CMS Distributes First $10 Billion from Rural Health Transformation Fund
April 6, 2026 · 2 min read
Arthur Griffin
The Centers for Medicare and Medicaid Services has distributed $10 billion to all 50 states as the first installment of a $50 billion, five-year program to overhaul rural healthcare delivery. Created by the One Big Beautiful Bill Act, the Rural Health Transformation Program represents the largest dedicated federal investment in rural health infrastructure in U.S. history.
How $10 Billion Gets Divided Among 50 States
CMS split the inaugural distribution into two equal pools. The first $5 billion was allocated evenly — $100 million per state as a baseline. The second $5 billion was distributed competitively based on a scoring framework: 50 percent weighted toward state characteristics (rural population size, uncompensated care burden, geographic footprint), 30 percent toward the quality of state improvement plans, and 20 percent toward alignment with administration policy priorities.
First-year awards range from $147 million (New Jersey) to $281 million (Texas). Alaska received $272 million, followed by California and Montana at $233 million each. Oklahoma ($223 million) and Kansas ($222 million) round out the top tier.
"The purpose of this $50 billion investment in rural healthcare is not to pay off the bills… The purpose is to allow us to right-size the system," said CMS Administrator Mehmet Oz.
Where States Plan to Spend
States must direct funds toward at least three approved use categories. Common proposals include telehealth and digital infrastructure expansion, workforce recruitment and retention programs, hub-and-spoke regionalized care models, mental health and substance-use disorder integration, chronic disease management, and transition to value-based payment models.
CMS retains authority to claw back funding if states fail to deliver on promised policy changes or miss performance benchmarks in annual reviews.
How Grant Seekers Can Tap This Funding
The $10 billion flows to state agencies, not directly to individual organizations. But hospitals, community health centers, behavioral health providers, telehealth companies, and rural health nonprofits should engage their state health departments now to influence spending plans and position for subgrants.
States receiving the largest allocations will need implementation partners immediately. Rural health organizations can track related funding opportunities through grantedai.com as state-level RFPs begin emerging this spring.
With $40 billion still to be distributed through 2030, early engagement with state planning processes will compound advantages in future funding cycles.
In-depth analysis of this story and related grant opportunities is available on the Granted blog.