Medicaid Reimbursement Shifts, Rural Health Transformation, and What EMS Agencies Need to Know

The world of Emergency Medical Services is changing fast, and staying informed is more important than ever. On October 16, 2025, Public Consulting Group (PCG) and the International Association of Fire Chiefs (IAFC) hosted a lively webinar that brought together EMS experts, agency leaders, and policy makers to discuss the future of Ground Emergency Medical Transportation (GEMT) and Medicaid reimbursement.

Understanding HR1 and Its Impact on EMS

The passage of HR1 marks a turning point for Medicaid reimbursement. EMS providers are watching closely as the Centers for Medicare & Medicaid Services (CMS) prepares to release further guidance. In the meantime, PCG’s analysis helps agencies understand what’s changing and how to prepare.

One of the most significant updates is the reduction in provider tax assessments, which will begin in 2028 and continue for five years. State directed payments will also be capped, with non-expansion Medicaid states limited to 110 percent of Medicare rates and expansion states capped at Medicare rates. These changes could redefine which provider types are eligible for supplemental payments, and there’s growing anticipation for CMS to clarify whether emergency medical services will be included. A decrease in Medicaid enrollment may also mean fewer Medicaid transports, impacting EMS agency revenue.

Title VII of HR1 contains twenty-one sections focused on Medicaid financing. Two sections, Provider Taxes and State Directed Payments, are especially relevant for EMS providers. Notably, Fee for Service state plan programs such as GEMT, ASPP, PEMT, and ESPP are not mentioned, so agencies with existing programs under a State Plan Amendment should expect their funding to remain stable.

Provider Taxes: What EMS Agencies Need to Know

For Medicaid expansion states, the new provider tax “safe harbor” cap will gradually decrease from six percent to three and a half percent of net patient revenue over five years. Nursing home taxes are exempt from this phase down, and non-expansion states will keep their current safe harbor rates. The Congressional Budget Office estimates that these changes will save over $190 billion in federal spending between 2025 and 2034, with $20 million allocated for CMS implementation.

EMS Provider Assessments remain a vital tool for states seeking additional federal funds for supplemental payments. Public EMS providers have several financing options, while private providers often face exclusive provider taxes. The reduction in the safe harbor threshold means Medicaid expansion states will see less funding for provider tax programs, although these programs may continue beyond 2032 with lower payouts.

New provider tax programs face stricter limitations, as they must adhere to a zero percent safe harbor threshold. This restriction makes it difficult to design programs that do not negatively impact providers. The “75/75 rule” further limits the ability of providers to recoup their tax payments, adding another layer of complexity for agencies considering new programs.

State Directed Payments: Adjustments and Effects

State directed payments are also undergoing changes. The cap on supplemental payments is being reduced, with expanded Medicaid states limited to Medicare rates and non-expansion states allowed up to 110 percent of Medicare rates. States that currently exceed these caps must reduce payments by ten percent annually starting in 2028. The federal government expects to save nearly $150 billion over the next decade as a result of these changes.

Current regulations do not explicitly include emergency medical services as a defined provider type, but further guidance from CMS is anticipated. This uncertainty means that EMS agencies must stay informed and be prepared to adapt as new rules are released.

GEMT Programs and the Rural Health Transformation Program

For GEMT programs, the revised provider tax and state-directed payment regulations will affect Medicaid reimbursement for EMS organizations in states with those programs. However, existing programs under a State Plan Amendment are expected to maintain their funding. The Rural Health Transformation Program (RHTP) may offer new opportunities for innovation and support, especially for agencies serving rural communities.

The RHTP is designed to improve health outcomes in rural America by supporting innovative care models, workforce development, and technology adoption. With $50 billion in funding over five years, the program will help rural providers become sustainable access points for care and encourage collaboration among facilities. Applications will be evaluated based on their ability to improve access to EMS, integrate services with the broader healthcare ecosystem, and demonstrate measurable benefits in timely emergency response and cost reduction.

Unlocking New Opportunities for EMS in Rural America

The Rural Health Transformation Program is an initiative designed to revitalize healthcare delivery in rural communities across the United States. The program encourages rural facilities to collaborate, share resources, and coordinate operations to improve efficiency and patient outcomes.

A key component of the RHTP is workforce development. Rural EMS agencies often struggle with recruiting and retaining skilled professionals. The program supports efforts to attract and retain healthcare workers. This includes not only paramedics and EMTs, but also community health workers, pharmacists, and patient navigators.

Technology innovation is another cornerstone of the RHTP. Rural providers are encouraged to adopt digital health tools, improve data sharing, and invest in cybersecurity. Ensuring that even the most remote communities have access to high-quality emergency services.

Application Details: How EMS Agencies Can Compete for RHTP Funding

Access to EMS is critical in rural areas, but agencies face unique hurdles. Large geographic coverage, difficult terrain, and longer response times can delay care. Workforce shortages and reliance on volunteers add to the challenge. The RHTP recognizes these issues and encourages applicants to propose solutions that integrate EMS with the broader healthcare system.

When applying for RHTP funding, EMS agencies should focus on several key factors:

State policies and infrastructure are central to a strong application. Agencies should describe how EMS will coordinate with other provider types and integrate with the healthcare delivery system. Collaboration with primary care providers and expansion of models like community paramedicine are highly valued.

Alternative sites of care are another area of emphasis. Agencies are encouraged to propose infrastructure that supports treating patients in place during emergency calls, reducing unnecessary transports, and improving efficiency.

Investments in speed, access, and cost are critical. Proposals should highlight strategies to improve response times, expand access to care, and reduce the overall cost of emergency medical services.

Feasibility and sustainability are essential for long-term success. Applications must demonstrate financial sustainability and robust evaluation metrics. The program favors initiatives that can produce measurable benefits in timely access to emergency services and reductions in total emergency care costs.

The scoring methodology for RHTP applications rewards detailed, actionable plans that address these priorities. For final allocations in 2028 through 2030, preference will be given to arrangements that have produced measurable improvements in emergency response and cost efficiency.

RHTP Timeline: What EMS Agencies Need to Know

The timeline for the Rural Health Transformation Program is straightforward but competitive. Funding begins in fiscal year 2026 and continues through 2030, with $10 billion available each year. Half of the funds are distributed equally among approved states, while the other half is allocated by CMS based on factors such as rural population, the proportion of rural health facilities, and the status of certain hospitals.

Applications are evaluated on technical merit, with special attention paid to how well they address the unique needs of rural EMS. Agencies should prepare to submit detailed proposals that showcase their readiness to innovate and collaborate.

By understanding the details of the Rural Health Transformation Program and preparing strong applications, EMS agencies can position themselves to secure funding and drive meaningful change in rural healthcare. The RHTP represents a significant opportunity for providers to improve access, enhance care quality, and build a more resilient emergency medical system for rural America.

Looking Ahead: Opportunities for EMS Agencies

As the landscape continues to evolve, supplemental payment programs are being implemented across the country, with more than thirty-five states actively developing or expanding their initiatives. Interest in these programs is growing as providers seek solutions to funding challenges and strive to deliver high-quality emergency care.

PCG encourages EMS agencies to stay connected and informed. For questions or additional information, agencies can reach out to PCG directly at EMSStrategies@pcgus.com.

Conclusion: Why Optimism Matters for EMS Leaders

While the future of Medicaid reimbursement for EMS providers is uncertain, there are reasons to remain optimistic. Legislative changes present challenges, but they also create opportunities for innovation, sustainability, and improved care.