The federal rural health fund, totalling $50 billion for all states, originated as part of House Resolution 1, the sprawling tax-and-spend bill backed by Republican lawmakers and signed by Trump in early July 2025. Discussions about a fund for rural hospitals<\/a> or health care providers began making headlines in June as lawmakers worked to recruit more Republican support for H.R. 1. A cornerstone of the budget package included dramatically downsizing the federal Medicaid health insurance program for low-income people, a sticking point for some Republicans<\/a>, including those facing upcoming reelection bids.\u00a0<\/p>\n \u201cThe purpose of it was, look, we\u2019re going to cut Medicaid funding, there\u2019s going to be less people covered. And so obviously the folks that are hit the hardest are the small rural facilities,\u201d said Ed Buttrey, the president and CEO of the Montana Hospital Association, in a January interview with Montana Free Press. Leaders of rural facilities, many of which have tighter margins than larger health care systems, have said they may be particularly squeezed<\/a> by Medicaid enrollment cuts, as they still have to provide care to uninsured patients but don\u2019t have other ways to cover costs.\u00a0<\/p>\n Explaining the thinking of congressional Republicans that backed the rural health fund, Buttrey said, \u201cLet\u2019s inject some money into those facilities to help right-size them, to help them with workforce, to help them with long-term sustainability so that even with the Medicaid cuts \u2014 well down past the five years of the [Rural Health Transformation] program \u2014 we are gonna hope that those facilities remain there, that they\u2019re financially healthy and that they can serve the people locally.\u201d<\/p>\n WILL THE RURAL HEALTH FUND BE ENOUGH TO BACKFILL MONTANA\u2019S LOST MEDICAID REVENUE?\u00a0<\/strong><\/p>\n Congressional analysts have estimated that, when implemented, H.1. will strip more than $900 billion from the federal Medicaid spending nationwide over the next decade. (New Medicaid standards are expected to begin taking effect in most states by the end of the year.) The $50 billion Rural Health Transformation Fund is slated to be distributed to all states over the next five years, with 2026 being the first. Obviously, the amount of money that could be lost through Medicaid cuts is far greater than the new investment.<\/p>\n But how much Medicaid money could be siphoned out of Montana\u2019s health care system because of the changes to H.R. 1? That\u2019s hard to pinpoint. A 2025 report commissioned by the Montana Health Care Foundation<\/a>, a nonprofit health policy advocacy group, estimated that Montana could lose between $4.8 and $6.1 billion in federal Medicaid funds over the span of a decade. If those projections come true, the loss would be multiple times the upper amount that one year of the Rural Health Transformation grant could infuse into the health care system.\u00a0<\/p>\n Buttrey, a longtime Republican state lawmaker who became well-known for sponsoring bills to renew Montana\u2019s Medicaid expansion program for low-income adults, took the helm at the hospital association last summer. He said his goal is for Montana to use the rural health funds to preemptively protect providers from Medicaid instability \u2014 as much as possible, anyway. That could include health care providers having new tools to make sure that eligible Medicaid recipients stay enrolled, or to help create money-making ventures that can keep hospitals afloat even if Medicaid revenue falls.<\/p>\n \u201cI think when you look at the Medicaid funding loss to Montana versus the opportunity we have with [the] rural health [fund], if we do things really thoughtfully and correctly in Montana, we can offset those losses. But that\u2019s our goal,\u201d Buttrey said. \u201c\u2026 I mean, I\u2019m a hopeful person.\u201d<\/p>\n WHAT DOES MONTANA WANT TO DO WITH THE MONEY?<\/strong><\/p>\n Montana\u2019s program application, released to the public in November<\/a>, included five high-level initiatives. Here they are, verbatim:<\/p>\n The state health department suggested several specific projects for each initiative \u2014 many of which could be executed through contracts with Montana health care providers and industry groups. The money could be used to create a statewide bed registry, for example, so providers could more easily transfer patients depending on needs or availability. Other uses could be financing upgrades to IT systems and electronic health record systems, or helping emergency medical service teams buy new software and equipment.<\/p>\n But some of the state\u2019s ideas might be harder for non-policy wonks to make sense of. The largest single funding proposal in Montana\u2019s application suggests spending $418 million over a five-year span to create a Center of Excellence within the Gianforte administration\u2019s state health department. That entity would aim to \u201crapidly create a rural health supply and demand fact base for Montana and develop recommendations to align care delivery services with rural health needs at the county and facility level.\u201d Clear as mud? We thought so, too.<\/p>\n LET\u2019S DIG INTO THE STATE\u2019S PROPOSED CENTER FOR EXCELLENCE A LITTLE MORE.\u00a0<\/strong><\/p>\n In some of its application materials and public presentations about the rural health funding, Montana\u2019s health department has proposed \u201cright-sizing\u201d rural facilities and services to be more cost-efficient, while still meeting the needs of rural residents.\u00a0<\/p>\n In a December meeting with state lawmakers, the health department\u2019s deputy Medicaid director, Gene Hermanson, tried to elaborate on the purpose of the Center of Excellence.<\/p>\n \u201cSay there is a rural facility where, today, they provide inpatient services and they have a number of staffed beds, but their inpatient utilization rate is low. And that might be a service line where they\u2019re losing a lot of money. Whereas the community may have the need for outpatient services that they may have to travel a long way to get to, to a bigger community. So the role of the Center of Excellence would look at that, in that situation, and would encourage a movement where that facility could increase its service lines related to outpatient service,\u201d Hermanson said.<\/p>\n Reading between the lines, we wondered if this effort could push rural providers to downsize or close existing services if they\u2019re not making enough money to keep the lights on, and instead pivot to providing services \u2014 like specialty care \u2014 that bring in more money long term.<\/p>\n Buttrey said the Montana Hospital Association has been \u201cconcerned\u201d about the state\u2019s Center of Excellence proposal for a while. Instead of a broad, one-size-fits-all approach to reduce inpatient beds, Buttrey said MHA is advocating for a case-by-case approach.<\/p>\n \u201cWe\u2019ve been pushing for using the Center of Excellence [to get] a real assessment of each individual facility in their community to see where they have their assets and what the community needs. And in some cases, to say, \u2018Hey, their inpatient capacity is just right. Or maybe they need a little more.\u2019\u201d<\/p>\n Jean Branscum, the president and CEO of the Montana Medical Association, an industry group that lobbies for physicians, said there aren\u2019t \u201ctoo many details\u201d about what the Center of Excellence will be working on. But, she said, she hopes the state will encourage new ways for health care systems to work together across regions to meet patient needs. That could include creative ways to fund data sharing agreements, hire specialty providers who can travel to different communities, or incentivize medical providers to provide outcome-based health care \u2014 also known as \u201cvalue-based\u201d services that reward improvements in patient health.<\/p>\n \u201cHow can you create networks?\u201d Branscum said. \u201cSo we\u2019re not siloed.\u201d<\/p>\n SO, COULD A RURAL HOSPITAL USE THE MONEY TO FINANCE A NEW ROOF?<\/strong><\/p>\n Probably not. The federal government put several conditions on the money, including a general prohibition on uses for physical infrastructure \u2014 like adding a new wing to a hospital. But grant money could help tackle infrastructure costs that are directly related to carrying out an initiative \u2014\u00a0like furnishing a lab to provide new services to patients that help stabilize a facility\u2019s bottom line, or buying a new truck for an EMS crew.\u00a0<\/p>\n HOW IS THE MONEY GOING TO BE DOLED OUT?<\/strong><\/p>\n A spokesperson for the health department, Jon Ebelt, told Montana Free Press in a January email that the federal government\u2019s award has been made in the form of statewide \u201ccooperative agreements\u201d with the Centers for Medicare and Medicaid Services.\u00a0<\/p>\n He said CMS \u201cdoes not pre\u2011allocate the $233.5 million into initiative\u2011specific \u2018buckets.\u2019\u201d Rather, federal counterparts approved the state\u2019s general plan, allowing the state to move forward with submitting a more specific budget that details how it will spend the first-year grant funds. Montana has until Jan. 30 to submit that revised budget, Ebelt said, and the federal government is expected to review it in another 30 days.<\/p>\n Buttrey and Branscum said that they anticipate the state will soon open the door for contractors, including rural health providers and association groups, to submit bids for different projects within each of the state\u2019s five initiatives. Those contract opportunities will likely come in the form of \u201cRequest for Proposals,\u201d or RFPs. Buttrey and Branscum said those bids could open in the coming weeks, but that they\u2019re not aware of a specific timeline.<\/p>\n \u201cIndividuals are eagerly awaiting the unleashing of those monies, because they have so many ideas that they think can advance and improve rural healthcare in Montana and ultimately provide better patient care,\u201d Branscum said.<\/p>\n ANY OTHER NEXT STEPS TO LOOK OUT FOR?<\/strong><\/p>\n The state health department has created a Rural Health Transformation Program Advisory Committee, a group intended to provide input about how the grant funds are spent and invested in ongoing projects. The committee\u2019s membership has yet to be published on the state\u2019s RHTP website<\/a>.<\/p>\n Ebelt said that group is scheduled to meet for the first time in Bozeman on Jan. 22. At that meeting, Ebelt said the group will \u201cshare project goals, next steps, and gather public feedback.\u201d Additionally, he said, \u201ccommittee members will provide targeted input on launching initiatives; however, this is not a decision-making meeting, and no funding awards will be determined.\u201d<\/p>\n Ebelt directed members of the public to go to the state\u2019s RHTP website in the coming weeks to view the advisory committee\u2019s agenda and membership list.<\/p>\n \t\t\t\t\tLATEST STORIES<\/p>\n \t\t\t\t\t\tFour years of legalized adult-use marijuana in Montana produces more than $1 billion in sales<\/a>\t\t\t\t\t\t<\/p>\n Montana\u2019s regulated marijuana market grew modestly between 2022 and 2025, but adult-use cannabis sales surged while medical marijuana sales collapsed. Four years of sales have generated $216 million in cannabis tax revenue.<\/p>\n![\"Lauren](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2026\/01\/20260106LM-DPHHSHearing-0012.jpg\")
Charlie Brereton, Director of the Montana\u2019s Department of Public Health and Human Services (DPHHS), answers questions during at the Health and Human Services Interim Budget Committee meeting on Dec. 15, 2026, in Helena. Credit: Lauren Miller, Montana Free Press, CatchLight Local\/Report for America<\/p>\n\n