Rural health care... A hammer...

The rural health 'Hunger Games' are underway

States are scrambling for a piece of a $50 billion fund. It's unclear where the money will go.

By Alice Miranda Ollstein

The Trump administration on Monday kicked off a scramble among the 50 states for a slice of a new $50 billion fund for rural health care, but experts on the ground fear its rushed timeline, lack of guardrails and potential for politicization will leave some hospitals struggling to stay open.

States have just a few weeks to submit detailed applications for the fund, which Congress created late in its negotiations over a bill this summer that made deep cuts to Medicaid and other health programs. Federal health officials will then have a couple months to review them and dispense the money.

On a press call Monday morning, Centers for Medicare and Medicaid Services Administrator Mehmet Oz made sweeping promises about the impact of the program, which he called a “massive opportunity to make rural America healthy again.”

“We can use this as an opportunity to pivot from the crisis that we are currently living in to the comeback that America expects from us,” Oz told reporters. “If we invest these monies wisely, we won’t just have health care systems barely hanging on in rural America — they’ll start to thrive.”

Monday’s announcement kicks off a “Hunger Games"-like competition for the federal funds, but health industry leaders in states desperate to shore up their crumbling rural health systems remain skeptical about where the money will ultimately go.

After the application window closes in early November, half of the fund will be dispensed at the discretion of Oz, while the other half will be divided equally among states that apply — meaning Wyoming would get the same amount as California despite their massive population difference.

States have no ability to appeal if their applications are rejected or they receive less money than they requested. Oz also said the federal government can “claw back” funding from states that “don’t perform” and redistribute it, saying: “This is not punitive. This is a very clever decision by the crafters of the law.”

The Federation of American Hospitals wrote to Oz in August pleading that CMS require states to put rural hospitals at the front of the line when the agency distributes the federal funds, and several industry leaders warned the fast timeline and lack of guardrails in the program leave the door open to fraud.

“You better believe everyone’s coming out of the woodwork to try for this money,” said Ryan Kelly, the executive director of the Alabama Rural Health Association. “You can’t imagine how many phone calls I’ve skipped, let alone taken, from different organizations that say, ‘Oh, I’ve got the latest greatest thing that can save rural health care.’”

Oz shared some examples on the press call Monday of good proposals for applying for the $50 billion, including upgrades to electronic medical records and telehealth services, mobile clinics that work in hard-to-reach neighborhoods and the implementation of payment models that move low-volume rural hospitals away from traditional fee-for-service setups.

“It’s not designed to pay back old bills or pay operating expenses,” he stressed. “It’s designed very specifically to transform the health care system.”

Lisa Hunter, a leader at the health advocacy group United States of Care, pointed to “a lot of wiggle room” in how Oz and governors spend the money, noting that the law lists a state’s “ruralness” as a criteria but doesn’t give a definition.

“What are the ways that this process and the application evaluation and criteria are going to be applied in a way that is not susceptible to gaming?” she asked.

Even if all the money goes to where it’s needed most, many experts are concerned that it will not make up for the massive hit rural providers are expected to take from the other provisions of the bill, including the reduction of hundreds of billions of dollars in Medicaid.

An August report from the health consulting firm Manatt and the National Rural Health Association estimated that the law will result in rural hospitals losing 21 cents out of every dollar they receive in Medicaid funding — a cut of nearly $70 billion for hospitals in rural areas over a 10-year period.

“Rural advocates are grateful for $50 billion,” said Lisa Davis, director of the Pennsylvania Office of Rural Health. “But while $50 billion sounds like a lot of money, in looking at some of the issues that states need to address, it may not completely alleviate the situation.”