For years, Missouri’s rural hospitals have been in crisis. 

The state has seen 12 rural hospitals close since 2014, while others have been forced to scale back services like obstetrics or specialized providers. This year, nearly 55% of Missouri’s rural hospitals operate at a loss. 

As part of President Donald Trump’s budget legislation, which included about $1 trillion in cuts to health care, lawmakers created a new $50 billion Rural Health Transformation Fund to offset some of those costs for rural health providers, paid out to states over five years. 

Of the $50 billion in the Rural Health Transformation Fund, half will be split evenly among all states with approved applications. The other half will be split based on metrics like the number of rural residents or rural health facilities and the amount of uncompensated care each state takes on. 

Missouri will receive $216 million during the 2026 fiscal year, the Centers for Medicare and Medicaid Services announced Monday, while Kansas will receive $222 million.

By expanding community networks, rewarding providers for better patient outcomes, investing in workforce development and shoring up data-sharing, Missouri argued in its application for the new federal money that its plan will transform how rural health care works. 

“It’s about doing everything more efficiently and getting everyone into the right care, while we are going gangbusters on prevention and trying to get the person to be able to access what it takes to live their healthiest life,” said Dave Dillon, the vice president of public and media relations at the Missouri Hospital Association. 

The Centers for Medicare and Medicaid Services, the federal agency which will oversee the new program, is expected to announce which states received funding on Dec. 31. 

Medicaid cuts bring focus to rural health roadblocks

Trump-led H.R. 1, dubbed by its supporters the “One Big Beautiful Bill,” will cut $1.1 trillion from Medicaid and the Affordable Care Act over 10 years. Some estimates forecast as many as 8.6 million people nationwide will lose health coverage over the next decade. In Missouri, it is estimated that between 130,000 and 170,000 people could lose coverage.

Under H.R. 1, Missouri could lose an estimated $23 billion in federal funding over the next decade, the Missouri Foundation for Health estimates. The rural health fund was introduced as a way to offset some of the cuts set forth in the budget bill, but experts warn that the Medicaid cuts could still have massive negative impacts on rural communities. 

Experts warn that the cuts under the budget legislation will cause financial problems for hospitals through an increase in uncompensated care — hospitals treating patients when they cannot pay. 

With more expensive health plans or no coverage at all, many people will delay treatment for their health conditions. As a result, they will likely begin to rely more on more expensive emergency rooms as their primary form of health care. 

The threat is twofold for hospitals: more crowded emergency rooms, and more burden to pay for the uninsured patients who come through the doors. 

For example, Mercy, a St. Louis-based hospital system that operates hospitals and emergency rooms across Missouri, Kansas, Oklahoma and Arkansas, estimates it will lose $300 million in revenue annually beginning five years from now, executives told The Beacon in August. 

KFF estimates about $137 billion of the nearly $1 trillion in Medicaid cuts alone will impact rural areas — nearly three times the available rural transformation funding. 

States will be awarded money based on how well they meet the goals set out in the creation of the rural health fund: making rural America healthy again, addressing access concerns, workforce development and innovation. 

“The idea is that they’re really making investments in innovations that will allow them to provide care at lower cost, basically, and target real problem areas,” said Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation. 

Missouri is asking for $1 billion in funding and will work with the General Assembly to allocate the funding, said Baylee Watts, a spokesperson for the Department of Social Services, in an email to The Beacon.

Still, Hempstead said, it’s not a replacement for money that will be lost through Medicaid cuts. 

“It’s by no means a direct replacement. The total amount of dollars is not the same,” Hempstead said. “These Medicaid cuts are permanent, and this Rural Health Transformation Fund is sort of a one shot.” 

Inside Missouri’s application 

Although Missouri’s hospitals are facing the largest headwinds as a result of the budget bill, the new federal money is designed to address all areas of rural health. 

Missouri feels confident about its application. U.S. Sen. Josh Hawley pushed for the fund to be created as a result of the cuts to Medicaid, and Sen. Eric Schmitt is close to the administration. 

Plus, the state already has a pilot program in place — the Transformation of Rural Community Health program (ToRCH) — which the Missouri Department of Social Services says will guide the state’s use of the federal dollars. 

The application has five pillars with separate costs: building up ToRCH statewide, creating alternative payment models based on improving health outcomes, bolstering data sharing, workforce development and technical assistance for providers. 

Under the plan, the state will create 30 local community hubs across Missouri, including behavioral health providers, federally qualified health centers, rural health clinics, public health agencies, emergency medical services departments, pharmacies and community organizations. 

They’ll be tasked with meeting monthly and sharing patient data to create more referrals for services. The local hubs will be overseen by seven regional hubs to facilitate data sharing, manage finances and create cohesion across the state. All of the community networks will be housed under the Rural Health Transformation office inside the Department of Social Services. 

“From watching what the state has been doing on rural health, in general, I would say we are getting a pretty good amount of attention for this ToRCH program,” said Timothy McBride, a health economist at Washington University in St. Louis. “This builds on that concept.” 

Another key part of the application is reforming how the state reimburses providers for care. Missouri plans to reward community hubs for how effective they are at improving patients’ health, rather than for what services they provide. 

In 2026, the first year of the program, the state will work with stakeholders to create incentives for things like reducing emergency room visits. In its application, Missouri says this method will push health care providers to rely more heavily on data that tracks health outcomes and push them to collaborate with other organizations, like food banks or community health centers, to improve their patients’ health. 

“This approach has transformational potential, as it is unlike any of the existing (alternative payment models) of which the State is aware,” the Department of Social Services wrote in the application. “Missouri will create a national model to shift the paradigm of payment and sustainability of rural health delivery.” 

These goals fall in line with how the federal government is thinking about health care, Hempstead said. 

“This administration has been a big advocate for interoperability and modernization, which in general is something that can increase efficiency and reduce costs, hopefully,” Hempstead said. “But I think it can be a challenge for smaller systems and independent systems.” 

Although it will be a challenge to get data sharing on par with what Missouri’s application demands, leaders feel well-positioned to take on the task. 

The Missouri Hospital Association, Missouri Primary Care Association and Missouri Behavioral Health Council — all key stakeholders in the state’s application — have been investing heavily in shoring up how providers track patient data. 

In writing its application, Missouri held biweekly working groups, several in-person meetings and small-group provider conversations to draft the proposal and outline data priorities, funding and workforce solutions. 

The leaders of the organizations “worked closer together over these past six months than we ever have,” said Brent McGinty, the CEO and president of the Missouri Behavioral Health Council. 

“I really think that it’s an innovative approach that will pay off for Missouri in the long run,” McGinty said. 

The state will also invest heavily in shoring up Missouri’s health care workforce to adapt to some of these changes. 

Every one of Missouri’s 99 rural counties has a health care professional shortage designation, and 42% of Missouri’s counties are maternity care deserts. 

By 2026, the application states, Missouri will have a shortage of more than 2,100 physicians. 

The state will use the federal money to expand health care-focused education programs and certifications in high schools. Other aspects will include bolstering child care and housing assistance to improve recruitment and retention in rural areas. 

“While some efforts — like certified nurse midwife training — will take longer to scale, they are structured for long-term sustainability,” Watts said. “In the near term, significant staffing funds from the award will support positions such as program managers and community health workers within newly established community hubs, providing immediate capacity. Technology will also play a key role in addressing workforce gaps through expanded telehealth and remote patient monitoring (RPM), ensuring care reaches patients even when local staffing is limited.”

The final pillar of the program will provide technical assistance to hospitals and providers. The application said the state will increase use of artificial intelligence tools like ambient listening to help streamline administration tasks and workloads. 

Despite all of these changes, hospitals will still be facing stiff financial headwinds. 

“I guess I’m a little bit cynical,” McBride said. “This is certainly going to help rural areas. It’s better than not having it. But do I think it’ll solve the problems? Probably not, especially in the wake of the other thing that is going to happen — budget cuts to Medicaid.”