Exploring Federal Priorities in the Rural Health Transformation Program

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Exploring Federal Priorities in the Rural Health Transformation Program

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RHT Program Key Facts

Purpose: To help state governments support rural communities across America in improving health care access, quality and outcomes by transforming the health care delivery ecosystem.

Program Administrator: Centers for Medicare and Medicaid Services.

Funding Amount: $50 billion over five years.

Eligibility: All 50 U.S. states are eligible to apply, but each state may submit only one official application through a designated state agency.

As part of the sweeping H.R. 1 legislation authorized by Congress in July 2025, the Rural Health Transformation (RHT) Program was established to channel $50 billion over five years to support state-led efforts to strengthen rural health. With rural communities across the nation affected by declining populations, workforce shortages and hospital closures - as well as significant changes to Medicaid included in H.R. 1 - the program directs new resources toward stabilizing care delivery and encouraging long-term transformation. To guide state applications, the Centers for Medicare and Medicaid Services (CMS) has outlined five strategic goals for the RHT Program:

• Make Rural America Healthy Again
• Sustainable Access
• Workforce Development
• Innovative Care
• Technology Innovation

In alignment with these goals, each state must identify at least three priority areas in its application where it plans to invest RHT funds. Options include prevention and chronic disease management, behavioral health, provider payments, consumer technology solutions and other areas listed in Section 71401 of Public Law 119-21. As one of the largest federal investments in rural health, the RHT program prioritizes both sustainability and innovation - allowing states flexibility to design applications around the interventions and initiatives most likely to drive lasting and transformational change.

How RHT Program Funding Works

Understanding how the $50 billion is structured and distributed is critical for applicants and stakeholders alike, as the funding design itself pushes states to balance feasibility with forward-thinking innovation. The RHT Program will award $10 billion annually, with each year's funding evenly split into two streams: baseline funding and workload funding (Figure 1). Baseline funding is provided in equal shares to all states with approved applications, giving states a stable foundation to support the sustainability of their rural health systems. Workload funding, by contrast, is distributed through a competitive process that is based upon a state's score across two categories - its rural facility and population score, which is based upon data-driven measures and is fixed upon scoring, and its technical score, which is based upon the following types of metrics:

• Data-Driven: Points are awarded based upon value of the state's metric relative to other states.
• Initiative-Based: Points are awarded based upon CMS's assessment of the quality and execution of the initiatives proposed in the state's application. Full scoring is set at submission; states start at 50 percent and can earn more points toward their yearly score as they implement their initiatives and achieve milestones.
• State Policy Actions: Points are awarded for current policies identified in the application and for commitments to enact said policies by deadlines set in application. Failure to enact committed policies results in lost points or fund recovery.

Figure 1. Breakdown of Rural Health Transformation Program Funding Over Five Years (FY 2026-2030)

Source: Centers for Medicare and Medicaid Services. (Sept. 19, 2025). Rural Health Transformation: Notice of Funding Opportunity Webinar.

In the first year of the RHT Program, states with an approved application will receive an equal share of baseline funding, while those awarded with workload funding will receive allocations based on their fixed rural factors data, partial credit (50 percent) for initiative-based factors, and any eligible policy actions already in place. In subsequent years, baseline funding continues to be distributed equally, but workload funding will be re-scored annually (Figure 2). While scores for rural factors data will remain fixed, initiative-based and policy scores will be reassessed each year to reflect progress toward milestones and implementation of commitments. This means states' shares of workload funding will change based upon how they and other states deliver on their policy commitments and initiatives. Finally, unspent or unobligated funds will be distributed annually based upon the same formulas. Although the funding structure is complex, it is designed to reward states whose initiatives demonstrate both long-term viability and measurable innovation.

Figure 2. Rural Health Transformation Program Funding Redistribution

Note: FY = federal fiscal year, which runs from Oct. 1 to Sept. 30. BP = budget period.
Source: Centers for Medicare and Medicaid Services. (Sept. 19, 2025). Rural Health Transformation: Notice of Funding Opportunity Webinar.

Kansas's Approach to the RHT Program Application

Application Development Team: Comprised of the State of Kansas Interagency Task Force (KDHE and KDADS) and the University of Kansas Health System Care Collaborative (Care Collaborative), the Application Development Team is charged with developing the project and budget narratives.

Kansas Rural Health Innovation Alliance (KRHIA): Established by Governor Laura Kelly, this group of appointed stakeholders provides feedback on proposed initiatives, governance and project management plans. Participants will be notified of their participation by Oct 3.

Other Opportunities for Input: Interested parties were invited to submit proposals for consideration by 3 p.m. on Oct 3.

Timeline

• Oct. 3: Deadline for interested parties to submit initiative proposals for consideration.
• Sept. 29 -Oct. 8: One-on-one meetings between Application Development Team members and KRHIA members to receive stakeholder input.
• Oct. 20: Facilitated group discussion between Application Development Team and KRHIA members on draft initiatives for consideration.
• Oct. 24: Draft project and budget narrative delivered to the State Interagency Task Force by the Care Collaborative.
• Oct . 30: State Interagency Task Force returns comments on draft to the Care Collaborative.
• Nov. 3: Project and budget narratives are finalized by the Application Development Team.
• Nov. 5: RHT Program submission deadline.

Source: KDHE Rural Health Transformation Program Webpage.

Applications Define Long-Term Potential

Even more so than in other federal programs, in the RHT program, each state's application is crucial for its success. Each state's ceiling for initiative-based funding is fixed at submission, meaning as states make progress toward meeting the milestones set within their application, they cannot exceed the score ceiling established in their initial plan. This program design underscores the importance of selecting both initiatives that are feasible to implement, but also innovative enough to gain higher scores in the application scoring process, as new initiatives added on later in the program do not raise the scoring ceiling. Because workload funding is competitive and distributed through a formula that compares state scores, allocations also are shaped by how states perform relative to each other. This makes the initial application decisive not only for eligibility to participate in the program, but also for a state's funding potential, with CMS placing an emphasis throughout the workload funding on initiatives that both demonstrate sustainability beyond FY 2030 and incorporate bold, innovative initiatives.

Examples of Innovations Highlighted in the Notice of Funding Opportunity

While each state has flexibility to design its own plan based upon individual state needs, the Notice of Funding Opportunity (NOFO) highlights several areas where innovation could be transformative for rural communities, including emergency medical services (EMS), artificial intelligence (AI) and expanding the community-based care team.

Supporting Emergency Medical Services Initiatives

The RHT Program NOFO specifically includes EMS as one of the initiative-based technical score factors (See technical score factor C.2. in the NOFO) that states can choose to include within their applications. It outlines the unique challenges rural communities face in accessing emergency medical services, which include longer travel times for EMS providers to reach patients in their often large and sparsely populated service areas, as well as prevalent shortages in EMS workforce, often due to reliance on a volunteer workforce. The NOFO provides several examples of how states can strengthen their EMS workforce, including implementing collaborative models between EMS and other health care providers such as primary care physicians, adopting or expanding models such as community paramedicine, or investing in equipment and infrastructure that supports treatment "in place." The goal with these types of interventions is not only to make response times quicker, but also to support financial sustainability for rural EMS entities that often have struggled with limited reimbursement rates.

Implementing Consumer-Facing Artificial Intelligence Tools

The RHT Program NOFO also highlights the expansion of consumer-facing technology, such as artificial intelligence platforms, as another initiative-based technical score factor (See technical score factor F.3. in the NOFO) that states can receive points for within their applications. It identifies technological solutions, such as AI chatbots or AI-powered symptom checkers, as ways rural communities can access personalized medical education and support without having to travel long distances. The NOFO states that applications can include plans for the development and deployment of various AI-powered consumer facing tools that support chronic disease management and prevention. It also outlines the alignment of chosen technological tools with CMS's Health Technology Ecosystem criteria for patient-facing apps as a key factor in scoring. Additionally, the NOFO allows for training and technical assistance to support the integration of AI tools in care delivery. By mentioning AI specifically within the NOFO, CMS has signaled its commitment to support initiatives that incorporate emerging technologies that can support rural health.

Building a Community-Based Health Workforce

Under the Talent Recruitment initiative-based technical score factor (See technical score factor D.1. in the NOFO), the RHT Program NOFO identifies the investment and expansion of non-physician, community-based health workforce members as a way states can expand their workforce capacity. The NOFO identifies multiple ways that states can support community-based workforce members, such as community health workers (CHWs), doulas, peer support specialists and health navigators - roles that can strengthen care coordination, prevention and culturally appropriate care in rural communities. Opportunities include supporting health care career education opportunities in rural areas, such as career pathway programs in local high schools, and supporting career pathways for community-based providers across a variety of settings, such as local health departments, community-based organizations and independent providers. These expanded models can help rural communities offer a broader range of services in areas that have historically faced significant workforce challenges.

Other Allowable Uses

The areas detailed above represent a fraction of the opportunities that states can include within their RHT Program applications. Other areas of opportunity include increasing remote care models, such as telehealth or remote patient monitoring; implementing rural provider networks to facilitate sharing of best practices and training resources, and expanding access to specialty services; and pursuing innovative models to increase access to maternal care services, such as supporting an expanded maternal care team.

Looking Ahead

The RHT Program represents one of the largest rural-specific federal investments made, offering $50 billion over five years to support innovative and transformative approaches to improving rural health. Looking ahead, the stakes remain high for states, as each state's initial application sets its funding ceiling and determines its baseline share of workload funding, while annual recalculations of workload funding are designed to incentivize performance. Sustainability and innovation are central pillars of the RHT Program, with emphasis placed in the NOFO on pursuing initiatives that extend beyond traditional approaches - such as resizing EMS systems to fit rural health needs or integrating AI to increase patient engagement - while also prioritizing strategies that are built to last beyond the five years of funding. Going forward, states also will need to consider how they will oversee implementation over the course of the RHT Program to ensure its strategies are meeting needs in rural communities and remain aligned with federal goals and requirements.

Stay tuned for further updates on policy shifts that may affect health programs and services in Kansas. For related work on how federal policies could impact Kansans, please check out Hill to the Heartland.

Funding for Hill to the Heartland is provided in part by the Sunflower Foundation: Health Care for Kansans, a Topeka-based philanthropic organization with the mission to serve as a catalyst for improving the health of Kansans. KHI retains editorial independence in the production of its content and its findings. Any views expressed by the authors do not necessarily reflect the views of the Sunflower Foundation.