The Centers for Medicare & Medicaid Services (CMS) announced $10 billion in this year’s awards to all 50 states through the Rural Health Transformation Program (RHTP), continuing this historic investment to strengthen rural healthcare across America.
Established through the Working Families Tax Cuts Act, RHTP provides $50 billion over five years to help states improve healthcare access, quality, and outcomes in rural communities. Rural health challenges extend beyond geography and long travel distances. Many communities also face shortages of health professionals, high rates of chronic disease, limited specialty and behavioral health capacity, barriers to healthy living, aging infrastructure, workforce recruitment and retention challenges, and fragmented care delivery. RHTP gives states resources and flexibility to address these interconnected challenges while establishing clear expectations for implementation, accountability, and measurable progress.
RHTP at a Glance
- $50 billion over five years for rural health transformation.
- Each year $10 billion is awarded from fiscal year (FY) 2026 through FY 2030. All funds must be expended by Sept. 30, 2032, or they will be returned to the U.S. Treasury.
- All 50 states participate in the program.
- At least $100 million per state, per year, is given through equal baseline funding.
- State-led transformation plans address the needs of each state’s rural communities.
- Annual reporting and funding determinations help CMS monitor implementation and progress throughout the five-year program.
RHTP supports transformation across the rural healthcare delivery system. It is not limited to one type of provider or designed simply to provide short-term operating support to individual hospitals. States are pursuing strategies involving hospitals, clinics, emergency medical services, behavioral health providers, community organizations, workforce partners, technology, and other parts of the rural health ecosystem.
What Does RHTP Support?
RHTP is designed to address the interconnected challenges facing rural communities and strengthen healthcare delivery across five strategic goals:
Make rural America healthy again: Support rural health innovations and new access points to promote preventive 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 RHTP 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 highly skilled healthcare 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 healthcare 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.
The five strategic goals set the overall direction for RHTP. States must use RHTP funds for at least three approved uses under the program. These include prevention and chronic disease management; rural workforce recruitment and retention; technology-enabled care and health IT; behavioral health and substance use disorder services; innovative care and payment models; and investments that help rural communities strengthen and right-size their healthcare delivery systems.
How Does RHTP Funding Work?
Congress established a two-part structure for distributing the $10 billion available each year:
50% — Baseline Funding
Half of the annual funding is distributed equally among all approved states. With all 50 states participating in RHTP, each state receives $100 million in baseline funding each year.
50% — Workload Funding
The other half is allocated using factors established in the RHTP Notice of Funding Opportunity (NOFO). These factors account for differences among states and include:
- Characteristics of a state’s rural population and healthcare facilities;
- Initiatives included in the state’s rural health transformation plan;
- Certain state policy actions; and
- Other technical, data-driven factors described in the NOFO.
The baseline and workload portions together determine each state’s annual RHTP award.
What Is Different About Year 2?
The initial FY 2026 awards reflected the statutory funding structure and evaluation of states’ plans. Subsequent funding is also determined pursuant to statutory requirements and is informed by states’ progress implementing their approved plans.
All 50 states submitted annual reports to CMS documenting their progress during the program’s first year. CMS uses annual reporting to monitor implementation and inform funding for subsequent budget periods.
For initiative-based portions of the funding framework, CMS uses an established checkpoint model to assess implementation progress. Checkpoints measure concrete steps in implementation, such as establishing program governance, developing and receiving approval of project plans, launching initiatives, reaching milestones, establishing methods for measuring results, and planning for long-term sustainability.
This approach recognizes that transformation occurs over time. Early implementation may focus on building the capacity needed to produce longer-term changes in healthcare access, delivery, and outcomes.
Why Can State Awards Change From Year to Year?
RHTP was designed so that a portion of the funding is competitively allocated and can change from year to year.
The equal baseline portion remains the same for participating states. The workload portion can change as CMS applies the program’s annual funding methodology, including factors that reflect implementation progress and progress toward state policy actions.
As a result, a state’s total award may increase, decrease, or remain similar from one year to the next. A decrease in one year does not determine a state’s funding trajectory for the remainder of the program; funding is dynamic as determined annually under the program’s established methodology. Annual funding determinations do not change the program’s underlying goal: supporting all participating states as they implement long-term strategies to transform rural healthcare.
Year 1: Building the Foundation
During Year 1, states worked to establish governance structures, build partnerships, hire staff, develop and approve project plans, establish contracts and subawards, purchase equipment and technology, launch initiatives, and begin implementing programs in rural communities.
Because states entered RHTP with different rural populations, workforce capacity, disease burdens, health system designs, and implementation plans, progress does not look identical in every state. Some initiatives are already reaching patients and communities, while others have focused initially on building the infrastructure needed to deliver new or restored services and produce measurable results over the remaining years of the program.
Learn more about how states are putting their rural health transformation plans into action through CMS’ state snapshots and additional state progress materials, available at the Medicaid website.
Understanding RHTP
RHTP addresses more than geographic barriers. Long travel distances can make accessing care difficult in rural communities, but rural health challenges also include health professional shortages, chronic disease burden, limited specialty and behavioral health services, aging infrastructure, workforce instability, and fragmented delivery systems. RHTP gives states tools to address these challenges within their states.
RHTP is about more than hospitals. Rural hospitals are an important part of rural health systems, but RHTP supports broader transformation involving providers, workforce, technology, emergency services, prevention, behavioral health, community partnerships, and new care-delivery models.
States are in the driver’s seat. Each state developed its own rural health transformation plan based on the needs of its rural communities. CMS establishes program requirements and provides oversight, while states determine how to implement their approved strategies within those requirements.
RHTP is a transformation program, not a replacement for other federal healthcare funding. RHTP funds must support approved transformation activities and may not supplant existing government funding sources or programs.
Awards come with ongoing accountability. RHTP is a cooperative agreement, meaning CMS remains substantially involved throughout implementation. States must report progress, comply with federal requirements, and use funding for approved purposes. CMS provides ongoing technical assistance and monitors implementation through dedicated Project Officers, reporting, financial oversight, and other program controls.
Funding, obligations and accountability. States must obligate RHTP funds within the applicable budget period. Funds that are properly obligated within that period generally remain available for expenditure through the end of the following fiscal year, subject to program requirements.
CMS has published state obligation data through July 31, 2026, as a point-in-time look at states’ use of Year 1 funding. These figures do not, by themselves, measure a state’s overall progress or determine its Year 2 award.
Unexpended funds are subject to redistribution under the statute. This redistribution process is based on the same methodology used to determine each state’s allocation amount and would be allocated to the other states in a different distribution cycle. It is distinct from the annual process CMS uses to determine each state’s next RHTP award.
What Happens Next?
This year’s awards mark the next phase of implementation as states build on the groundwork and partnerships established during the first year. States will begin more detailed quarterly reporting in November 2026.
States will continue submitting required quarterly and annual reports to CMS throughout the program. CMS will use information submitted by states to monitor implementation, provide technical assistance, assess compliance, and inform annual funding determinations. Over time, this data will help CMS assess progress toward the access, workforce, health, technology, and sustainability goals states committed to pursue through their transformation plans.
New RHTP funding allocations continue through FY 2030, and all RHTP funds must be expended by Sept. 30, 2032, or they will be returned to the U.S. Treasury.