HHS Establishes Office of Rural Health Transformation, Advancing $50 Billion Rural Health Initiative

On December 29, 2025, the Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), formally established the Office of Rural Health Transformation (ORHT) within the Center for Medicaid and CHIP Services (CMCS). This represents a significant step toward enhancing access to healthcare in rural communities.

The creation of ORHT represents a major investment in rural clinics and providers. With $50 billion in funding, CMS will use ORHT to help states develop rural health plans, provide technical support, and oversee program accountability over a five-year period running through September 30, 2031.

Allocated Funding Distribution Breakdown

Under the governing legislation, a base amount of $25 billion funding is allocated evenly with each state receiving a base amount of $100 million per year for 5 years. States may receive additional funding based on their applications and a range of factors, including measures of rurality, the condition of a state’s rural health system, current or proposed policy actions to improve access and quality of care in rural communities, and the anticipated scale and impact of proposed initiatives. 

CMS has already begun issuing awards for 2026, and according to agency data, the top three funding recipients are Texas ($281,319,361), Alaska ($272,174,856), and California ($233,639,308), while New Jersey ($147,250,806), Connecticut ($154,249,106), and Rhode Island ($156,169,931) received the lowest award amounts.

Program Initiatives

The administration has emphasized that the program is intended to support a nationwide commitment to strengthening rural health care delivery. States are expected to expand preventive, primary, maternal, and behavioral health services, establish new access points that bring care closer to home, and implement evidence-based, outcome-driven strategies such as physical fitness and nutrition initiatives, food-as-medicine programs, and chronic disease prevention models. Additional focus areas include strengthening rural emergency care, investing in the rural clinical workforce through training programs, residencies, and recruitment and retention incentives, and modernizing rural health infrastructure and technology. 

The program also encourages states to streamline operations and empower community providers. Additional initiatives include enhancing data-sharing and clinically integrated networks as well as testing new primary care and value-based payment models to improve sustainability and patient outcomes.

States will have regulatory responsibilities and must submit regular updates to CMS, which will allow the agency to monitor progress, highlight effective strategies, support successful implementation, and maintain oversight.

Reed Smith will continue to track developments with regard to the new rural health transformation office and grants, If you have any questions about this, please do not hesitate to reach out to the author or to the health care lawyers at Reed Smith.