Improving Rural Health: State Policy Options for Increasing Access to Care

Improving Health Insurance Coverage

Several studies have shown that lacking health insurance coverage is a major barrier for accessing quality health care services. While the uninsured rate has declined over the last 10 years, consumers still face significant challenges when it comes to gaining affordable health insurance coverage—especially in rural areas. Rural communities face a higher uninsured rate compared to their urban counterparts and premiums for health plans sold on the Patient Protection and Affordable Care Act’s (PPACA or ACA) insurance marketplaces are generally higher in rural counties. In addition, rural areas tend to have fewer insurers participating in the ACA marketplaces.

State policymakers may consider several policy options for improving the accessibility and quality of health insurance coverage in rural communities. These include pursuing policies to improve private insurance coverage affordability and consumer choice, evaluating health insurance oversight, and filling coverage gaps for those without private insurance through programs like Medicaid.

Private and Public Health Insurance Coverage

While most rural Americans are covered through private health insurance, rural residents are often at a disadvantage when it comes to access and affordability. This is reflected in the ACA’s state and federal insurance marketplaces. Insurer participation, or the number of insurance carriers offering health insurance plans in a given service area, can significantly affect competition, control premium growth and bolster consumer choice. Though the number of insurers participating in the marketplace increased in 2020, roughly 10% of enrollees—mostly living in rural counties—had access to only one participating insurer. Furthermore, non-metro counties had an average of 2.0 participating insurers compared to 2.6 for metro counties.

The limited options in rural areas can be attributed to several factors, including low population density and difficulties forming provider networks. Smaller populations may put insurers at greater financial risk, because insurers are unable to spread risk across a larger group of people. In addition, forming provider networks can be extra costly and cumbersome in rural areas with few primary care providers and specialists. If a health insurance service area has fewer providers, providers may demand the insurer reimburse at a higher rate.

States are pursuing several policy options to increase consumers’ options, bolster competition among insurers and lower the overall costs of private health insurance plans. Currently, 12 states have gained federal approval and funding through the Centers for Medicare & Medicaid Services (CMS) to operate reinsurance programs, which protect insurers from high medical claims for beneficiaries with complex and costly medical needs. Reinsurance programs usually involve a third party acting as an insurer for the insurance company. Such programs pay part of the insurance company’s claim once it surpasses a certain amount or covers the health insurance claims for individuals with predetermined, high-cost conditions.  Several studies have demonstrated reinsurance programs are an effective way to lower insurance premiums and maintain insurer participation in the insurance marketplaces.

States are also modifying insurance regulations to offer greater flexibility to insurers while still maintaining protections for health plan enrollees. One option is allowing for more flexible network adequacy standards—which require health insurance plans to include enough participating providers and specialists so enrollees can readily access health care services—in rural areas with fewer providers. States can establish specific network adequacy standards for rural areas, such as limiting how long and far a person must travel to the nearest in-network provider. Additionally, states may pursue policies to redesign rating areas—or geographic areas in which insurers can vary premiums—in order to expand health insurance risk pools, discourage insurers from exiting rating areas in rural communities, and combine rural rating areas with nearby suburban and urban areas.

Some states are also promoting alternatives to marketplace plans—including short-term limited-duration insurance plans, association health plans (AHPs) and farm bureau plans—as a way for consumers to access more affordable health coverage. For example, the Iowa General Assembly enacted legislation allowing the Iowa Farm Bureau Federation to provide a health benefit plan to its members that is similar to an AHP. Under the new law, Farm Bureau health plans are not considered insurance and not subject to state insurance regulation. Subsequently, the Iowa Farm Bureau developed three coverage plans with premiums generally lower than plans sold on the ACA marketplace. These plans cover preventive services at no cost, as well as some level of coverage for maternity care, mental health and substance abuse, and prescription drug coverage.

While consumers frequently pay lower premiums for these coverage options, they often provide fewer benefits and may not comply with key ACA provisions, such as covering the 10 essential health benefits or guaranteeing coverage for those with preexisting conditions. Additionally, some studies indicate these non-ACA compliant coverage options raise the overall costs for ACA-compliant plans, and several states have enacted legislation banning or limiting the use of these coverage options.

Beyond private insurance plans, many rural residents rely on public insurance options for health coverage. Medicaid, a federal-state partnership with shared authority and financing, is a public health coverage program for low-income children, their parents, older people and people with disabilities. In rural communities—where people have higher rates of poverty and disability and lower rates of employer-sponsored insurance—Medicaid represents a common source of coverage. As of 2017, nearly 1 in 4 non-elderly adults in rural areas were enrolled in Medicaid, and in many states, Medicaid coverage rates are higher in rural areas compared to urban and non-rural areas.

The ACA prompted many states to expand Medicaid coverage to individuals with an income at or below 138% of the federal poverty level. To date, 36 states and the District of Columbia have adopted Medicaid expansion, though there is some variability in eligibility, premium payments and other requirements for states expanding through CMS Section 1115 Waivers. According to the Center for Children & Families at the Georgetown University Health Policy Institute, the uninsured rate for rural and small town residents dropped to 16% in states expanding Medicaid eligibility for low-income adults, compared to 32% in states that did not expand Medicaid. Furthermore, the health coverage disparities between rural and urban populations lessened in Medicaid expansion states, to an average of 16% of people uninsured in rural areas and 12% uninsured in urban locations.

Health Insurance Coverage Policy Options

• Consider policies, such as reinsurance programs, that make private health insurance more affordable for individuals and small businesses and control rising premiums.
• Determine strategies for improving how the state regulates private health insurance plans, including plans sold on the individual and small group marketplaces.
• Evaluate the effect of Medicaid expansion on state budgets, coverage gains in rural communities and the bottom line for rural health facilities.

Safeguarding Health Care Facilities

While improving insurance coverage is critical for accessing health care services, rural residents often live far from health care facilities offering these vital services. Rural Americans live an average of 10.5 miles from the nearest hospital compared to 4.4 miles for urban Americans and 5.6 miles for suburban Americans.

In order to ensure rural Americans can readily access services at a health facility, states are actively pursuing policies that improve the financial status of rural hospitals, change how health services are paid for, and expand access to other health care facilities beyond rural hospitals.

Rural Hospital Closures

Rural hospitals provide vital services for their residents and improve the overall economic and social well-being of rural communities. These hospitals, however, face significant financial pressure due to several factors. Rural hospitals generally have lower patient volumes and serve a high number of uninsured, Medicare and/or Medicaid patients, along with patients who are generally older, sicker and require more costly care. In addition, rural areas struggle to recruit and retain an ample health care workforce and they are often geographically isolated from their target patient populations.

Due to these financial pressures and other factors, rural hospitals are closing or no longer providing inpatient care at an increasing rate. Between 2010 to 2019, 120 rural hospitals closed or ceased providing inpatient services across 31 states, and 1 in 4 rural hospitals are currently at risk of closing. A 2016 Kaiser Family Foundation (KFF) study on hospital closures in three rural communities found that closures significantly reduce access to health services (especially emergency care) and result in job loss and other adverse economic effects. In addition, health care providers often leave their local community following a rural hospital closure.

Number of Rural Hospital Closures, 2010-2019

State	Closures
Alabama	6
Alaska	1
Arizona	3
Arkansas	1
California	4
Florida	2
Georgia	7
Illinois	1
Indiana	1
Kansas	5
Kentucky	4
Louisiana	1
Maine	3
Massachusetts	1
Michigan	1
Minnesota	3
Mississippi	5
Missouri	6
Nebraska	1
Nevada	1
New York	2
North Carolina	7
Ohio	2
Oklahoma	8
Pennsylvania	3
South Carolina	4
South Dakota	1
Tennessee	13
Texas	20
Virginia	2
Wisconsin	1

Source: UNC Sheps Center for Health Services Research, 2005-2020

Ensuring the financial viability of rural hospitals is a top priority for policymakers who are exploring several options to keep rural hospital doors open. Some states are bolstering Medicaid coverage and expanding eligibility as a strategy to improve rural hospitals’ bottom line. Rural hospitals heavily rely on Medicaid reimbursement for health care services, but states that have not expanded Medicaid coverage have experienced a higher concentration of closures due to greater amounts of uncompensated care. An analysis in Health Affairs found that expanding Medicaid eligibility improved the overall financial status of rural hospitals and reduced the likelihood of closures.

States legislatures are also enacting policies providing targeted technical and financial assistance to rural hospitals. These policies often include establishing task forces, special committees or additional state resources to assist struggling rural hospitals. For example, the Tennessee General Assembly enacted the Rural Hospital Transformation Act in 2018, which charged the Tennessee Department of Economic and Community Development with creating “transformation plans” for rural hospitals in consultation with professional consulting firms. The transformation plans must include action steps and focused strategies to enhance a rural hospital’s business model. Alabama, Georgia and Vermont also established certain resources and supports through legislation to avoid rural hospitals closures.

Payment Reforms

As another strategy for improving the financial status of rural hospitals and health facilities, some states are transitioning away from traditional fee-for-service payments—which provide payments for each individual service and procedure. Instead, they are adopting alternative payment models (APMs) for certain payers, such as state Medicaid programs. While potentially providing a more predictable funding source for rural hospitals, APMs emphasize improving patients’ clinical outcomes and lowering overall health care costs.

Prospective payments, such as bundled payments or global budgeting, offer incentives to providers to deliver high-quality care at a lower price tag. Through a bundled payment model, insurers and other payers agree to provide a lump sum for a single “episode of care,” such as a hip replacement or maternity care. The goal of bundled payments is for providers to avoid unnecessary, costly care and prevent expensive medical complications. Global budgeting is functionally similar to bundled payments, but this model provides payments at the population level. Payers provide a fixed dollar amount to broadly cover all patient services over a certain period. Providers are then responsible to keep health care costs below the fixed amount by pursuing the most appropriate and cost-effective treatment options.

While prospective payments and other APMs are becoming more widespread, rural-specific models may be used to help alleviate financial pressures for rural facilities. Several states—including Pennsylvania, Oregon and Texas—are pursuing these payment models to improve rural health outcomes, reduce unnecessary spending and provide a fixed income source for rural hospitals.

Other Rural Health Facilities

Many communities rely on rural hospitals for necessary services. However, states are exploring alternatives to supplement hospital inpatient care, including community health centers, rural health clinics, school-based clinics and free-standing emergency departments. For rural communities that lose their full-service hospital, or who are on the brink of losing their hospital, these facilities can help fill in some health care service gaps, improve overall health outcomes and avoid costly hospitalizations.

The Health Resources and Services Administration (HRSA) operates the Health Center Program. Through the federal program, community health centers offer a consistent source of primary health care to people living in underserved communities and often improve access to other necessary services—such as mental health, substance use disorder treatment or oral health services. Health centers provide preventive and primary care services to nearly 28 million patients annually, including 1 in 5 rural residents. Increased access to community health centers is associated with improved health outcomes—such as patients with hypertension controlling high blood pressure—all while reducing health care costs.

School-based health centers (SBHCs), which often receive federal funding through HRSA’s Health Center Program, increase access to primary care and preventive services among school-aged children and their families. In 2018, children represented 1 out every 9 patients seen in a health center. SBHCs provide a wide range of services, including primary care, mental health, oral health and other health care services. The number of SBHCs in rural communities quadrupled to over 800 between 1998 and 2017, and the reach of SBHC services in rural areas continues to improve through innovative delivery options, such as telehealth. An economic systematic review of several studies found that using SBHCs resulted in net savings to state Medicaid programs of between $30 and $969 per visit.

CMS operates the Rural Health Clinic (RHC) program, which aims to increase primary care services for Medicaid and Medicare patients in rural communities. To qualify as an RHC, a clinic must operate in a rural and designated health professional shortage area, provide primary care services, and employ non-physician providers like physician assistants or nurse practitioners. These facilities receive enhanced reimbursement rates for providing primary care services to patients enrolled in Medicare or Medicaid. As RHC patients are often older and poorer, RHCs help facilitate wellness, health promotion and disease prevention for these underserved populations.

State-licensed free-standing emergency departments (FSEDs) function as fully operational emergency departments and are often required by state statute to be open 24/7. These physically separate, stand-alone facilities either operate under a larger health system, subjecting the FSED to the same federal or state regulations as the parent health system, or are independently owned and operated. However, independent FSEDs do not meet the federal definition of a hospital, and thus are ineligible for Medicare and Medicaid reimbursement. Beyond filling emergency service gaps, rural residents can often access other vital health services, such as urgent and primary care, at FSEDs. Although these facilities may provide key emergency services, some reports have highlighted frequent instances of surprise medical billing for patients unaware that the FSED is out-of-network.

State policymakers can bolster the role of these facilities in rural areas by evaluating state regulations and ensuring sustainable investments for outpatient health facilities. For instance, 35 states and Washington, D.C., maintain Certificate of Need (CON) laws, which require certain facilities to seek state approval if they plan to establish or expand their service capacity. The extent to which state CON laws regulate facilities varies greatly state to state, and a state may require CON approval for health facilities such as FSEDs.

Additionally, states can fund and support rural health facilities through general fund appropriations. For example, 16 states and the District of Columbia  appropriated an average of $5.3 million in state funds explicitly for SBHCs in FY 2017, and the number of SBHCs receiving dedicated state funding has continued to increase throughout the U.S.

Health Care Facilities Policy Options

• Evaluate Medicaid reimbursement policies and other targeted state policies to improve the financial status of rural hospitals and reduce uncompensated care.
• Examine the current payment and delivery systems for rural facilities and identify ways to improve access and lower costs through alternative payment models. States can establish special committees or task forces to assess various models.
• Gather information and data from primary care associations and other organizations on certain rural health facilities offering primary and preventative services.
• Examine current state funding and policies that support rural health facilities.

Changing Health Care Delivery

Rural America struggles to recruit and retain health care providers, its residents are isolated from services, and its older population may be unable to access services in order to live safely and independently. Due to the unique health care landscape—and geographical landscape—of rural America, state policymakers, stakeholders and providers often take innovative approaches to how health services are delivered. States are exploring ways to address health service gaps and provide necessary care for rural patients, including leveraging the role of non-physician providers, using telehealth services, and providing home and community-based services for older adults.

Non-Physician Providers

Rural areas are disproportionately affected by provider shortages and other barriers to health care access for patients. A 2016 HRSA report found that, without any substantive changes to the rural health delivery system, 37 states are projected to experience primary care physician shortages by 2025. Additionally, medical students are more likely to pursue medical specialties and work in urban or suburban areas. While rural areas continue to experience primary care physician shortages, demand for primary care services is growing, partly due to an aging population and higher rates of chronic diseases.

Many states are leveraging non-physician providers—such as nurse practitioners (NPs) and physician assistants (PAs)—to address primary care service gaps. Each year, approximately 16,000 NPs graduate from primary care programs compared to 5,000 graduating primary care physicians. NPs are also more likely to practice in medically underserved communities, such as rural areas. The number of PAs practicing in the primary care field is expected to increase 39%, from 33,000 to 46,000, by 2025. Additionally, 15% of PAs practice in rural or frontier counties and many PA programs in rural states have a higher percentage of rural-practicing PAs.

For NPs and PAs to meet the growing primary care needs of rural communities, many state legislators are evaluating laws and regulations defining the roles and responsibilities of these health care workers, also known as scope of practice (SOP) laws. A number of states have taken steps to increase the practice authority licensure for non-physician primary care providers, as well ensure non-physician providers are reimbursed the same rate as physicians when providing the same services. Proponents of these laws say non-physician providers can be trained quicker and less expensively than physicians without compromising quality. Others argue that physicians’ longer, more intensive training equips them to diagnose more accurately and treat patients more safely.

States are evaluating SOP policies not only to improve access to primary care services, but to bolster necessary behavioral health services. While the prevalence of certain mental health conditions and substance use disorders are greater in rural areas than in urban locations, there continue to be behavioral health provider shortages in rural communities. Many states have allowed NPs and PAs to prescribe buprenorphine-containing products, which are used to treat opioid dependency. States have also established different licensing and credentialing standards for licensed professional counselors and addiction counselors to meet the mental and behavioral health needs of rural Americans.

Beyond SOP laws, states are also developing various recruitment and retention policies to bring primary cares providers—including physician and non-physician providers—to rural communities. These often include pathway programs and scholarship and loan repayment programs. Pathway programs aim to introduce students from backgrounds underrepresented in health professions to health care careers. Participating students may be more likely to practice in their communities, such as rural or other underserved areas.

Scholarship and loan forgiveness or repayment programs provide financial incentives for students to practice in HPSAs—including several medically underserved rural areas—often for a minimum of two years. States can establish state-run programs and/or seek federal dollars for loan forgiveness and scholarship programs. For example, 41 states, Washington, D.C., and the Mariana Islands (U.S. territory) receive federal cost-sharing grants through the State Loan Repayment Program. States can use these federal dollars to provide loan repayments to various primary care providers, including physicians, NPs and PAs.

Telehealth

States are increasingly relying on telehealth to increase access to care for rural patients. HRSA defines telehealth as “the use of electronic information and telecommunication technologies to support long-distance clinical health care, patient and professional health-related education, public health, and health administration.” For patients living in remote areas with few providers, health professionals can provide a broad range of services virtually, including primary care and care for mental health, substance use disorder or oral health. Telehealth can also support rural providers by facilitating continuing education and collaboration among health care providers.

States are assessing payment, licensure and practice standards policies to further enhance the reach and effectiveness of telehealth services. All states and Washington, D.C., provide some form of Medicaid reimbursement for telehealth services, though coverage varies state to state based on telehealth modality and the scope of services covered. Forty-two states and Washington, D.C., have state laws relating to private insurance reimbursement for telehealth services, which typically entails private insurers offering comparable or equivalent coverage and/or reimbursement for telehealth services as for in-person services.

Additionally, states are evaluating licensure standards for health care workers to increase the use of and access to telehealth. Because telehealth often crosses state borders, providers may be held to several state-specific licensure requirements. Thus, states are adopting temporary licenses, telehealth-specific licenses and/or licensure compacts to facilitate services across state lines.

Lastly, providers using telehealth technology may experience barriers due to state-specific practice standards. Standards of care—or what another similarly trained and equipped provider would do in a similar situation—apply to all health care services, delivered remotely or in person. Some states, however, are adopting standards specifically requiring that the applicable standards of care that apply to in-person care also apply to telehealth.

Home and Community-Based Services

With an older and sicker population making up a large share of rural communities, ensuring access to high-quality long-term services and supports (LTSS) for seniors and people with disabilities is of high importance for rural America. LTSS includes a broad range of day-to-day assistance for individuals with chronic health conditions and significant health challenges affecting daily activities. LTSS is often delivered by nurses and direct care workers, and demand for these workers is anticipated to increase markedly in the coming years.

Medicaid is the nation’s largest payer for LTSS, and although older individuals and people with disabilities make up less than one-quarter of Medicaid beneficiaries, they account for almost two-thirds of Medicaid spending. These high costs are especially prevalent in rural areas where a larger share of residents, especially older residents, are covered through Medicaid. For example, studies of rural LTSS use found rural Medicaid beneficiaries were more likely to use nursing home services compared to their urban counterparts, often restricting consumer choice and driving up costs for state Medicaid programs.

States can leverage home and community-based services (HCBS) to shift away from institutionalized care and help older individuals “age in place.” HCBS refers to services provided in one’s own home or community rather than a health facility. Rural seniors and individuals can receive various types of health and social services through HCBS, including skilled nursing care, occupational and physical therapy, hospice care or everyday personal care. With 3 in 4 Americans preferring to remain in their homes while aging, HCBS not only meets patients’ preferences but also results in significant cost savings to state Medicaid budgets. The Medicaid and CHIP Payment and Access Commission found an increase in HCBS compared to institutional care for Medicaid beneficiaries due to concerns about the high costs of institutional care and overall patient preferences. Additionally, a 2013 AARP analysis of publicly funded HCBS programs found lower per-person costs for HCBS compared to institutionalized care and an overall slower growth in health care costs.

In order to improve access to HCBS, states may seek federal funds to help older individuals and those with disabilities transition from institutional care to home and community-based settings, evaluate HCBS benefits for state Medicaid programs and target specific populations requiring long-term care. For example, nearly all states and Washington, D.C., offer long-term care services through a Medicaid HCBS waiver, also known as a 1915(c) waiver. States can “waive” certain federal requirements for state Medicaid programs to better fit the local context and HCBS needs of their state. Through a Medicaid HCBS waiver, states can target a certain area with a greater need rather than the entire state, make Medicaid services available only to a particular group or population, and provide Medicaid services to individuals who would otherwise only receive Medicaid coverage in an institutionalized setting. Medicaid HCBS waiver programs vary greatly, reflecting the significant role legislators, government officials and other stakeholders play in shaping a state’s HCBS policies.

Additionally, several states are enacting policies to relieve the financial burden for family caregivers, who provide a large share of HCBS, often without compensation. Several states have enacted paid family leave laws, which allow family caregivers to receive employer benefits while caring for older family members. Furthermore, various states—including Arizona, Hawaii, Minnesota, Virginia and Washington—have established state-run programs that provide reimbursement and other financial assistance to family caregivers.

Health Care Delivery Policy Options

• Assess and consider scope of practice, licensure and payment parity policies for the non-physician workforce.
• Establish and fund recruitment and retention programs for the rural health care workforce. Policymakers can do this by supporting new or expanded residency programs, trainings and rotation opportunities in rural health care facilities.
• Consider policy options expanding access to health services via telehealth, including payment and reimbursement, licensure standards and standards of care.
• Evaluate effective state policies for improving access to and the quality of HCBS for older rural residents, such as increasing HCBS benefits and supporting family caregivers.

Conclusion

The policy options discussed in this brief highlight only some of the innovative strategies that state legislators and stakeholders are employing to improve access to care in rural communities. Regardless of the policy, legislators can adopt common approaches to improve the health and access to health care services for residents in rural communities. These include:

• Assess the magnitude of the problem. Gathering data about unmet health care needs, rural financial pressures and workforce challenges can help legislators understand the most pressing problems and ensure that access, workforce, long-term care and other aspects of rural health care support the overall wellness of rural residents.
• Engage stakeholders to review policies, identify challenges and opportunities, and develop effective programs.
• Align policies and investments to support programs that work. Legislators play an important role by ensuring that programs and state funds support approaches that have proven results.
• Look at the workforce differently. While strengthening the workforce involves strategies for increasing the quantity of providers in rural areas, states and localities are demonstrating that innovation plays a role. They are employing technology, including telehealth, and redefining roles for primary care providers and care extenders to expand the reach of the current workforce and improve access to care.

Legislators can play important roles by ensuring that the state’s health care policies and investments meet the unique needs of rural communities and the workforce that supports them, and that the strategies have been evaluated and proven to be effective.

Additional NCSL Resources

• Understanding Medicaid: A Primer for State Legislators
• Increasing Access to Health Care Through Telehealth
• 10 State Strategies for Improving Medicaid: Quality, Outcomes and the Bottom Line
• Long-Term Services and Support: Case Studies from Four States
• Improving Access to Care in Rural and Underserved Communities: State Workforce Strategies

This project is supported by the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) under grant number UD3OA22893, National Organizations for State and Local Officials. This information or content and conclusions are those of the authors and should not be construed as the official position or policy of, nor should any endorsements be inferred by HRSA, HHS or the U.S. government.