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Policy & oversight

Federal Rural Health Scoring Favors States That Ease Hospital Construction Permit Laws

CMS told states that Rural Health Transformation Program applications score higher for those planning to roll back certificate of need laws, and six states have since pledged changes.

By the Goodsurance editorial teamOctober 23, 2026

The Trump administration has tied a portion of the Rural Health Transformation Program application scoring to whether states plan to roll back certificate of need laws, known as CON laws, which require healthcare providers to win state approval before opening or expanding health facilities, KFF Health News reported October 22.

CMS told states applying for RHTP grants that applications from states with fewer CON rules would receive higher scores. The five-year RHTP distributes 10 billion dollars a year to states from 2026 through 2030, totaling 50 billion dollars over the program's life.

Federal rural health grants now score higher for states that plan to ease hospital construction permit laws.

Six states indicated in their applications that they would consider changing their CON laws: Tennessee, Alaska, Connecticut, Delaware, Iowa, and Mississippi. Tennessee moved furthest, passing bipartisan legislation in April that would gradually unwind most of its remaining CON rules over four years.

Backers of rolling back CON laws argue that the rules have raised healthcare prices, blocked needed facility construction, and limited rural patients' access to newer technologies. Supporters of the laws counter that they were designed to prevent monopolies, reduce duplicate services, and hold down costs in underserved communities.

The debate has direct relevance for rural Medicare beneficiaries. Whether new hospitals, specialty clinics, or other facilities can be built in their communities depends in part on whether CON laws remain in effect. Changes tied to RHTP funding could reshape the healthcare options available to rural Medicare enrollees across those states.

In plain words

Many states have a rule that a hospital or clinic must get state permission before building something new. These rules are called certificate of need laws. The federal government has a large program that gives money to rural hospitals. It now gives a higher score on funding applications to states that plan to weaken or remove those permission rules. Six states said they will make that change. People in rural areas who have Medicare could end up with more or fewer hospital options depending on what their state decides.

Source: KFF Health News
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