$10B for Rural Health: What the First Year of CMS’s Rural Health Transformation Awards Tells Us
Download the full Tandem Research Report on the RHT initiative here.
On December 29, 2025, CMS announced the first-year awards under the new Rural Health Transformation (RHT) Program—a five-year, $50 billion federal investment aimed at strengthening health care in rural communities nationwide. In FY2026 alone, CMS will distribute $10 billion across all 50 states, averaging about $200 million per state, with awards ranging from $147.3 million to $281.3 million.
That “everyone gets funded” structure matters. Unlike many competitive grant programs that concentrate resources in a subset of places, RHT is designed to establish a national floor for rural investment—while still differentiating based on rurality, need, and expected impact. The brief notes that awards fall within a relatively narrow band because of a statutory formula: a $100 million base allocation per state plus additional need-based funds.
A tight distribution—by design
RHT’s first-year award spread is surprisingly compact for a $10B program. The median award is $201.1 million, and the middle 50% of states fall between $189.5M and $211.1M (a spread of about $21.6M). Even at the extremes, the largest award (Texas, $281.3M) is “only” 1.91x the smallest (New Jersey, $147.3M).
The practical implication: because most states are playing with roughly comparable resources, the program may generate unusually useful cross-state learning about what actually works—especially when states take different approaches to the same constraints.
What $150M–$280M can realistically buy
The brief is clear-eyed about scale: awards at this level won’t “rebuild rural delivery systems from scratch,” but they can upgrade core infrastructure. At this funding level, states can finance shared services like interoperable EHR upgrades, cybersecurity, and statewide analytics; sustain multi-year workforce strategies; expand telehealth and mobile access points; and build regional care models that preserve local access while ensuring specialty backup.
That’s especially important in a rural landscape defined by compounding constraints: workforce shortages limit service capacity, financial fragility restricts modernization and recruitment, and service-line closures can destabilize entire local systems.
Eight strategies showing up (almost) everywhere
Across the one-page state abstracts CMS released, the brief identifies eight recurring themes—essentially a shared playbook for rural transformation:
Prevention and chronic disease management as the organizing frame
Workforce pipelines and retention (training, rotations, incentives, and broader care teams)
Technology modernization—especially interoperability and cybersecurity
New access points that reduce travel, including mobile units and school-based care
Emergency response and “right-sized” acute care (EMS upgrades, treat-in-place models)
Maternal and perinatal services as a test of regional coordination
Behavioral health integration and crisis capacity
Payment reform and sustainability, often tied to value-based care readiness
The examples underscore how these themes translate into real delivery changes—like using schools, libraries, and mobile units as care sites to make telehealth and prevention usable in communities with limited broadband or transportation options.
The big risk: fragmentation (and siloed tech)
RHT’s opportunity comes with a predictable failure mode: fragmentation into disconnected subgrants and isolated technology investments. The brief flags classic pitfalls—weak governance, siloed systems, sustainability gaps, and misaligned incentives (for example, tech upgrades without payment reform to support new care models).
That’s why it emphasizes sequencing: front-load shared infrastructure (workforce pipelines, data, EHR interoperability), then test and scale new models, while shifting incentives away from volume-based reimbursement.
What to watch next
Looking ahead to years 2–5, the brief points to a core set of “make-or-break” questions: can states sustain new services after funding tapers by transitioning to value-based payment; will workforce investments actually increase rural capacity rather than reshuffle scarcity; and will EHR modernization deliver true interoperability instead of new silos?
If RHT succeeds, it won’t just fund programs—it will leave behind durable capabilities: shared infrastructure, stronger regional networks, and governance models that can keep rural access stable long after the five-year window closes.
