Article
The ask
The Rural Health Transformation Program will distribute $50 billion from fiscal 2026 through 2030. On Aug. 5, the American Hospital Association sent CMS comments urging the agency to prioritize direct support for rural hospitals and providers. Its requests included:
- Lifting the 15% cap CMS placed on payments to providers.
- Lifting the 20% cap on infrastructure and capital improvement spending for years two through five.
- Working with Congress to let states revise initial applications and extend the time to spend obligated funds.
- Publicly posting the funding information states report.
- Avoiding administrative barriers that keep hospitals from receiving funds.
- Reporting program funds separately on the Medicare cost report.
The last request is technical but important. Separate reporting could help keep one-time transformation funds from being mixed into cost data used for future payment calculations.
The financial backdrop
In a companion blog post the same day, AHA payment policy director Shannon Wu argued that keeping care close to home is itself an affordability strategy. She cited research associating rural hospital closures with roughly 50% longer emergency transport times and higher death rates for time-sensitive conditions. More than 150 rural hospitals have closed or converted since 2010, according to the UNC Sheps Center figures she cited. Medicare and Medicaid account for about 72% of rural hospital discharges, and rural hospitals absorbed more than $7 billion in Medicare and Medicaid underpayments in 2020.
With that payer mix, rural hospitals have little room to absorb new costs. Funding that flows mostly to state-designed initiatives or vendors, rather than to hospitals delivering care, may not stabilize the facilities that anchor local access.
What rural leaders can do now
- Know your state plan. Get a copy of your state’s approved application and identify which initiatives could involve your hospital.
- Be ready with projects. Prepare proposals with clear budgets and outcome measures for workforce, technology, care coordination or capital needs that fit state priorities.
- Partner regionally. Joint proposals with clinics, EMS and larger systems may be better positioned for state funding.
- Track the accounting. Work with your finance team and auditors on how program funds will be recorded and reported.
- Engage your association. State hospital associations are shaping how dollars are distributed and can carry provider concerns to state officials.
Archive entry for Aug 7, 2026, added Nov. 11, 2026.