On December 29, 2025, the Centers for Medicare & Medicaid Services (“CMS”) announced that it will distribute award amounts to all 50 states under the first year of the Rural Health Transformation Program (the “Program”).[i] CMS also established a new Office of Rural Health Transformation (“ORHT”) within the Center for Medicaid that will be responsible for overseeing the program and leading CMS’ engagement with state and local governments and other stakeholders.[ii] The Program is a first of its kind $50 billion initiative to improve and strengthen healthcare in rural communities nationwide via collaboration between CMS and all 50 states to realize their transformative visions for rural health.
How Funding Awards Will Be Distributed
The Program’s $50 billion in funds will be allocated over five years, with $10 billion available each year beginning in 2026. The first year awards to be granted in 2026 range from $147 million (awarded to New Jersey) to $281 million (awarded to Texas). Adhering to the U.S. Department of Health and Human Services’ (“HHS”) standard cooperative grantmaking procedures, CMS evaluated states’ applications through a rigorous merit review process, taking into consideration assessments from subject matter experts across the following disciplines: clinical, operational, workforce, technology, and payment mechanism.
Under Public Law 119-21, funding must be distributed to states as follows:[iii]
- 50% of the funds must be allocated equally among all approved states to support the initial implementation of Rural Health Transformation Plans; and
- The remaining 50% of the funds must be allocated to prioritize states with a larger percentage of the population located in a rural area and with a large number of rural health clinics (as defined by statute)[iv] and other criteria as determined by the HHS Secretary.
Criteria under the Notice of Funding Opportunity for the remaining 50% of funds include:[v]
- State-specific rural health metrics;
- State policy actions to improve rural healthcare access and quality; and
- Proposed initiatives with the greatest potential impact and scalability for rural communities.
How States Plan to Use Rural Health Funding Awards
The Office of Rural Health Transformation published the RHT Program State Project Abstracts submitted in each state’s application to the Program[vi] and prepared a 50-state spotlight summarizing the initiatives in each application.[vii]
To summarize, states nationwide plan to use Program funds to support initiatives to improve rural health by:
- Expanding Access to Care: Increasing the availability of preventive, primary, maternal, and behavioral health services. States are introducing new care access points, developing community-based health programs, and enhancing emergency medical services. In addition, many states aim to address the root causes of diseases and manage chronic conditions by implementing evidence-based, outcome-driven strategies such as physical fitness and nutrition programs.
- Strengthening the Rural Clinical Workforce: Supporting training and residency programs, investing in training existing clinical workforces, providing incentives for recruitment and retention, and creating new pathways for local students to pursue healthcare careers.
- Modernizing Health Infrastructure and Technology: Modernizing rural healthcare facilities and equipment, improving cybersecurity and interoperability, expanding telehealth and other digital health tools that facilitate timely access to care, and exploring new technologies to ease clinician burdens.
- Increasing Structural Efficiency and Empowering Community Providers: Streamlining operations, fostering enhanced care coordination, building partnerships, and creating specialized care models and clinically integrated networks to keep care local.
- Advancing Innovative Care Models and Payment Reform: Testing new primary care and value-based care models, strengthening partnerships of rural health providers with other providers, and promoting regional collaboration.
State-Level Considerations for Providers
Some states have already specified certain sub-award recipients, primarily consisting of state agencies. Rural hospital leaders have expressed concern regarding whether the funds will reach their hospitals.[viii] Healthcare providers, digital health companies and stakeholders should continue to monitor state regulatory agency activities and requests for proposals to find vendors/contractors for projects or services to support states’ rural health transformation plans.
Program Goals, Structure, and Next Steps
Dedicated CMS project officers will coordinate kickoff meetings, provide ongoing support, and monitor progress through regular state updates. This enables CMS to identify best practices, ensure effective implementation, and maintain strong program oversight. Additionally, states will gather annually at the CMS Rural Health Summit, which will take place during the CMS Quality Conference in 2026. These annual Summits will facilitate the sharing of lessons learned, highlight successful models, and promote regional innovation in rural health. The Program has significant potential to improve healthcare access and outcomes for 60 million Americans who live in rural areas.
FOOTNOTES
[i] Centers for Medicare & Medicaid Servs., CMS Announces $50 Billion Awards to Strengthen Rural Health in All 50 States (Dec. 29, 2025), https://www.cms.gov/newsroom/press-releases/cms-announces-50-billion-awards-strengthen-rural-health-all-50-states.
[ii] Centers for Medicare & Medicaid Servs., Statement of Organization, Functions and Delegations of Authority, 90 Fed. Reg. 59,837 (Dec. 22, 2025).
[iii] Public Law No. 119-21, 139 Stat. 78 (2025), Sec. 71401 https://www.congress.gov/119/plaws/publ21/PLAW-119publ21.pdf.
[iv] 42 U.S.C. § 1395x(aa)(2).
[v] U.S. Dep’t of Health & Human Servs., Funding Opportunity No. CMS-RHT-26-001, Rural Health Transformation Plan Grants, https://grants.gov/search-results-detail/360442.
[vi] ORHT, RHT Program State Project Abstracts (Dec. 2025), https://www.cms.gov/files/document/rht-program-state-provided-abstracts.pdf.
[vii] ORHT, https://www.cms.gov/files/document/rural-health-transformation-50-state-spotlights.pdf.
[viii] Laura Dyrda, ‘They did not accept any of our recommendations’: Rural hospital CEOs fear losing out on $50B in federal funds, Becker’s Hosp. Rev. (Jan. 12, 2026), https://www.beckershospitalreview.com/finance/rural-hospital-ceos-fear-losing-out-on-transformation-funds/?origin=BHRSUN&utm_source=BHRSUN&utm_medium=email&utm_content=newslett.