The $50B Rural Health Transformation Program: What States Need to Know
The federal government is allocating $50 billion in rural health care funding to all states that apply. With half of funding tied to demonstrated performance year-over-year, states that invest early in planning, evaluation, and reporting will be best positioned to maximize their funding potential.
What Is the Rural Health Transformation Program?
On September 15, 2025, the Centers for Medicare & Medicaid Services (CMS) released a Notice of Funding Opportunity (NOFO) for all states to apply for funds under the Rural Health Transformation Program (RHTP). Authorized in July 2025 as part of a $50 billion, five-year federal investment, the program is designed to improve rural health access, quality, and outcomes through system-level transformation.
Critical Program Parameters
- Not a supplement for existing coverage.
- Funding cannot be used to supplant lost or past Medicare or Medicaid funding or billings.
- Funds cannot be used to cover services that could be reimbursed by insurance.
- Time-limited spending windows. Funding is distributed in annual budget periods. Any FY2026 grant funding must be fully spent by the end of September 2027.
- Performance-contingent. CMS uses a 23-factor scoring methodology, and future workload funding will depend on demonstrated performance. How well states demonstrate execution in Year 1 directly affects future allocations.
RHTP Funding Structure & Priorities
RHTP distributes $50 billion over five years and is split into two equal pools:
- Baseline Funding: $25 billion allocated equally across all states with approved applications.
- Workload Funding: Discretionary $25 billion distributed based on state rurality factors, qualitative assessment of state initiatives, adoption of CMS-prioritized policy actions, and other CMS priorities. CMS will use a 23-factor scoring methodology to assess state execution annually.
With 50% of funding discretionary, Year 1 performance will directly determine Year 2–5 allocations. States that demonstrate strong planning, implementation, and results will be rewarded with greater discretionary funding in subsequent years.
State Rural Health Reporting Requirements
To receive funding in subsequent budget periods, state awardees must meet rigorous reporting requirements and adhere to program requirements, including the submission of annual and quarterly reports.
Annual Reports: Deliver a cumulative summary of programmatic/funding activities and milestone progress over the reporting period.
Quarterly Reports: Tactical tool for short-term monitoring and operational adjustments.
Both report types feed directly into CMS’s annual rescoring process and will inform funding decisions for subsequent years. The reports will detail state progress towards meeting goals, inform annual rescoring used to determine funding for subsequent years, and provide valuable data for broader program analysis.
RHTP Evaluation Requirements
CMS required states to include initial evaluation strategies in their RHTP applications. Those strategies must now be built out and executed. According to CMS, states should plan for their evaluation infrastructure to scale accordingly. Key requirements include:
Evaluation Plan: A three- to five-year evaluation plan, updated annually, that uses both quantitative and qualitative methods to assess implementation and results. This includes the creation of baselines, targets, theories of change, and a measurement framework established in Budget Year 1. Each initiative must be accompanied by at least four quantifiable performance metrics, with at least one metric per initiative demonstrating the geographic distribution of impact, using county- or community-level data. Subsequent years then track performance against those baselines year-over-year.
Data Collection: Creation of data collection and survey infrastructure to gather and review monthly data, milestones, and deliverables across contracted organizations.
Final Evaluation Reports: A final evaluation report at the end of the contract period, translating findings into materials suitable for leadership, CMS, and other stakeholders. This includes a Cumulative Annual Program Evaluation Report encompassing yearly results from RHTP inception through Year 4, and a Final Evaluation Report at the conclusion of Budget Year 5 synthesizing findings and outcomes across the full grant period.
What Funding Can & Can’t Do
CMS has been explicit about both permitted uses and restrictions for grant funding.
✓ Funding can be used for:
- Transformation of care delivery
- Improved access to, quality of, and cost of healthcare in rural America
- Expanded or enhanced services but not duplicative programs
- Technological & infrastructure investments and startup costs that will have sustainable impact beyond the end of the program
✗ Funding may not be used for:
- New construction
- Clinical services that duplicate billable services or attempt to alter existing fee schedules
- Supplanting lost or past Medicare or Medicaid funding or billings
- Services that could be reimbursed through insurance
Spending Caps
Within each annual budget period, states must also observe category-level caps. In a given budget period:
How EVALCORP Can Help Rural Health Transformation Programs
EVALCORP brings deep experience in program evaluation, needs assessment, and strategic planning for health and human services programs—including behavioral health and complex federal grant initiatives like RHTP.
Our team regularly designs and administers grantee and provider surveys to capture self-reported data on service delivery and individual-level outcomes that cannot be drawn from administrative records alone.
As states move from application to implementation, we can help you:
- Develop a RHTP evaluation plan aligned with your application commitments and CMS scoring criteria
- Design performance measurement frameworks, including logic models and baseline metrics in Year 1
- Build and administer data collection infrastructure, such as surveys, to collect self-reported information from grantees and track relevant outcome measures
- Prepare quarterly and annual reports that demonstrate results and support continued funding eligibility
- Provide implementation support to identify what’s working, where adjustments are needed, and how to document your program’s impact