Contributor: Accountable Care and Rural Access—Why New Transformation Grants Should Enable Payment Reform

Access to care in rural America has become one of the most pressing and persistent challenges in health policy. Across the country, rural communities face hospital closures,¹ reductions in services including inpatient stays,² and deepening workforce shortages.³ Patients travel long distances for specialty care,⁴ behavioral health services are scarce, and postacute options are limited or nonexistent. These access constraints exist alongside a disproportionately high burden of chronic disease,⁵ disability, and aging—precisely the conditions that demand continuous, coordinated care.

Recent policy changes and economic pressures have only intensified this strain. Inflation and rising labor costs hit low-volume providers hardest, while the One Big Beautiful Bill cuts Medicaid funding by $1 trillion over a decade,⁶ leaving rural health systems operating with little margin for error.

Many rural providers, like critical access hospitals, rely on cost-based reimbursement or flat, encounter-based payments like federally qualified health centers (FQHCs). These payment mechanisms do not support long-term transformation and generally encourage episodic, sick care rather than coordinated, connected care.

This crisis has prompted renewed federal attention, including the Rural Health Transformation Grants. These investments of $10 billion a year for 5 years are designed to support access and innovation. The effectiveness of this money will depend on whether they are used to reinforce the status quo—a fee-for-service (FFS) payment system—or to enable payment reforms that better care for rural populations.

We have seen firsthand how accountable care drives access, improves quality, and can meaningfully better our health system.

At Hopscotch, we leverage capitated contracts with Medicare Advantage plans and the ACO REACH (Accountable Care Organization Realizing Equity, Access, and Community Health) model to provide a technology-forward, patient-first experience that is tailored to our high-needs patients. Our team-based model provides 4.5-star clinical quality that would be impossible to deliver in an FFS setting. In turn, we’ve seen significantly reduced hospitalizations and total cost of care in our patients.

Across experience at a large rural FQHC, Community Care of West Virginia; supporting rural clinicians in value-based care models at Main Street Health; and serving low-income seniors in public housing at Matter Health, there is a clear understanding of what vulnerable populations and their clinicians need to succeed in value-based care. Opportunities like the Long-term Enhanced ACO Design (LEAD) Model offer high-impact solutions by enabling more personalized care, stronger coordination, a greater focus on prevention, and the use of data analytics to better inform patient care, particularly for small, rural FQHCs.

But the barriers to building an infrastructure that supports accountable care are high, so policy makers must ensure that these $50 billion in transformation grants actually support transformation and aren’t used as a Band-Aid that’s layered upon an already broken health system.

Why FFS Is Failing Rural America

FFS payment remains the dominant financing model across rural America, but its limitations are especially pronounced in low-density settings. At its core, FFS rewards volume: more visits, more procedures, more billable encounters. Rural providers, however, operate in environments where volume is inherently constrained. Small patient populations, geographic dispersion, and workforce shortages make it impossible to “make up” revenue through utilization.

In response, policy makers have instituted a series of subsidies and cost-based reimbursements. But even with increased rates or supplemental payments, FFS remains poorly suited to rural care. Payments are retrospective, limiting providers’ ability to invest in care coordination, data infrastructure, or technology, components necessary to support accountable care. Importantly, FFS offers little or no reimbursement for services that matter most in rural communities like care management, transportation, outreach, and prevention.

The misalignment runs deeper. FFS incentivizes episodic, facility-based care, even though rural health outcomes depend on longitudinal management, community-based support, and deployment of new technology to support patients in their homes.

We have seen rural health clinics run the numbers on whether they should follow best practice and provide whatever preventive and screening services possible when a patient is in the clinic for a sick visit or follow the payment incentive to ask the patient to come back next week, even with a significant loss to follow-up. In rural America, the problem is not just inefficiency and lack of supply; it starts with the absence of a payment model designed for low-volume, high-need populations.

When Payment Aligns With Rural Reality, Access Improves

Despite these challenges, recent experience demonstrates that alternative payment models can stabilize rural providers and preserve access. Accountable care, in particular, offers a framework that shifts focus from volume to population health and total cost of care, creating flexibility to meet patients where they are.

Several federal and state demonstrations illustrate this potential. The Medicare ACO Investment Model provided upfront capital to smaller and rural ACOs, generating more than $381 million in gross Medicare savings over 3 years.⁷ Evaluations found increased annual wellness visits and primary care engagement in addition to reduced hospitalizations and avoidable admissions. Elements of that model have since been incorporated into the Medicare Shared Savings Program through Advance Investment Payments, acknowledging the importance of prospective funding for participation.

At the state level, Vermont’s All-Payer ACO Model—built on the Next Generation ACO framework but tailored to a predominantly rural state—demonstrated statistically significant savings and quality improvements along with increased preventive screenings and primary care access.⁸ By aligning Medicare, Medicaid, and commercial payers, the model enabled a single statewide ACO to invest in primary care, behavioral health integration, and community-based services at scale.

Hospital-focused models tell a similar story. Pennsylvania’s Rural Health Model, which tested global budgets for participating hospitals, stabilized access across rural communities and served as the foundation for the CMS Innovation Center’s AHEAD (Achieving Healthcare Efficiency through Accountable Design) Model. Notably, no participating hospitals closed during the COVID-19 pandemic, and early results show improvements in avoidable utilization and quality metrics relative to national rural averages.⁹

All 3 models share a common thread: predictable revenue, flexibility in care delivery, and accountability for outcomes. Accountable care models allow providers to fund telehealth, home-based services, and specialist consultation through technology, critical tools for overcoming geographic barriers. They also support integration across primary care, behavioral health, and postacute settings, where rural fragmentation is most acute.

Importantly, these successes required intentional policy design—upfront investment, tailored benchmarks, and recognition that rural providers need time and support to assume accountability.

Why Rural Providers Still Face Barriers to Accountable Care

The same structural challenges that make accountable care attractive in rural America also make participation difficult under current policy. Financial barriers loom large. Many rural providers struggle to generate savings against benchmarks based on historically low utilization, even when outcomes improve. Cost-based reimbursement further complicates benchmarking, while limited access to capital constrains risk tolerance.

Structural barriers also persist. Attribution is more volatile in low-density markets, where small population shifts can have outsized financial effects. Workforce shortages slow care redesign, and the scarcity of specialists limits opportunities for coordination. Rural providers are often asked to manage population health without the networks or infrastructure available to their urban counterparts. Many rural communities need to recruit from out of state, but licensing delays slow efforts to onboard new hires, increasing costs and reducing overall access.

Regulatory barriers related to payment can compound these challenges. FQHCs, for example, have requirements that patients see a physician face-to-face, and their one-visit/one-service payment rules limit the treating of multiple chronic conditions in one sitting.¹⁰ Fragmented billing structures undermine virtual care and team-based models—precisely the approaches most valuable in rural settings. Without needed adjustments, accountable care risks remaining out of reach for the providers who could benefit most.

The Rural Health Transformation Grants: Inflection Point or Missed Opportunity?

The Rural Health Transformation Grants arrive at a pivotal moment. Properly deployed, they could provide the upfront investment rural providers need to participate in accountable care and transition away from unsustainable payment models. Misapplied, they risk becoming another temporary patch, propping up FFS infrastructure without addressing its underlying flaws.

What will not work is using grant funding solely to sustain existing facilities or finance short-term workforce fixes disconnected from payment reform. While these investments may provide temporary relief, they do little to change the incentives that drive access erosion. Similarly, capital projects unlinked to accountability risk reinforcing fragmentation rather than enabling integration.

What will work is strategic alignment. States can use these grants to build the infrastructure required for accountable care: data and analytics capabilities, care management teams, virtual care platforms, and community partnerships. Grants can support glide paths into risk-based models across Medicare, Medicaid, and commercial payers, ensuring that rural providers are not forced to leap into downside risk unprepared.

We’ve already seen creativity from a handful of states. Georgia is addressing chronic disease through more integrated and community-based delivery models. North Carolina is expanding integrated behavioral health and primary care services. Tennessee is investing in workforce development, technology, and innovative care models.

The grants can serve as accelerators for payment reform, if states like Georgia, North Carolina, and Tennessee treat them as such and policy makers ensure funds are spent appropriately.

Designing Policy for Rural Reality

Rural America lacks a payment system aligned with the realities of delivering care in low-density, resource-constrained environments. Accountable care offers one of the most promising frameworks for stabilizing and expanding access, but only if policy is intentionally designed to support rural participation.

The Rural Health Transformation Grants present a rare opportunity to move beyond temporary relief toward lasting reform. Whether that opportunity is realized will depend on choices made now about where to invest, what to prioritize, and how seriously policy makers take the need to align payment with access.

The question is whether this moment will be used to finally build payment models that reward keeping people healthy wherever they live.

References

1. Rural hospital closures. Cecil G. Sheps Center for Health Services Research. Accessed May 13, 2026. https://www.shepscenter.unc.edu/programs-projects/rural-health/rural-hospital-closures/

2. Rupasingha A, Cho J. 146 rural hospitals closed or stopped providing inpatient services from 2005 to 2023 in the United States. US Department of Agriculture, Economic Research Service. February 18, 2025. Accessed May 13, 2026. https://ers.usda.gov/data-products/charts-of-note/chart-detail?chartId=110927

3. Hortstman C, Shah A. The state of rural primary care in the United States. The Commonwealth Fund. November 17, 2025. Accessed May 13, 2026. https://www.commonwealthfund.org/publications/issue-briefs/2025/nov/state-rural-primary-care-united-states

4. Maganty A, Byrnes ME, Hamm M, et al. Barriers to rural health care from the provider perspective. Rural Remote Health. 2023;23(2):7769. doi:10.22605/RRH7769

5. Rural health disparities. Rural Health Information Hub. Accessed May 13, 2026. https://www.ruralhealthinfo.org/topics/rural-health-disparities

6. Coffey A, Hahn H. Medicaid cuts in the One Big Beautiful Bill Act leave 3 in 10 young adults vulnerable to losing health care access. Urban Institute. August 7, 2025. Accessed May 13, 2026. https://www.urban.org/urban-wire/medicaid-cuts-one-big-beautiful-bill-act-leave-3-10-young-adults-vulnerable-losing

7. Fout B, Trombley M, Bengtsson A, et al. Evaluation of the Accountable Care Organization Investment Model. Abt Associates; September 2020. Accessed May 13, 2026. https://www.cms.gov/priorities/innovation/data-and-reports/2020/aim-final-annrpt

8. Evaluation of the Vermont All-Payer Accountable Care Organization Model: 2018–2022. NORC at the University of Chicago; June 2024. Accessed May 13, 2026. https://www.cms.gov/priorities/innovation/data-and-reports/2024/vtapm-4th-eval-full-report

9. A snapshot of the Pennsylvania Rural Health Model (PARHM). Rural Health Redesign Center. July 5, 2024. Accessed May 13, 2026. https://rhrco.org/a-snapshot-of-the-pennsylvania-rural-health-model-parhm/

10. Frequently asked questions on the Medicare FQHC PPS. CMS. Updated November 21, 2019. Accessed May 13, 2026. https://www.cms.gov/medicare/medicare-fee-for-service-payment/fqhcpps/downloads/fqhc-pps-faqs.pdf