States face pushback on their rural health transformation plans

Source: CBS News

March 3, 2026 / 5:00 AM EST / KFF Health News


In the final days of 2025, governors around the country trumpeted the hundreds of millions of federal dollars they won from a new, $50 billion rural health fund. But plans to spend those nine-digit awards aren't all warmly received. At least one group of Republican state lawmakers appears to have scuttled an initiative preapproved by federal officials. And at least one hospital association persuaded its state health leaders to alter who greenlights spending. Other critics are taking a more cautious approach.

That's because the Centers for Medicare & Medicaid Services, which manages the five-year Rural Health Transformation Program, says states could lose money if they make major changes to the plans approved in their applications. Changes could also delay states' ability to get projects rolling in time to show the agency that they're meeting progress deadlines. "During the application period, states were advised to only propose initiatives and state policy actions that the state deemed feasible," said CMS spokesperson Catherine Howden, who noted that the agency will work with states case by case.

The recent pushback reflects "tension" over state plans — which were approved by the federal government — from state lawmakers and health leaders who want more input amid tight deadlines, said Carrie Cochran-McClain, chief policy officer of the National Rural Health Association, the largest organization representing rural hospitals and clinics. Cochran-McClain said many states must pass a bill to allow federal dollars to be spent and added that because the program rolled out so quickly "there's important work that still needs to be done in some states between the legislatures and the governors."

State lawmakers want to have a say, she said, in "how the funding is being allocated — how the implementation will go." Congressional Republicans created the program as a last-minute sweetener to include in their One Big Beautiful Bill Act, signed into law last summer. The funding was intended to offset concerns about the outsize fallout anticipated in rural communities from the law, which is expected to slash Medicaid spending by nearly $1 trillion over a decade.

Read more: https://www.cbsnews.com/news/states-rural-health-transformation-plans/