WASHINGTON, D.C. — The Centers for Medicare & Medicaid Services (CMS) this week unveiled two sweeping initiatives aimed at transforming American health care—one to overhaul rural health delivery and another to lower prescription drug costs for millions of low-income Americans. Together, they mark the largest investment in rural and Medicaid reform in U.S. history.
The first initiative, the Rural Health Transformation Program, drew participation from all 50 states, each submitting a proposal for a share of the $50 billion fund designed to rebuild health systems in underserved areas. The effort, authorized under the Working Families Tax Cuts Act, calls on states to expand access, improve quality, and strengthen sustainability for rural care providers.
“When every state steps up to strengthen rural health, it shows the true character of our nation,” said Health and Human Services Secretary Robert F. Kennedy, Jr. “Rural families have been left behind—driving hours for care or going without it entirely. This program restores fairness and brings quality health care back to every American community.”
CMS Administrator Dr. Mehmet Oz called the 50-state participation “an extraordinary moment” and described the program as a generational investment in America’s heartland. “This program moves us from a system that has too often failed rural America to one built on dignity, prevention, and sustainability,” he said. “Every state with an approved application will receive funding so it can design what works best for its communities—and CMS will be there every step of the way.”
The program’s five goals include improving access, building the rural health workforce, promoting preventive care, testing innovative delivery models, and expanding use of health technology. CMS expects to announce final awards by December 31, 2025, with funds distributed over five years beginning in fiscal year 2026.
Meanwhile, CMS also announced a bold step to cut drug costs under Medicaid through the GENErating cost Reductions fOr U.S. (GENEROUS) Medicaid Model, a new pilot that allows participating states to purchase certain medications at prices comparable to those paid in other developed nations.
“Thanks to President Trump’s leadership and Dr. Oz’s bold direction at CMS, we’re expanding access to affordable medicines for millions of Americans,” Kennedy said. “By bringing most-favored-nation pricing to Medicaid, we’re driving down drug costs and protecting the future of care for our most vulnerable citizens.”
CMS officials said the model, launching in 2026, could save taxpayers billions while improving access to critical therapies. Under the initiative, the agency will negotiate directly with pharmaceutical companies, and participating states will implement uniform coverage standards for drugs in the pilot.
“Under the leadership of President Trump and Secretary Kennedy, CMS is making a historic commitment to driving down the cost of drug prices and ensuring Americans have access to life-saving medications,” Oz said. “The GENEROUS Model will help ensure state Medicaid programs are paying a fair and reasonable price for prescription drugs—furthering our efforts to preserve funds for our most vulnerable.”
“GENEROUS aims to ensure that Medicaid pricing will be on par with those in other developed nations,” said CMS Innovation Center Director Abe Sutton. “My hope is that all eligible Medicaid programs choose to participate in the pilot so their dollars can go further to support those in need.”
The announcement follows recent agreements between the White House and major drug manufacturers to align U.S. drug prices more closely with international benchmarks. CMS will issue a Request for Applications for manufacturers and seek letters of intent from states interested in joining the pilot later this fall.
Together, the rural health and Medicaid drug cost initiatives reflect what CMS calls a “new era of pragmatic reform”—one that blends innovation, efficiency, and accountability to ensure the nation’s health care system better serves all Americans.
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