The Rural Health Transformation (RHT) Program was created through the July spending bill (the One Big Beautiful Bill Act) and is designed to strengthen rural health and tamper some of the provider payment cuts that were included in the bill. Approximately 60 million Americans live in rural areas, which presents unique challenges when accessing care.  

While the program is temporary (funds end in FY 2030), it provides states with additional resources to engage in a variety of “approved uses,” such as increasing provider payments, testing value-based models and strengthening existing systems (e.g., enhance cybersecurity protections). This means that a state may or may not decide to use the funds for increased payments to rural hospitals. All 50 states can apply for an RHT Program award, while the District of Columbia and U.S. territories are not eligible.  

Congress has allocated $50 billion to the RHT Program for the fiscal years 2026–2030.  

  • $25 billion will be distributed evenly among approved states over five years. 
  • $25 billion will be awarded competitively, based on rural factors, state policies, application initiatives, and the overall quality of proposals. 

Up to 50 awards are available, one for each state. States will have until the end of the following fiscal year to spend redistributed funds, with the exception of those redistributed in FY 2032, those funds must be spent by the end of that year.   

  • Budget period 1 funding begins on December 31, 2025. 
  • Subsequent budget periods will start on October 31st of each fiscal year.  
  • States have until September 30th of the following year to spend funds.  
  • Unused or unallocated funds will be redistributed in the upcoming fiscal year.  

The deadline for states to apply is November 5, 2025. CMS must approve or deny applications no later than the end of 2025. Examples of information states must submit include:  

  • Project summary and narrative 
  • Budget narrative 
  • The Governors’ endorsement 
  • Indirect cost rate agreement 
  • Business assessment of application organization 
  • Program duplication assessment 
  • SF-424A: Budget Information for Non-Construction Programs 
  • Disclosure of Lobbying Activities (SF-LLL) 
  • Project/Performance Site Location 

CMS has adopted following funding restrictions:  

  • Capital expenditures and infrastructure cannot exceed 20% of total funding awarded to a state. 
  • Provider payment cannot exceed 15% of total funding awarded to a state. 
  • Replacing an Electronic Medical Record system cannot exceed 5% of total funding if a previous EMR system was already in place as of Sept. 1, 2025. 
  • No more than 10% of the amount allotted to a state for a budget period may be used by the state for administrative expenses. 
  • Funding for initiatives like the “Rural Tech Catalyst Fund Initiative” cannot exceed the lesser of the 10% of awarded funding or $20 million.  

 

AHPA extends our gratitude to our emerging colleague, Samantha Fragette, guest author of this article. 
Samantha is an undergraduate student in the University of Central Florida’s
School of Global Health Management and Informatics.