How the “One Big Beautiful Bill Act” Impacts Rural Healthcare 

PEORIA, IL – July 24, 2025 – The “One Big Beautiful Bill Act” (OBBBA) that was signed into law by President Trump on July 4, 2025 represents a pivotal shift for rural healthcare. This comprehensive bill introduces significant changes to Medicaid funding while simultaneously establishing a new rural health fund. Rural hospital leaders must understand these key provisions to navigate the changing landscape. We’re breaking down the key points that rural health systems need to know. 

Key Impacts on Rural Health Systems 

1. SUBSTANTIAL MEDICAID CUTS 

• Reduced funding: Medicaid is a critical funding source for rural hospitals. The OBBBA is projected to reduce general Medicaid spending on rural hospitals by an estimated $50.4 billion to $70 billion collectively over 10 years. 
• Provider tax limitations: The OBBBA includes provisions that will freeze or phase down states’ ability to levy provider taxes, which many states rely on to fund their share of Medicaid, limiting state flexibility to support rural providers. 
• Coverage loss: The bill is expected to result in loss of Medicaid coverage for individuals and an increase in uncompensated care, which will further impact the financial viability of rural hospitals. 

2. RURAL HEALTH TRANSFORMATION PROGRAM (RHTP) 

• Dedicated, limited funding: The OBBBA establishes a new Rural Health Transformation Program (RHTP), which allocates $50 billion in dedicated funds over five years ($10 billion annually from 2026 to 2030). 
• State-Administered: These funds will be administered by the Centers for Medicare & Medicaid Services (CMS) to states through an application process, not to individual providers.¹ 
• Application Requirement: To be eligible, states must submit detailed rural transformation plans to CMS by December 31, 2025. State funding allotments will be based on each state’s rural population share, number and financial condition of rural health facilities, geographic diversity and alignment with national health priorities. 
• Permitted use of funds (states that receive funds must apply to at least three): 
  • Improve access to hospitals and healthcare providers in rural areas 
  • Improve healthcare outcomes for rural residents 
  • Prioritize new and emerging technologies that emphasize prevention and chronic disease management 
  • Support access to opioid use disorder treatment and mental health services 
  • Initiate, foster and strengthen local and regional strategic partnerships between rural hospitals and other healthcare providers to promote measurable quality improvement, increase financial stability, maximize economies of scale and share best practices in care delivery 
  • Enhance clinician recruitment and training in rural areas 
  • Prioritize data and technology-driven solutions that help rural hospitals and other rural healthcare providers furnish high-quality health care services as close to a patient’s home as is possible 
  • Strategies to manage long-term financial solvency and operating models 
  • Identify specific causes driving the accelerating rate of stand-alone rural hospitals becoming at risk of closure, conversion or service reduction. 

What Rural Health Systems Should Do Now:

STAY INFORMED 

Proactively analyze the OBBA’s impact and actively monitor federal and state updates to optimize new funding opportunities and mitigate financial risk.

STRATEGIC PLANNING:

Evaluate the various implications from changes to funding that can impact revenue and care compensation. Surface areas to improve operational efficiencies and explore strategic partnerships to ensure long-term viability. 

The OBBBA presents significant changes from Medicaid cuts but offers an opportunity through the RHTP for states and rural health systems to strategically invest in the future of rural healthcare delivery. 

Pointcore’s expertise in navigating complex healthcare legislation ensures leaders are not just compliant but strategically positioned to thrive and leverage new opportunities presented by the OBBBA. We will be monitoring the details of the OBBBA and providing updates as information becomes available.