Colorado and other states are poised for the biggest federal investment in rural health care in generations. But how much Colorado receives will depend on how well it competes against every other state in a battle royale application process.
It’s the rural health “Hunger Games,” as Politico put it.
“I have some high hopes for this,” Kim Bimestefer, the executive director of Colorado’s Department of Health Care Policy and Financing, said on a webinar earlier this month.
Here are the basics:
Republicans’ “big, beautiful” tax and spending bill, passed earlier this year in Congress and signed by President Donald Trump, contained $50 billion for improvements to rural health care. That money will be doled out over five years, so figure $10 billion per year.
Half of the money will be distributed evenly among states that submitted a qualifying application. Every state applied, so, assuming they all meet the minimum application standards, that means each state will get at least $100 million per year.
Competing for cash
It is the second half of the money where things get sporty.
That money will be distributed based on a competitive analysis by the federal Centers for Medicare and Medicaid Services of each state’s application. This is the agency, housed within the U.S. Department of Health and Human Services, that Dr. Mehmet Oz runs.
Half of the money in this competitive pot — that’s $2.5 billion per year — will be distributed based on need. CMS, as the agency is known, will look at factors such as a state’s rural population size, the percentage of a state’s health facilities that are in rural areas and how a state’s rural hospitals are doing financially.
For the second half of the competitive money, CMS will look at how innovative a state’s application is or what kind of infrastructure and partnerships a state has in place to make the most of the money it’s given.
How Colorado ranks
Colorado scores well in some of these areas.
“We are ahead of the game here in our quality programs,” Kami Tam Sing, the director of HCPF’s Rural Health Transformation Program, said on the webinar. She mentioned things like Colorado’s Hospital Transformation Program, which tries to improve quality and cost-effectiveness by paying hospitals more for providing better care.
In other areas, Colorado likely won’t rank as highly as other states. For instance, while nearly half of Colorado’s rural hospitals are losing money caring for patients, Colorado has not seen a rural hospital close in decades, which isn’t the case for other states.
“We have folks down in the South that do have a lot of rural closures,” Colorado Rural Health Center CEO Michelle Mills said. “I suspect they will likely get a good portion of that funding.”
An analysis by the nonpartisan health care research organization KFF agreed, finding that Colorado is in line for about $46 million per year based on need, in addition to the $100 million a year for submitting a qualifying application. That ranked Colorado 29th for need-based funding. (The analysis did not attempt to estimate funding for the final chunk of money, based on innovation.)
There are also restrictions on how states can use the money. It can’t be used to pay the state’s share of standard Medicaid costs, so it won’t help the state’s budget picture. There are limits on how much of it can be paid directly to medical providers or used for upgrading electronic medical records systems. And it can’t be used for construction projects, which Mills said was disappointing to people she talked with given the number of aging medical facilities in rural areas.
Looking big-picture
That leaves Colorado looking at macro-level initiatives like training more people to work in rural health care, creating rural health networks so providers can better support each other, working on chronic disease prevention, improving tech systems and developing payment models that could reward rural health providers for doing a good job.
All of this new money will be arriving at a time when Medicaid funding is shrinking, both because of state cuts and because of other provisions of the “big, beautiful” bill. These new threats to rural hospitals and health clinics make it vitally important for Colorado to use this money well, Mills said.
“This in no way is going to cover the cost of the Medicaid cuts that are being proposed,” Mills said. “But what we do hope is that this will help us prepare for the future and sustain health care in our rural communities.”
The federal government has said it will announce funding amounts by Dec. 31.