CMS awarded grants to all fifty states under the Rural Health Transformation Program. Now states have until January 30, 2026 to resubmit budgets showing how they intend to use their grant money to implement their proposed projects and CMS has 30 days to respond. These next steps will be critical in showing whether rural hospitals receive needed monies from the grant process.
Although the Rural Health Transformation Program was intended to attenuate some of the negative impacts to rural hospitals from the significant cuts to Medicaid under the Administration’s tax and spending cut bill, many rural hospitals and hospital associations are concerned that rural hospitals will not receive needed funds from the grants. This is because the grant proposals submitted to CMS did not all list the ultimate grant recipients and because many of the grant proposals were for statewide projects. As Texas Hospital Association President and CEO John Hawkins told Becker’s Hospital Review, “the proof will be in the details.”
It is critical that rural hospitals receive funds from the Rural Transformation Program because the $50 billion in grants allocated over five years will not nearly make up for the Medicaid cuts. In addition, although the grants will be distributed over five years, the Medicaid cuts will have long term impacts on rural and other hospitals. As Mr. Hawkins told Becker’s, “The dollars need to be focused on hospitals, which took the brunt of the Medicaid cuts.”
The American Hospital Association has also urged CMS to prioritize payments to hospitals as part of the Rural Health Transformation Program grant funding. In an August 11, 2025 letter to CMS Administrator Mehmet Oz, M.D., the AHA emphasized that it was important to prioritize payments to hospitals because “[h]ospitals serve as a critical – and sometimes the sole – source of care for rural communities.”
The attorneys at Whatley Kallas, LLP will continue to monitor the implementation of grants under the Rural Health Transformation Program. Whatley Kallas’s earlier post on the grant process is linked here. The Becker’s Hospital Review article is linked here. The AHA letter to Dr. Oz is linked here.