The recently-enacted federal reconciliation legislation (PL 119-21, also known as HR 1, or the “One Big Beautiful Bill Act”) established a new Rural Health Transformation Program, which is funded at $50 billion over the next five years. Half of this funding will be distributed equally among all states, and half will be allocated through competitive grants based on certain factors to be established by the Center for Medicare and Medicaid Services (CMS). This program is intended to mitigate potential impacts to rural hospitals associated with revisions to Medicaid in the reconciliation bill; allowable uses of the funds include payments to health care providers, rural clinical workforce recruitment and retention efforts, and support for substance use disorder treatment and mental health services.
In order to draw down its allocation of funds and to compete for additional funding, Virginia must submit an application by the end of December. This application is required to include a rural health transformation plan, which must detail how the state will improve access to health care in rural areas and health outcomes of rural residents, among other objectives. The plan is also required to identify specific causes of rural hospitals’ risk of closure and to outline strategies to manage their long-term solvency.
On August 13, Governor Youngkin officially directed the Secretary of Health and Human Resources and the Secretary of Finance to work with the Department of Medical Assistance Services, the Virginia Department of Health, other state and local government agencies, and representatives of health care providers to develop the rural health transformation plan so that Virginia can be positioned to apply for its share of the funding. The Governor’s directive requires the plan to include a Virginia-specific assessment of need, an assessment of national best practices in meeting rural health care needs, and options for investing funding to improve rural health. The Secretary of Health and Human Resources is directed to facilitate outreach to stakeholders, to include holding listening sessions in rural areas, establishing a central email address to receive comments, and engaging with legislators.
The directive also requires consultation with business leaders, local governments, nonprofits, and institutions of higher education on how to implement new work and community engagement requirements in the Medicaid program, as well as the development of a plan in concert with localities, local departments of social services, Medicaid managed care organizations, and Medicaid members to implement the new requirement for eligibility redeterminations to be conducted twice a year for individuals covered under Medicaid expansion.
The centralized email address to receive comments is RuralTransformation@governor.virginia.gov. VACo will share further details on the development of the plan as they become available.
VACo Contact: Katie Boyle