Category: Tennessee | Healthcare
Tennessee will receive $210.3 million in second-year funding through the federal Rural Health Transformation Program, the U.S. Department of Health and Human Services announced Monday. The state previously received $206.9 million during the program’s first year.
The five-year initiative, created through President Donald Trump’s One Big Beautiful Bill Act of 2025, provides a potential total of up to $1 billion for Tennessee. Future awards depend on the state’s progress carrying out plans approved by federal officials.
Federal Program Structure
The Rural Health Transformation Program is a $50 billion federal effort supporting rural healthcare. Participating states receive $100 million in guaranteed base funding, with additional money distributed through a competitive process.
The program was enacted alongside Medicaid changes described as reducing federal Medicaid funding by $900 billion over 10 years. Tennessee’s estimated reduction over that period is $6 billion.
Program money cannot be used for construction, clinician pay, loan repayment, hospital operating shortfalls, existing debt, increased reimbursement rates or restricted payments to providers.
Tennessee Spending and Project Work
Tennessee’s plan identifies five areas of work: access to healthcare, maternal and child health, technology infrastructure, preventive health and wellness, and workforce development.
Of the state’s 17 initiatives, five have completed planning and project-preparation work. The other initiatives remain in the preparation stage.
As of July 31, Tennessee had spent $31.3 million from its first-year award. Value-based payment programs accounted for $20.7 million of that spending, while $3.3 million supported perinatal-center training, emergency medical services supplies and care.
TennCare is leading a $100 million expansion of value-based payments under the state’s program plan.
Policy Commitments
Tennessee’s application included several policy commitments that legislators have questioned as conditions for receiving the full amount of available funding. Among them was eliminating the state’s certificate of need law, which regulates certain healthcare facilities and services. Tennessee enacted a partial certificate of need reform in 2024.
The application associated $2.19 million in first-year funding with further certificate of need changes. It also tied $2.04 million to broader practice authority for nurse practitioners, physician assistants, pharmacists and dental hygienists.
Other commitments included restoring the Presidential Fitness Test in schools and requiring nutrition instruction as part of physicians’ continuing medical education. The state also proposed seeking a U.S. Department of Agriculture waiver to prevent SNAP benefits from being used for items classified as “non-nutritious.”
The SNAP-related proposal was connected to $6.36 million in first-year funding. In June, a federal judge blocked Tennessee and several other states from putting SNAP purchase restrictions into effect.
Tennessee must use its first Rural Health Transformation Program funding tranche by Sept. 30, 2027.