The Centers for Medicare & Medicaid Services (CMS) has revealed how it will distribute funding under the Rural Health Transformation Program, a new $50 billion federal initiative aimed at strengthening healthcare in rural parts of the United States. All 50 states have applied for funding, which is part of a five-year effort created this summer under the One Big Beautiful Bill Act (OBBBA).
The program is designed to help states address longstanding rural health challenges, including access to care, workforce shortages, prevention efforts and the use of innovative care technologies.
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How Funding Is Allocated
CMS structured the program so that $10 billion per year is available beginning in fiscal year 2026. Half of that amount is distributed evenly across all states, giving each a baseline share. The remaining 50% is awarded based on the strength of each state’s rural health plan, gauged by goals such as expanding preventive care and sustaining rural access.
On average, states can expect around $200 million in funding, though actual amounts vary. This has been closely watched by hospitals and rural health providers as many prepare to navigate anticipated cuts in other Medicaid support programs tied to the OBBBA.
Top and Bottom Recipients in FY2026
States Receiving the Most
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Texas is set to receive the largest award at about $281.3 million, primarily for its comprehensive “Rural Texas Strong” plan, which includes telehealth, infrastructure investment and wellness programs.
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Alaska follows with approximately $272.2 million, funding initiatives focused on alternative payment models and workforce development.
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Other high-funding states include California, Montana, Oklahoma and Kansas, each receiving more than $220 million.
States at the Lower End
On the other end of the spectrum, New Jersey and Connecticut will receive the smallest shares, at roughly $147.3 million and $154.2 million, respectively. Rhode Island, Delaware, Massachusetts, Arizona and Maryland are also among the lower-funded states.
What’s Next for Rural Healthcare
CMS has also published application-abstract documents outlining how states plan to use the funds. The agency will partner with states through ongoing technical assistance to help implement their rural health strategies and track outcomes over the next several years.
Providers have welcomed the investments as a significant boost for rural care but caution that these awards may not fully offset broader Medicaid funding cuts.
