Rural patients disproportionately depend on coverage from public payers (Medicare, Medicaid, and Marketplace subsidies). As a result of reductions to coverage for rural residents, many rural clinics and hospitals face financial pressure that may lead to reduction or elimination of essential services, delays in much needed facility upgrades, or closure. H.R. 1 introduces sweeping Medicaid eligibility and enrollment changes. Several of its provisions will have particularly significant consequences for rural patients, providers, and state systems. 

Medicaid Eligibility Redeterminations: Beginning in 2027, the Medicaid adult expansion population will have their eligibility reviewed every six months as opposed to the current cycle of once every twelve months. 

• Rural Medicaid beneficiaries face more structural barriers to complying with eligibility redeterminations, such as lack of internet or transportation access, that puts them at higher risk for being improperly disenrolled.   

 

Medicaid Community Engagement (Work Requirements): Starting January 1, 2027, new Medicaid work requirements require able-bodied adults in the Medicaid expansion population to engage in work or other qualifying activities as a condition of receiving Medicaid benefits. 

• For rural communities—where Medicaid coverage is high, jobs and training programs are limited, and providers and state agencies already face severe workforce shortages—the administrative demands, documentation requirements, and frequent verification processes pose significant risks to coverage continuity and strain rural health systems. 

On June 3, 2026, CMS release the Medicaid Community Engagement Interim Final Rule implements work and activity requirements, restoring prior redetermination eligibility processes and establishing complex verification, exemption, and compliance systems that states must administer. 

• States may seek good-faith extensions through 2028, and CMS will distribute $200 million in implementation grants.  NRHA is concerned that rural beneficiaries and providers will still face disproportionate challenges navigating and operationalizing the new requirements. 

 

Provider taxes: H.R. 1 freezes all current provider tax arrangements, prohibits new provider taxes, and requires a phasing down of hold harmless thresholds in Medicaid expansion states from 6% to 3.5%. Provider taxes represent a significant amount of reimbursement to rural providers and play a key role in the financial sustainability of rural providers and facilities. 

• In Medicaid expansion states, phasing down provider-tax thresholds below current levels threatens the sustainability of state Medicaid programs and would directly reduce access to care for rural residents, who already face higher uninsurance rates and fewer local providers.
• In non-expansion states, maintaining current provider-tax authority is critical; any further reductions beyond H.R. 1’s limits would weaken Medicaid financing and jeopardize rural hospitals that rely on SDPs to remain solvent. 

 

For more information, please reference NRHA’s Letter to CMS on H.R. 1 Medicaid Implementation, NRHA’s Comments to CMS on Community Engagement, NRHA’s Comments to CMS on State Directed Payments, and NRHA’s H.R.1 Implementation Tracker. Additionally, you can also reference KFF’s Tracker on state Implementation of the 2025 Reconciliation Law Medicaid Work Requirements.

NRHA will be reviewing your campaign messages and may use your story to utilize in our advocacy efforts. If you have any questions, please contact NRHA’s Grassroots and Communications Coordinator, Sabrina Ho (sho@ruralhealth.us).