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Part 1 of the guide

How RHTP money flows.

A durable map of the program. Where the money comes from, how CMS splits it, who is eligible to receive the federal award, what the spending clock is, and the rules that decide what the funds can pay for.

Verified against primary CMS sources on 2026-05-27.

The program, in one paragraph

A $50 billion federal program, five years, run by CMS, awarded only to states.

The Rural Health Transformation Program is a $50 billion federal program that runs for five years, federal fiscal years 2026 through 2030, at about $10 billion a year. It was created by Section 71401 of Public Law 119-21, the budget reconciliation law enacted July 4, 2025, and is codified in the Social Security Act at section 2105(h). It is run by the Administrator of CMS, through the Office of Rural Health Transformation, established inside the Center for Medicaid and CHIP Services (the office is new as of December 2025). CMS awards the money only to states, which then distribute it. That last sentence is the most important one on this page, and the eligibility section below explains why.

Identifiers worth keeping: Funding Opportunity Number CMS-RHT-26-001, Assistance Listing 93.798, program contact MAHARural@cms.hhs.gov.

The flow, top to bottom

From Congress, through CMS, into your state, down to you.

The federal layer is fixed by statute. Everything below the state line is state-designed and state-discretionary: each of the 50 states picks its own mix of subgrants, procurements, and provider payments, and CMS does not pre-approve individual subrecipients (it monitors after the fact). This is why "how the money reaches you" has a different answer in every state and for every organization type.

  1. Congress

    Public Law 119-21, section 71401

    Appropriates $10 billion per year, fiscal years 2026 through 2030.

  2. CMS

    Administrator, through the Office of Rural Health Transformation

    Awards to the 50 states only, split by the 50/50 method below.

  3. State lead agency

    Department of Health, or in several states the Medicaid agency

    Distributes funds downstream by mechanisms the state chooses.

  4. Distribution gates

    State subgrants, state procurements, direct provider payments, regional pass-through

    The state picks its own mix of subgrant NOFOs, RFPs, capped provider payments, and intermediaries.

  5. Subrecipients

    Hospitals, FQHCs, rural health clinics, nonprofits, collaboratives

    Carry out the funded work and procure goods and services to deliver it.

  6. Vendors and contractors

    Health technology, consultancies, service providers

    Paid out of a subrecipient's award or directly under a state procurement.

How CMS splits the money among states

The 50/50 method: half equal, half by workload and performance.

Each year's $10 billion is split into two halves. The equal half is locked. The workload half is recalculated annually based on what a state actually delivers, which means a state that executes well can grow its later-year award, and a state that underdelivers on its committed metrics can lose points and dollars.

50%

Baseline

Distributed equally among all approved states, up to a maximum of 50. With all 50 approved, that is roughly $100 million per state per year, the same for every state regardless of size.

50%

Workload

Distributed by a points-based scoring formula. A state's share is the workload pool times the state's points divided by the sum of all approved states' points. At least one quarter of approved states must receive workload funds.

The published weight categories

About 50% of the weight

Rural facility and population factors

Scored once in late 2025 and not recalculated. Includes absolute rural population (10%), share of rural health facilities (10%), uncompensated care (10%), percent of population rural (6%), frontier metrics (6%), state area in square miles (5%), and percent of hospitals receiving Medicaid disproportionate-share payments (3%).

About 50% of the weight

Technical factors

Recalculated every year from the state's annual report. Sixteen factors covering the quality of the state's initiatives, its data metrics, and specific state policy actions (licensure compacts, scope-of-practice, certificate-of-need, nutrition CME, others). Most are weighted at 3.75%, four are weighted at 1.75%.

CMS announces each next year's amounts by October 31 of the prior year, which is the recalculation date worth marking on a calendar.

Who is eligible for the federal award

Only the 50 states can receive the federal award.

The District of Columbia and the territories are not eligible. Local governments, hospitals, universities, nonprofits, tribes, and any other entity are not eligible to receive the federal award directly. A governor designates a single lead state agency to apply and submits a letter of endorsement.

This is the structural fact behind the entire money-path insight. A hospital, clinic, nonprofit, or vendor never gets money from CMS. They get it from their state, on the state's terms, through one of the downstream mechanisms in the flow above. The next guide, how to get RHTP money, walks the route for each organization type.

The spending clock

Use it, or lose it back to the Treasury.

For each budget period, a state must spend its awarded funds by the end of the following federal fiscal year. "Spent" means actually paid out, including through subawards and contracts, not merely earmarked. Unexpended or unobligated funds are redistributed to other states. Any funds still unexpended or unobligated as of October 1, 2032 return to the U.S. Treasury.

  • Sep 15 2025 NOFO released, state applications due Nov 5 2025.
  • Dec 29 2025 All 50 states approved (year-one award range $147M to $281M, averaging about $200M, specific to year one).
  • Early 2026 States finalize budgets with CMS (year-one process, specific to year one).
  • Five budget periods First is 10 months, each later one is 12 months. First period runs into late October 2026.
  • Oct 31 each year CMS announces the next year's allocation.
  • Oct 1 2032 Statutory sunset; unobligated funds return to the U.S. Treasury.

This deadline pressure is why states move quickly from award to subgranting, and why timing is decisive for anyone trying to capture the money.

What the money can be used for

The statute names ten use categories. States must fund three or more.

The categories cover prevention and chronic disease, provider payments, consumer technology, technology adoption in rural hospitals (including remote monitoring, robotics, and artificial intelligence), clinical workforce with a five-year rural commitment, IT and cybersecurity, right-sizing delivery systems, behavioral health and substance use, value-based and innovative care models, and a catch-all for sustainable rural access. The CMS NOFO restates these and adds named categories beyond the statute, including behavioral health, community collaboration, and capital expenditures and infrastructure (the NOFO layer can change between budget periods).

For the full ten-use list with each use defined and the read-across to state sub-initiatives, see the federal program reference. That page carries the schema markup that lets answer engines pull each use definition directly; this guide does not duplicate it.

Caps that shape what states actually fund

  • 10% administrative. Ceiling on a state's allotment, including direct and indirect administrative costs. Statutory.
  • 15% provider payments. Ceiling on payments to providers for patient care, per budget period. NOFO.
  • 20% capital and infrastructure. Ceiling per budget period. NOFO.
  • 5% EMR replacement. Ceiling where a certified EMR was already in place. NOFO.
  • Technology catalyst. A rural-tech catalyst initiative is capped at the lesser of 10% or $20 million per period. NOFO.

These caps push states away from simply cutting operating checks to hospitals and toward funding transformation, technology, and collaboratives, which is what creates the vendor and partner opportunity.

The rule that fails the most applications

Anti-supplantation: new activity is fundable, existing budgets are not.

To be eligible, a state must certify that none of the RHTP funds will be used for an expenditure that finances the non-federal share of any other federal program (Medicaid, CHIP, or waivers of those plans). The statutory language, SSA 2105(h)(2)(A)(ii), reads:

"a certification that none of the amounts provided under this subsection shall be used by the State for an expenditure that is attributable to an intergovernmental transfer, certified public expenditure, or any other expenditure to finance the non-Federal share of expenditures required under any provision of law, including under the State plan established under this title, the State plan established under title XIX, or under a waiver of such plans."

In plain terms: RHTP money must fund something new, not backfill or replace existing spending. The NOFO extends this posture into "do not replace clinical services that insurance could reimburse" and "fund only new elements." This is the single most common reason a proposed use of funds gets rejected, and reframing a request from "pay for what we already do" to "build new, measurable, sustainable capability" is the core skill of getting funded.

If a state misuses funds against its approved plan, CMS may withhold, reduce, or recover payments, and those decisions are not subject to administrative or judicial review. There is no state matching requirement.

Sustainability

Funded activities have to outlive the program.

The statute requires each state's plan to outline strategies for the long-term financial solvency and operating models of rural hospitals, and use category (J) targets sustainable access. The NOFO requires an explicit Sustainability Plan describing how each successful initiative will continue after the program funding ends. For anyone seeking funds, this means a credible answer to "what pays for this after 2030" (a Medicaid-billable pathway, a payer contract, a value-based arrangement) materially strengthens the case.

Sources

Where every fact on this page comes from.

All sources below accessed 2026-05-27. Specific dates, dollar figures, and office structure are year-one or recent and should be reverified at the CMS source before reuse.

Now see how the money reaches you.

The federal layer is the same everywhere. The path from a state award to your bank account depends on what kind of organization you are. The next guide walks each route.

Read Part 2 See the federal reference