Rural Hospital Finance and Coordination

Rural hospitals are a vital part of the Texas health care delivery system. Texas established it has a public policy interest in sustaining and supporting rural hospital operations.

The Office of Rural Hospital Finance and Coordination (RHFC) is a division within the HHSC Chief Financial Officer Division that provides financial and technical assistance to help preserve rural hospitals’ delivery of health care services to Texans.

Rural hospitals may request help from the RHFC team by emailing HHSC Rural Hospital Help. To receive periodic information about rural hospital finance in Texas, sign up for email updates.

RHFC defines a hospital as a “rural hospital” if it meets one of the following: (1) is located in a county with 68,750 or fewer persons according to the 2020 U.S. Census; or (2) is designated by Medicare as a Critical Access Hospital (CAH), a Sole Community Hospital (SCH), or a Rural Referral Center (RRC) that is not located in a Metropolitan Statistical Area (MSA); or (3) has 100 or fewer beds, is designated by Medicare as a CAH, a SCH, or a RRC, and is located in an MSA.

Please email HHSC Rural Hospital Help for any questions about the list of rural hospitals.

Rural Hospital Technical Assistance

RHFC is the first point of contact for rural hospitals that need technical assistance from HHSC or have health care services and/or Medicaid-related questions.

The RHFC team:

  • Provides dedicated customer service support for rural hospitals.
  • Conducts analysis of rural hospital participation in Medicaid payment programs, including assessing barriers to participation.
  • Conducts outreach to increases awareness of and participation in Medicaid supplemental and directed payment programs.
  • Coordinates with the Rural Hospital Advisory Committee.
  • Drafts and publishes the Rural Hospital Services Strategic Plan.
  • Augments communication efforts between HHSC and rural hospitals.

RHFC will coordinate meetings when a rural hospital has questions or issues that are complex and involve multiple teams or departments within HHSC. This coordination is meant to ensure a rural hospital’s inquiry is addressed as a whole and doesn’t require additional outreach.

RHFC hosts technical assistance webinars and meetings, as well as prepares informational documents for rural hospitals about HHSC programs and related questions.

Use the following resources for more information:

Rural Hospital Financial Assistance

Open Grant Opportunities

ATTENTION INTERESTED APPLICANTS:

Questions related to current grant opportunities must be submitted to the sole point of contact identified in each Request for Application (RFA).

  • Rural Hospital Debt Reduction (HHS0015180)

Rural Hospital Debt Reduction Grant

HHSC is accepting applications for the Rural Hospital Debt Reduction Grant. This grant provides one-time funding to qualified rural hospitals to reduce their debt to improve the financial stability of the hospital.

HHSC will award up to 25 grants to qualified hospitals. Each awardee will receive a lump sum payment of $250,000.

Applications are due Apr. 24, 2025 by 10:30 am (CDT).

To apply for this grant, applicants must submit their completed application using one of two methods: (1) HHS Online Bid Room, or (2) Sealed package with USB drives. Refer to Section 8.3, Required Submission Method, of the RFA, for details about the approved methods. Applications submitted by any other method (e.g., email) will not be considered.

Closed HHSC Grant Opportunities

Rural Hospital Improvement Grant

The Rural Hospital Improvement Grant provides one-time funding to qualified rural hospitals to support hospital improvement activities aimed to improve the financial stability of the hospital. Each qualifying hospital will receive a lump sum payment of $350,000.

Applications for the Rural Hospital Improvement Grant closed on Apr. 9, 2025.

Rural Hospital Labor and Delivery Grant

The Rural Hospital Labor and Delivery Grant provides one-time funding to qualified rural hospitals to invest in activities that will sustain inpatient labor and delivery services. Each qualifying hospital awarded a grant will receive a lump sum payment of $250,000.

Applications for the Rural Hospital Labor and Delivery Grant closed on Apr. 8, 2025.

Maternal Care Operations Grant

The Maternal Care Operations Grant provides one-time funding to improve rural maternal care in facilities where emergency labor and delivery services can occur. Each qualifying hospital will receive a $35,000 lump sum payment for the purchase of neonatal equipment, supplies and training for emergency labor and delivery health care services. Rural hospitals must not provide inpatient labor and delivery services to be eligible for the grant.

Applications for the Maternal Care Operations Grant closed on Sept. 13, 2024.

Rural Hospital Financial Stabilization Grant

The Rural Hospital Financial Stabilization Grant provides time-limited financial support for operational costs for certain rural hospitals to assist them with improving their long-term financial solvency and sustainability. Grants are provided as a two-year award. Each grantee will receive a lump sum payment based on financial need:

  1. Tier 1 (Basic Need) ­– $100,000 in fiscal year (FY) 2024; $50,000 in FY 2025.
  2. Tier 2 (Moderate Need) – $175,000 in FY 2024; $87,500 in FY 2025.
  3. Tier 3 (High Need) – $250,000 in FY 2024; $125,000 in FY 2025.

Applications for the Rural Hospital Financial Stabilization Grant closed on July 8, 2024.

Texas Rural Emergency Hospitals Financial Stabilization Grant

HHSC issued funding through the Texas Rural Emergency Hospitals Financial Stabilization Grant in October 2023. As the first grant issued by HHSC to distribute funding appropriated by the Texas Legislature for fiscal years 2024 and 2025, the grant provided time-limited financial support for hospitals transitioning into their new role as rural emergency hospitals. The grants helped to support long-term financial solvency and sustainability.

Rural hospitals that obtained both the state Limited Services Rural Hospital (LSRH) license under Texas Health and Safety Code Chapter 241, Subchapter K, and the federal rural emergency hospital designation from the Centers for Medicare & Medicaid Services by Aug. 31, 2023, were eligible to apply for the Texas Rural Emergency Hospitals Financial Stabilization Grant.

For each eligible hospital, HHSC provided a two-year, $750,000 grant distributed quarterly in four flat fee amounts of $187,500 for the first grant year and $375,000 distributed quarterly in four flat fee amounts of $93,750 for the second grant year.

Open enrollment for the Texas Rural Emergency Hospitals Financial Stabilization Grant application closed on Oct. 13, 2023. HHSC awarded grants to four rural emergency hospitals.

Information for Rural Hospitals

New Rural Emergency Hospital Designation

A Rural Emergency Hospital (REH) is a Medicare provider type designed to maintain access to critical emergency and outpatient hospital services in communities that may be unable to support or sustain a Critical Access Hospital (CAH) or small inpatient rural hospital. The U.S. Congress established the REH designation in December 2020 through Section 125 of the Consolidated Appropriations Act, 2021, which became effective Jan. 1, 2023. Conversion to an REH allows for the provision of emergency services, observation care and additional medical and health outpatient services, if elected by the REH, that do not exceed an annual per patient average of 24 hours.

According to CMS, the REH designation provides an opportunity for CAHs and certain rural hospitals to prevent a potential closure and continue to provide essential services for the communities they serve. Facilities eligible to apply for the REH designation include CAHs and rural acute care hospitals with 50 or fewer beds that were open as of Dec. 27, 2020. Facilities that closed after December 27, 2020, can apply if they re-enroll in Medicare and meet all REH Conditions of Participation and requirements.

Use the following resources to learn more about the REH designation:

HHSC Licensure Information

For hospitals to apply to the Centers for Medicare and Medicaid Services (CMS) to obtain an REH designation, states must first establish licensing requirements for this new provider type. On Oct. 5, 2023, HHSC adopted standard rules (Texas Administrative Code (TAC) Title 26 Chapter 511) for Limited Services Rural Hospitals. These rules permit a qualified rural hospital to be designated as an REH under the Code of Federal Regulations Sections 485.502 and 485.506, and to apply to HHSC for a limited services rural hospital (LSRH) license under Texas Health and Safety Code (HSC) Chapter 241, Subchapter K.

To apply for an LSRH license, applicants must complete Form 3240, LSRH License Application (PDF), follow the application’s instructions, and submit all required information to HHSC. An LSRH license is necessary for a provider to apply to become an REH Medicare provider.

Email Health Care Regulation Policies and Rules or visit the following resources for more information:

Rural Hospital Reports

Rural Hospital Services Strategic Plan

HHSC created the Rural Hospital Services Strategic Plan to improve health care access and outcomes in rural communities. The 86th Texas Legislature added Texas Government Code Section 531.201, which requires HHSC to create the strategic plan to ensure rural Texans have access to hospital services.

HHSC must submit a progress report regarding the development and implementation of the strategic plan by Nov. 1 of each even-numbered year. HHSC published its first Rural Hospital Services Strategic Plan Progress Report in November 2020.

Rural Hospital Grant Program Report

The 2024-25 General Appropriations Act, House Bill 1, 88th Legislature, Regular Session, 2023 (Article II, HHSC, Rider 88), requires HHSC to submit a report detailing the expenditure of funds appropriated to the Rural Hospital Grant Program for state fiscal years 2024-2025. Through Rider 88, the Texas Legislature appropriated $25 million for each state fiscal year of the 2024-2025 biennium to HHSC to support rural hospitals through grants via the Rural Hospital Grant Program. HHSC’s first report includes the number of grants awarded, the number of hospitals served by each grant program, the amount awarded per entity, and the effectiveness of the grants.