Rural Health Transformation Program’s application deadline arrives, bringing states and hospitals a step closer to billions in funding dollars

In the final days before the application deadline for the $50 billion Rural Health Transformation Program (RHTP), states and hospitals were scrambling to present the relevant information to CMS in the best possible light.

Nov. 5 is the deadline to for states to apply for a share of the $10 billion that will be made available each year from 2026 through 2030. Applications must be wrapped up only about 50 days after the notice of funding opportunity (NOFO) was issued in mid-September. CMS has firmly maintained the deadline amid the extended government shutdown, and the 52-page FAQ was updated with additional mandatory guidance Oct. 31.

Filling out the extensive application as instructed ensures a state receives at least one-fiftieth of a $5 billion annual disbursement over the five-year funding period, meaning $100 million per year for the state’s rural healthcare providers. The other $5 billion per year will be disbursed at CMS’s discretion based on demographics and prospective programs described by states in their applications.

Martie Ross, JD, who is assisting with one state’s application in her role as director of PYA’s Center for Rural Health Advancement, thinks the typical annual grant per state could end up between $150 million and $300 million when CMS announces the allocations by Dec. 31.

The $50 billion was apportioned by the 2025 budget reconciliation bill as a way to help rural healthcare providers mitigate anticipated spending reductions in Medicaid and other healthcare programs. Those cuts, stemming from other provisions in the bill also known as the One Big Beautiful Bill Act, have been projected to total roughly $1 trillion over a decade.

Doling out the RHTP dollars

Of the factors that will determine the $5 billion in annual discretionary funding, half are based on a state’s rural characteristics (e.g., how many people and hospitals are in designated rural areas).

Among the remaining criteria, which feed into a complicated scoring system that will be used to determine grant totals, some factors require states to align certain policies with the Trump administration’s regulatory and healthcare priorities. For example, states must promise to enact policies easing certificate-of-need regulations.

Other criteria are intended to promote transformative initiatives in areas such as population health, workforce recruitment and digital health innovation. States have described how they’ll use the funding to build a sustainable healthcare infrastructure, said Hanford Lin, partner and state health and human services practice leader for Guidehouse.

Some Midwestern states have looked to incorporate existing recommendations from their rural health task forces, said Rushil Desai, senior vice president and sector general manager for Gainwell. Other applications are heavily driven by state hospital associations, with most of the funding likely being funneled back to hospitals.

“The balance here is how you achieve the goals the feds have laid out from a data infrastructure [and] interoperability perspective to provide sustainability to rural hospitals,” Desai said.

The RHTP is not meant to resemble the Provider Relief Fund, in which the stated intention was to help providers cover COVID-19 expenses and pandemic-related lost revenue.

Applicants are “fighting the public perception that the [RHTP] was intended to replace lost Medicaid revenue, and that’s just not [the purpose],” PYA’s Ross said. “CMS has said repeatedly that this is to prevent you from being in the position that cuts to Medicaid funding hurt you.”

Workforce as a focus

As described in applications, the biggest point of emphasis may be efforts to shore up the clinical workforce in rural areas.

“I think there’s going to be a heavy concentration on rural residency programs to grow rural physicians [and] a lot around allied health,” Ross said.

Workforce-related funding could go toward addressing the nursing shortage by increasing capacity in nursing schools and bolstering the supply of preceptors, she noted.

If implemented successfully, training programs and innovative staffing models can be maintained long after the funding expires, establishing a talent pipeline for hospitals.

“If it’s a productive and financially sustaining service line for a facility, [such as] general surgery, urological surgery, orthopedic surgery, GI medicine — all things that can provide additional revenue to the facility while keeping care local — eventually they should not only be able to sustain themselves, but [they] can help support other efforts in the community, like nutrition services or outreach for elderly patients,” said Richard Makowiec, MD, MBA, chief surgical officer at the staffing solutions company Synergy Health Partners.

Using technology to expand access

Establishing an enhanced infrastructure for remote patient monitoring also is a common theme in RHTP applications.

Said Makowiec, “I think you will see a lot of specific locations saying: Hey, we have a specific need [with], for example, behavioral health in this community. We know we can get expertise from another community. So, what technology can help us provide that efficient care delivery while maintaining digital security, interoperability and data sharing?”

However, there has been confusion around the potential use of the funding for telehealth initiatives, Ross said. Apparently, the money cannot be applied to get a specialist set up in an urban area to deliver telehealth to rural residents. Instead, a newly funded position would have to be in a rural area.

AI is an area of interest but is challenging for rural hospitals because many have “slower, smaller [electronic health records] that don’t have that type of integration,” Ross said. “They’re all saying, ‘Well, we don’t know what to buy and we don’t know where the Good Housekeeping seal is on AI for rural hospitals.’”

States will need to ensure the availability of reimbursement sources for new technology.

“You want to use this funding as a catalyst to start and build something, but there needs to be that five, seven, 10-year outlook of ‘How will this keep going after the RHTP funds are exhausted?’” Lin said.

Other ways to improve healthcare

Integrated care for dual-eligible beneficiaries is another popular program being described on states’ applications, Ross said. That can take the form of Programs for All-inclusive Care of the Elderly (PACE) models, which could be prohibitively expensive for communities to implement without the funding.

Other considerations are provider incentive payments for cost and quality initiatives in Medicaid, along with reimbursement mechanisms to link rural providers with community health workers. Ross also anticipates efforts to set up clinically integrated networks.

RHTP restrictions to consider

States cannot put the funding toward paying for clinical services that already are being reimbursed. If Medicare is the only payer for a given service line, for example, applicants must segregate the other segments of their providers’ payer mixes and calculate the prospective payment for those.

Funded construction is limited in the RHTP. Essentially, anything that requires a permit is off limits, Ross said.

States don’t need to file new RHTP applications in subsequent years but should be aware that funding can be clawed back if CMS does not like what it sees in a state’s progress reports. In addition, funding awarded to take effect Jan. 1, 2026, must be spent by Oct. 1, 2027.

Furthermore, “They’ve effectively said if you have a project you want to do, it needs to be in the application,” Ross said. “There’s no coming back later and saying, ‘Hey, we just got this great idea. Can we spend our money on this?’”

As a result, she said, “The application starts looking like Christmas trees. There’s all sorts of stuff hung on it.”