Home health agencies provide critical nursing and therapy services to over three million Medicare beneficiaries annually. Delivering home health care to beneficiaries living in rural communities presents a unique set of challenges, including long travel times for staff to visit patient’s homes. In recognition of these challenges, Medicare has intermittently provided a percentage increase over standard payments to home health agencies for serving rural beneficiaries, known as rural add-on payments. Yet the effect of rural add-on payments on the supply of home health agencies that serve rural communities is unknown. Taking advantage of the pseudo-natural experiment created by varying add-on payment amounts over time (0, 3, 5 and 10%), UW Medicine researchers Tracy Mroz (Department of Rehabilitation Medicine), Davis Patterson, and Bianca Frogner (both Department of Family Medicine) used publicly available data from Home Health Compare to examine how rural add-on payments affected the number of home health agencies serving rural counties from 2002-2017. Results published today in Health Affairs suggest that supply changes in rural counties adjacent to urban counties do not differ from urban counties regardless of the amount of rural add-on payments. However, only higher add-on payment amounts (5%, 10%) keep supply changes in rural counties not adjacent to urban counties on pace with urban counties. Medicare has recently revised how rural add-on payments are made, shifting from broadly applied payments for serving beneficiaries in any rural community to payments targeted towards serving beneficiaries in sparsely populated communities with low home health care utilization. Study findings provide some support for this new approach but raise questions about whether the current amount and eventual sunset of rural add-on payments will maintain supply of home health agencies serving remote rural communities. The study was funded by the Agency for Healthcare Research and Quality.