Tracking State Preparation for the Rural Health Transformation Program

Heather Howard, Rebecca Lopez, and Jamila McLean, State Health and Value Strategies

Note: This expert perspective has been updated as of September 18, 2025 to reflect CMS’ release of the Notice of Funding Opportunity.

On July 4, 2025, President Trump signed budget reconciliation legislation (H.R.1) into law. It made sweeping changes to healthcare programs, cut Medicaid spending by $911 billion over 10 years, and will lead to significant coverage losses. 

To address rural health concerns stemming from these cuts, H.R.1 includes $50 billion for a Rural Health Transformation Program (RHTP). Administered by the Centers for Medicare and Medicaid Services (CMS), the program will distribute $10 billion annually from 2026 through 2030; 50% of those payments will be distributed equally across states with an approved Rural Health Transformation Plan, while the remaining half will be distributed to states at the discretion of CMS. On September 15, CMS released a Notice of Funding Opportunity (NOFO) for states to apply for funds; applications are due November 5, with CMS required by statute to make awards by December 31. For analysis of the NOFO, including the allowable uses of funding, application components, and the distribution and scoring methodology, see Manatt Health’s CMS Releases Rural Health Transformation Funding Opportunity. 

While temporary, time-limited funding cannot supplant the deep cuts in H.R.1, the RHTP nonetheless presents an opportunity for states to secure federal funding to support investments in rural healthcare. State Health and Value Strategies published an expert perspective detailing key considerations for states as they design their transformation plans and apply for the fund. These include: the importance of engaging stakeholders; strengthening your current rural healthcare footprint while thinking innovatively about ways to promote health; focusing on uninsured individuals and controlling costs; investing in state capacity; tying funding to service delivery and outcomes; and focusing on sustainability.

The map below highlights state action to create a transformation plan and prepare to apply for the RHTP, including issuing Requests for Information and other efforts to educate the public and gather stakeholder input. 

Map updated as of: 1/12/2026