Federal officials at the Centers for Medicare & Medicaid Services missed an Oct. 31 deadline to tell states how much money they will receive next year from the $50 billion Rural Health Transformation Program, alerting state officials to the hold-up in a mass email on Oct. 30, KFF Health News reported on Nov. 5.
In a 12-sentence email sent at 4:05 p.m. EDT on Oct. 30, Alina Czekai, director of the federal Office of Rural Health Transformation within CMS, told state leaders that officials “discovered an additional administrative process requirement.” Czekai wrote that each state’s second-year base funding of $100 million is available, while the competitive portion of the 2027 awards is delayed.
“We are working to resolve this as quickly as possible,” Czekai wrote in the message, without giving a new date for when the competitive funding figures will be released. Despite the delay in announcing the total allocations, Czekai informed states that budget revisions triggered by the new awards remain “due back to CMS” by Nov. 30. Neither Czekai nor the CMS press office responded on the record to questions from KFF Health News.
What the Delay Means for State Health Budgets
The Rural Health Transformation Program, established in July 2025 under the One Big Beautiful Bill Act and overseen by CMS according to the U.S. Government Accountability Office, distributes $10 billion a year over five years from fiscal year 2026 through fiscal year 2030 to all 50 states. President Donald Trump has touted the initiative as an “unprecedented” effort to “revitalize hospitals in our cherished rural communities.”
Under the program rules detailed on Medicaid.gov, half of the $10 billion annual fund is divided equally among all 50 approved states as a $100 million base allocation. The remaining $5 billion each year is awarded through a competitive federal scoring process that varies widely by state. Because the competitive portion is delayed, state health agencies do not know their full 2027 rural health budgets even as they face the Nov. 30 deadline to return revised spending plans to federal regulators.
On Nov. 2, Beth Fisher, a spokesperson for Kentucky’s Cabinet for Health and Family Services, confirmed the funding delay to KFF Health News. Kentucky received nearly $213 million in the program’s first year, and Fisher wrote that the rural health grants were meant to “lessen the impacts” of expected reductions in federal Medicaid funding. “Team Kentucky believes that healthcare is a basic human right,” Fisher said.
State officials who spoke to KFF Health News on condition of anonymity out of fear of federal retribution said the Oct. 30 notice compounded months of tight deadlines and heavy reporting demands. One state official called the email “cryptic,” another said there have been “plenty of surprises along the way,” and a Midwestern state health association leader said her staff was “in the dark over here” regarding the money.
How the $50 Billion Program Scored First-Year Grants
In 2026, the program’s first year, total awards ranged from $147 million to $281 million per state, with Texas receiving $281,319,361. When the program launched in 2025, state leaders had just over seven weeks to write and submit their initial applications. After CMS announced the first-year awards ahead of schedule in late December 2025, states had eight months to submit revised budgets, begin distributing funds to local communities, and upgrade rural health technology infrastructure. “The first annual progress reports, detailing how each state awarded and spent their money, were due” to CMS by the end of August 2026, KFF Health News reported.
Alan Morgan, chief executive of the National Rural Health Association, which represents rural hospitals and clinics, told KFF Health News that a national program of “this size, scope, and complexity” running on a compressed schedule is bound to run into “unforeseen issues in implementation.” Still, Lori Foley, who leads revenue and compliance advisory at the national consulting firm PYA, said the rapid rollout did not “set anybody up for success to make meaningful progress.”
Michael Baker, director of healthcare policy at the center-right American Action Forum, told KFF Health News that calculating the second-year awards “seems to be more complicated than the office anticipated.” Baker noted that federal staff created “ambitious” grading metrics that awarded points for initiatives such as expanding rural health workforces and adopting policy priorities like the presidential fitness test for schoolchildren.
While the overall first-year totals did not immediately appear skewed by party, an academic data analysis and a KFF Health News review of the discretionary competitive scores found that states with Republican governors tended to receive more of the competitive money, while states with Democratic governors crowded the bottom quarter of those awards. In the weeks leading up to the November 2026 midterm elections, in which Democrats won majorities in the U.S. Senate and House as well as several governorships, administration officials promoted the rural health fund across battleground states. Health and Human Services Secretary Robert F. Kennedy Jr. announced an $11 million grant in New Hampshire for mobile health and emergency care, and CMS Administrator Mehmet Oz promoted investments in Ohio including $30.3 million in one-time funds for rural hospitals.