Medicaid Matters Weekly is a blog series aimed to be a trusted source for timely updates, insights and expert guidance on the ever-changing landscape of Medicaid, with a special focus on long-term care. Each week we’ll highlight critical developments, how they impact your clients, and offer practical tips to keep your planning strategies sharp and your clients protected.
What Rural Medicaid Clients Might Gain from New Federal Funding
Last week, the “Big Beautiful Bill” was signed into law—and while many provisions tighten Medicaid eligibility or reduce reimbursement, not everything in the legislation was a cut. One headline worth watching: a $50 billion investment in rural health care, aimed at improving access and stability in areas long underserved by the system.
This new Rural Health Transformation Program, launching in fiscal year 2026, will distribute federal grants to states over a five-year period. The funding is intended to support payments to rural health care providers, expand the rural health workforce, and drive improvements in care delivery. It’s a sizable infusion—but its effectiveness will depend on how states apply, allocate, and deploy the money.
The funding will be split two ways:
- 40% will be distributed equally to all states with approved applications.
- The remaining 60% will be distributed based on a formula considering:
- The number of rural residents in metropolitan statistical areas.
- The percentage of all U.S. rural health facilities located in a state.
- The presence of hospitals serving large numbers of low-income or high-needs patients.
States can use these funds for a wide variety of improvements, from workforce expansion and technical assistance to the delivery of care and direct service payments.
Rural health systems have long been in crisis. More than 130 rural hospitals have closed since 2010. Many others operate on thin margins and are at risk of closure, especially those reliant on Medicaid, which reimburses at lower rates than private insurance.
Recent studies by research, polling and journalism organization, KFF, found that nearly 1 in 4 rural residents is covered by Medicaid. Medicaid plays a critical role in keeping rural hospitals open and staffing stable. Rural hospitals are more likely to serve aging, low-income populations, who happen to be those who are most likely to need skilled care.
In theory, this new funding could stabilize at-risk facilities, enhance service delivery, and reduce care deserts. However, implementation will vary by state, and the earliest funds won’t be available until 2026.
LWP Practice Tip: Anticipate uneven impacts. Some rural communities may see real improvements while others may not benefit at all, depending on state participation and allocation decisions. Further, don’t assume funding = access. Even with this support, not all facilities will survive or offer consistent Medicaid access. Continue emphasizing early planning and multiple care options.
The Rural Health Transformation Program could represent a meaningful shift for clients living in rural areas, especially those relying on Medicaid for long-term care. But like many parts of the “Big Beautiful Bill,” the benefits will depend on execution, not just appropriation.
Staying informed and advocating for access aren’t just smart strategies, but essential steps, because Medicaid Matters.
