Bridging the Gap: Examples of Medicaid Innovation Enhancing Health Care Access in Rural America

Access to health care services in rural America is a national concern. Between 2005 and 2025, 111 rural hospitals have closed across the U.S., with 88 of those closures since 2010. Additionally, while 20% of the U.S. population lives in rural regions, only 10% of physicians practice there. The closure of rural hospitals reduces access to emergency services, maternal care, acute treatments, and worsens outcomes for chronic diseases within rural populations. Limited access to specialized care and emergency departments increases the risk of death and delays in treatment, further complicating chronic disease management. Rural residents tend to be older, sicker, and more likely to experience poverty compared to their urban counterparts, leading to higher mortality rates from heart disease, cancer, unintentional injuries, chronic respiratory diseases, and strokes.

Improving health care access for Americans living in rural parts of the United States is a complex challenge. Terms like shared savings programs, state plan amendments, and 1915(b) waivers may not immediately come to mind as solutions. However, Medicaid programs are using these – and many other tools – to ensure millions of Americans living in rural and frontier regions can access life-saving health care services.

Medicaid is one of the largest purchasers of health care services in rural communities, providing coverage for nearly a quarter of residents under age 65. In doing so, it plays a critical role in maintaining the health care infrastructure that serves all Americans in these areas. Medicaid Directors are uniquely positioned to partner with local communities to address the distinct challenges rural populations face—such as long travel distances to care, provider shortages, and financially strained health care providers operating with little or no financial reserves.

The following examples highlight just a few of the many ways Medicaid is transforming rural health care—improving access for its members and strengthening the overall health care system in rural communities across the U.S.

Tennessee

Tennessee secured an 1115 waiver agreement with the Centers for Medicare and Medicaid Services (CMS) in 2021 to launch the TennCare Shared Savings program. This initiative is designed to contain Medicaid cost growth while enhancing the quality of care. Under the agreement, if Medicaid program costs remain below a set cap, which gradually increases over time, the state can retain a percentage of the federal savings. These savings are then reinvested to enhance benefits or services within Medicaid or serve additional people in need, all in an effort to enhance the health and well-being of Tennesseans.

In state fiscal year 2025, a portion of these savings was used to improve health outcomes for Medicaid members in rural and underserved communities across Tennessee through the Rural Healthcare Resiliency Program, which began in 2022. In its third round of funding, the program distributed over $45.7 million to 23 projects focused on addressing critical health care needs. These initiatives aimed to strengthen health care infrastructure and provide sustainable solutions for rural areas. The projects targeted areas like preventive care, behavioral health, substance abuse treatment, mobile medical services, integrated care, care navigation, and transportation support. The resiliency program was part of a comprehensive $200 million investment through TennCare shared savings to implement recommendations from the Governor’s Rural Health Care Task Force.

In addition to improving integrated, high-quality health care in rural parts of Tennessee, the program also supported innovative, evidence-based care models. It also addressed needs identified in County Health Assessments and enhanced connections to social services that impact health outcomes.

Missouri

The Missouri Department of Social Services (DSS) leveraged a 1915(b) waiver amendment to launch the Transformation of Rural Community Health (ToRCH) initiative. This collaborative effort seeks to improve health outcomes in rural Missouri by addressing social determinants of health (SDOH), such as housing, transportation, and access to nutritious food. The project brings together rural hospitals, primary care and behavioral health clinics, and community-based organizations (CBOs) through the Unite Us Community Information Exchange (CIE) platform.

The ToRCH model allows hospitals to serve as central “hubs” in their communities, focusing on reducing avoidable hospitalizations and emergency department visits by addressing non-medical factors that affect health. The initiative supports hospitals in managing health-related social needs for Medicaid members, promotes preventive care, and encourages collaboration with local partners to improve overall community well-being. The aim is to reduce health care costs, enhance health outcomes, and create sustainable solutions for rural providers.

Launched in June 2023, ToRCH began by selecting six rural hospitals, each of which formed leadership boards consisting of clinical and community partners. These boards combine local knowledge with clinical expertise to address health-related social needs (HRSN) services, which are expected to positively impact both hospital outcomes and community health. Through the Unite Us CIE platform, community partners—ranging from clinical providers to social service organizations—collaborate to send, receive, and resolve referrals for services, such as transportation to medical appointments or delivery of healthy food.

Georgia

To help support hospitals that serve a high number of low-income patients, federal law requires state Medicaid programs to make Disproportionate Share Hospital (DSH) payments to qualifying hospitals that treat large numbers of Medicaid and uninsured individuals. Each state receives an annual DSH allotment that limits the total amount of federal funding available for these payments. In addition to this statewide cap, there is a hospital-specific limit: a hospital cannot receive federal DSH funds that exceed its uncompensated care costs for Medicaid and uninsured patients, after accounting for any payments it has already received on behalf of those patients.

In 2023, as part of the Medicaid Innovation Advancement Project, the Georgia Department of Community Health (DCH) received CMS approval for a revised Disproportionate Share Hospital (DSH) allocation methodology. This new approach, formalized through a State Plan Amendment (SPA) in April 2023, was designed to strategically direct DSH resources to areas where Medicaid member access was most at risk. When hospital-directed payments exceed 10% of total payments made to Managed Care Organizations (MCOs), hospitals that are critical access hospitals, rural hospitals with fewer than 100 beds, and state-owned acute care hospitals receive up to 100% of their uncompensated care costs for services provided to uninsured and Medicaid patients. Any remaining DSH funds are then allocated to all other acute care hospitals.

Georgia used this approach to help sustain access to rural hospitals and ensure that they continue to provide vital care to Medicaid members in underserved communities. Rural areas face significant challenges, such as an aging population and higher rates of chronic illness. Georgia’s DSH allocation methodology is one example of how Medicaid helped bridge the gap in health care services and mitigate the adverse effects of hospital closures, ultimately improving health outcomes for Medicaid members and reducing preventable deaths in these communities.

Medicaid’s Role in Advancing Rural Health Access 

Medicaid programs are on the frontlines of the nation’s work to ensure access to health care in rural regions, using levers like shared savings initiatives, waivers, and state plan amendments to address the health care challenges faced by rural communities. Medicaid Directors are creating and implementing innovative solutions tailored to the unique needs of their populations. Whether through reinvestment in health care infrastructure, tackling social determinants of health, or bolstering financial support for rural hospitals, these strategies and others like them are making a significant impact on rural Medicaid members and ensuring that these communities can access the quality care they need.