Guest Column: South Carolina Must Seize Rural Healthcare Opportunity

by TOM DAVIS

The One Big Beautiful Bill Act, championed by the Trump Administration – and passed by Congress last July – included major Medicaid reforms that will financially challenge rural communities, where hospitals and clinics operate on thin margins and serve large numbers of Medicaid patients. To cushion the impact, the Act created a $50 billion Rural Health Transformation Fund.

Half of this fund will be distributed to states on a per capita basis. The other half will be awarded competitively to states that have removed barriers to rural healthcare, including laws that prevent nurse practitioners (NPs) and physician assistants (PAs) from practicing without needless financial or bureaucratic interference. Empowering these non-physician providers is essential to rural health, since most doctors choose to work in urban areas.

Currently, South Carolina law requires NPs and PAs to pay “collaborating” physicians several thousand dollars annually as a condition of providing routine healthcare services they were trained to provide and that state law recognizes as falling within their scope of competence. These physicians are rarely on-site and provide no actual oversight or care, so the mandatory payments simply add to healthcare costs without conferring any medical benefit.

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That’s why most other states have eliminated requirements that NPs and PAs pay such fees. And it’s why U.S. Health and Human Services Secretary Robert F. Kennedy Jr., and CMS Administrator Dr. Mehmet Oz have stated that states imposing these unreasonable financial restrictions on routine healthcare delivery will be penalized when applying for the $25 billion in competitive funding.

Gov. Henry McMaster must submit South Carolina’s application for these funds by this Wednesday, November 5, 2025 and he can strengthen our state’s application by expressing support for legislation now pending in the General Assembly to eliminate these unnecessary “collaboration” fees.

After speaking with state officials and healthcare stakeholders, I believe he has three concerns about doing so. However, none should prevent him from taking this step.

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First, Gov. McMaster correctly recognizes that using one-time federal money for ongoing expenses creates fiscal risk. But that concern doesn’t apply here. The $25 billion in competitive funding is designed to support restructuring rural healthcare, not to fund permanent programs. It is meant to pay for one-time capital investments, such as facility upgrades and telemedicine infrastructure, that strengthen long-term capacity without creating recurring costs.

Second, the governor may worry about a potential “claw-back” of federal grants if the legislature ultimately fails to pass the supporting legislation. This concern is unfounded for several reasons:

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• It is not certain that funds would be clawed back if the legislature fails to act. The competitive-grant criteria focus on a state’s current regulatory environment and demonstrate commitment to reform, not on guaranteeing future legislative outcomes that no governor can unilaterally control. Federal agencies understand that governors cannot mandate legislative action; they can only advocate for it.

• Standard federal grant practice allows states to retain funding if they made good-faith efforts to meet conditions and acted in compliance with grant terms. Claw-backs typically occur only in cases of fraud, misuse of funds, or failure to attempt compliance, not because a state legislature exercises its independent judgment. The governor expressing support for pending legislation demonstrates the required good-faith effort.

• Governors routinely accept conditional federal funding without fear of claw-backs. For example, FEMA disaster grants often require subsequent state matches or legislative appropriations and transportation funding frequently depends on states meeting future regulatory standards. This is standard fiscal practice, not a trap designed to penalize executive leadership.

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Third, as a constitutional conservative, Gov. McMaster may hesitate to weigh in on legislation pending before the General Assembly. But expressing support for a bill is not overstepping, it’s executive leadership. Governors regularly advocate for legislation that aligns with their policy goals. Including a statement of support in South Carolina’s grant application would simply clarify Gov. McMaster’s priorities, as governors across the country routinely do.

Here’s the bottom line: If South Carolina fails to submit the strongest possible application for the $25 billion in competitive funding, our rural communities will fall behind, and our tax dollars will fund healthcare improvements elsewhere. The Rural Health Transformation Fund envisioned by President Trump’s administration is a lifeline that will be desperately needed when the Medicaid cuts are implemented. South Carolina must seize it.

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ABOUT THE AUTHOR…

Tom Davis represents Beaufort and Jasper counties in the South Carolina Senate.

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