HHS Offers $50B in Rural Health Grants Including IT, Cyber

The U.S. Department of Health and Human Services has rolled out a $50 billion state grant program to “transform” rural healthcare. The grant program – authorized under the “Big Beautiful” bill signed into law in July by President Donald Trump – includes investment opportunities related to IT and cybersecurity.

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The funding will be available to states in $10 billion allocations over the next five years beginning in fiscal 2026.

But the so-called Rural Health Transformation Program grants only appear to make a dent to the overall Medicaid cuts that rural healthcare could face over the next decade.

KFF, a health policy news network, estimates that under Trump’s tax and spending law, the nation’s 1,800 rural hospitals over the next 10 years could lose between $137 billion and $155 billion in Medicaid funding, which overall is expected to be reduced by $1 trillion by fiscal 2036.

The American Hospital Association in an Aug. 11 letter to the Centers for Medicare and Medicaid Services administrator Dr. Mehmet Oz, said that about half of rural hospitals are delivering care “significantly below” the cost of providing services, and are struggling to remain viable.

“Many are facing risks of closure due to low patient volumes, high fixed costs, outdated infrastructure and workforce shortages,” the AHA wrote. “They also rely more heavily on public payers – Medicare and Medicaid – and have a corresponding lower share of private coverage. Moreover, when rural hospitals close, it threatens the health and economic vitality of the entire community.”

But with pending Medicaid cuts, any extra funding – including money for IT and cyber – is much needed and potentially helpful for resource-stretched rural clinics, hospitals and other such entities, some experts said.

“This represents $10 billion each year, over a five-year period,” said Alan Morgan, CEO of the National Rural Health Association. “That is a significant investment in the future of rural health, but we’ll have to see how exactly the states proceed in distributing the funds,” he told Information Security Media Group.

“Addressing IT/cyber needs is a key focus area, but it is unclear how these funds will be used among the priority areas.”

Jim Roeder, vice president of IT and HIPAA security officer at Lakewood Health Systems in Staples, Minnesota, a rural community, said the RHT program is “a step in the right direction” to look at ways to help increase funding for underserved providers, but he adds that more work needs to be done.

“From what we heard in talking with many executives and IT personnel at these locations last summer is they really need additional funding and workforce support that is in a sustainable and long-term structure,” said Roeder, who is also the co-chair of the Underserved Provider Cybersecurity Advisory Group of the Health Sector Coordinating Council. “I hope that is what this program can eventually grow and become.”

Program Details

The RHT program, administrated by CMS, has funding opportunities related to five “strategic goals,” HHS said in a statement on Monday.

Those include:

• Tech innovation: Foster use of innovative technologies that promote efficient care delivery, data security and access to digital health tools by rural facilities, providers and patients. That includes projects supporting remote care, improving data sharing, strengthening cybersecurity and investing in emerging technologies such as robotics and artificial intelligence;
• Make rural America healthy again: Support rural health innovations and new access points to promote preventative health and address root causes of diseases. Projects will use evidence-based, outcomes-driven interventions to improve disease prevention, chronic disease management, behavioral health and prenatal care;
• Sustainable access: Help rural providers become long-term access points for care by improving efficiency and sustainability. That includes rural facilities working together – or with regional systems – to share or coordinate operations, technology, primary, specialty care and emergency services;
• Workforce development: Attract and retain skilled healthcare workforce by strengthening recruitment and retention of healthcare providers, pharmacists and other clinicians in rural communities;
• Innovative care: Spark the growth of innovative care models – including accountable care organizations – to improve health outcomes, coordinate care and promote flexible care arrangements.

CMS said half – or $25 billion – of the funding will be evenly distributed to all states with an approved application. The other half will be awarded to approved states based on individual state metrics and applications “that reflect the greatest potential for and scale of impact on the health of rural communities,” CMS said.

The deadline for states to apply is Nov. 5. “There is only one opportunity to apply for funding and one application period for this program,” CMS said, adding that awardees will be announced by Dec. 31.

Stretched Resources

Roeder said his main concern about the RHT program is whether it will be enough funding for rural hospitals and other eligible facilities that need help. “If each state applies that means it would be $100 million to each state each year for five years,” he said.

Minnesota has about 200 critical access hospitals and other rural healthcare providers that might potentially qualify for the funding. “The state would decide to split it evenly to 200 healthcare providers, that would be $500,000 to each a year. If other facility types such as long term care, skilled nursing facilities are eligible as well it can reduce that amount even more per facility,” he said.

“Depending on how the other funding cuts play out it could realistically end up still being a loss of funding federally. Again, these are assumptions because there isn’t a solid structure on how the state has to give out the funds yet once approved,” he said.

Morgan of the National Rural Health Association said that he hopes rural hospitals and clinics either form new rural networks, or work within existing systems and networks, for these project proposals under the grant program.

“HHS wants to see sustainability, not a one-time payment into infrastructure that cannot be maintained over time,” he said. “Working in a collaborative manner to address IT and cyber needs within a network or system helps ensure that these new systems can be properly updated and maintained over time.”

Focused federal investment to enhance cybersecurity and health information technology among rural healthcare providers should prove helpful to those organizations, said Jennifer Stoll, chief external affairs officer at OCHIN, a nonprofit provider of health IT services and products.

“Together, OCHIN and the Health Sector Coordinating Council stand ready to provide states with the subject matter support needed to inform their applications for these critical funds,” said Stoll, co-chair of HSCC’s Underserved Provider Cybersecurity Task Group.

Roeder said it is important that rural healthcare facilities indeed make a variety of investments to protect their infrastructure, including multifactor authentication, next-gen firewalls, and EDR, MDR and XDR, he said.

“Having some sort of detection and response is crucial for these places that don’t have a lot of workforce or bandwidth to help with the protection and remediation of their resources.”