CMS opens $50B rural health fund to states: 1-time application due Nov. 5

CMS on Sept. 15 released new details on how states can apply for the $50 billion Rural Health Transformation Program. 

The program, enacted under the Working Families Tax Cuts Act and expanded through the One Big Beautiful Bill Act, aims to improve access, care quality and infrastructure in rural communities. However, some policy experts and rural hospital leaders have raised questions about whether the funding will have a substantial effect on rural providers.

Eight things to know:

1. Applications are due Nov. 5. States have until Nov. 5, 2025, to apply. There will be only one opportunity to submit an application. CMS will announce awardees by Dec. 31, 2025, and begin disbursing funds in 2026.

2. States — not hospitals — will receive the funds. Unlike previous federal relief programs, this one does not provide direct payments to rural hospitals. Instead, states must apply for and manage the funds, with CMS approval. States are not legally required to allocate money to rural hospitals specifically.

3. $50B will be disbursed over five years. Each year, $10 billion will be distributed through 2030. Half will be divided equally among all approved states, while the other half will be awarded at the discretion of the CMS Administrator Mehmet Oz, MD, who can approve or deny applications and allocate discretionary funding. The law allows him to define eligible uses, even if those have minimal ties to rural hospitals, according to a July 23 report published by Health Affairs.

4. No performance accountability is required. While states must submit a transformation plan and annual reports, continued funding is not tied to performance or outcomes. Once approved, funding continues through 2030 regardless of progress.

5. Program goals prioritize innovation, workforce and tech. CMS outlined five strategic priorities:

• Supporting innovations and new access points to promote preventative health and address root causes of diseases.
• Improving financial sustainability for rural providers.
• Strengthening recruitment and retention of providers in rural communities.
• Supporting care model innovation to improve health outcomes, coordinate care and promote flexible care arrangements.
• Expanding digital health and data security infrastructure.

6. Funding may bypass local providers. States can meet program criteria without directing money to rural hospitals. Broadly defined eligible activities — such as chronic disease prevention or telehealth — could channel funds to national vendors rather than local providers, according to Health Affairs.

7. Short-term program comes with long-term Medicaid cuts. Although the rural program runs for five years, the broader legislation includes permanent Medicaid cuts. The Congressional Budget Office projects 12 million people will lose coverage, with rural Medicaid funding falling by $155 billion over 10 years, according to KFF Health News.

8. States face tight execution timelines. While states must submit applications by Nov. 5, they must also start obligating funds quickly. CMS can claw back unspent money as early as September 2027, leaving states with limited time to implement meaningful change.

Click here for more details on the program.

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