Enhance Funding for Local Rural Health Programs

ACTION NEEDED:

Urge your members of congress to support increased funding and further support for local rural health initiatives that increase access to care and support the vitality of rural communities. Additionally, urge Congress to continue to support funding for critical programs under the Federal Office of Rural Health Policy (FORHP) at or above the enacted Fiscal Year (FY) 2026 funding level.

BACKGROUND: 

Over 46 million people, or over 13 percent of the U.S. population, live in rural areas, where they face higher disparities in chronic diseases and increased mortality from preventable causes. Rural communities experience provider shortages, healthcare facility closures and long travel times for care, making local health services increasingly critical. The Federal Office for Rural Health Policy (FORHP) funds grants to expand access to care, build health capacity and provide technical assistance to rural hospitals. In FY 2025, FORHP awarded nearly $365 million in grants, including funding for programs that strengthen the rural health workforce, behavioral health, access to care, maternal health and rural hospitals. 

Counties manage Medicaid services across rural, suburban and urban areas, where Medicaid covers 18 percent of non-elderly adults and 41 percent of children in rural regions. Protecting Medicaid funding is essential to sustain healthcare services and providers in these communities, especially for Emergency Medical Services (EMS). EMS serves as a vital safety net in rural areas but is plagued with workforce shortages and underfunding. NACo supports increasing reimbursement rates for rural EMS providers from Medicare, Medicaid and the VA, and advocates for the permanent adoption of COVID-19 era reimbursements for certain EMS services. 

POLICY RECOMMENDATIONS:

• Fund Rural Health Programs: Support the Federal Office of Rural Health Policy (FORHP) at or above FY 2026 funding levels to maintain critical rural health initiatives.
• Strengthen Medicaid and Medicare for Rural Access: Increase reimbursement rates for rural EMS providers, including establishing sustainable reimbursement for treatment-in-place services to support community-based care and reduce avoidable transports. Reform Medicare policies to eliminate urban–rural payment differences and fully fund programs that sustain rural hospitals and essential health services.
• Delay scheduled Disproportionate Share Hospital (DSH) payment cuts to protect rural hospital stability: Rural hospitals operate on thin margins and serve a disproportionate share of Medicaid and uninsured patients; delaying DSH reductions would help prevent service line closures, preserve emergency and obstetric care access
• Incentivize Rural Health Professionals: Implement tax relief and incentives for health professionals and National Health Service Corps members practicing in underserved areas, and support reforms to Graduate Medical Education (GME) programs to address the shortage of primary care providers.
• Expand Rural Telehealth: Extend Medicare reimbursement for telehealth services; expand Health Services Outreach grants; and support initiatives for rural health research, farm safety and state rural health development.

KEY TALKING POINTS:

• In 2023, nearly half (48 percent) of rural hospitals operated at a financial loss, according to the American Hospital Association.
• Rural hospitals depend significantly on Medicaid, Medicare and other government programs to maintain operations, with Medicare contributing nearly half of their revenue. However, reimbursement rates have not kept up with the rising costs of delivering care.
• Rural counties are more likely than urban counties to have ambulance deserts, where access to an ambulance station is more than 25 minutes away. Four out of five counties have at least one ambulance desert. Due to this, rural residents may wait up to 30 minutes for emergency services.