New federal funding will bolster state investment, strengthen labor and delivery services across 21 rural hospitals serving families in 17 counties

SALEM, Ore. — Governor Tina Kotek, Oregon Health Authority (OHA), and the Hospital Association of Oregon, announced today that the Centers for Medicare & Medicaid Services (CMS) approved Oregon’s proposed state directed payment to strengthen and stabilize maternity care services in rural communities. By matching state funding secured by Governor Kotek , these approved federal funds will result in a total investment of up to $37.5 million for 21 rural hospitals that provide maternity services for some of Oregon’s most remote communities. For rural hospitals, many of which will navigate reductions in Medicaid funding due to H.R. 1, these payments will help provide additional staffing and essential medical equipment, sustain and create good paying jobs and invest in strategies that improve overall quality of care of maternity services, such as supporting community outreach to pregnant Oregon Health Plan (OHP) members.

"I fought for these funds in my budget to stabilize services in Oregon because rural communities deserve reliable, high quality maternity care close to home,” Governor Kotek said. “The Trump Administration’s cuts to Medicaid will make rural maternity care harder to sustain and I applaud the work by the agency to maximize state dollars to support Oregon providers. I appreciate this partnership from hospital leaders who participated in conversations with my office to devise how these funds will be spent, and our continued partnership as we work together to improve access to care where it’s needed most.”

The directed payment is part of a one-time $25 million investment authorized by the Legislature in House Bill 5025 (2025). The coordinated effort is led by Governor Kotek with OHA and the Hospital Association of Oregon to strengthen maternity services. Roughly half of all births in the state are covered by OHP, and Medicaid funding changes have already begun to impact rural healthcare providers in Oregon and across the country.  

“CMS’s approval enables us to support rural hospitals at a moment when maternity services are under tremendous pressure,” said Dr. Sejal Hathi, Director of OHA. “OHA worked hard to secure this funding because rural families and communities cannot wait as healthcare costs rise and labor and delivery units close. These funds will help reinforce essential care for expecting OHP members while also strengthening services for entire communities. As we implement this directed payment, OHA remains committed to bolstering the full continuum of maternity care and closing longstanding gaps—so that families can access the safe, high-quality care they need throughout pregnancy and beyond.”

At a time when Oregon’s rural hospitals are increasingly impacted by federal policy changes, these payments are designed to stabilize maternity services, strengthen access to care, and create good paying jobs in communities with limited resources. The funding aims to ensure safe, reliable services for OHP members. The investments are expected to improve access to prenatal and postpartum care, reduce preventable complications, and promote more equitable maternal health outcomes across rural Oregon.

“Oregon's rural hospitals face mounting financial and workforce challenges in sustaining the maternity services families rely on,” said Becky Hultberg, president and CEO of the Hospital Association of Oregon. “CMS’s approval was a critical step in releasing funds to rural hospitals, providing much-needed support to help protect access to maternity care in rural Oregon. This investment highlights what can be achieved when state leaders, hospitals, and our partners work together to protect care in communities.”

 

In counties such as Malheur County — where more than half of residents are enrolled in OHP — improvements to maternity services often benefit the broader community. While activities like outreach may focus specifically on OHP members, other investments, such as equipment upgrades or additional staffing, enhance care for all patients.

In addition to the directed payment, OHA is continuing to strengthen the full continuum of maternity care by expanding access to doulas and lactation counselors, implementing a community-based access program to support culturally specific and geographically diverse perinatal service providers, and prioritizing maternal and child health through the Rural Health Transformation Program. OHA recognizes that maternity care extends far beyond hospital services—from prenatal visits and labor and delivery to postpartum supports, home visiting, and lactation services—and is working across this entire continuum to close gaps and improve equitable access to care for families in every community. 

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Every day, in multiple ways, the Oregon Health Authority supports individuals, communities, and partners across the state so that all families can thrive. OHA is further supporting rural hospitals by providing a total of $35 million in federal Rural Health Transformation Program funding this year. While most rural hospitals are eligible to receive $963,000 each through this opportunity, three larger rural hospitals with more than 50 beds can each receive nearly $1.4 million. This direct funding is designed to help rural Oregon improve access to critical services during a time of tremendous change and challenge in healthcare. On May 7, OHA announced which hospitals are eligible for this federal funding and how much each hospital can receive. For more details, please refer to the Rural Health Transformation Program newsletter.