Federal officials announced Monday that $10 billion in Rural Health Transformation Program awards will be distributed among all 50 states for the 2027 fiscal year.
The funding is part of a five-year, $50 billion federal initiative established by Congress to support rural health care access, improve health outcomes and strengthen health care services in rural communities.
Texas received the largest award for 2027, totaling nearly $282 million. Alaska, Montana, California and Oklahoma followed with the next-largest allocations.
The program provides $10 billion annually through 2030. Half of the annual funding is divided equally among the states, with each receiving $100 million in baseline funding. The remaining funds are distributed using factors that include rural population, health care facilities and the initiatives outlined in each state’s application.
States developed their own plans for using the funding. Eligible focus areas include maternal and behavioral health, preventive care, chronic disease management, access to medical services, rural health care workforce development, and investments in technology and medical equipment.
Congress established the program following concerns from rural health care providers and lawmakers about the potential impact of Medicaid reductions included in the One Big Beautiful Bill Act, signed by President Donald Trump last year.
According to the health research organization KFF, rural areas could face approximately $137 billion in losses associated with the legislation.
All 50 states submitted annual reports outlining their progress during the program’s first year. The Centers for Medicare & Medicaid Services reviewed those reports as part of its process for determining the 2027 awards.
CMS Administrator Dr. Mehmet Oz said states have begun using the funding to bring health care services closer to rural residents and that the agency looks forward to supporting continued progress.
The federal government says states are expected to use the grants to test and expand programs that can remain financially sustainable after the five-year funding period ends.
Rural health care leaders have welcomed the additional federal funding while also expressing concerns that it may not fully offset the financial effects of Medicaid reductions.
The program’s long-term impact will depend on how states use the funding, whether their initiatives improve access to care and whether those efforts can continue after federal grant support concludes.
