The U.S. Centers for Medicare & Medicaid Services (CMS) this week took major steps to operationalize one of the largest federal investments in rural health care in decades, formally establishing a new agency office and announcing the distribution of $50 billion in funding to all 50 states aimed at strengthening care delivery in rural communities.
On Dec. 29, CMS announced the creation of the Office of Rural Health Transformation (ORHT) within the agency’s Center for Medicaid and CHIP Services. The office will oversee implementation of the Rural Health Transformation (RHT) Program, a five-year, $50 billion initiative created under the One Big Beautiful Bill Act with the goal of expanding rural health infrastructure while fostering greater innovation.
In a companion announcement, CMS said it has awarded funds to all 50 states through the RHT Program, with first-year allocations for 2026 averaging roughly $200 million per state. The federal funds are intended to help states address longstanding gaps in rural health care that have contributed to hospital closures, workforce shortages and limited patient access to essential services.
Access to outpatient surgery in rural areas often falls into these gaps. Moving forward, some of the funds could be used to support ASCs and outpatient surgery in America’s most rural markets.
A new rural health hub
The establishment of the ORHT signals CMS’ intent to move beyond planning and into execution. The office will provide technical assistance, coordinate partnerships with state and local stakeholders, and monitor progress against rural health goals throughout the life of the program, which runs through Sept. 30, 2031.
“Healthy communities start with access to reliable care, no matter where you live,” Health and Human Services (HHS) Secretary Robert F. Kennedy, Jr., said in a statement. “By establishing the Office of Rural Health Transformation, we are making sure this historic investment delivers real results for rural families and strengthens health systems for the long term.”
The office will also host state engagement efforts and serve as the primary liaison between CMS and awardees, guiding implementation of state-specific transformation plans that were evaluated through a merit-based review process.
“The Rural Health Transformation Program represents a generational investment in the health and vitality of rural America,” CMS Administrator Dr. Mehmet Oz added. “By formally establishing the Office of Rural Health Transformation, CMS is reinforcing its commitment to strong leadership, accountability, and partnership as states prepare to turn this investment into lasting improvements for rural communities.”
State awards and strategic priorities
Under the RHT Program, states will receive funding from a $50 billion pool distributed over five years. In 2026, allocations range from about $147 million to $281 million per state, with funding designed to expand access to care, bolster the rural health workforce, modernize facilities and technology, and support innovative care models.
CMS’ announcement highlights several intended uses for the funds: expanding preventive and primary care services; strengthening emergency medical services; investing in workforce training, recruitment and retention; and advancing digital health tools like telehealth and remote patient monitoring. States also plan to test new payment models and regional coordination systems aimed at improving outcomes and reducing inefficiencies in rural networks.
A portion of the funding is distributed equally among all states that meet eligibility requirements, while the remainder is based on factors such as rural population size, the state’s current rural health infrastructure and policy actions that enhance access and quality of care.
Why it matters for ASCs
Rural ASCs often operate in thin markets with limited patient volumes, workforce constraints and competition from larger systems. While most RHT Program funds flow through state health agencies rather than directly to providers, increased state investment in telehealth infrastructure, workforce development and care coordination models could help ASCs expand service lines and improve operational resilience.
“There has not been much new development in rural health care in the last 20 years, and one challenge facing surgery centers today is that we tend to operate them the same way we did 20 years ago,” Linda Bedwell, CEO of ASCend Specialists, previously told ASC News. “Twenty years ago, the landscape looked quite different. Now, our case mix is changing. People are aging. Some are actually moving to rural areas because it can sometimes be easier to live there.”
CMS plans to hold a Rural Health Summit during its 2026 Quality Conference and requires regular reporting from states to track progress, identify effective practices and accelerate innovation.
