Rural hospital leaders are raising concerns that some of the new federal rural health transformation funding could flow through state governments without ever reaching the hospitals the program was designed to support. CMS awarded $50 billion across all 50 states through the Rural Health Transformation Program, a five-year initiative running from 2026 through 2030. The program is intended to strengthen access, infrastructure and workforce capacity in rural communities. But states are not legally required to pass the funds directly to rural hospitals and early signals from legislators in some states have hospital CEOs worried. Hospital executives say that gap between federal intent and state discretion is creating unease as rural providers face continued financial pressure, including looming Medicaid cuts tied to the same legislation that authorized the program. Funds aren’t guaranteed to hospitalsUnder the program, $10 billion will be distributed annually, with half of the funding allocated equally across states and the remainder awarded based on factors such as rural population, land mass, facility needs and proposed policy actions. While states must submit annual reports to CMS, funding is not contingent on performance, and there is no mandate that dollars be directed to rural hospitals. That structure has prompted concern among rural leaders who say the funds could be absorbed into state-run initiatives, new administrative departments or competitive grant programs that may offer limited near-term relief to struggling providers. Jeremiah Hodshire, president and CEO of Hillsdale (Mich.) Hospital, said rural hospitals in Michigan spent months advising the state on how…
