On September 15, 2025, the Centers for Medicare & Medicaid Services (CMS) announced the Rural Health Transformation Program, a $50 billion federal initiative designed to strengthen health care in rural communities. Authorized under the Working Families Tax Cuts Act, this program invites all 50 states to apply for funding to modernize rural care delivery, expand access, and address persistent health disparities.
Program Overview
The initiative will allocate $10 billion annually over five years starting in fiscal year 2026. The funding supports state-driven plans that tackle the structural challenges of rural health care, with a focus on innovation, sustainability, and outcomes.
Funds will be distributed in two parts:
- 50% will be equally divided among all states with approved applications.
- 50% will be awarded competitively, based on proposals demonstrating the strongest potential to improve rural health outcomes.
States must apply by November 5, 2025. This is the only application window, and award announcements will follow by December 31, 2025.
Strategic Goals
The Rural Health Transformation Program supports five core objectives:
- Improve health outcomes by investing in prevention and targeting the root causes of disease.
- Sustain rural providers through financial and operational improvements.
- Develop the workforce by attracting and retaining qualified health professionals in rural areas.
- Encourage innovative care models that better coordinate and deliver services.
- Expand technology access for patients and providers, including telehealth and digital infrastructure.
What This Means for North Carolina
North Carolina is home to some of the most rural counties in the nation, many of which face critical health challenges—high rates of chronic disease, limited provider availability, hospital closures, and access issues. According to the North Carolina Rural Health Research Program, over 70 rural counties in the state have persistent health professional shortages.
This new federal program offers a rare opportunity for North Carolina to:
- Strengthen rural Medicaid delivery systems, especially in underserved regions like the Sandhills, the Foothills, and the northeastern part of the state.
- Support small rural hospitals and FQHCs with funding to remain operational and expand services.
- Enhance broadband and digital health access, improving telehealth and care coordination for rural Medicaid beneficiaries.
- Address workforce shortages by supporting new training pipelines, residency programs, and retention incentives tailored to rural practice settings.
North Carolina’s Department of Health and Human Services (NCDHHS), Medicaid managed care organizations, and rural provider networks are likely to be key players in shaping the state’s application. Providers and community organizations may want to engage early to ensure their needs and ideas are included in the planning process.
If North Carolina applies and is approved, the state could receive a substantial share of federal funds to support its rural transformation agenda. Medicaid professionals should stay informed, collaborate with state and local agencies, and look for opportunities to participate in new initiatives.
Action Steps You Can Take
- Get Informed: Read the CMS Notice of Funding Opportunity (NOFO) to understand the program’s goals, allowable uses of funds, and timeline. Stay updated through your state’s Medicaid agency, Department of Health, or rural health office.
- Engage with State Agencies: Reach out to your state’s Medicaid office or health department to ask how they’re preparing the application. Offer to participate in advisory committees, working groups, or stakeholder feedback sessions. Your frontline insights matter.
- Share Data and Local Needs: Help your organization or health system contribute local data, patient stories, or case studies that highlight rural health challenges. Share what’s working and what’s not, from staffing shortages to access barriers to outdated tech.
- Advocate for Your Region: Talk to local leaders, hospital administrators, and community organizations about the importance of applying. Make sure your region’s rural needs are represented in the state’s proposal, especially if you’re in an underserved county.
- Collaborate Across Sectors: Build alliances with FQHCs, behavioral health providers, public health departments, EMS, and telehealth services to propose regional solutions. Unified, cross-sector approaches tend to strengthen applications.
- Promote Workforce Strategies: Encourage your organization to recommend or pilot workforce solutions, such as loan repayment programs, flexible scheduling, mobile care teams, or rural residency tracks, as part of the state’s application.
- Prepare for Implementation: Even before funding is awarded, begin identifying areas for improvement in your facility or practice that align with the program’s five strategic goals. Think about how your team could contribute to scaling innovative care models, technology upgrades, or care coordination systems.
Why This Matters
This is a time-sensitive, one-time opportunity. The application deadline is November 5, 2025, and there will be no second round. States that act quickly and collaboratively have the best chance at receiving not only the baseline funding, but also competitive awards based on their proposal’s scale and potential.
Health care workers on the ground, especially those who serve Medicaid populations, are in a unique position to shape real, lasting improvements in rural health care. Your voice and expertise are essential.
For more information and to access the official Notice of Funding Opportunity, visit the Rural Health Transformation Program page. A video message from CMS Administrator Dr. Mehmet Oz is available here.