The $50B Rural Health Transformation Program: How it works

The federal government has launched a new $50 billion program to improve rural health, and states are scrambling to win funding.

Congress and President Trump created the new Rural Health Transformation Program in July. It was created at least in part to help win passage of the big tax package known as HR 1, and to address concerns about Medicaid cuts.

The federal government will be awarding the money to the states over the next five years. States had to submit their applications earlier this month.

There are two big buckets of money in the new program. Half of the money, $25 billion, will be divided up among all states with approved applications. The government will award the other $25 billion on a competitive basis.

Dr. Mehmet Oz, head of the Centers for Medicare & Medicaid Services, said he wants to see bold ideas. He also said that the money won’t be given out to help hospitals pay bills.

Oz encouraged proposals to focus on new technology, including AI and telehealth, workforce development and efforts to keep people healthy.

Hospitals and health systems around the country made suggestions to state governments on their submissions.

Hospitals say they’re hoping to get support from the rural health program. Rural hospitals have been struggling mightily for years. Researchers say as many as half of America’s rural hospitals are in the red. But state applications are also focusing on support for primary care and community health clinics.

Hospitals are waiting to see what happens, but they won’t have to wait long. The government has said it will make decisions on funding by the end of the year.

Still, analysts say the rural health program won’t offset losses in Medicaid funding. KFF projects Medicaid funding will fall by $137 billion over the next 10 years.