Texas is set to receive $281 million in the first year of Rural Health Transformation Program funding — the largest total award of any state — yet it will receive the lowest amount per rural resident, according to KFF.
The state has the largest rural population in the U.S., with more than 4.2 million rural residents. That translates to about $66 per rural resident, according to KFF’s Jan. 6 report. By contrast, New Jersey is receiving the smallest overall first-year award at $147 million. With a rural population of 137,792, the funding amounts to $1,069 per rural resident.
Across all states, first-year awards average $157 per rural resident but vary widely, according to the report. Rhode Island will receive $6,305 per rural resident, the highest in the nation. Ten states will receive less than $100 per rural resident, while eight will receive more than $500.
The disparity stems in part from how the $50 billion Rural Health Transformation Program is structured. CMS will distribute $10 billion annually from fiscal years 2026 through 2030 to all 50 states. Half of the funding is distributed equally across states — meaning every state gets at least $100 million a year — while the other half is allocated based on a mix of measures of rural need and other criteria.
Only a quarter of the total fund — $12.5 billion — is being distributed exclusively based on measures of state need, and just 5% of the overall fund is tied to rural population size. Other factors considered in that need-based portion include the number of rural facilities, land area, and the share of hospitals receiving Medicaid disproportionate share hospital payments.
Because the equal share accounts for a large portion of the first-year awards, total funding amounts vary modestly relative to large differences in rural populations across states, according to the report.
The Rural Health Transformation Program was created in July as part of HR1, in part to help offset Medicaid funding cuts, including an estimated $137 billion to rural areas over the next decade.
CMS has emphasized that the funding is meant to support broader health system transformation in rural communities, not just compensate hospitals for cuts, according to the report. Examples of eligible initiatives include expanding telehealth services, remote patient monitoring, workforce development programs and supporting regional collaboration among providers.
CMS stipulates that direct payments to hospitals and other providers for patient care cannot exceed 15% of total funds, though providers could benefit through other means, such as infrastructure investments (capped at 20%), according to the report.
“It is unclear how much of the money will benefit rural hospitals either directly or indirectly and the extent to which this will offset hospitals’ losses under the reconciliation bill,” KFF said in its report.
The post How Texas represents a paradox in Rural Health Transformation funding appeared first on Becker's Hospital Review | Healthcare News & Analysis.
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