On July 4, 2025, the One Big Beautiful Bill Act (OBBB) was signed into law, establishing the Rural Health Transformation Program and allocating $50 billion to reshape rural health care across America.
Why This Matters for Rural Health
The Rural Health Transformation Program targets some of the most pressing challenges facing rural communities. Specifically, the funding will support four key priorities:
- Reducing health disparities in rural communities
- Ensuring continuity of care for rural health care providers
- Offsetting projected Medicaid reductions, which could reach $1 trillion over the next decade
- Expanding technology and telehealth solutions to strengthen access to rural health services
By addressing these priorities, the program aims to close long-standing gaps in care and help rural health providers and hospitals remain sustainable.
How the $50 Billion Will Be Distributed
The Rural Health Transformation Program divides funding into two main streams:
| Funding Stream | Details |
| Direct Awards – $25 billion |
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| Formula-Based Awards – $25 billion |
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According to the law, the CMS formula will account for:
- The percentage of a state’s population living in rural census tracts within metropolitan statistical areas (MSAs).
- The state’s share of rural health facilities compared to the national total.
- The condition and needs of rural hospitals within the state.
- Other considerations the CMS Administrator identifies as relevant.
In practice, once states receive funds, they will have discretion in how to distribute dollars across rural hospitals, clinics, and other healthcare providers.
What States Need to Do Now: Application Requirements
Although CMS has not yet released full details of the application process, states should begin preparing now to submit their single grant application. This application will determine eligibility for both the direct award and any additional funding distributed through the formula.
Under the law, CMS must announce approved applications by December 31, 2025. As a result, the deadline will come well in advance, giving states limited time to act. Recently, the CMS Administrator stated in a media interview that applications will open in early September 2025. Recently, Hagerty has observed shorter deadlines to submit federal grant applications.
Each state may submit only one application, and if approved, will receive grant disbursements across fiscal years 2026–2030. At the core of the application is a comprehensive Rural Health Transformation Plan. This plan must outline specific strategies to address the unique needs of rural communities across several priority areas:
- Expand Access: Increase the availability and accessibility of hospitals and providers for rural residents.
- Enhance Health Outcomes: Establish measurable goals to improve population health in rural areas.
- Leverage Technology: Prioritize telehealth and innovative tools for prevention and chronic disease management.
- Strengthen Partnerships: Support strategic collaborations among rural hospitals, health systems, and providers to drive quality, efficiency, and financial stability.
- Workforce Development: Create robust strategies to recruit and retain clinicians in rural areas.
- Patient-Centered Delivery: Implement data-driven solutions to ensure patients receive care as close to home as possible.
- Financial Sustainability: Propose long-term, viable operating and funding models to stabilize rural hospitals.
- Root Cause Analysis: Identify and address the underlying causes of rural hospital closures, service line reductions, or conversions.
By focusing on these priorities, states can demonstrate their commitment to transforming rural health care into the future. Hagerty recommends states begin to gather information and data that supports these priorities now, so they are better prepared when the grant application period opens.
Eligible Uses of Program Funds
The OBBB clearly identifies how states may use funds from the Rural Health Transformation Program. Allowable uses include:
- Advancing Research and Service Areas: States can promote evidence-based interventions to improve prevention and chronic disease management. They can also identify the “right-sized care” needed to match community demand, expand opioid and substance abuse research and services, and launch projects that deliver value-based rural health care.
- Investing in Technology: States can prioritize technology-driven solutions to strengthen prevention and disease management. This may include funding software and hardware upgrades, enhancing cybersecurity protections, and investing in tools that improve efficiency and patient outcomes. Additionally, states can dedicate funds to technical assistance and training, helping providers develop and adopt technology-enabled solutions that advance rural health care delivery.
- Supporting Staff Pay, Recruitment, and Retention: States may offer payments to providers and create programs that recruit and retain clinical staff in rural areas. In many cases, recruited staff must commit to serving these communities for at least five years.
- Additional Uses: CMS also permits states to fund additional initiatives that strengthen sustainable access to high-quality rural health care, as determined by the CMS Administrator.
Taken together, these eligible uses create flexibility for states while ensuring that every investment strengthens access, sustainability, and innovation in rural health care.
Hagerty Can Help
For decades, our firm has partnered with states, health departments, and healthcare providers to secure and manage critical funding. To date, Hagerty has helped organizations identify, obtain, and oversee more than $95 billion across federal and state grant programs.
Importantly, Hagerty’s expertise extends beyond traditional grant programs. The firm has supported clients through novel rural health initiatives, including those developed by the Centers for Medicare & Medicaid Services (CMS), the Department of Health & Human Services (HHS), and the Federal Communications Commission (FCC) for telehealth during the COVID-19 public health emergency.
With this background, Hagerty Consulting can help states maximize the Rural Health Transformation Program by providing:
Grant Writing and Application Support
- Develop and write Rural Health Transformation Plans tailored to state priorities.
Planning and Program Design
- Create and structure programs that allow rural healthcare providers to efficiently access and use funds.
Program and Grant Management
- Advise, manage, and support grant-funded programs and compliance with all grant requirements, including audits and reporting.
In addition, states can use up to 10 percent of awarded funds for administrative costs, which includes managing grant funding and overseeing rural health programs—an area where Hagerty can provide proven, hands-on support.
Shaping the Future of Rural Health Care
The Rural Health Transformation Program represents an opportunity to strengthen rural health systems, close gaps in care, and build sustainable models for the future. By acting now, states can position themselves to leverage funding and drive meaningful change for rural communities. Our expert professionals are ready to partner with states in planning, securing, and managing this rural health care investment.
