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The Centers for Medicare and Medicaid Services awarded a $827.555 million cooperative agreement to the Tennessee Department of Health on December 29, 2025, under the Rural Health Transformation Program (CFDA 93.798) to build a comprehensive, outcomes-driven, sustainable care delivery system in Tennessee's rural communities through October 30, 2030.

Tennessee's plan advances five strategic goals: rural healthcare transformation through right-sizing facilities and outcomes-based payment models; maternal and child health investments; prevention-focused health delivery addressing locally identified concerns and nutrition security; health-tech infrastructure solutions enhancing operational performance and administrative efficiency; and workforce development strengthening the healthcare pipeline and local talent retention. The state will deploy $200–$500 million annually toward high-impact rural transformation initiatives through fiscal year 2031 and beyond, leveraging existing statewide infrastructure including the Governor's Rural Health Taskforce, Rural Health Resiliency Program, and County Health Councils. Sub-awards will be selected through competitive processes.

As of July 1, 2026, Tennessee Department of Health has distributed sub-awards designated for emergency medical services rural health transformation funding to county governments and local entities including McMinn County, McNairy County, Decatur County Industrial Development Board, Lawrence County, Macon County, Union County, Henry County School System, Hickman County Schools, Smith County, Cheatham County, and Giles County. Work is performed throughout Tennessee's rural communities.

Abstract

The state of tennessee will leverage the rural health transformation fund (RHTF) to build a comprehensive, outcomes-driven, sustainable care delivery system in its rural communities-anchored in prevention, innovation, workforce capacity, and value-based transformation. Under the guiding principle of "better care, closer to home," tennessee's plan advances each strategic goal and use of funds suggested by CMS, centered on five goals. Goal 1 - rural healthcare transformation incentivizing transformative change in rural health by right-sizing rural facilities and investing in outcomes-based payment models that enhance and sustain access in rural communities. Goal 2 - maternal and child health generational investments to ensure strong starts for every rural family goal 3 - make rural tennessee healthy again embedding prevention into health and healthcare delivery by addressing locally identified concerns, expanding early detection, and improving nutrition security goal 4 - technological infrastructure investing in health-tech solutions that enhance operational performance, allow for innovative care solutions, maximize efficiencies, and cut administrative waste. Goal 5 - workforce development strengthening a comprehensive healthcare workforce pipeline, training and retaining local talent leveraging its proven statewide infrastructure (including the governor's rural health taskforce, rural health resiliency program and county health councils), the state is prepared to deploy $200-500 million annually toward high-impact rural transformation initiatives through FY 2031 and beyond. Sub-awards will be selected through competitive processes, detailed below. Governor LEE has made rural health a top priority since his first executive order, and tennessee's strategy is built on years of collaboration, a strong evidence base, and knowing what works: tennessee's competitive grant model (healthcare resiliency program) and tenncare shared savings framework will drive innovation, measurable outcomes and scalability across all rural counties. To match this opportunity, in addition to RHTF funds, tennessee will leverage an additional $125M shared savings for capital investments in rural health facilities. We will empower rural communities to invest in health-tech, engage new care pathways, and benefit from coordinated, value-based care close to home. For federal partners valuing urgency, impact and accountability, rural tennessee presents a compelling opportunity to demonstrate how state-led, data-driven transformation can redefine rural health access and outcomes nationwide. With RHTF support, tennessee is positioned to become the archetypal model in the nation for how rural systems can sustainably deliver high-quality, accessible care-anchored in prevention, technology, and value.