Health and Human Services Secretary Robert F. Kennedy Jr. is calling on states to submit “bold, audacious proposal ideas” to revitalize rural healthcare using the funds appropriated by Republicans in the budget bill this summer.
Kennedy and Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz announced on Monday that states are now eligible to submit proposals for funding by the Rural Hospital Transformation Program passed in President Donald Trump’s One Big Beautiful Bill Act in July.
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“We encourage governors to submit bold, audacious proposal ideas as strong as the people they serve,” Kennedy said in a video posted on X. Together, we will build a rural health system that works strong, sustainable, centered on patients, and we will make rural America healthy again.”
The Rural Hospital Transformation Program allocates $10 billion annually between 2026 and 2030, totaling $50 billion over the next five years.
Each year, the $10 billion will be split down the middle, with 50% going evenly to each state and the other half being given to states based upon “a variety of factors” as determined by the CMS administrator.
Securing rural healthcare funding was a point of bipartisan contention during debates over the passage of Trump’s One Big Beautiful Bill Act, largely due to the statute’s $1 billion reduction in long-term Medicaid spending and technical changes on how states can raise Medicaid revenues.
Rural hospitals have been struggling for decades. More than 1 in 4 of the nation’s 1,700 rural hospitals in the United States had negative operating margins in 2023.
That’s mainly because, as medical technology becomes more specialized and expensive, it becomes more difficult for smaller hospitals to afford to offer high-quality care to patients. As a result, patients are increasingly willing to travel farther distances for top-notch services, creating a negative feedback loop of low revenue streams for rural providers.
During his video address with Kennedy on Monday, Oz said that rural health funding is “not about sustaining failures” but rather “building success.”
“The program tackles the root causes of rural healthcare failure. It gives states the tools to design solutions that last, not band aids that fail,” Oz said.
The statute gives Oz as CMS Administrator a wide latitude to determine which states and projects receive funding.
Oz and Kennedy said the funding is circumscribed to five “buckets” ranging from innovative care and technology solutions to improving rural facilities and regional systems.
The Make America Healthy Again agenda, which focuses on preventive medicine, also offers funding opportunities for states focused on nutrition and physical activity resources.
Oz also outlined that improving the rural healthcare workforce will be a key priority, including reforming medical licensing procedures for better interstate exchange.
“Rural health depends on people,” said Oz. “States can recruit and retain professionals by letting pharmacists and nurse practitioners expand their roles and by streamlining licensing across state lines; all this becomes feasible, and without it, shortages are going to continue to choke rural healthcare.”
In an exclusive interview with the Washington Examiner during the rural health program’s planning stages, Oz said his agency intended to provide governors with a “Chinese menu approach” of program ideas that could be modified and tailored to each state’s individual needs.
“Take them if you want, modify them so they fit the needs of your state, and hopefully that’ll accelerate the process for you,” Oz said in August.
DR. OZ’S PLAN FOR THE $50 BILLION IN RURAL HOSPITAL FUNDS
The deadline for states to apply for funding is Nov. 5. Award decisions will be announced by CMS on Dec. 31, with funds to be allocated in January 2026.
“For too long, when it comes to health care access and infrastructure, we’ve left behind the backbone of America,” Oz said in a press statement. “That stops now with this program that will spark real change for rural health care.”