From Becker’s Hospital Review

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.

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.
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.
6. 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.
7. 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.
8. 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.
9. 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.

The Centers for Medicare & Medicaid Services (CMS) today announced that all 50 states will receive awards under the Rural Health Transformation Program, a $50 billion initiative established under President Trump’s Working Families Tax Cuts legislation (Public Law 119-21) to strengthen and modernize health care in rural communities across the country. In 2026, states will receive first-year awards from CMS averaging $200 million within a range of $147 million to $281 million. This unprecedented federal investment will help states expand access to care in rural communities, strengthen the rural health workforce, modernize rural facilities and technology, and support innovative models that bring high-quality, dependable care closer to home.

“More than 60 million Americans living in rural areas have the right to equal access to quality care,” said Health and Human Services Secretary Robert F. Kennedy, Jr. “This historic investment puts local hospitals, clinics, and health workers in control of their communities’ healthcare. Thanks to President Trump’s leadership, rural Americans will now have affordable healthcare close to home, free from bureaucratic obstacles.”

“Today marks an extraordinary milestone for rural health in America,” said CMS Administrator Dr. Mehmet Oz. “Thanks to Congress establishing this investment and President Trump for his leadership, states are stepping forward with bold, creative plans to expand rural access, strengthen their workforces, modernize care, and support the communities that keep our nation running. CMS is proud to partner with every state to turn their ideas into lasting improvements for rural families.”

A Nationwide Commitment to Strengthen Rural Health Care

The Rural Health Transformation Program is a national commitment to improving the health and well-being of rural communities across the country. With this funding, states will implement comprehensive strategies to improve care delivery, support providers, and advance new approaches to coordinating health care services across rural communities. Across the country, many states are planning efforts that will:

• Bring More Care Within Reach

States will advance Make Rural America Healthy Again goals by expanding preventive, primary, maternal, and behavioral health services and creating new access points that bring care closer to home and help preserve strong local health systems. Many states are implementing evidence-based, outcomes-driven strategies—such as physical fitness and nutrition programs, food-as-medicine initiatives, and chronic disease prevention models—to address root causes of diseases and manage chronic conditions. States will also strengthen rural emergency care through improved emergency medical services (EMS) communication, treat-in-place options, and coordinated transfers.

• Strengthen and Sustain the Rural Clinical Workforce

States will support clinical workforce training, residencies, recruitment and retention incentives, and new pathways that help students begin health care careers in their own communities. States are also investing in programs to train and support the existing clinical workforce and build futures close to home.

• Modernize Rural Health Infrastructure and Technology

Investments will modernize rural facilities and equipment; strengthen cybersecurity and interoperability; and expand telehealth, remote patient monitoring, and digital tools that enable timely access to care. States are also exploring the use of technology such as AI scribes and clinical workflow improvement tools to reduce burdens on clinicians.

• Driving Structural Efficiency & Empowering the Community Providers

States will prioritize streamlining operations, empowering providers to enhance coordination of care and resources, and building partnerships across the state with the goal of keeping care local. This includes establishing specialized hub-and-spoke models, rural regional centers of excellence, comprehensive data-sharing platforms, and rural clinically integrated networks.

• Advance Innovative Care Models and Payment Reform

States will test new primary care and value-based care models, strengthen partnerships among rural and other providers, and promote regional collaboration that improves health sustainability and patient outcomes.

Awardees and Funding Amounts

The Rural Health Transformation Program’s $50 billion in funds will be allocated to approved states over five years, with $10 billion available each year from 2026 through 2030. As directed by Public Law 119-21:

• 50% of the funding is distributed equally among all approved states. This provides states with a strong foundation to begin implementing their Rural Health Transformation Plans; and
• 50% is allocated based on a variety of factors. As described in the Notice of Funding Opportunity, those factors include individual state metrics around rurality and a state’s rural health system, current or proposed state policy actions that enhance access and quality of care in rural communities, and application initiatives or activities that reflect the greatest potential for, and scale of, impact on the health of rural communities. All scoring factors are outlined further in the Notice of Funding Opportunity.

CMS made funding awards to all 50 states.

State Award List (Alphabetical)

With today’s announcement, CMS launches a new phase of collaboration with every state to accomplish their transformative visions. CMS project officers dedicated to each state will convene program kickoff meetings and provide ongoing guidance and technical assistance during implementation. States will submit regular updates so CMS can track progress, identify proven approaches, support successful execution of their plans, and ensure strong oversight throughout the program.

States will also convene annually at the CMS Rural Health Summit—to be held during the CMS Quality Conference in 2026—to share lessons learned, highlight effective models, and accelerate innovation across regions.

Additional Background

CMS evaluated applications through a rigorous merit review process, consistent with standard HHS grantmaking procedures, that incorporated assessments from federal and non-federal subject matter experts with unique perspectives relevant to rural health. These individuals represented expertise across clinical, operational, workforce, technology, and payment mechanism disciplines. Reviewers were screened for conflicts of interest and did not assess applications from states with which they had personal or professional ties. Applications were evaluated using a structured scoring framework outlined in the Notice of Funding Opportunity and aligned with statutory goals, ensuring a fair and consistent process across all 50 states.

The program follows standard HHS grants policy, including protections that ensure the integrity of the merit review process, consistent with longstanding HHS practices for competitive grant and cooperative agreement programs. Additional information on the Rural Health Transformation Program, including the Notice of Funding Opportunity, is available at: http://www.cms.gov/RHTProgram.

To view the Rural Health Transformation Program State Project Abstracts visit https://www.cms.gov/files/document/rht-program-state-provided-abstracts.pdf

Get CMS news at cms.gov/newsroom, sign up for CMS news via email and follow CMS on X @CMSgov

The Centers for Medicare & Medicaid Services (CMS) provided additional guidance outlining how states should implement landmark community engagement requirements created by the Working Families Tax Cut (WFTC) legislation (Public Law 119-21). The reforms—among the most significant Medicaid eligibility and financing changes in more than a decade—aim to connect able-bodied, working-age adults with work and community engagement opportunities, reduce improper enrollment, and strengthen the long-term sustainability of Medicaid and the Children’s Health Insurance Program (CHIP).

States must implement these requirements by January 1, 2027, but may choose to do so earlier.

On November 28, the Centers for Medicare & Medicaid Services (CMS) issued the Calendar Year (CY) 2026 Home Health Prospective Payment System (HH PPS) Rate Update final rule, which updates the Medicare payment policies and rates for home health agencies (HHAs).

CMS estimates the Medicare payments to HHAs in CY 2026 would decrease in the aggregate by an estimated1.3.1 percent. Also, CMS finalized the policies to remove the COVID-19 Vaccine measure, exemption process for prior authorization for certain Durable Medical Equipment, Prosthetic Devices, Prosthetics, Orthotics and Supplies (DMEPOS) accreditation and improvement to the DMEPOS competitive bidding program to give beneficiaries access to current and supported technology.

The rule is effective January 1, 2026.

Per an Executive Order and the 2026 Hospital Outpatient Prospective Payment System (OPPS) final rule, the Centers for Medicare and Medicaid Services (CMS) will survey hospitals to find out how much they pay for outpatient drugs. This survey runs from January 1 through March 31, 2026.

The results will help shape Medicare payment policies starting in 2027. Hospitals that received OPPS payments for outpatient drugs between July 1, 2024 and June 30, 2025 must complete the survey.

Hospitals should confirm their Point of Contact by emailing OPPSDrugSurvey@cms.hhs.gov as soon as possible. CMS is offering training webinars on December 11.

On December 8, the Centers for Medicare & Medicaid Services (CMS) released guidance for states about new community engagement requirements for certain Medicaid beneficiaries.

The guidance explains requirements from the “Working Families Tax Cut” legislation signed into law on July 4, 2025, which requires certain adult Medicaid recipients to show they are working, going to school, volunteering, or participating in job training programs to qualify for coverage. States must notify current beneficiaries about these new rules and begin implementing the requirements by January 1, 2027, with required outreach starting between July and September 2026 depending on each state’s chosen approach.

CMS will issue additional rules by June 1, 2026. For more information, please visit: www.medicaid.gov/medicaidreforms.

In November, the Centers for Medicare & Medicaid Services (CMS) issued updates to Medicare payment policies and rates for hospital outpatient services under the Hospital Outpatient Prospective Payment System (OPPS) for calendar year (CY) 2026.

In addition to finalizing the payment rates, this year’s rule includes an update to the methodology used to calculate the Overall Hospital Quality Star Rating to emphasize the Safety of Care measure group in hospitals’ star ratings. It finalizes a new payment for drug administration services provided in off-campus outpatient departments, eliminates the ‘inpatient only’ list, changes the hospital price transparency requirements, and changes to the Hospital Outpatient Quality Reporting (OQR) and Rural Emergency Hospital Quality Reporting (REHQR) programs.

CMS is not finalizing their proposal to increase the annual offset amount for non-drug items and services per the 340B Remedy Rule at this time. CMS anticipates finalizing a larger reduction (such as 2 percent or other reduction greater than 0.5 percent) beginning in CY 2027; CMS will instead implement the previously finalized 0.5 percent reduction for CY 2026.

In November, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would revise the Medicare Advantage (MA) Program, Medicare Prescription Drug Benefit Program (Part D), and Medicare Cost Plan Program. It proposes updates to MA and Part D Star Ratings quality measurements and streamlining certain enrollment processes.

Comments due on January 26, 2026.