News: CMS announces $50 billion rural hospital initiative, report finds many at risk of closure

Last week, CMS announced that all 50 states will receive awards under the Rural Health Transformation Program, an initiative totaling $50 billion meant to strengthen and modernize healthcare in rural communities. This news comes at a time when 756 rural hospitals are at risk of closing, including 323 facing immediate financial danger, according to a recent report published by the Center for Healthcare Quality and Payment Reform.

In their press release, CMS said that states will receive first-year awards averaging $200 million within a range of $147 million to $281 million in 2026. The funds will be allocated to approved states over five years, with $10 billion available each year from 2026 through 2030. CMS states that 50% of the funding is distributed equally among all approved states, while the other 50% will be allocated based on a variety of factors, including individual state metrics around rurality and a state’s rural health system, current or proposed state policy actions that enhance access and quality of care in rural communities, and application initiatives. Scoring factors can be found in detail in the Notice of Funding Opportunity

Temporary federal relief funding helped many rural hospitals stay open during the COVID-19 pandemic, but the expiration of that support leaves many with detrimental financial challenges, HealthLeaders reported. Based on the Center for Healthcare Quality and Payment Reform analysis’s findings, more than one-third of rural hospitals lost money overall in 2024. The report calls for higher Medicare Advantage payments, capacity-based funding, and reforms to preserve rural care.

Editor’s note: To read the CMS press release, click here. To read the Center for Healthcare Quality and Payment Reform report, click here.