Trump administration links part of rural health grant scoring to hospital laws
CMS made state certificate-of-need policies one factor in distributing part of a $50 billion rural health program, and six states said they would revisit their laws, according to a new KFF Health News report.
The Trump administration made state restrictions on hospital construction one factor in the competition for part of a $50 billion rural health fund, creating a financial incentive for states to loosen or repeal those rules. Six states said in their applications that they would revisit the laws, KFF Health News reported on October 19.
The policies are commonly called certificate-of-need, or CON, laws. They require a provider to obtain state approval before building or expanding certain health facilities or adding some costly services and equipment. More than 30 states and Washington, D.C., retain some form of the rules, according to the National Conference of State Legislatures.
The federal program and the scoring rules
Congress created the five-year Rural Health Transformation Program in President Donald Trump’s tax-and-spending law. Half of the money is divided equally among states. The other $25 billion is distributed using several factors, including rural population and facilities, proposed initiatives, performance data and state policy commitments.
A Centers for Medicare & Medicaid Services presentation for applicants lists certificate-of-need policy as 1.75% of the technical score. Other policy factors include professional licensing compacts, scope-of-practice rules and short-term insurance. The documents therefore do not make CON repeal the sole condition for funding, but they do give states a scoring advantage for changing those laws.
CMS told applicants that certificate-of-need requirements can impose an added cost and burden on rural facilities. An agency FAQ says states could receive credit both for policies already in force and for future changes promised by a stated deadline. It also says policy commitments can be rescored in later budget periods as states make progress.
KFF Health News, whose report was published by CBS News, identified Alaska, Connecticut, Delaware, Iowa, Mississippi and Tennessee as states that proposed reviewing, loosening or ending their rules. Tennessee has moved furthest: lawmakers voted in April to phase out most remaining CON requirements over four years.
A longstanding argument over competition and access
Supporters of repeal argue that requiring government permission protects incumbent hospital systems, delays new facilities and equipment, and raises prices by limiting competition. Critics counter that new providers can concentrate on profitable services and better-insured patients, leaving rural and nonprofit hospitals with fewer resources for emergency care and other less profitable obligations.
The federal incentive enters a debate that predates Trump and has crossed party lines. States have repeatedly narrowed or removed CON laws, while hospital associations and some local health systems have warned that unrestricted expansion can destabilize facilities serving thinly populated areas.
The administration’s approach does not directly repeal any state law. Legislatures and state officials still decide whether to change their rules. Its practical effect is to attach federal grant points—and potentially a portion of future funding—to those choices.
What the new reporting establishes
The October 19 report brings together the federal scoring documents and state applications to show how the incentive is influencing policy discussions. It does not establish that every proposed change was caused solely by the federal program; several states had debated CON reform before the fund existed.
The consequences will depend on the details adopted in each state. A broad repeal, a narrower exemption for rural projects and a streamlined approval process could produce different effects. CMS will also rescore policy commitments, meaning promised changes may matter again when later-year awards are calculated.
For the Trump administration, the policy uses a large rural-health program to advance a broader preference for deregulation and competition. For states, it creates a trade-off: preserve rules intended to coordinate health investment, or loosen them to improve a federal application while accepting the risk of unintended changes in local hospital markets.
Sources and image credit
Reporting: KFF Health News report published by CBS News; primary documents: CMS Rural Health Transformation Program applicant presentation and CMS program FAQ; state-law background: National Conference of State Legislatures.
Image: Uvalde Memorial Hospital in Uvalde, Texas, photographed April 9, 2021, by Lance Cheung for the U.S. Department of Agriculture, via Wikimedia Commons and USDA’s Flickr account; public domain. Resized to 1600×900 with no text added. The archival image is illustrative and does not depict a 2026 grant decision.