On September 15, CMS revealed details on applications for the much-anticipated Rural Health Transformation Program (“RHTP”), which was passed as part of the One Big Beautiful Bill (“OBBB”) in July of this year. The RHTP provides $10 billion in annual funding (ending in 2030) to all 50 States to further various objectives directed at strengthening rural hospitals. Not all States will receive the same amount, however, as how a State aligns itself with the goals of the current administration will play a significant role in the amounts it receives.
RHTP Overview
Every State in the country is eligible to receive funding, with half of the $50 billion to be allocated equally among the 50 states (called the “Baseline Funding”) and the remaining half to be allocated based on factors that demonstrate heightened need for the funding – factors which will be demonstrated in the application process (called the “Workload Funding”):
The RHTP can be seen as an answer (or even offset) to the OBBB’s cuts to Medicaid funding, which was anticipated to disproportionately impact rural hospitals. The Notice of Funding Opportunity (“NOFO”) was posted to grants.gov, a website used to apply for federal aid on the same day CMS made its announcement. The RHTP has five stated “goals,” which are slightly expounded upon in the application materials in the NOFO:
- Make rural America healthy again: Support rural health innovations and new access points to promote preventative health and address root causes of diseases. Projects will use evidence-based, outcomes-driven interventions to improve disease prevention, chronic disease management, behavioral health, and prenatal care.
- Sustainable access: Help rural providers become long-term access points for care by improving efficiency and sustainability. With RHT Program support, rural facilities work together—or with high-quality regional systems—to share or coordinate operations, technology, primary and specialty care, and emergency services.
- Workforce development: Attract and retain a high-skilled health care workforce by strengthening recruitment and retention of healthcare providers in rural communities. Help rural providers practice at the top of their license and develop a broader set of providers to serve a rural community’s needs, such as community health workers, pharmacists, and individuals trained to help patients navigate the healthcare system.
- Innovative care: Spark the growth of innovative care models to improve health outcomes, coordinate care, and promote flexible care arrangements. Develop and implement payment mechanisms incentivizing providers or Accountable Care Organizations (“ACOs”) to reduce health care costs, improve quality of care, and shift care to lower cost settings.
- Tech innovation: Foster use of innovative technologies that promote efficient care delivery, data security, and access to digital health tools by rural facilities, providers, and patients. Projects support access to remote care, improve data sharing, strengthen cybersecurity, and invest in emerging technologies.
As a condition for receiving the funds, States must spend them on at least three of the following nine healthcare-focused areas: (1) prevention of chronic disease; (2) provider payments; (3) consumer tech solutions; (4) training and technical assistance; (5) workforce; (6) IT advances; (7) appropriate care availability; (8) behavioral health; or (9) innovative care models (such as developing value-based care). Although States will have wide latitude in how they spend the funding they ultimately receive, the amount of that funding will be determined by how they plan to spend it (and how they follow through with their plan).
Application Details
Given that the Baseline Funding is allocated evenly regardless of application or State-specific factors, States applying for funding will be focused on the “Workload Funding” and the factors that go into it. These factors themselves have both an objective and subjective component, with the objective component being the “Rural Factors Data” and the subjective component being the “Application Information”:
- Rural Factors Data: This includes metrics such as the size of a State’s rural population, the proportion of rural health facilities in the State, the amount of uncompensated care, population in rural areas, geographic distribution of the state (i.e., distance patients must travel for care in rural areas), and the percentage of hospitals that receive Medicaid DSH payments.
- Application Information: This includes factors such as how the State plans to use the funds (so called “programmatic initiatives”), and current State policy. CMS will look at how and whether the State plans to implement integrated care models, promote nutritional goals, restrict SNAP benefits on non-nutritious foods, collaborate with larger health systems, implement licensure compacts, etc.
For the Application Information, CMS will assign a weighted score of 0-100. The States are then re-scored annually and essentially given a CMS report card on subjects like access to health, quality of care, financial trends, workforce data, technology improvements, and program implementation. States can receive more funding for following through with their goals, but they may receive less funding if they do not.
The deadline for States to apply is November 5, 2025, and this is the only opportunity for a State to do so. To apply, each State must submit its own application (and cannot do so jointly with other states), which must come from a State department or agency endorsed by the corresponding governor. CMS will announce the respective State allocations by December 31, 2025.
