CMS Announces the First Year of Rural Health Transformation Program Funding: What the FY26 Awards Show
CMS just announced the first year of funding under the Rural Health Transformation Program with $10 billion flowing to all 50 states for the first year. After much speculation about which states would receive the largest awards, the results are in: awards cluster in a relatively narrow range, with no state dramatically outpacing or lagging behind others.
For those expecting clear winners and losers, the distribution may seem anticlimactic. But look past total dollars and examine per-capita funding across rural and frontier characteristics, and a clear picture emerges: CMS followed its formula, frontier geography drives the biggest differences, and politics doesn't explain the results.
More importantly, FY26 is a baseline year. State execution this year will determine funding adjustments in years two through five, making implementation speed and effectiveness critical from day one.
Reminder on the Distribution Mechanics
Each year from 2026 to 2030, $10 billion is available under the program. Fifty percent is baseline funding, split evenly across all approved states. The remaining fifty percent is workload funding, allocated based on a set of rural facility and population factors, including rural population size and share, frontier characteristics, geographic dispersion, uncompensated care, and safety-net indicators such as Medicaid DSH participation.
For FY26, the rural facility and population score were fixed at application. Most technical and policy-based factors either play a limited role in the first year or phase in later. As a result, FY26 is the cleanest year to assess whether CMS applied the rural criteria in the way the NOFO suggested.
FY26 Awards by State
The table below shows each state’s FY26 award, estimated 2024 population, and per-capita funding. Population figures are approximate and used for comparison rather than precision.
| State | FY26 Award ($) | 2024 Population (M) | $ per Capita |
|---|---|---|---|
| Alabama | $203.40M | 5.16 | $39.42 |
| Alaska | $176.20M | 0.73 | $241.37 |
| Arizona | $167.00M | 7.58 | $22.03 |
| Arkansas | $198.90M | 3.03 | $65.71 |
| California | $233.64M | 39.43 | $5.93 |
| Colorado | $200.11M | 5.96 | $33.59 |
| Connecticut | $150.22M | 3.62 | $41.50 |
| Delaware | $154.70M | 1.02 | $151.67 |
| Florida | $209.94M | 23.37 | $8.98 |
| Georgia | $218.86M | 11.18 | $19.57 |
| Hawaii | $151.60M | 1.44 | $105.28 |
| Idaho | $192.40M | 1.97 | $97.67 |
| Illinois | $205.30M | 12.58 | $16.33 |
| Indiana | $206.93M | 6.92 | $29.89 |
| Iowa | $195.10M | 3.21 | $60.78 |
| Kansas | $189.70M | 2.94 | $64.52 |
| Kentucky | $201.20M | 4.53 | $44.43 |
| Louisiana | $204.60M | 4.59 | $44.58 |
| Maine | $174.80M | 1.38 | $126.67 |
| Maryland | $168.18M | 6.26 | $26.84 |
| Massachusetts | $162.01M | 7.14 | $22.69 |
| Michigan | $173.13M | 10.14 | $17.08 |
| Minnesota | $193.09M | 5.79 | $33.34 |
| Mississippi | $205.00M | 2.94 | $69.73 |
| Missouri | $216.28M | 6.25 | $34.64 |
| Montana | $187.60M | 1.13 | $165.93 |
| Nebraska | $184.90M | 1.98 | $93.38 |
| Nevada | $160.70M | 3.19 | $50.38 |
| New Hampshire | $155.40M | 1.39 | $111.80 |
| New Jersey | $147.25M | 9.50 | $15.50 |
| New Mexico | $185.20M | 2.11 | $87.77 |
| New York | $212.06M | 19.87 | $10.67 |
| North Carolina | $213.01M | 11.05 | $19.29 |
| North Dakota | $182.80M | 0.79 | $231.39 |
| Ohio | $202.03M | 11.88 | $17.01 |
| Oklahoma | $197.40M | 4.02 | $49.10 |
| Oregon | $188.90M | 4.27 | $44.24 |
| Pennsylvania | $193.29M | 13.08 | $14.78 |
| Rhode Island | $149.80M | 1.10 | $136.18 |
| South Carolina | $200.03M | 5.48 | $36.51 |
| South Dakota | $181.90M | 0.92 | $197.72 |
| Tennessee | $206.89M | 7.23 | $28.62 |
| Texas | $281.32M | 31.29 | $8.99 |
| Utah | $175.60M | 3.50 | $50.17 |
| Vermont | $156.10M | 0.65 | $240.15 |
| Virginia | $189.54M | 8.81 | $21.51 |
| Washington | $181.26M | 7.96 | $22.78 |
| West Virginia | $194.20M | 1.77 | $109.72 |
| Wisconsin | $203.67M | 5.96 | $34.17 |
| Wyoming | $180.50M | 0.58 | $311.21 |
Five Patterns that Matter
The per-capita distribution tells a more detailed story than total awards alone. Five patterns stand out:
Per-capita funding aligns closely with rural and frontier characteristics. Wyoming ($311/capita), Alaska ($241), North Dakota ($231), Vermont ($240), and South Dakota ($198) lead the distribution. States with small populations, large geographic footprints, and frontier conditions consistently appear in the upper end of the distribution. Wyoming, Alaska, the Dakotas, Vermont, and Montana are all clear examples. This is consistent with CMS’s emphasis on frontier metrics and geographic dispersion.
Large states receive higher awards in absolute terms but cluster at the bottom on a per-capita basis. California, Texas, Florida, and New York all receive substantial total funding, yet fall well below the median per resident. Population dilution drives this result, exactly as the baseline-plus-workload structure would predict.
The spread in total award amounts is relatively compressed. While per-capita funding varies dramatically, absolute awards fall within a narrow band. Differences in rural need across states are much larger than differences in FY26 funding. This reflects the dominance of the baseline allocation and suggests CMS intentionally limited dispersion in the first year.
Not all rural factors appear to carry equal weight. Frontier status and geographic dispersion are more strongly reflected in per-capita outcomes than absolute rural population counts. Large states with sizable rural populations do not separate meaningfully from other large states, indicating that CMS bounded the influence of raw rural population to prevent a small number of states from capturing a disproportionate share of workload funding.
Commonly cited political or policy explanations are not supported by the data. There is no clear partisan pattern in the per-capita distribution, with red, blue, and swing states appearing throughout both the high and low ends. Medicaid expansion status similarly does not explain the results: some non-expansion states receive high per-capita funding, while several expansion states receive relatively little. The distribution is more consistently explained by the scoring structure CMS laid out in the NOFO than by political alignment or state policy posture.
Taken together, the FY26 distribution behaves much more like the rural scoring framework described in the NOFO than a population-based or politically driven allocation, while also reflecting CMS’s choice to keep first-year differences constrained.
What This Means for Years Two Through Five
FY26 marks the start of implementation, not the end of allocation.
With awards announced, CMS will move into cooperative agreement execution with states, finalize workplans, and begin ongoing oversight. At the same time, states will start turning their approved plans into action, including releasing grants, procurements, and RFPs tied to workforce, technology, infrastructure, and care delivery initiatives.
This is where real variation will emerge. States will differ in how quickly they stand up governance, how clearly they define priorities, and how effectively they execute funding. Those differences will matter far more than FY26 award amounts for outcomes and for future funding adjustments.
For providers, vendors, and other partners, the next phase is about tracking state implementation and positioning early. Coral Health Advisors is monitoring rollout across all 50 states, tracking governance structures, funding timelines, and procurement processes as they unfold. We help clients identify opportunities and navigate state-specific strategies in workforce, technology, infrastructure, and care delivery. Contact us to discuss your strategy.