CMS has formally established the Office of Rural Health Transformation within the Center for Medicaid and CHIP Services, creating a permanent home for the federal government’s $50 billion Rural Health Transformation Program.
The move follows the launch of the program earlier this year under President Donald Trump’s Working Families Tax Cuts legislation and comes as CMS begins distributing funding to all 50 states. The five-year initiative is one of the largest federal investments ever aimed at stabilizing and modernizing rural healthcare delivery.
CMS said the new office is designed to strengthen oversight, coordination and accountability as states begin implementing ambitious plans to expand access, modernize infrastructure and support rural providers through Sept. 30, 2031.
“The Rural Health Transformation Program represents a generational investment in the health and vitality of rural America,” CMS Administrator Mehmet Oz, MD, said in a Dec. 29 news release. “By formally establishing the Office of Rural Health Transformation, CMS is reinforcing its commitment to strong leadership, accountability, and partnership as states prepare to turn this investment into lasting improvements for rural communities.”
Eight things to know:
1. The office will oversee a $50B, five-year rural health initiative. The Office of Rural Health Transformation will continue leading implementation of the Rural Health Transformation Program, which allocates $50 billion from 2026 through 2030 to strengthen rural health systems and expand access to care nationwide. The office sits within the Center for Medicaid and CHIP Services, signaling CMS’ intent to closely align rural health transformation with Medicaid policy, state partnerships and delivery system reform.
2. All 50 states have been approved for funding. CMS announced Dec. 29 that every state will receive awards under the program. First-year funding in 2026 averages about $200 million per state, with awards ranging from roughly $147 million to $281 million. Each state will be assigned a CMS project officer. States must submit yearly progress reports, and CMS will convene an annual rural health summit beginning in 2026 to share best practices.
The agency awarded the following amounts to each state for fiscal 2026:
Alabama: $203,404,327
Alaska: $272,174,856
Arizona: $166,988,956
Arkansas: $208,779,396
California: $233,639,308
Colorado: $200,105,604
Connecticut: $154,249,106
Delaware: $157,394,964
Florida: $209,938,195
Georgia: $218,862,170
Hawaii: $188,892,440
Idaho: $185,974,368
Illinois: $193,418,216
Indiana: $206,927,897
Iowa: $209,040,064
Kansas: $221,898,008
Kentucky: $212,905,591
Louisiana: $208,374,448
Maine: $190,008,051
Maryland: $168,180,838
Massachusetts: $162,005,238
Michigan: $173,128,201
Minnesota: $193,090,618
Mississippi: $205,907,220
Missouri: $216,276,818
Montana: $233,509,359
Nebraska: $218,529,075
Nevada: $179,931,608
New Hampshire: $204,016,550
New Jersey: $147,250,806
New Mexico: $211,484,741
New York: $212,058,208
North Carolina: $213,008,356
North Dakota: $198,936,970
Ohio: $202,030,262
Oklahoma: $223,476,949
Oregon: $197,271,578
Pennsylvania: $193,294,054
Rhode Island: $156,169,931
South Carolina: $200,030,252
South Dakota: $189,477,607
Tennessee: $206,888,882
Texas: $281,319,361
Utah: $195,743,566
Vermont: $195,053,740
Virginia: $189,544,888
Washington: $181,257,515
West Virginia: $199,476,099
Wisconsin: $203,670,005
Wyoming: $205,004,743
3. Funding flows to states, not directly to hospitals. Unlike past relief programs, funds are distributed to states, which design and implement rural health transformation plans subject to CMS approval. States are not required to direct dollars specifically to rural hospitals.
4. Half of the funding is distributed equally. Fifty percent of the $50 billion is divided evenly among approved states, providing a baseline level of funding regardless of state size or rural population, according to CMS. The other 50% is distributed based on metrics such as rurality, health system needs and the scale and potential impact of state proposals, as outlined in the notice of funding opportunity.
5. Investments target workforce, infrastructure and care delivery. State plans focus on strengthening the rural clinical workforce, modernizing facilities and technology, expanding telehealth and remote monitoring, improving emergency services and testing new primary care and value-based models. CMS said many states are deploying evidence-based, outcomes-driven strategies — such as physical fitness and nutrition programs, food-as-medicine initiatives and chronic disease prevention models — to address the root causes of illness and better manage chronic conditions.
Investments also aim to strengthen rural emergency care through improved emergency medical services communication, expanded treat-in-place options and better coordination for patient transfers. In addition, states plan to modernize rural facilities and equipment, bolster cybersecurity and interoperability and adopt digital tools — including AI scribes and clinical workflow technologies — to reduce administrative burden and support clinicians.
6. ORHT will provide technical assistance and federal coordination. The office will guide states through implementation, provide technical assistance, coordinate federal and state partnerships and assign CMS project officers to each state. States must submit regular progress updates, allowing CMS to track performance, identify best practices and intervene when implementation challenges arise over the five-year program.
7. CMS is positioning the office for long-term transformation. By formally establishing ORHT, CMS aims to create lasting infrastructure for rural health policy beyond the life of the program. States will convene annually at a CMS Rural Health Summit to share lessons learned and accelerate innovation across regions.
8. Policy experts raise concerns. Despite the program’s $50 billion headline investment, policy experts and rural hospital leaders have raised concerns about whether the program will deliver meaningful benefits to rural providers, according to a study published July 23 in Health Affairs. Because funds flow to states, which are not required to allocate dollars to rural hospitals, critics worry money could be diverted to broader initiatives, vendors or administrative efforts with limited on-the-ground impact.
The program also grants the CMS administrator broad discretion over half of the funding and does not tie continued payments to performance or rural health outcomes. Compounding those concerns, the five-year program coincides with permanent Medicaid cuts expected to disproportionately affect rural areas, while tight timelines and potential clawbacks could limit states’ ability to plan and execute effective, provider-focused investments.
