cuts, because I knew how critical these resources would be for our hospital providers and patients. This funding will make a real difference for families across the Commonwealth, and I remain committed to fighting for Pennsylvania, so we can secure even more resources in the future,” he continued.
Not everyone shares the Trump administration’s high hopes for the program.
“I think there is a little bit of magical thinking on the part of the Feds that with this money, people are going to create these innovations that are going to pay for themselves, or they're going to capture lightning in a bottle by trying these things,” Hempstead said. “Then they're not going to need the money ongoing, because they will have developed these new solutions that are going to, quote, unquote, transform rural health care. I feel like that's probably optimistic, and when the money runs out, five years from now, states are going to notice.”
Areas of opportunity for Pa.’s rural health
There’s areas of opportunity for places where Pennsylvania’s rural health is really struggling, like maternal health. Pennsylvania now has an eight-county contiguous region larger than Connecticut with no labor and delivery units.
“Its greatest potential lies in its ability to find solutions to things like maternity healthcare deserts or folks who may lack access to primary care. I'm excited to see how folks at the local level respond to that, the state level agencies who are in charge of this funding and develop regional collaboratives that really align with the communities they're seeking to serve,” Adams from the Center for Rural Pennsylvania said.
There’s also potential to address rural healthcare workforce shortages with new training programs.
“Within the rural health transformation plan, there are some new models for how to train clinicians, especially in medically underserved areas, which can be rural or urban, but in this case, rural,” Davis said.
Rural health leaders hope the program will create self-sustaining innovations that won’t leave rural health systems on a cliff once the funding dries up in five years.
“My hope is that this funding provides enough time to build infrastructure and new models of care that are self sustaining, but there are still larger questions about how we fund quality health care in rural communities, both in hospital settings now and once this funding dries up in terms of continuing to support for the regional collaboratives,” Adams said.
The program’s launch started conversations about the struggles rural health faces.
“I do believe it's really put rural health on the map in a way that maybe it hadn't been in a while," Hempstead said.
"While I don't think this program is going to solve rural health problems, I think it's teeing up the criticality of addressing rural health needs in a way that is going to continue,” she said.
