STATEWIDE — Indiana is set to receive more than $200 million in the first year of a sweeping new federal effort to reshape health care in rural America, part of a $50 billion program that will send funding to all 50 states over the next five years — with expectations attached.
The Centers for Medicare and Medicaid Services announced Monday that states have been approved for the Rural Health Transformation Program, which will distribute $10 billion a year from 2026 through 2030. The initiative is designed to strengthen the rural health workforce, modernize care delivery and bring services closer to home for communities that often face provider shortages and long travel times for treatment.
Under the program’s formula, half of the funding is split evenly among participating states, giving each one a baseline award. The remaining funds are distributed based on factors such as the size and condition of a state’s rural health system, workforce needs and the plans states submit to improve access and outcomes.
For 2026, first-year awards range from roughly $147 million to $281 million nationwide. Indiana’s allocation totals $206,927,897, according to CMS.
Health and Human Services Secretary Robert F. Kennedy Jr. described the funding as a step toward closing long-standing gaps in rural care, saying millions of Americans living outside urban areas deserve dependable access to quality health services. CMS Administrator Dr. Mehmet Oz said the program puts states in charge of designing solutions that fit their local communities, from workforce recruitment to technology upgrades.
But the funding is not unconditional.
Federal officials have made clear that states must meet specific benchmarks and performance goals laid out in their approved plans to continue receiving the money in future years. Those expectations can include measurable progress in areas such as workforce expansion, access to preventive care, care coordination and system modernization. States that fail to meet required milestones could see funding reduced or withdrawn in later years.
All 50 states submitted multi-year strategies outlining how they would use the money, and CMS approved each plan for participation. In Indiana, state agencies worked with health providers and community partners to focus on improving access to rural hospitals and clinics, addressing staffing shortages and expanding care options in underserved areas.
The Rural Health Transformation Program was authorized under federal tax legislation passed during President Trump’s administration, representing one of the largest federal investments ever aimed specifically at rural health systems.
Rural providers across Indiana say the timing of the funding is critical, as many hospitals and clinics continue to face financial pressure, staffing challenges and rising demand for services. Whether the investment delivers lasting change, health leaders say, will depend on how effectively states carry out their plans — and whether they meet the conditions tied to the money.
