CMS’s Rural Health Funding Announcement - Key Takeaways
In order to address some of the healthcare funding cuts in HR.1, aka the “One Big Beautiful Bill,” (OBBA) a provision was added to allocate $50 billion for a Rural Health Transformation Program (RHTP), to be overseen by the Centers for Medicare and Medicaid Services (CMS). According to CMS, this funding is intended to “strengthen rural communities across America by improving healthcare access, quality, and outcomes by transforming the healthcare delivery ecosystem” and to further 5 strategic roles:
Make rural America healthy again
Create sustainable healthcare access
Support healthcare workforce development
Promote innovative care models
Foster technological innovation
Until recently, little was known about the program, how the money would be distributed, oversight structures, or other details. However, on September 15, 2025, CMS released a Notice of Funding Opportunity (NOFO) for the Rural Health Transformation Program outlining key requirements, deadlines, and criteria that states will need to apply for this funding. On Sept 23, independent health policy and news outlet KFF published a brief offering 5 key takeways from the Rural Health Transformation NOFO, and I have summarized their findings below.
Key Takeaways
The funding is to be disbursed “to approved states over five fiscal years, with $10 billion of funding available each fiscal year, beginning in fiscal year 2026 and ending in fiscal year 2030,” (via CMS) with 50% to be distributed equally amongst all approved states and 50% to be allocated by CMS based on a range of factors including rural population, proportion of rural health facilities, and other factors (53%), state-proposed initiatives (32%) and state policies (15%). Approvals/scoring will be conducted by a merit review panel, along with probably input from senior administrative appointees per Trump’s Aug 7, 2025 Executive Order.
States who implement Make America Healthy Again policies will receive more funding. These could potentially include Trump-administration-led changes to SNAP, dietary/nutritional guidelines, vaccine recommendations, autism research/treatment, etc.
It is unclear how much of this funding will be able to directly offset the impact of Medicaid cuts on rural facilities and providers. The funds are not intended to benefit rural hospitals directly or provide for patient care per se, but rather to “improve healthcare access, quality, and outcomes through system transformation,” by focusing on chronic disease interventions, addressing health and lifestyle factors, supporting tech investments, increasing provider recruitment to rural areas, funding capacity-building initiatives, etc. The funds are additionally limited in their ability to support ongoing expenses such as increased staffing or facility operations, to cover provider payments, or to pay for facility building/expansion, and cannot be used for any care that is in direct opposition to some aspects of the current administration’s political agenda, such as gender-affirming care or providing care provided to non-citizens. Additionally, states will have the final say in how much goes to rural hospitals and providers vs. private contractors, tech vendors, universities, urban health systems that operate rural facilities, and other non-healthcare entities supporting approved programs.
Not all states will get the same amount of discretionary funding, and politics could play a role in those allocations. For example, states that did not extend Medicaid will likely receive more due to having a higher percentage of uncompensated care, as will states whose existing policies are already in line with the current administrations directives and MAHA policies. States that have larger geographic areas, regardless of population, will also receive a higher share of these funds. Additionally, the involvement of administrative appointees in oversight and approval could provide an avenue for political pressure to be brought to bear on states hoping to access these funds.
Transparency regarding oversight and distribution of funds is lacking. There are no provisions in the current guidance to address key aspects of the RHTP, such as data collection to determine effectiveness of the funding and funded initiatives, the makeup of the merit review committee, how compliance/noncompliance will be determined and handled, and other parties/processes that will be involved in programmatic oversight. Additionally, the criteria for initial and continued approval of the funding are currently exceedingly broad and highly subjective. This includes language such as “continued funding is in the government’s best interest” and to prevent “fraud, waste, abuse,” a set of terms which the current administration has already applied broadly to defund/de-staff vital health research, grants, programs, and agencies with long-standing records for improving outcomes in both public and clinical health sectors, but that are not aligned with its political platform. It is reasonable to assume that similar rationales would apply to this funding.
Conclusion
While the latest announcement from CMS offers a welcome starting point for understanding the Rural Health Transformation Program, eligibility requirements, potential opportunities for utilization, and funding disbursement plans, it is far from clear how critical aspects of the program’s funding, approvals, allocations, and oversight will be managed. What is clear is that there are currently several pathways for the funding to be influenced by political pressures or diverted to programs, initiatives, contracts and entities that have little to do with the provision of rural health, and that are may not be supported by current evidence and data. Overall, while this funding is certainly needed and will no doubt provide beneficial support for some rural health initiatives across the country, the program as it currently stands is highly limited in scope, and has the potential to be misused or to be used in ways that do not produced the administration’s stated desired improvements to rural health outcomes.
Finally, it bears noting that the total amount of funding does not remotely make up for the anticipated financial, economic, and health-related impacts facing the state and its constituent healthcare facilities and communities as a result of federal budget cuts to Medicaid, SNAP, healthcare access and health-related programs. This is especially true in WNC, where the impacts of Hurricane Helene have dramatically impaired health access, access to health-supporting social needs like housing and food, along with other immediate and long-term physical and mental health outcomes.
As a private NC Medicaid consultant shared at a recent public discussion on the state budget impacts, the amount that states will receive by this program amounts to what insiders refer to as “Medicaid dust,” i.e. a negligible amount when compared to the overall program costs/budget. So while our state leadership will be strategizing to make the best of this opportunity to support rural health in WNC and the state as a whole, it would be wise to temper our collective expectations about the potential of this program, and to continue to collaborate and strategize other ways to strengthen the health and wellbeing our WNC’s communities and residents.
Learn More
Visit the KFF website to read the full summary of the Rural Health Transformation Program Notice of Funding Opportunity, as well as to view a breakdown of funding allocation factors and permitted usage of RHTP funds.
Read more about the potential impact of the OBBA on state policy and healthcare on the WNC HPI blog and podcast.
Disclaimer
Individual opinions, findings, conclusions, or recommendations expressed in this content are those of the author(s)/interviewee(s) and do not necessarily reflect the view of the WNC Health Policy Initiative or its host institutions of the University of North Carolina Asheville (UNCA), Mountain Area Health Education Center (MAHEC) or our funders.
