Indiana's rural hospitals can't afford "One Big Beautiful Bill"
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States next year will begin tapping the $50 billion rural health fund created by President Trump's "One Big Beautiful Bill," but questions have already arisen about how the funds will be allocated — and how much they will benefit rural providers.
Why it matters: The fund aims to help rural hospitals and providers adjust to sweeping changes in how Medicaid is financed, including limits on provider taxes and state-directed payments, but some providers are saying it won't be enough.
- The $50 billion sum also is about one-third of the roughly $155 billion in estimated cuts, per a KFF analysis, to federal Medicaid spending in rural areas, where many hospitals are already operating in the red.
State of play: The Indiana Hospital Association has warned that hospitals will see "catastrophic losses" from the changes in Medicaid and other federal funding. They're expecting to receive $1 billion less annually.
- Laura Brown, IHA deputy general counsel, said the dollars provided by the rural health fund are "critical" but will still fall short of the needs of the roughly two dozen rural hospitals in the state.
- "We're so thankful it was included," Brown told Axios, "but it does not offset the overall cuts we will see."
Zoom in: For the last five years, Good Samaritan, a 158-bed community hospital in Knox County, has been doing its best to break even, CEO Rob McLin told Axios.
- With two-thirds of its patients on Medicaid or Medicare, McLin said, Good Samaritan can't afford to absorb the coming losses and will have to cut services.
- Earlier this month, Good Sam announced it will close its hospice program at the end of the year.
What he's saying: "We're not crying wolf," he said. "The next step is services will start to drop, and you're going to see organizations going under."
How it works: The new rural health fund allocates $10 billion annually for the next five years, starting in 2026.
- The law says $25 billion is to be distributed equally among all states that submit a "detailed rural health transformation plan," which could include details on how they would use the funds. Indiana convened a working group to develop its plan.
- All the money has to be distributed by 2030 and spent by 2032.
Friction point: Flexibility built into the fund raises questions about how the Centers for Medicare and Medicaid Services will proceed, said Zach Levinson, director of the KFF Project on Hospital Costs.
- "States will also have discretion on how they distribute funds among hospitals and other providers," Levinson said. "And they maybe will steer some dollars to non-rural areas, pending CMS approval."
- The concern is that some states could be favored over others or that funding will not go to providers with the greatest needs.
What we're watching: Hospitals in rural and underserved areas are concerned about a double whammy if the government shutdown drags on.
- Health providers expect Congress will make them whole in an eventual funding deal and reimburse claims made during the shutdown, but that's not a given.
- Uncertainty about how long the shutdown will continue is leaving some of the most financially vulnerable hospitals in limbo.