CMS Announces First Round of $50 Billion Awards to Strengthen Rural Health: What It Means for Several Southeastern States

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12.30.2025

On December 29, 2025, the Centers for Medicare & Medicaid Services (CMS) announced a historic $50 billion investment in rural health through the Rural Health Transformation Program, established under what CMS refers to as the “Working Families Tax Cut” legislation (Public Law 119-21)[1]. This initiative provides all 50 states with substantial funding—averaging $200 million per state in the first year—to modernize rural health care, expand access, and support innovative care models. The program is designed to address longstanding disparities in rural health care access, workforce shortages, and infrastructure needs, with significant regulatory and operational implications for healthcare providers and local governments.

I. Key Program Goals

Expand Access to Care: States will use funds to increase preventive, primary, maternal, and behavioral health services, and create new access points for rural residents.

Strengthen the Rural Health Workforce: Investments will support clinical workforce training, recruitment, and retention, as well as new career pathways for rural students.

Modernize Infrastructure and Technology: Funding will help upgrade rural facilities, expand telehealth, and implement advanced digital tools.

Drive Innovation: States will test new care models, value-based payment systems, and regional collaborations to improve outcomes and sustainability.

II. Establishment of the Office of Rural Health Transformation

On December 18, 2025, the Secretary of Health and Human Services established the Office of Rural Health Transformation (ORHT) within the Center for Medicaid and CHIP Services (CMCS).[2] The ORHT now oversees the $50 billion Rural Health Transformation Program, including developing application criteria, distributing funds to states, providing policy guidance, monitoring state progress, conducting training, and ensuring accountability for improved rural health outcomes.[3] The Division of State Rural Engagement within ORHT focuses on collaboration, readiness assessments, and program integrity. As announced by CMS on December 29, 2025, ORHT will guide states, provide technical assistance, coordinate partnerships, and maintain strong oversight throughout the five-year program, which runs through September 30, 2031.

III. State-Specific Highlights

a. Alabama

FY26 Award: $203,404,327

Initiatives: Alabama’s plan includes 11 interrelated initiatives, such as digital obstetric care (using telerobotic ultrasound and labor/delivery carts in rural hospitals), a Cancer Digital Regionalization Initiative (mobile screening units and local referral hubs), and integrated behavioral health. The state aims to establish five telehealth and specialty care hubs, reduce unnecessary healthcare expenses, and improve maternal and cancer outcomes. Alabama is also committed to workforce development and expanding access to high-quality, affordable care close to home.[4]

b. Georgia

FY26 Award: $218,862,170

Initiatives: Georgia’s plan addresses significant gaps, with 82 rural counties lacking physicians specializing in obstetrics and gynecological care and 53 without hospitals. The state will deploy obstetric carts in rural emergency departments, expand mobile health units, and invest in telehealth infrastructure. Georgia will also implement the AHEAD model for value-based care and focus on behavioral health, EMS, and nutrition support for children and mothers. The program aims to reduce emergency department utilization and improve maternal and newborn health outcomes.

c. South Carolina

FY26 Award: $200,030,252

Initiatives: South Carolina’s plan targets longstanding disparities in rural health by expanding digital infrastructure, telehealth, and chronic disease management. Key initiatives include the “Connections to Care” program (improving digital health literacy and telehealth access), a Tech Catalyst Fund for rural health technology startups, and mobile health units to reach underserved populations. The state will also invest in workforce development and provider training to improve chronic disease and maternal health outcomes.

d. North Carolina

FY26 Award: $213,008,356

Initiatives: North Carolina will launch “ROOTS Hubs”—community-based care networks tailored to regional needs. The state will expand behavioral health and substance use disorder services, invest in workforce development, and modernize health information exchange. The program’s goals include reducing chronic disease, improving mental health treatment uptake, and increasing provider capacity in rural areas.

e. Tennessee

FY26 Award: $206,888,882

Initiatives: Tennessee’s strategy focuses on rural healthcare transformation, maternal and child health, technology infrastructure, and workforce development. Notable projects include a Memory Care Assessment Network (for dementia and memory care), a Rural Non-Emergency Medical Transportation (NEMT) program, and efforts to eliminate maternity-care deserts. The state will also invest in modernizing rural health technology and expanding the healthcare workforce pipeline.

IV. Legal Compliance Considerations

States, healthcare providers, and subrecipients must comply with:

Federal Grant Regulations: All awards are subject to HHS grantmaking procedures, including merit review, conflict of interest screening, and structured scoring frameworks.

Reporting & Oversight: States must submit regular progress updates to CMS, participate in annual Rural Health Summits, and maintain compliance with programmatic and financial reporting requirements.

Use of Funds: Funding must be used for approved initiatives—such as workforce development, infrastructure modernization, and care model innovation—and cannot be diverted for non-programmatic purposes.

Privacy & Security: Investments in technology must comply with HIPAA and federal cybersecurity standards, especially for telehealth and health information exchange.

State Policy Actions: States may be required to implement or maintain specific policy actions (e.g., licensure compacts, Medicaid reforms) as outlined in their applications and the Notice of Funding Opportunity.

V. Potential Funding Timelines

Program Duration: The Rural Health Transformation Program will allocate $50 billion over five years, with $10 billion available each year from 2026 through 2030.

Implementation: States will begin program kickoff meetings in early 2026, followed by ongoing technical assistance, annual summits, and regular reporting to CMS.

Subrecipient Funding: Healthcare providers, local governments, and other partners may receive subawards as states implement their Rural Health Transformation Plans.

VI. Conclusion

The CMS Rural Health Transformation Program represents an unprecedented opportunity for states to address the unique challenges facing rural communities. For Alabama, Georgia, South Carolina, North Carolina, and Tennessee, this funding will support innovative, locally tailored solutions to improve health outcomes, strengthen the workforce, and ensure sustainable access to care for millions of rural residents.

For questions, please contact the Health Care attorneys at Maynard Nexsen.

Sources:

• CMS Press Release, December 29, 2025.
• CMS Rural Health Transformation Program State Project Abstracts.
• CMS Rural Health Transformation Program State Spotlight.
• CMS Announces Establishment of the Office of Rural Health Transformation.
• Section 71401.
• 90 FR 59837 (December 22, 2025).

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_{[1] Section 71401 is available here.}

_{[2] See 90 FR 59837 (December 22, 2025) (available here).}

_{[3] See CMS Announces Establishment of the Office of Rural Health Transformation, CMS Newsroom, (December 29, 2025), available here.}

_{[4] To view the Rural Health Transformation Program State Project Abstracts visit https://www.cms.gov/files/document/rht-program-state-provided-abstracts.pdf.}