On July 4, 2025, President Trump signed into law the reconciliation bill, officially known as H.R. 1. One of the earliest high-impact provisions is the Rural Health Transformation Program (“Program”), a $50 billion fund which Congress added just prior to passage to help mitigate some of the legislation’s expected funding reductions to Medicaid. H.R. 1 provides for a one-time application process with decisions from the Centers for Medicare & Medicaid Services (CMS) permitted no later than December 31, 2025, so states will need to act quickly if they decide to pursue an application.
As part of the recent legislation, the Rural Health Transformation Program offers a significant opportunity for states to access federal funding aimed at strengthening rural healthcare. Here are some critical points to keep in mind as you evaluate this Program:
Unless CMS introduces additional requirements, the primary component of your state's application for Program funding will be a “detailed rural health transformation plan.” This plan should include key strategies focused on improving rural healthcare, such as:
Under H.R. 1, states will be required to submit a comprehensive spending plan to CMS that addresses at least three specific areas. Examples of these focus areas include:
Mercer is well-equipped to support your state in developing a strong rural health transformation plan, especially given the limited time available. Many states already have existing plans, resources, and data that can be leveraged for this process. Potential ways Mercer can assist include:
While the Rural Health Transformation Program presents a significant opportunity for states to access federal funding, success will depend on strategic planning, timely data collection, and a clear understanding of CMS’s evolving requirements. Mercer is committed to supporting your efforts through expert analysis, resource synthesis, and application assistance to help you navigate this complex process. As CMS’s implementation details become clearer, we will continue to provide guidance to ensure your state is well-positioned to maximize this opportunity.
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Please contact Charlie Greenberg, Eric Harkness, or your Mercer consultant to discuss the potential impact your specific state Program. You may also email us at: mercer.government@mercer.com.
For more information on our insights and services, visit our website: www.mercer.com/government.
Mercer is not engaged in the practice of law, or in providing advice on taxation matters. This report, which may include commentary on legal or taxation issues or regulations, does not constitute and is not a substitute for legal or taxation advice. Mercer recommends that readers secure the advice of competent legal and taxation counsel with respect to any legal or taxation matters related to this document or otherwise.
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