Imagine starting the new year with the promise of at least a $147 million payout from the federal government.<\/p>\n
But there are strings attached.<\/p>\n
In late December, President Donald Trump\u2019s administration announced how much all 50 states would get under its new Rural Health Transformation Program, assigning them to use the money to fix systemic problems that leave rural Americans without access to good health care. Now, the clock is ticking.<\/p>\n
Within eight months, states must submit revised budgets, begin spending, and show the money is going to good use. Federal officials will begin reviewing state progress in late summer and announce 2027 funding levels by the end of October.<\/p>\n
The money \u2014 divided into unique allocations for each state, ranging from $147 million for New Jersey to $281 million for Texas \u2014 represents the first $10 billion installment from the five-year, $50 billion program. Congress created the fund as a last-minute sweetener in Trump\u2019s One Big Beautiful Bill Act last summer to offset the outsize fallout<\/a> anticipated in rural communities from the statute\u2019s nearly $1 trillion in Medicaid spending cuts over the next decade.<\/p>\n Federal officials crafted the fund to give states \u201cspace to be creative,\u201d Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, said on a call with reporters after announcing the funding Dec. 29. \u201cSome states will fail, and we will learn from that.\u201d<\/p>\n The money was divided according to a complicated formula.<\/p>\n In 2026, each state will receive an equal $100 million share under the law<\/a> for the first half of the money, plus additional funding from the second half. Oz\u2019s staff steered payouts from the second portion based on each state\u2019s rural score, as well as results from a \u201ctechnical\u201d scoring system for project proposals.<\/p>\n Within hours of the announcement, academics and researchers began to parse the awards to better understand why some states received more than others, including whether the awards reflected any partisanship or political favoritism.<\/p>\n At first glance, total awards do not appear to favor states governed by either Republicans or Democrats. But one academic data analysis<\/a> teased out the amount awarded for each state\u2019s technical score, which is the part determined by the discretion of agency officials.<\/p>\n The analysis was performed at the University of North Carolina\u2019s Cecil G. Sheps Center for Health Services Research, which specializes in rural health. A KFF Health News review of the Sheps Center data found that states with Republican governors tended to receive more money for the parts of their application based on the technical score. Democratic-controlled states crowded the bottom quarter of those technical score awards.<\/p>\n Overall, though, the state awards reveal wild variation in how much money each state will get per rural resident, almost a hundredfold difference between the top and bottom.<\/p>\n In an emailed statement to The Arizona Republic<\/a>, a spokesperson for Arizona\u2019s Democratic Gov. Katie Hobbs accused the administration of shortchanging rural residents in the state, which was awarded $167 million this year from the program.<\/p>\n CMS spokesperson Chris Krepich said in an emailed statement to KFF Health News that \u201cpolitics played no role in funding decisions.\u201d<\/p>\n On the December call, Oz pushed states to start working on policy actions championed by the administration \u2014 such as approving presidential fitness tests and restricting food benefits \u2014 that could require legislative approval.<\/p>\n Half of states promised to mandate the presidential fitness test, Oz said. Many states also proposed food waivers under the Supplemental Nutrition Assistance Program, known as SNAP, which would limit low-nutrition items such as soda. He also said some states promised to teach health care professionals about nutrition. And others confirmed they will repeal certificate-of-need laws<\/a>, which require companies to prove that new health facilities they want to open are necessary.<\/p>\n Krepich said CMS\u2019 new Office of Rural Health Transformation is hiring program officers to serve as point people for three or four states. Many states are setting up their own offices to oversee the new funding.<\/p>\n Oz highlighted Alabama\u2019s \u201cbig maternity initiative with robotics doing ultrasounds\u201d and said states are tackling issues ranging from behavioral health to obesity.<\/p>\n A KFF Health News review of state \u201cproject abstracts<\/a>\u201d and \u201cspotlights<\/a>\u201d released by CMS shows that many states plan to address the workforce challenges in rural areas. Delaware, for example, plans to use its funding to create the state\u2019s first four-year medical school with a rural primary care track.<\/p>\n A third of states said they want to improve electronic health records, and every state mentioned telehealth.<\/p>\n Many state legislatures must pass laws<\/a> to distribute the funding to their state offices. Meanwhile, state officials are hiring staff, organizing advisory committees<\/a>, and preparing to dole out money<\/a>.<\/p>\n \u201cI\u2019m excited about what\u2019s next,\u201d said Terry Scoggin, former interim chief executive of the Texas Organization of Rural & Community Hospitals, or TORCH. Texas was awarded the biggest allocation. The money will bolster a rural hospital funding bill Republican Texas Gov. Greg Abbott signed last year, Scoggin said.<\/p>\n More than two dozen cash-strapped rural hospitals in Texas have closed or been converted<\/a> to clinics since 2005, a nationwide trend that hit the Lone Star State particularly hard. The state has the largest rural population in the United States. Texas\u2019 allocation amounts to about $66 per rural resident, according to a KFF policy analysis<\/a>. By contrast, Rhode Island was granted about $6,300 per rural resident.<\/p>\n Scoggin said he has \u201ca ton of concerns\u201d about companies taking the money instead of it helping rural hospitals and residents. \u201cI was blown away about how many for-profit companies reached out.\u201d The companies have also called rural hospitals and asked to work with them to apply for state money, he said.<\/p>\n The awards should be judged on how they benefit rural residents because \u201cthe stated goal of the program is to improve rural health,\u201d said Paula Chatterjee, an assistant professor of medicine at the University of Pennsylvania who co-authored a Senate Finance Committee memo<\/a> on the transformation fund.<\/p>\n Researchers at the Sheps Center conducted the analysis to estimate how much money states received from the technical score, which is the portion of funding based on the quality of their proposals and state policy actions that align with “Make America Healthy Again” priorities.<\/p>\n New Mexico won the least amount of technical funding, with less than 10% of its award based on the discretionary metrics. Alaska won the largest technical award, according to the Sheps Center data.<\/p>\n Texas, Nebraska, New Hampshire, and Hawaii rounded out the top five recipients of technical funding. In addition to New Mexico, the other lowest technical awards went to Michigan, New Jersey, Arizona, and California.<\/p>\n Mark Holmes, director of the Sheps Center, declined to comment on whether he saw any political bias in the awards but said the nuance in the final portion of discretionary awards based on technical scores is important because those dollars can be redistributed and potentially clawed back in future years.<\/p>\n \u201cWe can be fairly certain that every state will get at least a slightly, if not a vastly, different amount next year based on this re-pooling and reallocation piece,\u201d Holmes said.<\/p>\n <\/a>States now have a limited time to show they\u2019re using the money effectively to secure future funding.<\/p>\n But they can\u2019t start spending yet. CMS followed standard grant procedures and is requiring each state to submit revised budgets before they can draw down money, Krepich said.<\/p>\n States have until Jan. 30 to resubmit their budgets, and CMS then has 30 days to respond, according to the standard Notice of Award<\/a>. Under that timing, some states may not have cash in hand until March.<\/p>\n \u201cCMS is working closely with states to complete this process as efficiently as possible,\u201d Krepich said.<\/p>\n KFF Health News<\/a> is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF\u2014an independent source of health policy research, polling, and journalism. Learn more about KFF<\/a>.<\/p>\nUSE OUR CONTENT<\/h3>\n