The Working Families Tax Cuts legislation (WFTCL), Public Law 119‑21, is a large federal law passed on July 4, 2025 that combines tax provisions with major changes to Medicaid and CHIP financing and eligibility. One title of that law creates and directly funds the $50 billion Rural Health Transformation (RHT) Program, authorizing CMS to spend that amount over five years on grants/cooperative agreements to states to improve rural health care. Those rural health awards are therefore federally financed RHT dollars created in the WFTCL, while other Medicaid financing changes in the same law help offset the cost of this new spending in the overall federal budget.
The Rural Health Transformation awards are administered by the Centers for Medicare & Medicaid Services (CMS), an agency within the U.S. Department of Health and Human Services. CMS designed the $50 billion RHT Program created by the Working Families Tax Cuts Act, ran the national application process for all 50 states, evaluated and scored state plans, made the funding awards, and is overseeing implementation through its Center for Medicaid and CHIP Services and the new Office of Rural Health Transformation.
Yes. CMS states that the Rural Health Transformation Program totals $50 billion in federal funding, to be allocated to states over five years with $10 billion available each year from FY 2026 through FY 2030. The state amounts listed in the article (for example Alabama $203.4 million, Alaska $272.2 million) are the first‑year FY 2026 awards; states will receive additional annual tranches under the same program over the rest of the five‑year period according to the formula set in the Working Families Tax Cuts law.
State allocation amounts are determined by a two‑part formula written into Public Law 119‑21 and implemented by CMS. First, 50% of the $50 billion is divided equally among all states with approved applications, giving each a common baseline of funding. Second, the remaining 50% is awarded based on a merit‑review scoring process that weighs state metrics on rurality and the condition of the rural health system, existing or proposed state policy actions that enhance rural access and quality, and the likely scale and impact of each state’s proposed Rural Health Transformation initiatives, so that more need and more ambitious plans receive larger shares of the variable funding.
Individual rural hospitals and clinics do not apply directly to CMS; CMS awards the money to state governments, which then decide how to deploy their allocations. Each governor designates a lead agency—typically the Medicaid or state health department—to run the state’s Rural Health Transformation plan and then use the federal funds through state‑managed grants, contracts, and programs (for example, South Carolina’s Medicaid agency is the lead for its $200 million award and will issue guidance and webinars on funding opportunities, while Idaho officials note that how funds are used is up to the state). Rural providers that want access to these dollars generally must work with their state’s RHT program—by participating in state‑funded projects, responding to state grant or procurement opportunities, or partnering in initiatives such as telehealth expansion, workforce recruitment, or facility upgrades.
Yes. The Working Families Tax Cuts law and CMS’s funding notice limit Rural Health Transformation dollars to rural‑health transformation activities—such as expanding access points, strengthening the rural workforce, modernizing facilities and technology, and testing new care and payment models—and do not allow them to be used as general state budget relief or to replace required state Medicaid matching funds. CMS assigns each state a project officer and requires regular financial and programmatic reporting; states must submit annual progress reports, and CMS will convene an annual Rural Health Summit, although Becker’s Hospital Review notes that continued funding is not formally contingent on hitting specific performance targets. Separately, other sections of the Working Families Tax Cuts legislation tighten Medicaid financing rules (for example, new limits and reporting on health‑care provider taxes), which states must comply with while they are implementing their RHT‑funded initiatives.
Oversight and evaluation are organized around the program’s five statutory goals—improving rural health, sustaining access, developing the workforce, supporting innovative care models, and expanding health‑enabling technology—and around state‑defined outcomes. CMS requires each state to submit regular updates and annual reports so CMS can track progress, identify effective models, and “ensure strong oversight and successful implementation,” and the new Office of Rural Health Transformation within CMS assigns project officers, provides technical assistance, and will convene an annual Rural Health Summit where states share results. States’ approved applications must lay out measurable objectives (such as better management of chronic disease or maternal health, stronger rural workforce capacity, and increased use of telehealth and electronic records), and CMS uses those state‑level measures—as reported through these required updates—along with standard federal grant monitoring to judge whether the investments are improving rural access and outcomes.