CMS issues first $10 billion Rural Health Transformation awards to all states

In the latter half of 2025 the Centers for Medicare & Medicaid Services released the notice of funding opportunity for the Rural Health Transformation program and made initial funding awards totaling $10 billion to all 50 states. The budget period 1 allocation runs from December 29, 2025, through October 30, 2026, with individual state awards ranging from $147 million for New Jersey to $281 million for Texas.

CMS's monitoring plan calls for regular communication with states to discuss progress and challenges, review of information submitted by states, and the conduct of audits and site visits. The agency also intends to measure awardee performance, hold webinars to share lessons learned, and promote the adoption of promising practices.

CMS plans to allot up to $40 billion of the remaining program funds to states over the next four years based on satisfactory progress toward approved initiatives and other criteria. If a state fails to comply with the terms and conditions of its notice of award, CMS may withhold, reduce, or recover a portion of that state's funding. The authorizing legislation limits a state's ability to appeal or challenge any funding changes made by CMS, though officials are still determining how disputes will be handled.

The Government Accountability Office examined CMS documentation and interviewed agency officials and stakeholder representatives to describe these early implementation actions and the agency's monitoring approach.