GAO Says CMS Rural Health Monitoring Meets Rules

By David Thornton Columbus, OH · POLITICS DESK

Published Updated 3 min read

The GAO reported that CMS monitoring plans for the Rural Health Transformation program align with federal award requirements. The finding confirms oversight structures for the $50 billion initiative established in July 2025. Initial state funding allotments ranged from $147 million.

The Government Accountability Office reported that the Centers for Medicare & Medicaid Services monitoring plans for the Rural Health Transformation program align with federal award requirements. The agency found that planned monitoring activities are generally consistent with selected requirements related to monitoring of federal awards.

The One Big Beautiful Bill Act established the Rural Health Transformation program in July 2025. The legislation authorizes up to $50 billion in funding to states over five years. CMS estimated that Medicaid spent approximately $19 billion on rural hospitals in 2024.

CMS awarded initial Rural Health Transformation funding totaling $10 billion to all 50 states in the latter half of 2025. The agency and merit reviewers assessed state applications based on factors including rural characteristics and the strength of proposed initiatives. Federal law provides CMS with broad discretion to determine funding allotments to states.

CMS plans to allot up to $40 billion of remaining funds to states over the next four years based on their demonstration of satisfactory progress. The authorizing legislation limits states’ ability to appeal or challenge funding changes made by the agency. CMS may withhold, reduce, or recover funding if states do not comply with award terms and conditions.

Why It Matters

The $50 billion allocated for the Rural Health Transformation Program represents an increase compared to prior federal spending on rural hospitals. With CMS estimating that Medicaid spent approximately $19 billion on rural hospitals in 2024, the new program marks an expansion of federal support. The GAO finding that monitoring plans align with federal award requirements provides assurance that the agency has structured its oversight to meet statutory standards for managing these large-scale funds.

The requirement for states to submit detailed transformation plans marks a shift from earlier policies that focused on direct financial assistance. By tying up to $40 billion in future funding to demonstrated satisfactory progress, the program creates a performance-based framework for distributing resources. The use of existing data systems like MSIS and DataConnect allows CMS to leverage technology for program oversight and data-driven decision-making as it manages this level of investment in rural healthcare infrastructure.

Timeline

Pursuant to section 50203 of the One Big Beautiful Bill Act, enacted on July 4, 2025, the Secretary of the Interior is making available for coal leasing approximately 13,103,000 acres of Federal mineral estate. The OBBBA directs the Secretary of the Interior to make available for coal leasing a minimum of 4,000,000 additional acres of the Federal mineral estate within 90 days of enactment.

The Government Accountability Office reported that CMS's monitoring plans for the Rural Health Transformation program align with federal award requirements, as outlined in a letter to the Senate Finance Committee dated September 12, 2025. The GAO requested information from CMS regarding its monitoring plans for the Rural Health Transformation program, and CMS provided a detailed response outlining its approach to ensuring compliance with federal award requirements, as documented in a letter to the Senate Finance Committee on September 12, 2025. CMS has established policy guidance for rural health transformation programs, including conducting readiness assessments, ongoing monitoring, and oversight of state implementation, as detailed in the Statement of Organization, Functions, and Delegations of Authority published in the Federal Register on September 23, 2025. The Centers for Medicare & Medicaid Services awarded initial Rural Health Transformation funding totaling $10 billion to all 50 states in the latter half of 2025. The Government Accountability Office found that the Centers for Medicare & Medicaid Services' planned monitoring activities are generally consistent with selected requirements related to monitoring of federal awards on October 6, 2026. Primary sources: cms.gov, cms.gov (2), hhs.gov

What's New

The Centers for Medicare & Medicaid Services has historically been responsible for administering several rural health programs, including the Critical Access Hospital Program, which provides Medicare reimbursement to small rural hospitals based on cost. The One Big Beautiful Bill Act, which authorized the Rural Health Transformation Program, was the first major piece of legislation to explicitly require states to submit detailed rural health transformation plans as a condition for receiving federal funding, marking a shift from earlier rural health policies that focused more on direct financial assistance. Primary sources: cms.gov, finance.senate.gov

The RHT Program requires states to develop and implement rural health transformation plans, which are subject to review and approval by CMS, as described in the RHT Program Overview document released by CMS in August 2025. A study titled "Monitoring for Waste: Evidence from Medicare Audits" was published in 2023 in The Quarterly Journal of Economics. The $50 billion allocated for the Rural Health Transformation Program represents a significant increase compared to prior federal spending on rural hospitals, with CMS estimating that Medicaid spent approximately $19 billion on rural hospitals in 2024, making the new program a substantial expansion of federal support. Primary sources: doi.org, cms.gov

fact_check Facts

The Rural Health Transformation program will provide up to $50 billion in funding to states over five years.
The Centers for Medicare & Medicaid Services administers the Rural Health Transformation program through cooperative agreements with states.
Source: cms.gov
Federal law provides the Centers for Medicare & Medicaid Services with broad discretion to determine funding allotments to states.
The Centers for Medicare & Medicaid Services awarded initial Rural Health Transformation funding totaling $10 billion to all 50 states in the latter half of 2025.
The authorizing legislation limits states’ ability to appeal or challenge funding changes made by the Centers for Medicare & Medicaid Services.
The Centers for Medicare & Medicaid Services may withhold, reduce, or recover funding if states do not comply with award terms and conditions.
Source: cms.gov
The Rural Health Transformation program provides funding for activities such as recruiting clinicians to rural areas and providing training and technology to improve care delivery in rural hospitals.
The Centers for Medicare & Medicaid Services plans to monitor states’ activities through communication, review of submitted information, audits, and site visits.
Source: cms.gov
The Government Accountability Office found that the Centers for Medicare & Medicaid Services' planned monitoring activities are generally consistent with selected requirements related to monitoring of federal awards.

menu_bookBackground & Sources

Context and data our newsroom added to the originating report, with the primary source for each item shown below it.

The One Big Beautiful Bill Act established the Rural Health Transformation program in July 2025.
The Centers for Medicare & Medicaid Services (CMS) has historically been responsible for administering several rural health programs, including the Critical Access Hospital Program, which provides Medicare reimbursement to small rural hospitals based on cost.
Source: finance.senate.gov
The Government Accountability Office (GAO) reported that CMS's monitoring plans for the Rural Health Transformation program align with federal award requirements, as outlined in a letter to the Senate Finance Committee dated September 12, 2025.
Source: cms.gov
A study titled "Monitoring for Waste: Evidence from Medicare Audits" was published in 2023 in The Quarterly Journal of Economics.
Source: doi.org
The $50 billion allocated for the Rural Health Transformation Program represents a significant increase compared to prior federal spending on rural hospitals, with CMS estimating that Medicaid spent approximately $19 billion on rural hospitals in 2024, making the new program a substantial expansion of federal support.
Source: cms.gov
The Rural Health Transformation Program includes a requirement for states to submit progress reports, Federal Financial Reports, and other documentation as part of post-award monitoring, as outlined in the RHT Program Applicants Webinar Transcript from August 2025.
Source: cms.gov
The GAO requested information from CMS regarding its monitoring plans for the Rural Health Transformation program, and CMS provided a detailed response outlining its approach to ensuring compliance with federal award requirements, as documented in a letter to the Senate Finance Committee on September 12, 2025.
Source: cms.gov
The Rural Health Transformation Program is funded through cooperative agreements, which are formal arrangements between CMS and states that involve shared responsibility for achieving program objectives, as explained in the RHT Program Applicants Webinar Transcript from August 2025.
Source: cms.gov
CMS has established policy guidance for rural health transformation programs, including conducting readiness assessments, ongoing monitoring, and oversight of state implementation, as detailed in the Statement of Organization, Functions, and Delegations of Authority published in the Federal Register on September 23, 2025.
Source: hhs.gov
The RHT Program requires states to develop and implement rural health transformation plans, which are subject to review and approval by CMS, as described in the RHT Program Overview document released by CMS on August 2025.
Source: cms.gov
CMS's monitoring responsibilities under the Rural Health Transformation Program include conducting readiness assessments, ongoing program reviews, and site visits to ensure that states are implementing their approved transformation plans effectively, as outlined in the agency's Statement of Organization, Functions, and Delegations of Authority.
Source: cms.gov
Prior to the Rural Health Transformation (RHT) Program, CMS had limited experience with large-scale, multi-year rural health transformation initiatives, with most previous efforts focusing on targeted improvements rather than systemic change across entire state healthcare ecosystems.
Source: cms.gov
CMS will monitor the implementation of states' rural health transformation plans using existing systems such as the Medicaid Statistical Information System (MSIS) and DataConnect, as part of its broader effort to leverage technology for program oversight and data-driven decision-making.

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