Rural Health Transformation Program: More Details

Last week, we posted the announcement by the Centers for Medicare and Medicaid Services (CMS) regarding a notice of funding opportunity. It was the $50 billion Rural Health Transformation Program. It was created to somewhat offset the estimated $911 billion in Medicaid spending reductions over the next 10 years by the Big Beautiful Bill. Here is more information (and questions) about the program:

• CMS will distribute $25 billion equally across states that apply and are approved for the program.

• The second $25 billion will be allocated based on 23 factors, weighted on varying degrees. Three of the factors are based on measures specified in the reconciliation law; the remainder 20 factors will be added by CMS. Funding consideration will be based on:

  • Published, historical data about the number of rural residents and health facilities in the state.

  • CMS's review of the initiatives the state is proposing

  • Whether a state adopted, made progress toward adopting, or committed to adopting certain policies.

• States will receive more funds if they adopt Make America Health Again policies.

• States will be allowed to use the funds to improve the rural health care delivery system and how care is delivered.

• States cannot use the funds for -

  • payments to providers for care that exceeds 15% of total funds;

  • payments to supplement existing fees, such as Medicaid, or pay for care that is reimbursable by insurance. But they could be used for pay for, say, uncompensated care.

  • Construction, building expansion, or purchasing buildings, but it can be used for certain investments in existing rural health care facility buildings, not to exceed 20% of total funds.

  • Replacement for previous HITECH-certified electronic medical record systems that exceed 5% of total funds.

  • Funds for gender-affirming care (a limitation that is not restricted to care for minors) and reimbursement for most abortion services.

KFF published an extensive analysis on this subject. You can read it here.