CMS seeks to remove regulatory friction around how clinicians practice and move across state lines as part of its $50 billion Rural Health Transformation Program.
The agency explicitly incorporated scope-of-practice reform and licensure compacts into its funding methodology for the program, signaling that workforce flexibility is now central to rural access, capacity and sustainability, alongside infrastructure stabilization.
The move aligns with CMS’ broader acknowledgment that physician shortages — particularly in rural primary care — cannot be solved by physician supply alone. CMS notes these challenges must be addressed through expanded roles for physician assistants, nurse practitioners and pharmacists, as well as faster clinician mobility across states.
“These physician supply challenges could be mitigated, especially in the context of primary care, by expanding the scope of practice of other clinicians such as nurse practitioners and physician assistants who have training and competency in caring for many of the cases currently limited to physician care,” the agency wrote in a Sept. 15 funding notice.
The five-year initiative represents one of the largest federal investments ever made to stabilize and modernize the nation’s rural healthcare system. States were required to submit funding applications by Nov. 5. In late December, CMS said it had approved all 50 states for funding under the program and announced a new agency office to oversee the program.
The agency will disburse $10 billion annually from 2026 to 2030. Half of the funding in fiscal year 2026 was allocated equally across states. The remaining funding was awarded based on states’ rural population size, proposed policy actions and potential for impact. The average award was about $200 million.
Four notes on the program’s practice modernization push:
1. Scope-of-practice laws factored directly into how states were scored for funding. CMS assessed states’ scope of practice environments for PAs, NPs and pharmacists as part of the application process. States allowing these clinicians to practice to the full extent of their education and training received higher scores, while states with more restrictive supervision and delegation requirements were weighted less favorably.
2. CMS incorporated third-party assessments of clinician practice environments. The agency used the American Academy of Physician Associates’ state practice environment rating, which assesses states on a scale ranging from “reduced” to “optimal practice.” States received a higher rating if they joined the PA Licensure Compact or allowed PAs to practice to the full extent of their education and training. For nurse practitioners, CMS similarly evaluated whether states permit full, reduced or restricted practice authority using 2024 data from the American Association of Nurse Practitioners. Pharmacist scope of practice was evaluated using a 2025 Cicero Institute analysis, which classified states based on pharmacists’ authority to administer medications, order and perform laboratory testing, and prescribe drugs or devices.
3. CMS also gave greater weight to states that participated in interstate licensure compacts, including the PA Licensure Compact, Interstate Medical Licensure Compact for physicians, the Nurse Licensure Compact and EMS Compact. In the funding notice, CMS framed compact participation as a way to improve clinician mobility, competition and access to care in rural areas, while also signaling which states are best positioned to quickly deploy a flexible workforce.
4. State funding awards do not directly track with scope-of-practice flexibility. While CMS embedded clinician scope-of-practice and licensure flexibility into its scoring methodology, the total funding amounts awarded to states did not show a direct correlation with how permissive their practice environments are. For example, Texas, which operates under restricted practice environments for NPs and moderate practice environments for PAs, received $281.3 million, the largest allocation under the program. By comparison, Montana, which is designated as an optimal practice environment for PAs and a full practice environment for NPs, received $233.5 million. The contrast reflects that funding awards also accounted for factors such as rural population, access gaps and infrastructure needs.
