In July, the reconciliation law introduced a new $50 billion Rural Health Fund. A significant, one-time investment intended to offset projected Medicaid spending reductions that disproportionately affect rural providers. As rural hospitals, state agencies, and healthcare leaders digest what this means in practice, key questions are emerging: Who will receive the funds? How will they be distributed? And will this funding be enough to meaningfully change the trajectory of rural healthcare?

Continue reading to learn what’s currently known about the fund, why it was created, and what stakeholders may need to consider as implementation unfolds.

Why Was the Fund Created? The Rural Health Fund was established in response to Medicaid financing reforms that are expected to reduce rural health funding over the next decade. According to the Kaiser Family Foundation (KFF), rural hospitals stand to lose roughly $137 billion in Medicaid funding, with many of these cuts to begin after 2030.

The $50 billion allocation, distributed over five years from 2026 to 2030, is designed to ease this transition. But with only about 37% of projected losses covered, the fund is more of a bridge than a long-term fix.

How Will the Funds Be Distributed? The structure of the Rural Health Fund includes a few core components:

• $10 billion per year (2026–2030)
• Half of the funds will be distributed equally among eligible states
• Half of the funds will be allocated at the discretion of CMS

As of now, there is no formal guidance on how CMS will prioritize discretionary funding, nor are there mandated criteria for targeting hospitals by need, Medicaid volume, or financial status.

Key Limitations to Be Aware Of Despite its size, the fund faces several practical and strategic limitations:

• Short-term relief for long-term cuts. The funding timeline ends in 2030, while Medicaid reductions grow steeper beyond that point.
• No guaranteed targeting for high-need providers. Hospitals with negative margins or higher Medicaid patient loads are not explicitly prioritized.
• Transparency concerns. It remains unclear how CMS will track, report, or publicly share data about who receives funding and how it’s used.
• No structural policy change. The fund is temporary and does not amend existing Medicaid reimbursement formulas or quality programs.

How Might It Affect Rural Quality Reporting? While the Rural Health Fund does not directly change federal quality reporting frameworks, the temporary financial relief it provides could influence rural organizations’ ability to participate in, or strengthen their performance within, these programs. For many, the barrier isn’t willingness, but capacity. With added resources, hospitals, health systems, and clinics may have the opportunity to re-engage with or expand quality measurement efforts, depending on their program participation, billing model, and payer mix.

1. Short-Term Operational Stability Could Support Reporting Readiness For many rural hospitals, health systems, and clinics, ongoing financial stress has forced trade-offs between operational survival and participation in quality programs. Temporary relief from grant funding could give some organizations the bandwidth to re-engage with performance measurement, or participate for the first time, depending on their care delivery model and payer mix. For example, rural organizations may have reporting obligations if they:

• Participate in a Medicare Shared Savings Program (MSSP) ACO, where the ACO submits quality measures on behalf of all participants, including RHCs.
• Bill certain Medicare Part B services under the Physician Fee Schedule (PFS), triggering MIPS or MVP participation for those clinicians.
• Are part of a state Medicaid value-based or incentive program, which often includes its own quality metrics.
• Hold contracts with commercial payers that tie reimbursement to quality performance.

Strategic use of short-term funding could allow rural providers to invest in systems, workflows, and partnerships that improve both immediate compliance and long-term readiness for evolving federal and state programs.

2. Increased Emphasis on ROI for Grant Dollars and the Role of Performance Data With no formal reporting requirements tied to the grants (yet), states and systems may independently choose to track outcomes, utilization, and quality metrics to prove value and secure future funding. Rural providers participating in CMS quality programs will likely be better positioned to demonstrate performance success.

3. Data Infrastructure May Become a Funding Priority If part of the grant funding is used to build or improve electronic health records (EHRs), data reporting tools, or patient registries, rural systems may see improved accuracy and timeliness in their MIPS or MSSP submissions, especially as CMS continues shifting toward digital measurement and population-based reporting.

4. Potential Future Ties to Value-Based Participation While not yet mandated, future iterations of funding or discretionary awards could favor providers who participate in quality programs. Early participation and strong reporting could become differentiators when competing for grants or state-based support.

What Should Stakeholders Be Watching? As the fund rolls out, several developments are worth monitoring:

• Guidance from CMS on discretionary allocations
• State-level processes for evaluating and distributing funds
• Whether outcome measurement becomes expected, even informally
• Signals that future funding will prioritize value-based participation

Applying for the Rural Health Fund The Rural Health Fund application is expected to open on www.medicaid.gov in September 2025, with a final submission deadline of December 31, 2025. States will be required to submit their applications, including a Rural Health Transformation Plan. CMS will review and approve submissions by the end of the year, with funding scheduled to begin in FY 2026.

For rural health organizations, the takeaway is clear: Now is the time to prepare. Investing in the people, systems, and workflows that support quality reporting today may help secure funding tomorrow, and improve long-term resilience in a shifting policy period.

At Quantician, we help healthcare organizations stay informed, strategic, and ready for what’s next. As a CMS Qualified Registry, we work with rural hospitals, health systems, and clinics to navigate the quality reporting requirements that apply to their unique mix of programs, from ACO participation to state Medicaid initiatives and commercial value-based contracts, with confidence and clarity.

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