Medicare Rural Health Services Transition Act of 1987

Medicare Rural Health Services Transition Act of 1987 - Amends title XVIII (Medicare) of the Social Security Act to direct the Secretary of Health and Human Services to establish a program providing grants to small rural hospitals to assist such hospitals in modifying the type or extent of health care services they provide so that their services more closely approximate the changing needs of rural communities and are integrated with other community health care services.

Requires rural hospitals wishing to participate in the program to submit an application specifying the nature of the hospital's proposed grant project and a timetable (of no more than two years) for its completion to the State Governor, who shall transmit it to the Secretary within 30 days with his or her comments on such application. Directs the Secretary to consider such comments, each project's objectives, and each project's effect in reducing expenditures under part A (Hospital Insurance) of the Medicare program in choosing among applicants for such grants. Sets forth reporting requirements. Authorizes appropriations for FY 1988 and 1989.