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CMS

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H.R. 1 created a $50 billion fund called the Rural Health Transformation program in an attempt to offset the losses that rural health providers will experience associated with the other devastating cuts to health care in the legislation.

Each state must complete a one-time application for the five-year program to be reviewed by CMS. Many aspects of the application are still undecided, including the submission period, due date, state entity that must submit the application, and the form of the application. The RHTP application must include a plan to describe how the state would use the funds to:

  • Improve access to hospitals and other providers for rural residents;
  • Improve health care outcomes of rural residents;
  • Prioritize the use of new and emerging technologies that emphasize prevention and chronic disease management;
  • Initiate, foster, and strengthen local and regional strategic partnerships between rural hospitals and other providers to promote quality improvement, increase financial stability, maximize economies of scale, and share best practices;
  • Recruit and retain clinicians,
  • Prioritize data and technology driven solutions that help rural providers furnish health care services as close to the patient’s home as possible;
  • Outline strategies to manage long-term financial solvency and operating models of rural hospitals; and
  • Identify specific causes that are driving standalone rural hospitals to close, convert, or reduce service lines.

The funds will be distributed between 2026 and 2030, allotting $10 billion each year. $25 billion of this fund will be allocated equally among all states with an approved application by CMS. Assuming that all fifty states are approved, each state will receive a minimum of $100 million per year for five years. The other $25 billion will be distributed to states with an approved application in an amount determined by CMS based upon the state’s rural population, proportion of healthcare facilities in rural areas, and the situation of hospitals that serve a high proportion of low-income patients.

The bill lists several allowable uses of the PHTP funds:

  • Promoting evidence-based, measurable interventions to improve prevention and chronic disease management;
  • Providing payments to health care providers for the provision of health care items or services as specified by CMS;
  • Promoting consumer-facing, technology-driven solutions for the prevention and management of chronic diseases;
  • Providing training and technical assistance for the development and adoption of technology-enables solutions that improve care delivery in rural hospitals, including remote monitoring, robotics, artificial intelligence, and other advanced technologies;
  • Recruiting and retaining clinical workforce talent to rural areas, with commitments to serve rural communities for a minimum of five years;
  • Providing technical assistance, software, and hardware for significant information technology advances designed to improve efficiency, enhance cybersecurity capability development, and improve patient health outcomes;
  • Assisting rural communities to right-size their healthcare delivery systems by identifying needed preventative, ambulatory, pre-hospital, emergency, acute inpatient care, outpatient care, and post-acute care service lines;
  • Supporting access to opioid use disorder treatment services, other substance use disorder treatment services, and mental health services;
  • Developing projects that support innovative models of care that include value-based care arrangements and alternative payment models as appropriate; and
  • Additional uses designed to promote sustainable access to high quality rural health care services, as determined by the Administrator.

RCPA will continue to share information on the program and applications as it becomes available. Contact Emma Sharp with any questions.

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The Centers for Medicare and Medicaid Services (CMS) finalized the fiscal year (FY) 2026 inpatient rehabilitation facility (IRF) payment rule and published it in today’s Federal Register.

The final rule is a fairly straightforward payment and coverage rule, similar to the April 2025 proposed rule. The payment and IRF Quality Reporting Program (IRF QRP) updates are outlined below.

Payment: CMS expects an aggregate increase of $340 million in payments to IRFs across the PPS. This reflects an increase of approximately 2.6% in estimated payments, including all relevant adjustments.

Quality Reporting Program (QRP):

  • CMS finalized the removal of two quality measures: (1) the COVID-19 Vaccination Coverage among Healthcare Personnel (HCP) measure, beginning with the FY 2026 IRF QRP, and (2) the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure, beginning with the FY 2028 IRF QRP. IRFs will continue to have the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure data collection item in the IRF-PAI until October 1, 2026, with CMS making the data collection voluntary and removing Q4 2025 data for this measure from the FY 2027 IRF QRP Compliance Determinations. CMS took similar action in other recently finalized payment rules. CMS also finalized their proposals to end the public display of these measures following the September 2025 Care Compare refresh.
  • CMS finalized the removal of four Standardized Patient Assessment Data Elements (SPADEs) under the Social Determinant of Health (SDOH) category with the FY 2028 IRF QRP, specifically: Living Situation (R0310), Food (R0320A and R0320B), and Utilities (R0330).
  • CMS finalized its procedural and review-focused changes to the IRF QRP reconsideration process. First, CMS will permit IRFs to request, and CMS to grant, an extension to file a request for reconsideration of a non-compliance determination if, during the 30-day period to request a reconsideration, the IRF was affected by an extraordinary circumstance beyond the control of the IRF (for example, a natural or man-made disaster). Second, CMS is finalizing its proposed updates to the bases on which CMS can grant a reconsideration request, providing that CMS will grant a timely request for reconsideration, and reverse an initial finding of non-compliance, only if CMS determines that the IRF was in full compliance with the IRF QRP requirements for the applicable program year.
  • CMS noted that it received extensive feedback on its Requests for Information (RFI) in four separate domains: (1) future measure concepts for the IRF QRP; (2) potential revisions to the IRF Patient Assessment Instrument (IRF-PAI); (3) potential revisions to the data submission deadlines for assessment data collected for the IRF QRP; and (4) advancing digital quality measurement in IRFs.

Requests for Information:
The rule included four dedicated Requests for Information (RFI) related to the IRF QRP and IRF-PAI. The final rule summarized the comments they received on these topics but did not offer any commentary on what CMS plans to do in future work in these areas.

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The Office of Developmental Programs (ODP) has shared ODPANN 25-075. This announcement informs stakeholders of the submission of amendments to the Targeted Support Management State Plan, 1915(b)(4) Waiver, Consolidated Waiver, Community Living Waiver, and Person/Family Directed Support Waiver (P/FDS) to the Centers for Medicare and Medicaid Services (CMS) and the availability of supporting publications.

Links are provided throughout the announcement to the waiver amendment submissions and to the supporting documents and resources.

Please submit questions about this information electronically.

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On July 22, 2025, the Centers for Medicare and Medicaid Services (CMS) sent their annual notification regarding non-compliance letters to inpatient rehabilitation facilities (IRF) that includes information about a potential 2% payment penalty for failure to meet quality reporting requirements. The notification stated:

The Centers for Medicare & Medicaid Services (CMS) is providing notifications to facilities that were determined to be out of compliance with Quality Reporting Program (QRP) requirements for CY 2024, which will affect their FY 2026 Annual Payment Update (APU). Non-compliance notifications are being distributed by the Medicare Administrative Contractors (MAC) and were placed into facilities’ CASPER folders in QIES for Hospices, and into facilities’ My Reports folders in the Internet Quality Improvement and Evaluation System (iQIES) for IRFs, LTCHs, and SNFs, on July 21, 2025. Facilities that receive a letter of non-compliance may submit a request for reconsideration to CMS via email no later than 11:59 pm, August 26, 2025.

If you receive a notice of non-compliance and would like to request a reconsideration, see the instructions in your notice of non-compliance and on the appropriate QRP web page:

Members are encouraged to review the appropriate folder in the CMS Internet Quality Improvement and Evaluation System (iQIES) to verify whether you have been identified for a FY 2026 penalty.

RCPA is a member of the American Medical Rehabilitation Providers Association (AMRPA), and they have been directly involved in supporting IRFs with the reconsideration process. They recently provided the following information:

Should you receive a non-compliance letter, AMRPA stands ready to support your IRF with the ‎reconsideration process. Additional information is available on the AMRPA IRF QRP Reporting Program website, including content produced two years ago that is still applicable to this process. AMRPA and the FAIR Fund jointly provided a webinar and a Reconsideration Request Template letter for use by any AMRPA member facing a noncompliance determination.

Should you have any questions or need any additional assistance, please contact Troy Hillman. In reaching out, we ask that you provide the following ‎information:‎

  • A copy of the CMS non-compliance letter;
  • A copy of the IRF QRP Provider Threshold Report from iQIES with the report date range of ‎calendar year 2024; and
  • If CDC measures are identified as the issue(s), a copy of any CDC NHSN Reports, which show the ‎monthly data submissions in Calendar Year 2024 for the Catheter Associated Urinary Tract ‎Infection (CAUTI), Clostridium difficile Infection (CDI), COVID-19 Vaccination Coverage among ‎Healthcare Personnel (HCP), and/or Influenza Vaccination among Healthcare Personnel measures.

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The Centers for Medicare and Medicaid Services (CMS) released the calendar year (CY) 2026 Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems (OPPS/ASC) proposed rule in the July 17, 2025, Federal Register.

The rule outlines new proposed payment rates and related policies for a wide variety of Medicare providers, including not only physicians but other individual Medicare clinicians, such as physical and occupational therapists, speech-language pathologists, nurse practitioners, and physician assistants.

The proposed CY 2026 OPPS/ASC would implement a 2.4% increase to OPPS payment rates that reflects a market basket update of 3.2%, reduced by a productivity adjustment of 0.8 percentage points.

RCPA will provide a more detailed analysis of the OPPS/ASC proposed rule with a focus on the implications for rehabilitation providers. Additional information can be provided on this OPPS fact sheet.

Comments on the proposed rule are due by September 15, 2025. Members are encouraged to share comments and concerns to Melissa Dehoff by September 8, 2025, to include in RCPA’s comment letter.

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On July 14, the National MLTSS Health Plan Association submitted comments on the “Preserving Medicaid Funding for Vulnerable Population – Closing a Health Care-Related Tax Loophole” proposed rule. Per the Association:

This rule proposes to refine how CMS evaluates whether a health care-related tax is considered “generally redistributive.”

In our comments, we noted that we appreciate CMS’ efforts to strengthen the oversight and quality of Medicaid programs but raised concerns about the timelines and administrative burden on states, as well as the potential impact on individuals receiving long term-services and supports (LTSS).

The recommendations included:

  • Extending the transition period to three years for all states.
  • Providing clear implementation guidance and technical assistance to states.
  • Postponing finalization of the rule until further research and data analysis on provider-related taxes and impacts are conducted.

Read the full letter here.

In Pennsylvania, this rule would impact participants’ funding of approximately $1B in federal matching funds for HealthChoices, Community HealthChoices, and Behavioral HealthChoices. No immediate action is required. If you have any questions, contact Fady Sahhar.

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The Office of Developmental Programs (ODP) has released a significant update on the status of the Performance-Based Contracting (PBC) framework for Supports Coordination Organizations (SCO). Key changes reflect both public feedback and a shift towards a more unified and outcomes-driven service system. Based on comments from over 140 stakeholders, ODP has confirmed that all SCOs will be held to the same performance standards through a phased approach — eliminating previously proposed tiers. The timeline for tier determination has been adjusted (now set for 8/15/25 – 9/15/25), with performance measure submissions required between 10/1/25 – 11/1/25 to allow time for preparation and systems development.

In terms of payment structure, the transition to a monthly case rate model for all SCOs is scheduled to begin July 1, 2026. The definition of “Intensive TSM” has been revised, and billing guidance will now include qualified tasks for Associate SCs. These changes reflect a broader move away from task-based reimbursement toward an outcome- and quality-focused model, aligning with CMS’s HCBS Quality Measure Set and Pennsylvania’s population health priorities.

Next steps include the submission of 1915(b)(4) and (c) waiver amendments to CMS in late July, publication of finalized documents (including an implementation guide and preparedness toolkit), and SCO forums starting July 28. A new Performance Analysis Services (PAS) vendor is also developing a data system to support outcome tracking and analysis. ODP emphasizes that this transition requires a mindset shift — from measuring quantity to prioritizing quality and individual outcomes such as employment, community living, and health stabilization.

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The Centers for Medicare & Medicaid Services (CMS) issued an alert about a fraud scheme that uses phishing fax requests, which falsely claim to be from CMS staff, to obtain medical records and documentation for auditing purposes.

CMS does not initiate audits by requesting medical records via fax, and if you receive a suspicious request, do not respond. If you have additional questions about this alert, please reach out to Karissa Bjorkgren of CMS via email.

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Message from Rep. Dan Williams’s Office:

HARRISBURG, June 24 – Bipartisan legislation introduced by state Rep. Dan Williams, D-Chester, that would help Pennsylvanians take advantage of new federal Medicaid rules that give patients and clinicians more telehealth options for behavioral health services passed the PA House today with overwhelming support.

“The longstanding and outdated ‘four walls’ requirement has limited Medicaid reimbursement to services within the physical walls of a clinic,” said Williams. “This only creates barriers to care, particularly in rural areas and regions experiencing mental health workforce shortages.”

The Centers for Medicare and Medicaid Services gave states the option to waive the requirement on Jan. 1. In response, the Pennsylvania Department of Human Services has submitted a State Plan Amendment to adopt this flexibility, which is currently awaiting federal approval.

House Bill 1590 would repeal state regulations that conflict with the new federal flexibility. Importantly, the bill would not change existing rules requiring in-person treatment hours for outpatient behavioral health clinics.

“Under this bill, Pennsylvania can fully implement the change, expanding access to behavioral health services and reducing care gaps for our vulnerable populations across the Commonwealth,” Williams said.

The bill now moves to the state Senate for consideration.

It is important to note that, at this time, OMHSAS is awaiting approval from CMS. To address the Federal Medicaid payment conditions in the Pennsylvania statute, there was a need for this legislation to permit services be covered under Medicaid, and HB 1590 would achieve this. It is also important to reiterate that this bill will not change outpatient behavioral health clinic rules requiring in-person treatment hours. The passage of this bill will address these conditions for outpatient clinics as well as the delivery of SUD services.

Both the CMS SPA approval and the legislation would be retroactive to January 1, 2025.

Until then, the completion of both the SPA and the legislation on 4 walls flexibilities will remain in place. RCPA is grateful to have partnered with OMHSAS, House legislators, and other stakeholder associations on the development of this bill. We will continue our efforts in getting the legislation to the Governor’s desk.

If you have any questions, please contact RCPA COO and Director of Mental Health Services Jim Sharp.

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Capitol hill building in the morning with colorful cloud , Washington DC.

The Trump Administration’s “Big Beautiful Bill” was passed by House Republicans on May 22 and contains significant Medicaid cuts that could leave millions of Americans without coverage as well as severely reduce access to care. The proposed bill also includes cuts to Medicare funding, new restrictions on federal loans for medical students, and provisions to create a permanent, inflation-based mechanism for annual updates to Medicare physician payments. The legislation now heads to the Senate, where it will face further debate by lawmakers.

The proposed legislation seeks to accomplish the following:

Medicaid: 

  • The bill introduces a two-year acceleration of Medicaid work requirements for able-bodied adults ages 18 to 64, which is slated to take effect no later than December 31, 2026, instead of 2029. States have the ability to implement these requirements earlier to secure quicker savings.
  • Beginning October 21, 2027, states will be mandated to determine Medicaid eligibility every six months for people in the expansion population.
  • Medicaid and CHIP federal financial participation is prohibited under the bill revisions for people who fail to verify immigration status, citizenship, or nationality in the designated “reasonable opportunity” window.
  • States will also be required to cross-check their Death Master File quarterly to confirm deceased individuals are disenrolled. Should errors occur, there will be reinstatement provisions.
  • The Social Security Act is amended to cut retroactive Medicaid coverage from three months to one month before the application date.
  • Federal Medicaid and CHIP funding is prohibited for “specific gender transition procedures” provided to people under 18 years of age.
  • Eligibility for increased federal medical assistance percentage for states that are newly expanding Medicaid will be wound down. To qualify, states must start expansion by January 1, 2026, to restrict late expansion states from receiving an elevated match rate.
  • New rules for waiving the uniform tax requirement for Medicaid provider taxes will be imposed, which tightens conditions for states to use the financial tools.

Medicare:

  • A proposed staffing mandate is halted under the bill for long-term care facilities that receive Medicaid and Medicare funds.
  • The bill promotes the use of artificial intelligence to recover and reduce improper Medicare payments.
  • A May 20 report from the nonpartisan Congressional Budget Office found that the bill could cut nearly $500 billion over the next decade in Medicare funding.
  • The budget bill includes provisions to increase Medicare physician payments by an estimated 2.25% in 2026. This would be achieved by tying payments to 75% of the Medicare Economic Index. Starting in 2027, annual payments would be adjusted by 10% of the index, establishing a permanent, inflation-based update mechanism.
  • Under current law, physician pay is set to increase by just 0.25% in 2026 and 2.5% by 2035. The proposed changes would boost payments to 4.3% by 2035 instead. Physician groups, including the American Medical Association, strongly support the provision, calling it a critical step toward restoring stability after years of payment cuts.
  • The bill also adjusts the Medicare Physician Fee Schedule’s conversion factor, a key formula used to calculate final physician reimbursement. While the legislation introduces inflation-based updates, changes to the conversion factor could offset those increases and slow long-term payment growth. Physician groups have welcomed the update mechanism as a step in the right direction, though they say further reforms are needed to ensure physician payments fully reflect inflation and keep pace with rising practice costs over time.

CMS:

Outside of Congress, the Center for Medicaid Services (CMS) has also made announcements that could threaten access to healthcare:

  • On May 27, CMS announced increased federal oversight to prevent states from using federal Medicaid dollars to cover healthcare for undocumented immigrants for anything beyond emergency services, which violates federal law.
  • CMS outlined plans to increase audits of state Medicaid spending, eligibility systems, and financial controls, with recoupment of funds if misuse is found.

Please contact Emma Sharp with any questions.

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