OBBBA and RHTP Resource Center

By 2034, the bill’s provisions could reshape healthcare coverage for millions of Americans. While changes may affect up to 12 million people who rely on Medicaid and ACA plans, they also create an opportunity to reimagine how healthcare is delivered, especially in rural areas where 23% of residents depend on Medicaid. With more than 2.7 million rural residents potentially impacted, the Federal government, states, healthcare providers, and facilities may need to turn to innovative solutions that strengthen healthcare systems and payment models.

To offset the potential revenue losses from people who rely on Medicaid and ACA plans, the bill includes the rural Health transformation Program that allocates money for states to use for rural hospitals and healthcare providers.

The Rural Hospital Stabilization Act (H.R. 3063) hasn’t passed yet. It would allocate up to $5 million dollars in federal grants per rural hospital over a 5-year period. Funds could be used for operational costs, debt, and capital projects. Grants would be distributed by the HRSA Office of Rural Health Policy.

The Rural Health Transformation Program was passed as part of the OBBBA (H.R. 1). It’s a state-directed program administered by CMS. States must submit plans on how the money will be used in September 2025 and are responsible for distributing funds. States can plan for rural health care providers, including hospitals, health clinics, federally qualified health centers, and community mental health to use funds for provider payments, workforce recruitment and training, new technologies, support for opioid use treatments, mental health services, preventive care, and chronic disease management. The program provides for $50 billion in funding — $10 billion per year through 2030, $2 billion in 2030 and 2031 and $1 billion in 2032. Half of the funds will be distributed equally across states whose plans CMS approves. The other 50% will be given to states with approved plans based on the state’s rural population, number of facilities, and other factors not yet announced.

While the funds are intended for rural hospitals and providers, the law gives states discretion in how funds are distributed.

Things you can do today to understand how the bill may impact your practice or facility include understanding your payer mix. For example, calculating your percentage of visits or reimbursement from Medicaid payers or ACA plans will give you an idea of your potential decrease in volume or revenue. You may also want to review and update your charity care policies considering you may see an increase in uninsured people in your area.

The OBBBA will reduce Medicaid provider tax limits in expansion states from 6% to 3.5% by 2032. This could make it harder for states to fund Medicaid and lead to potential cuts in services, reduced provider reimbursements, or the need for states to raise taxes in other areas or find innovative solutions.

The bill caps SDPs at 100% of Medicaid rates in Medicaid expansion states and 110% in non-expansion states. SDPs paid at higher rates today will be reduced by 10-percentage points a year starting in 2028 until they reach the new limits. Rural hospitals are an exception. Payments for rural hospitals approved before May 1 2025, that exceed the new limits aren’t affected.