WASHINGTON — The U.S. government has begun disbursing federal funds to states under the Rural Health Transformation Program, a multiyear initiative designed to strengthen healthcare access, workforce capacity and infrastructure in rural communities, according to the Centers for Medicare & Medicaid Services (CMS).
CMS announced that all 50 states qualified for funding under the program, which provides a total of $50 billion over five years. The agency said first-year awards for 2026 range from about $147 million to $281 million per state, with funding intended to support state-approved rural health transformation plans. The program was established under federal legislation enacted in 2025 and is administered by CMS through its Office of Rural Health Transformation.
Federal officials said the first disbursements mark the beginning of implementation efforts that will continue through 2030. According to CMS, states are expected to use the funds to expand access to care, recruit and retain healthcare workers, modernize facilities and technology, and support new care-delivery models tailored to rural populations. Half of the funding is distributed equally among approved states, while the remainder is allocated using factors that include rural population levels, healthcare infrastructure needs and the projected impact of state proposals.
“More than 60 million Americans living in rural areas have the right to equal access to quality care,” Health and Human Services Secretary Robert F. Kennedy Jr. said when the awards were announced. CMS Administrator Mehmet Oz said the initiative aims to address longstanding disparities in rural healthcare access and outcomes.
States have proposed a range of projects under the program, including investments in telehealth, workforce development, chronic disease management, mental health services, cybersecurity improvements and technology modernization. CMS said participating states must implement approved transformation plans and meet oversight requirements to maintain eligibility for future funding.
Hospital groups and rural healthcare organizations have generally welcomed the release of funding. The American Hospital Association said the program could help hospitals strengthen staffing, infrastructure and access to services in underserved areas. Rural health advocates have also emphasized the importance of sustained federal support for communities facing provider shortages and financial pressures.
The Rural Health Transformation Program was launched after states submitted applications in late 2025. CMS reviewed proposals and announced funding allocations in December before the start of the 2026 fiscal year. Federal officials said the program is structured to support state-led reforms rather than direct federal management of local healthcare systems.
As of June, states were beginning to implement approved projects and distribute resources to healthcare providers and community partners. CMS said it will continue monitoring progress and providing technical assistance as additional annual funding rounds are released through 2030.
