In August 2025, I wrote a blog to help physicians understand the basics of the $50 billion rural health fund that was included in the July 2025 Republican budget reconciliation tax and spending law. Fast forward to December 29, 2025: CMS announced program awards totaling $50 billion spread across all 50 states. In its press release, CMS noted: “In 2026, states will receive first-year awards from CMS averaging $200 million within a range of $147 million to $281 million. This unprecedented federal investment will help states expand access to care in rural communities, strengthen the rural health workforce, modernize rural facilities and technology, and support innovative models that bring high-quality, dependable care closer to home.”
As part of its release, CMS published a summary of each state’s approved application and program. Simultaneously, state governments issued their own press releases announcing the awards while state health agencies and departments issued announcements doing the same. National and local news also offered additional perspectives.
Yet, despite all this coverage and attention, the details surrounding these awards and how they might impact providers have been difficult to decipher. In response, consider this overview of What Physicians Need to Know About CMS’s New $50 Billion Rural Health Grant Program:
The Law & Purpose of the Program
In July 2025, the Republican Congress passed, and President Trump signed into law, The One Big Beautiful Bill Act. Although not focused on healthcare, the law did include twenty-four new Medicaid policy changes that, according to the Congressional Budget Office (CBO), will contribute to a nearly $1 trillion overall reduction in federal Medicaid spending (compared to the previous baseline) over the next 10 years.
Not surprisingly given the politics, when the law was being debated, Republican lawmakers raised concerns about how these Medicaid changes might impact rural hospitals and other safety net providers. In response, lawmakers added a “Rural Health Transformation Program” and funded it with $10 billion per year each year from 2026–2030, tasking CMS with distributing these funds to the states to then distribute to providers.
State Application Process & Funding Awards to States
Last fall, CMS accepted state applications for program funds from September 15 through November 5. To qualify, each state had to submit a “rural health transformation plan” with a detailed budget and plans for how they would improve access to care, patient outcomes, and the long-term financial viability of rural hospitals and other providers. On November 5, CMS announced that all 50 states had met the application deadline to apply for their share of the funds. On December 29, CMS announced the awards.
Notably, the December 29 awards CMS made to all 50 states are only for the first of five years in the program. Awards for subsequent years are likely to be similar in nature and amount but will require an additional state application every year. Also notably, even though the grant awards have been made, the December 29 award letters said that states are not allowed to draw down their first-year award dollars until they submit a revised budget to CMS by January 30 and subsequently have that budget approved.
Subrecipient Award Opportunities for Providers
Providers will have to apply to be a subrecipient of program funds through their state program. Each state’s program and plan is unique but popular categories of allowable use of funds include provider reimbursements, payment and delivery system reforms, and provider technology purchases. A summary of each state’s program and allowable use of funds can also be found here and here. Interested providers should review the publicly available resources from their state and consider contacting their state’s medical societies, Medicaid programs, and government health agencies to inquire about the program and timeline for subrecipient (provider) awards.
As an example of the type of information that is publicly available, North Dakota's Health and Human Services agency created a rural health program website that includes details on “subaward opportunities”, noting detailed information on those opportunities being released in January 2026.
Recommended Next Steps
Like the Medicaid program, this rural health program is really 50 individual state-led programs, each with their own rules, restrictions, opportunities, and participation timelines. Thus, it remains important for interested providers to read up on their state’s program. And even though the states are not allowed to access the funding awards until CMS has approved their subsequent budgets following the January 30 deadline, some states are moving forward in parallel with their plans for subrecipient awards. Ultimately, Federally Qualified Health Centers (FQHCs), Certified Community Behavioral Health Clinics (CCBHCs), and other physician groups concerned about the potential impact of pending changes to Medicaid should consider the opportunities this grant program might offer.
To learn more about how NextGen Healthcare is helping Rural Health Clinics, FQHCs, and CCBHCs navigate an evolving healthcare landscape, visit here.
