FAQ: Rural Health Transformation Program (RHTP)

A new U.S. federal initiative called the Rural Health Transformation Program (RHTP) is allocating $50 billion to improve rural healthcare from coast to coast over five years. To the 20 percent of Americans living in rural areas — whose care is often limited by provider shortages, infrastructure challenges, and having to travel long distances to receive care — the program promises to dramatically change access to high-quality care for the better. Considering that only 11 percent of the nation's doctors practice in rural areas, the need is immediate.

Awards to all 50 states were announced in December 2025, and the program is now moving into active implementation. This FAQ covers where funds stand today, how rural practices can get involved, and what medical practices and providers need to know to make the most of this unprecedented investment.

Has RHTP funding actually reached rural practices yet, or is it still in the pipeline?

As of mid-2026, most RHTP dollars are still moving from state-level approval into active subrecipient contracts. CMS approved state awards in December 2025, and states then had to finalize spending plans (due January 30, 2026), receive CMS approval of those plans (by late February 2026), and execute formal cooperative agreements before funds could transfer.¹

States face an October 2026 deadline to obligate their first-year funds, and many are only now releasing the RFPs that will determine which organizations receive subawards.² In short: the money has been allocated, but for most rural providers, the practical opportunity to apply for or receive funds is happening now, not in the past. First year funds must be spent by subawardees before October of 2027.

How can my practice access Rural Health Transformation Program funds?

Practices, hospitals, and providers in rural areas cannot apply directly to CMS for funds. Only state governments can apply; rural practices need to work with their state's designated lead agency to benefit from the program.

That process is now well underway. CMS approved all 50 states' awards in December 2025, and states spent the following months finalizing spending plans — revised budgets were due to CMS by January 30, 2026, with CMS approval, or requests for revision, following by the end of February.³ Only after CMS approval could states enter formal cooperative agreements, the final step before federal dollars actually transfer — meaning there was a real gap between the award announcement and money moving, and many states are only now reaching active subrecipient procurement.

States have discretion over whether to issue subawards or contracts and to whom. Federal guidance places no restrictions on entity type — universities, local health departments, provider associations, and healthcare facilities are all eligible, and states aren't required to name specific subawardees in their applications.⁴ Notably, this isn't limited to rural-located organizations: an urban health system or vendor can participate as a subrecipient as long as the funded work advances access, quality, or outcomes for rural residents.⁵ This matters in practice more than it might sound — a large share of rural patients already travel into urban centers for specialty and behavioral health care, and many of those same urban hospitals and health systems provide the telehealth infrastructure that could extend that access back into rural communities. States are actively looking for exactly these kinds of partnerships.

Rural providers interested in accessing RHTP funds should:

• Contact their state's designated lead agency or hospital association
• Watch for state-specific RFPs and subrecipient application windows, which are opening on a rolling basis throughout 2026
• Explore subawardee or contractor status, including through partnerships with urban systems already engaged in telehealth or specialty referral relationships with rural communities
• Connect with regional program coordinators for guidance on eligibility and application processes

State examples, as of mid-2026:

• California was awarded $233.6 million for FY2026, administered through the Department of Healthcare Access and Information's State Office of Rural Health.
• Alaska ran a Letter of Interest period from February to March 2026 that drew nearly 1,800 LOIs from 864 organizations, advancing 403 to full implementation-pathway applications.
• Pennsylvania opened a targeted RHTP payment opportunity in July 2026 tied specifically to implementing Certified EHR Technology and onboarding to the state health information exchange.

Can urban health systems or non-rural vendors participate as subawardees?

Yes. Federal guidance places no geographic restriction on subrecipients — the deciding factor is whether the funded activity benefits rural residents, not where the organization performing the work is based.⁶ This opens the door for urban hospitals, health systems, and vendors, including those already providing telehealth-based specialty or behavioral health services to rural patients who currently travel into cities for care, to formally partner with states on RHTP-funded initiatives that extend that access back into rural communities. States retain full discretion over who receives subawards and aren't required to name subrecipients in their original applications, so opportunities are opening on a rolling, state-by-state basis.

What are the eligible uses and approved activities for RHT Program funds?

The T in RHTP stands for transformation, and the program is designed to support meaningful, transformative change in how rural healthcare is delivered. States must commit to using funds for at least three approved activities, and RHTP dollars cannot duplicate or replace existing federal funding.

According to CMS, approved uses of RHT Program funds include:

• Promoting evidence-based interventions for prevention and chronic disease management
• Providing payments to healthcare providers for specified services
• Promoting consumer-facing technology solutions for chronic disease prevention and management
• Providing training for technology adoption, including remote monitoring, robotics, and AI
• Recruiting and retaining clinical workforce in rural areas (minimum five-year commitment)
• Providing technical assistance, software, and hardware for specific IT advances
• Helping rural communities right-size their healthcare delivery systems across all service lines
• Supporting access to substance use disorder and mental health treatment services
• Developing innovative care models, including value-based care and alternative payment arrangements
• Additional uses that promote sustainable access to quality rural healthcare services, as determined by the program Administrator

Early state activity gives a clearer picture of what this looks like in practice. Several states have prioritized shared data, analytics, and interoperability infrastructure as a first-wave investment: Arizona is procuring vendors to build secure data pipelines, dashboards, and audit-ready fiscal tracking tools, and New Mexico has proposed a statewide Rural Health Data Hub to unify siloed data sources.⁷

What kind of technology partner do practices need to succeed with the RHT Program?

The success of the RHTP will ultimately be measured not just by dollars deployed, but by sustainable improvements in care delivery, operational efficiency, and patient outcomes. This is where technology partnerships become critical.

athenahealth's cloud-based platform helps rural practices maximize their RHTP investments and build sustainable operations that don't depend solely on physical proximity to patients. Our integrated approach combines clinical workflows, revenue cycle management, and population health tools in a single platform that grows with a practice's needs. Whether a state's RHTP funding focuses on telehealth expansion, workforce development, technology infrastructure, or other areas, athenahealth's solutions can help practices implement these investments strategically, meeting program requirements while building lasting operational improvements that continue delivering value long after the funding period ends.

One specific eligible-use category worth flagging for practices considering an EHR change: RHTP funds can support EMR replacement only where no more than five percent of a certified system existed as of September 1, 2025, a narrow, specific eligibility criterion rather than a general modernization allowance.⁸ Practices should confirm with their state lead agency whether a given technology investment falls within that criterion before assuming RHTP eligibility.

How much did my state receive, and how does that compare to other states?

First-year (FY2026) awards averaged $200 million per state, ranging from $147 million (New Jersey) to $281 million (Texas and Alaska).⁹ Half of each year's $10 billion is split equally across all approved states, guaranteeing each state at least $100 million per year regardless of size, and the other half is allocated based on rural population, facility needs, uncompensated care burden, and the strength of each state's proposed initiatives.¹⁰ Notably, award size doesn't track cleanly with rural population size; some smaller-population states received disproportionately large per-resident allocations, while others received comparatively little.¹¹ Practices can check their own state's award on the full CMS state award list.

How will Rural Health Transformation Program funding be distributed?

The program's funding structure reflects both equity and need-based considerations. Over five fiscal years (FY2026 through FY2030), CMS distributes $10 billion per year through a two-tiered allocation system:

• Baseline Equity Distribution (50%): $5 billion per year is divided equally among all states with approved applications, regardless of size or population — guaranteeing each eligible state at least $100 million per year.
• Need-Based Formula Distribution (50%): The remaining $5 billion per year is allocated using a formula considering rural population size and proportion, the number of rural health facilities requiring support, and levels of uncompensated care.

What is the timeline for the Rural Health Transformation Program?

• September 2025: CMS released the Notice of Funding Opportunity (NOFO)
• Mid-November 2025: State applications due
• December 29, 2025: CMS announced award decisions for all 50 states¹²
• January 30, 2026: States' revised, finalized spending plans due to CMS, adjusted to match actual award amounts¹³
• Late February 2026: CMS approved revised spending plans, or issued requests for revision¹⁴
• Spring–summer 2026: Cooperative agreements finalized and funds began actively transferring in most states
• August 2026: States begin required progress reporting to CMS¹⁵
• October 2026: Deadline for states to obligate first-year (FY2026) funds¹⁵
• Fall 2026 onward: States begin opening Year 2 (FY2027) LOI and application cycles¹⁶

The practical takeaway: award announcements happened on schedule in December 2025, but actual fund deployment trailed by two to three quarters. Rural providers should treat mid-to-late 2026 as the real window for subrecipient opportunities, not the announcement date itself.

What's different about Year 2 (FY2027) funding, and when should my practice start preparing?

States are already beginning to plan their second funding cycle. Alaska, for instance, anticipates opening a new Letter of Interest and application period for Year 2 in early fall 2026, with performance periods potentially starting January 1, 2027.¹⁷ Other states are expected to follow similar cycles as they close out Year 1 obligations by the October 2026 deadline. Practices that didn't participate in Year 1, or that want to expand their involvement, should begin monitoring their state lead agency's communications now, since Year 2 LOI windows may open with limited notice.

What reporting or compliance obligations do subrecipients take on once they receive funds?

States must begin progress reporting to CMS starting in August 2026, and that reporting obligation flows down to subrecipients receiving state-issued awards or contracts.¹⁵ Practices considering participation should expect standard federal grant compliance requirements, including documentation of how funds are used, progress against stated goals, and periodic reporting, as a condition of receiving RHTP dollars rather than a one-time application requirement.

Does RHTP funding count toward or replace other federal funding my practice already receives?

No. RHTP funds are designed to supplement, not duplicate or replace, existing federal funding streams such as Medicare or Medicaid payments. States must commit to using RHTP dollars for at least three approved activity categories, and CMS guidance is explicit that the program is meant to fund new transformation activities rather than backfill existing federal support. Practices should confirm with their state lead agency how a specific proposed use is being categorized to avoid any overlap with other federal funding sources they already receive.

How does RHTP interact with the Medicaid changes in the same legislation?

RHTP was created as part of the same 2025 budget reconciliation law (the One Big Beautiful Bill Act) that included an estimated $911 billion in federal Medicaid spending reductions over ten years, with an estimated $137 billion of that impact falling on rural areas.¹⁸ The rural health fund is widely understood as a measure intended to help offset that impact on rural communities. It's worth being direct about this relationship rather than presenting RHTP in isolation: the program represents new investment, but it exists alongside reductions elsewhere in the same legislation.

What is the Rural Health Transformation Program?

Created as part of the 2025 Federal Reconciliation Bill (also known as the One Big Beautiful Bill), the RHT Program is a $50 billion federal program aimed at strengthening rural healthcare through long-term investments in infrastructure, technology, and workforce development. Its goal is to improve access to care, quality of care, and patient outcomes in rural communities in all 50 U.S. states.

Unlike previous approaches, the RHTP takes a systematic view of rural healthcare challenges, recognizing that sustainable solutions require coordinated investments across multiple domains: clinical technology, operational infrastructure, and human capital development.

The opportunity for rural health providers and practices

The Rural Health Transformation Program is about much more than the money. It's an opportunity to reimagine what's possible for rural healthcare delivery. With strategic technology investments, workforce development, and infrastructure improvements, rural practices can build sustainable care models that serve their communities effectively while maintaining financial viability.

Rural providers who engage proactively with their state agencies and technology partners will be best positioned to benefit from this historic investment in rural healthcare's future.