On December 29, 2025, the Centers for Medicare and Medicaid Services (CMS) announced the first year of funding to states under the Rural Health Transformation Program (RHTP). The RHTP will provide states with a total of $50 billion over 5 years to strengthen and modernize health care in rural communities, with each state developing unique plans to expand health care access, strengthen workforce, build infrastructure and technology, and support care delivery innovation within rural communities.
States will receive between $147 and $281 million in the first year of the program, based on factors that include rural demographics, proposed and enacted policy changes, and proposed activities within the state’s RHTP application. States have up to 30 days to submit a revised budget that reflects their actual award amount and will need to be approved by CMS.
Rural communities have long faced disproportionate health challenges and barriers to health care access, including workforce shortages, transportation issues, and financial pressures experienced by rural providers. Loss of insurance coverage, reductions in Medicaid spending, and policy changes may place additional pressures on rural health ecosystems in a number of states.
The new influx of resources for rural health transformation offers states some opportunities and challenges. While RHTP funding is not intended to offset projected losses in funding for rural health systems, these new resources offer opportunities to rethink and transform the way care is delivered in rural communities, with an eye toward sustainability and more efficient models of care.
Early analysis and spotlights of key initiatives across state applications reveal both common themes and innovative strategies across the five strategic goals outlined by CMS:
Although the RHTP provides states with significant flexibility to tailor investments to their unique needs and priorities, ambitious timelines for the distribution and spending of program funds will pose administrative and coordination challenges. States had less than six weeks to develop their initial RHTP applications and will have until September 30, 2027, to expend the first year of funding.
Effectively administering funding — and enacting optional policy actions included in state plans — will be challenging in light of the need for coordination across various state agencies, legislatures, regulatory bodies, state procurement offices, and a wide variety of public and private sector partners. Depending on the unique requirements and proposed plans within each state, state officials administering RHTP funds may need to seek legislative or regulatory authority, navigate lengthy processes for procurement, and/or implement competitive grant application processes — all on an expedited timeline.
Collaboration across the many partners involved in rural health will be key to success. During the application development processes, many states solicited input and proposals from a wide array of partners, including Tribal partners, providers, health plans, associations, universities, community-based organizations, and affected communities. Many states also opted to make investments that build on existing state health priorities with infrastructure already in place. Continued engagement and collaboration among these internal and external partners will help ensure resources can be allocated efficiently and effectively.
In the coming weeks and months, NASHP will continue to support state officials as they navigate administration of RHTP funding and share strategies, engage partner organizations, and learn from one another. NASHP will also work with its existing state networks and cross-agency leaders to identify opportunities where RHTP efforts can be strategically aligned with state priorities on payment reform, primary care, maternity care, behavioral health, aging, and more.
