A U.S. rural health grant program scores states partly on hospital approval rules, and Tennessee's later phase-in leaves a gap between its application pledge and enacted law.
The Centers for Medicare & Medicaid Services (CMS) administers the $50 billion Rural Health Transformation Program for federal fiscal years 2026 through 2030. Half of the funding is divided equally among approved states; the rest is allocated using factors that include rural needs, proposed projects and state policy. All 50 states received awards for federal fiscal year 2026. Tennessee's award was $206,888,882.
CMS gives its Certificate of Need scoring factor a 1.75% weight in the points formula. The factor covers both current state policy and proposed changes. That percentage is a weight in the scoring formula, not a stated share of a state's grant.
Tennessee's application pledged to eliminate Certificate of Need requirements across facility categories by Jan. 1, 2027. Public Chapter 887 sets later dates for specific changes: starting July 1, 2028, it removes requirements for satellite emergency departments in counties where they currently apply and for cardiac catheterization services. The exemption for new acute care hospitals starts July 1, 2030.
The law requires satellite emergency departments and new cardiac catheterization facilities to be licensed as outpatient departments of licensed hospitals. Cardiac catheterization facilities operating as of July 1, 2028, are exempt from that licensing requirement. The law also requires the commission's future licensing standards for new acute care hospitals to include TennCare participation and charity-care requirements.
For the Certificate of Need factor, CMS's notice sets Dec. 31, 2027, as the deadline to finalize proposed policy actions. It classifies failure to meet that deadline as noncompliance and says it will recover payments based on points earned by those commitments.
The National Conference of State Legislatures (NCSL) counted 35 states and Washington, D.C., with Certificate of Need programs as of January 2025. NCSL says the rules aim to limit duplicated services and assess community need; a federal Certificate of Need mandate was repealed in 1987. CMS describes the rules as a burden for rural facilities. The Tennessee Hospital Association, opposing earlier proposals in 2024, argued that competitors could draw profitable services away from hospitals that also provide less-profitable care.
CMS is scheduled to determine federal fiscal 2027 award amounts by Oct. 31, 2026.
