Every one of the 50 states got its money. First-year awards from the Rural Health Transformation Program ran from $147 million to $281 million, and in ten states they came to less than $100 per rural resident. In eight others the figure topped $500. That spread is one finding in a KFF brief, updated on September 18, 2026, on the $50 billion fund now in its first year.
The brief was written by Zachary Levinson and Scott Hulver and first appeared on July 16, 2025.
Where the fund came from
President Trump signed a budget reconciliation bill, once known as the “One Big Beautiful Bill”, on July 4, 2025. It cut federal health spending deeply and cut taxes. KFF estimated, from figures released soon after, that it would take $911 billion out of federal Medicaid spending over ten years, about $137 billion of it in rural areas.
The rural health fund was a late compromise. It surfaced in Senate talks just before passage, after worries that the cuts would fall hardest on rural hospitals. Yet it was not written for hospitals alone, and KFF notes there are limits on how hospitals can benefit. The $50 billion may soften the Medicaid cuts but will not cover them, and unlike most of those cuts, the fund runs out.
How the money moves
The Centers for Medicare & Medicaid Services runs the program through a new Office of Rural Health Transformation. It will award $10 billion a year to approved states for fiscal years 2026 through 2030. Half is split equally among states. The rest follows measures of state need, state initiative scores, policy and other factors.
States can spend what they receive through the end of the following fiscal year. CMS will redistribute anything left over, and every dollar must be spent by the end of fiscal year 2032.
The law gives CMS wide room to decide how money is spread across states, to widen the allowed uses and to set the terms. Funding comes as a “cooperative agreement”, which requires “substantial CMS project involvement after an award is made.” CMS can withhold, reduce, eliminate or recover money if a state breaks program rules, fails to make “satisfactory progress,” or if funding is no longer “in the government’s best interest.” The law points to no administrative or judicial review of those calls.
A short runway
CMS put out its funding notice on September 15, 2025. Applications were due November 5, less than two months later, and they shape what each state can do and how much it gets for all five years. CMS announced the first $10 billion in awards on December 29.
After that, states had under a year to settle their plans with CMS, set up their own application process for local groups, review applications, commit the money and file a first annual progress report, which feeds into second-year awards. The first report was due August 31, 2026, and the deadline to obligate first-year funds is October 30, 2026. States differ in how well they handle procurement, and KFF says they have moved at very different speeds.
The projects vary as widely. Alabama is paying for telerobotic ultrasounds at a distance, and Alaska is using drones to carry medicine to remote places. California is linking regional hospitals with critical access hospitals, clinics and birthing centers. Montana is helping hospitals “right size”, which could mean dropping some services. North Carolina is backing farm-to-hospital programs and mobile food markets, and Nevada is offering incentives to recruit providers.
States that take the money must use it for at least three of the permitted purposes, among them telehealth, recruiting clinical workers who commit to rural service for at least five years, and chronic disease prevention.
Sources
- A Closer Look at the $50 Billion Rural Health Transformation Program | KFF
- Rural Health Transformation Program Launched with $50B Investment | TrustMed Solutions LLC posted on the topic | LinkedIn
