Virginia is set to receive $189.5 million from the Rural Health Transformation Fund, a $50 billion initiative meant to bolster health care access in rural communities over five years.
States will receive the first awards in 2026. Future allocations will depend on program performance, according to Peter Finocchio, press secretary for Gov. Glenn Youngkin. States will need to focus on the specific initiatives outlined in their applications to qualify for future funding.
Finocchio said by email Tuesday that states and the Centers for Medicare and Medicaid Services are still negotiating budgets for each initiative based on the awarded totals.
Half of the $50 billion will be distributed evenly across all 50 states. CMS is awarding the remaining half competitively, requiring states to submit applications detailing their demographics and proposed strategies to address barriers to rural care. Every state submitted an application for these funds.
Neither Finocchio nor a CMS spokesperson said how much of Virginia’s allocation came from competitive funding. Still, the state ranks in the bottom third of grant awards, even though 57% of its counties are considered rural, according to Virginia’s application.
Virginia centered its application on expanding existing initiatives. Those include increasing the use of data and technology, investing in workforce development and scaling up mobile health services to reach underserved areas.
The funding arrives as rural providers face mounting pressure from changes to Medicaid and insurance coverage, but key questions remain about how the funds will be divided among initiatives and whether the short timeline will allow programs to deliver measurable improvements before future allocations are reassessed.
Resources for innovation and collaboration
The new funding gives Virginia an opportunity to strengthen access to care in communities that have faced persistent challenges, said Tracy Douglas, CEO of the Virginia Community Healthcare Association.
Douglas represents the federally qualified health centers in Virginia, which provide care on a sliding-fee scale and serve Medicaid patients. They receive federal funding to ensure that patients can pay based on what they can afford.
At the same time, changes outlined in the federal spending bill, such as the end of enhanced subsidies for Marketplace insurance premiums and more frequent eligibility checks for Medicaid, could push more people to rely on the sliding-fee model. That shift could strain community health centers financially, Douglas said in an interview earlier this month.
Congress created the Rural Health Transformation Fund to offset cuts to Medicaid and other programs included in the federal spending bill passed in July. The legislation will change how hospitals receive reimbursement for Medicaid patients, potentially lowering payments and increasing the risk of rural hospital closures. However, states cannot use transformation funds to replace lost reimbursement.
Although the funding will not, by itself, address the structural and financial strains on rural health care, particularly in light of the federal spending bill, it does provide resources for innovation and collaboration, Douglas said.
The influx of federal dollars could bring new partnerships among community health centers, hospitals and mobile health providers. The fund also includes an infrastructure component to ensure that clinics have the equipment and facilities needed to scale mobile care.
Still, Douglas cautioned that the funding will not fill every gap.
“One of the biggest hurdles will be how the state prioritizes which proposals to fund. My understanding is that Virginia received hundreds of thoughtful, innovative submissions, including from community health centers,” Douglas said by email Tuesday. “The real test will be identifying projects that are not only creative but also sustainable and affordable over the long term.”
The transformation fund will end at the end of 2030, raising questions nationwide about what happens to programs once the money runs out.
CMS will reassess state funding based on program effectiveness
Evaluating the success of these programs in one year will pose another challenge, said Lauryn Saxe, chief strategy officer for the Virginia Center for Health Innovation and the executive director of its research consortium.
“This is a huge influx of dollars in a very short timeframe to turn them around into the programs that they’re going to be. And being able to use a large amount of money quickly always comes with trade-offs,” Saxe said. “I think one of the challenges is going to be how do we actually make sure that the dollars are used effectively and not just used.”
In its application, Virginia identified four initiatives to receive funding:
- CareIQ, which includes four sub-initiatives focused on technology innovation and expansion, artificial intelligence to support provider productivity, modernization of electronic health records and remote patient monitoring to track patient outcomes in facilities and at home.
- Homegrown Health Heroes, which also includes four sub-initiatives to support workforce development in Virginia.
- Connected Care, Closer to Home with three sub-initiatives to expand telehealth services and mobile clinics.
- Live Well, Together with four sub-initiatives focused on infrastructure, technology and education for assistance with nutrition, lifestyle changes and integrated care for seniors eligible for both Medicare and Medicaid.
Because these initiatives will roll out simultaneously, the state will need to ensure that they complement each other and produce meaningful outcomes, Saxe said. Making sure that those projects don’t duplicate services could also be challenging.
States will not reapply each year for federal funding, but CMS will reassess award amounts annually based on progress reports, performance metrics and required reporting, according to a CMS spokesperson. Funding levels may increase, decrease or remain the same. CMS will finalize 2027 allocations by Oct. 31, 2026.
That timeline could make it difficult to demonstrate impact, Saxe said. In one year, data may not capture meaningful changes in outcomes such as mortality rates or overdose trends.
Instead, early evaluations may focus on measures such as how many residents use the programs or whether more people successfully access behavioral health care.
“We have to try to build the evidence of what’s working and what’s not working along the way so that we can be making the case that Virginia should continue to get those dollars, but also pivot where we’re spending dollars if things aren’t working,” Saxe said.
Fresh food, maternal health are highlights
In announcing the Rural Health Transformation Fund awards, CMS highlighted several programs from different states. For Virginia, CMS noted two sub-initiatives from the state’s application, including Food as Medicine programs and innovative approaches to maternal care.
Food as Medicine programs operate as food pharmacies, providing food-insecure patients with produce prescriptions to help manage chronic diseases such as high blood pressure and diabetes.
Carilion Clinic supports one such effort, the Southwest Virginia Produce Prescription Program. It is a regional initiative that leverages partnerships with community-based organizations and food retailers to connect patients to nutritious foods. Doctors can write a prescription for fresh produce and the patient can use it to obtain free fruits and vegetables at Feeding Southwest Virginia locations and Virginia Fresh Match sites, said Rachel Burks, the community health education manager at Carilion.
These programs are emerging as effective tools in addressing chronic conditions such as high blood pressure or diabetes, especially in rural communities where access to fresh food can be limited.
“The aims of food as medicine initiatives align with the goals of the Rural Health Transformation Fund to re-shape rural health care delivery by investing in preventive, community-based solutions that address root causes of poor health and strengthen local systems,” Burks said. “By embedding nutritious food access within clinical care, food as medicine efforts not only improve patient outcomes and quality of life but also support thriving communities and local food systems.”
[Disclosure: Carilion is one of our donors, but donors have no say in news decisions; see our policy.]
Virginia also proposed expanding rural prenatal and postpartum care through community hubs, mobile units and telehealth. According to CMS, the plan prioritizes mothers with substance use disorders, expands remote monitoring, and supports rural hospitals in efforts to prevent labor and delivery unit closures.