红领巾瓜报

The Long View听听

On December听29, 2025,听the听Centers for Medicare & Medicaid Services (CMS)听 the highly anticipated funding awards to states for the 鈥攁听five-year,听$50 billion听federal initiative designed to stabilize and transform rural health systems across the country. This听new federal investment听marks听a pivotal moment for states and their partners to address long-standing challenges in rural healthcare while听laying听the foundation for broader transformation.听It听provides听an opportunity听to reimagine care delivery, strengthen infrastructure, and build sustainable models that address听entrenched听gaps in rural health.听

Directing Resources to Rural Communities听

RHTP is designed with a focus on rural communities, where residents face persistent challenges such as provider shortages, hospital closures, and limited access to care. RHTP investments will support infrastructure development, IT system implementations and trainings, workforce recruitment and retention, and innovative care models tailored to rural community needs. The long-term goal is to create lasting capacity and resilience in rural health systems and promote better health outcomes for residents.听

But the vision听doesn鈥檛听stop there.听

Catalyzing Statewide Transformation听

While rural communities are the primary beneficiaries, we believe the impact of the RHTP will extend beyond rural borders. The program鈥檚 design encourages states to develop initiatives that can serve as pilots and start-ups, creating scalable solutions that can be adopted statewide. Workforce development programs, for example, may begin by focusing on rural providers and community health workers (CHWs) and training these individuals but, over time, strengthen the healthcare workforce across entire states and regions.听

Much of the federal funding will enable states and their partners to invest in technology modernization, telehealth expansion, and integrated care models. These improvements assuredly will enhance access and quality for rural residents. And these same technologies can be deployed to enhance efficiency and coordination across entire health systems, laying the groundwork for broader system transformation and health improvement. The focus on chronic care management and innovative care arrangements has the potential to improve outcomes for all populations.听

Collaborative Pathways听for States and Partners听

States and their partners鈥攊ncluding health systems, community-based organizations, and technology innovators鈥攈ave a valuable opportunity to collaborate on initiatives. In our review of state applications and the initial wave of state driven funding solicitations, we identified efforts to tackle long-standing system challenges, including:听

• Data Sharing and Interoperability. States responded to the federal application with extensive technology and data听interoperability related听investments that have statewide benefits. Several states include information system initiatives that can scale care coordination statewide, including initiatives to build dedicated teams for analytics, data integration, and evaluation and tracking outcomes across initiatives. They have an opportunity to create the statewide backbone鈥攕tarting with rural hubs and then expanding interfaces systemwide. States also will be advancing consumer-facing technology for preventive听and chronic care, grounded in statewide听health information exchange (HIE)听and data strategy, again testing first in rural settings and accelerating statewide adoption of effective approaches.听
• Maternal Health & Perinatal Care.听Several states听proposed听embedding听family medicine with听obstetrics听fellowships, expanding听doula/midwife pathways, and deploying听remote prenatal monitoring听with support from听nursing teams. These rural pilots听could听help听standardize practice, improve outcomes, and scale across听the state.听Many other state proposals听explicitly include听initiatives to strengthen access to听maternity care,听linked听to broader workforce and technology investments that can be adopted in听urban听settings.听
• EMS Modernization.听States听also听plan to develop and strengthen听emergency medical services听(EMS)-led preventive and complex care support in rural areas.听One application, for example,听formalizes听such听EMS-led support in rural areas, with protocols and training designed to听scale听broadly.听Another state听references听mobile health and听EMS integration, creating rural pilots to improve response, navigation, and handoffs that can be standardized across the emergency care system.听

Looking Ahead听

RHTP is more than a funding stream. It听is听a catalyst for innovation and collaboration, providing听an important avenue听to address听the听chronic inequities in quality, access,听and outcomes听that people living in听our nation鈥檚 rural communities听often experience. But it also could听foster improvement听statewide.听Program evaluation and performance monitoring听of the small, community-based programs and the large-scale, multi-site,听multi-year听initiatives will provide insights that inform strategic decision-making at the local,听state听and federal levels.听By听scaling听effective听rural health-focused initiatives听and听investing in听new and听feasible听tools, strategies, and programs,听states can create models that improve care delivery for all听their听residents听in the future. This is a moment for states, providers, and partners to think big and design programs that deliver lasting impact.听

红领巾瓜报 (红领巾瓜报)听offers support to听state听agencies, health systems, and community partners听shaping听rural-first pilots that are听designed听for scalability鈥攆rom听maternal and perinatal care networks, EMS community care models,听caregiver听and CHW pipelines, to telehealth modernization and behavioral health integration.听Our rural听expertise听and our unique ability to combine听expertise听in clinical, operational, policy, and data reforms for care improvement听are听well-suited to the goals of RHTP.听

With the RHTP听funding听advancing to state partners听early听in听2026 and annual recalculations听of state awards听tied to performance, the time to design rural pilots that become statewide programs is now.听

For questions about the RHTP听opportunities for your organization and the solutions 红领巾瓜报听can tailor to meet the needs of your state, contact听Kathleen Nolan听and听Andrea Maresca.听

Connecting the Dots:听A new blog听series for 2026听

Connecting the Dots is a monthly 红领巾瓜报 blog series that brings together insights from our experts to examine the major policy, program, and market forces shaping healthcare coverage, delivery systems, and financing in听2026. The posts look beyond individual changes, instead connect emerging developments across programs and markets to help leaders understand听what鈥檚听changing, why it matters, and how their decisions shape the path ahead.听

On February 11, 2026, the Congressional Budget Office (CBO) released report. The publication, which represents the first time CBO has released Medicare and Medicaid spending baseline projections since , reflects the impact of the 2025 Budget Reconciliation Act (P.L. 119-21, OBBBA), recent changes to Medicare reimbursement for skin substitute products, and the latest Medicare Part D and Medicare Advantage bids.

CBO鈥檚 baseline serves many functions, including serving as the official 鈥渟corekeeping鈥� benchmark used for cost estimates of proposed legislation under consideration in Congress.

Changes to CBO鈥檚 Medicaid Baseline

CBO decreased its projections of 2026鈥�2035 by approximately $514 million from its January 2025 baseline update. The main driver of that reduction is the impact of the Medicaid provisions in the 2025 Budget Reconciliation Act, which CBO expects will reduce total Medicaid enrollment by 13.1 million people in 2035. The drop in Medicaid spending from the OBBBA-related enrollment reductions was partially offset by technical changes CBO made to the Medicaid baseline.

Medicaid costs per enrollee grew by 16 percent in 2025, which was more than CBO had anticipated. The agency attributes the cost per enrollee growth to a reported decrease in the average health status of Medicaid enrollees following the end of the COVID-era continuous eligibility policy.

CBO anticipates that payment rates for Medicaid managed care plans will begin to rise in 2026 because of this decrease in the average health status of enrollees, and the agency has updated the Medicaid baseline accordingly (see Figure 1).

Changes to CBO鈥檚 Medicare Baseline

Compared with its January 2025 baseline, CBO increased its projections of by about $1 trillion (roughly $942 billion, by 红领巾瓜报 (红领巾瓜报) calculations). The main driver of that increase came from CBO鈥檚 updates to its Medicare Part D spending projections, which were increased to reflect higher than expected 2026 bids from private insurance plans that administer the Part D benefit. According to their 2026 bids, Part D plans anticipate a 35 percent increase in their annual per enrollee costs in 2026鈥攁 trend that CBO was not expecting and . Part D spending per beneficiary in 2035 is now projected to exceed $4,000, up from less than $3,000 in the January 2025 baseline (See Figure 2).

The agency鈥檚 Medicare Part A fee-for-service (FFS) spending projection increase was the result of larger than expected increases in 2025 enrollment and per enrollee spending. Those trends were also seen in Medicare Part B FFS but were partially offset by the Centers for Medicare & Medicaid Services鈥檚 (CMS) recent reimbursement changes to skin substitute products. Overall, CBO estimates that the skin substitute reform issued in CMS鈥檚 and final rules will save $245 billion over the 2026鈥�2035 period, including the effects on the Medicare Advantage (MA) program (see Figure 3).

Finally, CBO reduced its spending projections for MA compared to the January 2025 baseline. This change was made to reflect lower-than-expected Medicare Advantage enrollment in 2025, although the spending implications of lower enrollment were partially offset by higher-than-expected bids in 2026 by providers of MA plans (see Figure 4).

Contact an 红领巾瓜报 Expert Today

Interested in understanding how CBO鈥檚 latest baseline update affects the federal budgetary implications of certain Medicare or Medicaid policy topics or proposals? Contact our experts, Mark Desmaris and Rachel Matthews, to learn more about 红领巾瓜报鈥檚 鈥淐BO-style鈥� federal budgetary scoring work, which relies on The Moran Company鈥檚 long-standing methodology. [1]

Beyond federal budget scoring, 红领巾瓜报 is working with states, health plans, and providers to assess how changes in enrollee health status are affecting utilization, costs, and payment rates鈥攁nd what those trends may mean for Medicaid and MA organizations and providers. Our teams support states in evaluating managed care rate setting and program design, help Medicaid and MA plans anticipate risk and bid implications, and assist providers in understanding how changes in patient acuity could affect care delivery, contracting, and financial performance.

[1]Specifically, we apply our understanding of CBO precedents to predict how CBO will likely evaluate the budgetary impact of the legislation in question. We use our best judgment to adopt the assumptions CBO would tend to use, with the understanding that any variance in the assumptions CBO ultimately adopts could cause our estimate to differ from theirs.