What CMS’s $50B Rural Health Transformation Program Means for FQHCs

What CMS’s $50B Rural Health Transformation Program Means for FQHCs 

Late in 2025, the Centers for Medicare & Medicaid Services (CMS) announced that all 50 states will receive funding under the historic Rural Health Transformation Program (RHTP) — a five-year, $50 billion federal investment designed to strengthen and modernize rural health care across the United States. This initiative marks one of the largest federal commitments to rural health improvement in decades, with $10 billion allocated annually from FY 2026 through FY 2030.  

For FQHCs, this funding presents both opportunity and obligation: states will funnel these federal dollars into local systems, and community health centers must be at the table to help guide how funds are used to best support rural patients and providers. 

How the Funding Works — A State-by-State Framework 

Funding Distribution Mechanism 

CMS divides the $50 billion into two main pools: 

• 50 % equally distributed to all approved states — establishing baseline funding that every state can count on.  

• 50 % allocated competitively based on data-driven criteria, including: 

• Size of the rural population 

• Number and condition of rural health facilities 

• Hospital status and broader health needs 

• Quality of the state’s proposed approach to strengthening rural health systems  

In fiscal year 2026, first-year awards ranged roughly between $147 million and $281 million per state — with the largest recipients being Texas, Alaska, and California, and smaller states still receiving substantial funding.  

What States Must Do to Access Funds 

Each state submitted a detailed RHTP application that: 

• Defines the specific rural health challenges it plans to address. 

• Outlines strategies across multiple priority areas (e.g., workforce, technology, care delivery, and sustainability). 

• Demonstrates measurable goals and how outcomes will be tracked. 

Once CMS approves the plans, funding is disbursed and states begin implementation — often in collaboration with local stakeholders, including FQHCs, rural hospitals, behavioral health providers, EMS, and public health systems.  

Priority Uses of the Money 

States must use their RHTP funds for at least three approved uses, which commonly include: 

• Prevention and chronic disease management initiatives 

• Workforce training, recruitment, and retention 

• Value-based care models and alternative payment arrangements 

• Technology modernization such as telehealth, digital tools, and interoperable data systems 

• Behavioral health and substance use disorder services  

This flexibility allows each state to tailor investments to its most pressing rural health needs. 

How RHTP Is Taking Shape Across States  

Here’s how some states are planning to use their awards to transform rural health — and where FQHCs can have influence: 

Texas: $281M and Counting 

With the largest award, Texas plans a “Rural Texas Strong” initiative focused on stabilizing rural health systems, bolstering workforce development, expanding access to mental and physical health services, and increasing preventive care efforts. Community providers will be invited to apply for sub-grants within the state’s framework, making FQHC involvement critical.  

Missouri: $216M for Digital and Workforce Strategies 

Missouri’s plan emphasizes regional coordinating networks and data infrastructure that enable community partners to share patient information and coordinate care more effectively — especially important for multi-county service areas typical of rural populations. Workforce expansion and partnerships with public health and social service organizations are central to this strategy.  

Vermont: $195M for Community-Centric Expansion 

Vermont’s award will support staffing, mental health partnerships, and enhanced care access in remote regions — often requiring creative solutions for transportation challenges, broadband limitations, and provider shortages.  

Across the country, funding priorities vary, but common themes include workforce support, prevention programs, data and technology upgrades, and expanded care access points — all areas where FQHCs are already deeply engaged. 

Why FQHCs Should Lead Conversations  

State governments will determine how RHTP funds are distributed locally. If FQHCs are not actively participating in state planning and implementation committees, other providers or interests may capture opportunities that should support community-centered providers first. 

Here’s how FQHC leadership can shape meaningful outcomes: 

Engage Early in State Planning 

Join rural health coalitions, provide data on unmet need, and ensure state plans include FQHC-relevant workforce, technology, and care model initiatives. 

 Align With Measurable Outcomes 

CMS is prioritizing measurable impact. FQHCs with strong data infrastructure and performance measurement frameworks can help states define and monitor success — and position themselves for a larger share of discretionary funds. 

Collaborate Across Sectors 

FQHCs are often the bridge between health care, public health, social services, and community organizations — exactly the partners states need to deliver on RHTP goals. 

The RHTP represents a once-in-a-generation opportunity to reshape rural health. With the right strategy and a collaborative mindset, FQHCs can not only access federal funding but also help define how that funding improves care for rural residents now and long into the future.