Rural Health Transformation Program

$50 Billion in New Funding, But Action Is Required

In response to the rural healthcare community’s strong advocacy around the potential negative financial impacts of the recently signed healthcare reform law, Congress included a new $50 billion investment in rural healthcare infrastructure: the Rural Health Transformation Program.

This fund, administered by CMS, will distribute $10 billion annually from 2026 to 2030 to support states in reshaping rural healthcare systems. While this is a promising step, the program requires quick and coordinated action from states, facilities, and rural health leaders to ensure that funds reach frontline providers like Rural Health Clinics (RHCs), Critical Access Hospitals, and community health centers.

Key Deadline Approaching: State Applications Due by December 31, 2025

To participate, each state must submit a Rural Health Transformation Plan by December 31, 2025 to CMS. Without an approved plan, a state will not be eligible for any portion of the $10 billion/year in funding.

What Must Be Included in a State’s Rural Health Transformation Plan?

The state application must detail how the funds will be used to:

• Improve access to care in rural communities
• Strengthen health outcomes for rural populations
•  Foster rural care partnerships between providers, hospitals, and community organizations
•  Enhance technology utilization such as telehealth, digital records, and care coordination
• Drive rural economic opportunity, including workforce development and facility modernization
• This plan will shape how rural health systems evolve and who benefits over the next decade.

How Will Funds Be Distributed?

The funding comes in two main parts:

1. Submitting an approved plan secures each state an equal share of 50% of the funds.
2. The CMS Administrator decides how to allocate the remaining 50% based on:
   • The percentage of a state’s population living in rural census tracts
   • The proportion of rural facilities in the state compared to the nation
   • The situation of hospitals in the state (financial distress, closures, etc.)

Which Rural Facilities Could Benefit?

Each state will decide how to use the funds, so RHCs will only receive direct financial support if state leaders explicitly include them in the transformation strategy:

• Rural Health Clinics (RHCs)
• Critical Access, Sole Community, Medicare-Dependent, and Small Rural Hospitals
• Rural Emergency Hospitals
• Federally-Qualified Health Centers (FQHCs)
• Community Mental Health Centers
• Section 330-funded health centers
• Opioid Treatment Programs and Certified Community Behavioral Health Clinics
• Behavioral and substance use providers in rural census tracts

But There Are Still Gaps and Uncertainties

While the $50 billion investment is significant, it does not offset the projected revenue losses rural providers may face due to Medicaid coverage reductions and marketplace changes in the larger bill.

Additionally, the use of funds will vary by state, and it’s unclear if providers like RHCs will see any direct financial support unless they are explicitly included in the state’s transformation strategy.

How Can Rural Providers Prepare and Advocate?

RHCs and rural stakeholders must act now to make their voices heard and secure the support their services need.

1. Contact State Officials Immediately

• Engage your State Medicaid Office, Governor’s Office, and State Office of Rural Health
• Ask how they plan to approach the Rural Health Transformation Plan and urge them to involve rural providers directly

2. Offer Input and Solutions

• Share success stories from your clinic, especially around care coordination, telehealth, behavioral health, and workforce development
• Recommend specific uses for the funds that align with the goals of the program

3. Collaborate with Other Rural Facilities

• Work with local hospitals, FQHCs, and behavioral health providers to present a unified vision
• Highlight how inter-facility partnerships can strengthen rural systems and meet CMS’s transformation goals

4. Stay Informed & Engaged

• Track updates from CMS on application guidance and scoring criteria
• Connect with advocacy organizations like NARHC, NOSORH, and NRHA for tools and templates to support provider input

Final Thoughts: RHCs Must Be at the Table

This is a rare and meaningful opportunity to invest in rural healthcare. To make the most of it, states must use the funds wisely and equitably. State leaders must include Rural Health Clinics in their plans for funding and decision-making that will shape the future of rural care. These clinics are already hubs of access, innovation, and workforce strength, and excluding them risks weakening the entire rural healthcare system.

This is not the time to wait; it’s the time to lead.