Innovating and Investing in Rural Health: How States Propose Spending the $50 Billion Rural Health Transformation Fund

Jamila McLean, State Health and Value Strategies

Signed into law on July 4 by President Trump, H.R.1, the budget reconciliation legislation, made significant changes to the healthcare system. The legislation cut Medicaid spending by $911 billion over a ten-year period and is projected to contribute to substantial losses in health coverage. To address the anticipated effects of these reductions on rural health systems, the statute established the $50 billion Rural Health Transformation Program (RHTP). Administered by the Centers for Medicare and Medicaid Services (CMS), 50% of the funds will be distributed in equal amounts to states with an approved Rural Health Transformation Plan, while the remaining 50% will be awarded at the discretion of CMS.

On November 5, 2025, CMS announced that all 50 states had submitted applications for participation in the RHTP and as of December 12, 43 states have shared either their full application or a summary of their proposal. States aligned their submissions with the five RHTP strategic goals outlined by CMS: (1) Make Rural America Healthy Again, (2) Sustainable Access, (3) Workforce Development, (4) Innovative Care, and (5) Technology Innovation. While there are similarities in the applications, there are also notable differences in the specific initiatives and activities proposed across states.

Each state is permitted to submit one application, however, they will have the opportunity to refine and scale the scope of their proposals to match the level of funding ultimately awarded. Yet, states may only implement activities that are included in their initial submission. As such, it appears that most states chose to take a broad approach in defining the activities they may pursue by including a wide range of potential activities, rather than limiting themselves to a narrow set of specific commitments.

This expert perspective explores select themes from the publicly-available applications.

Technology Innovation

Perhaps the most consistent theme across all applications was a strong intent to leverage technology to expand access to care. Many states proposed enhancing access by scaling existing solutions, including broader telehealth services (e.g., expanded teledentistry in Iowa), greater interoperability, and electronic health records and health information exchange upgrades. Several applications also included proposals for new technology-driven approaches, including remote patient monitoring and the use of artificial intelligence (AI) for clinical decision support, operational efficiency, and workflow optimization (e.g., Maryland, Minnesota, Nevada, and Virginia), as well as the development of consumer-facing AI tools and portals (e.g., Alaska). In addition, states such as Alabama, Georgia, and South Dakota expressed interest in exploring telerobotic technologies to support rural access to ultrasound services and certain surgical procedures.

Workforce Development

Another prominent theme was the need to strengthen the rural health workforce through both recruitment and retention strategies. Applications emphasized attracting new talent, by supporting investments in residency and fellowship training programs, mentorship initiatives, and the development of new career pipelines. For example, Utah highlighted its “Grow-Your-Own” pathway that connects high school students to healthcare certifications, while New Hampshire highlighted “earn-to-learn” models and the use of mobile learning units. Across several applications, initiatives aimed at workforce retention efforts frequently included support for signing bonuses, relocation assistance, transportation support, and childcare support (e.g., Arizona, Connecticut, and Montana).

In addition to recruitment and retention efforts, most applications also underscored the need to innovate in how and where care is delivered. Many states proposed implementing or expanding mobile health units, including initiatives designed to “treat in place” and equip EMS providers with the resources needed to care for individuals within their communities, thereby reducing reliance on costly transportation to distant hospitals or other health facilities (e.g., Colorado, New Jersey, North Carolina, and Ohio) . Additionally, numerous proposals, including California, Iowa, Oregon, Tennessee, and Washington)  incorporated strategies to strengthen rural networks by establishing or improving regional health hubs or hub-and-spoke models to enhance resource coordination and further improve access for rural communities. Pennsylvania will establish rural maternal health hubs comprised of hospitals, community providers, behavioral health partners, and community-based organizations to provide comprehensive care management and navigation for patients from preconception through 12 months postpartum and for babies during their first year of life.

Prevention & Community Health

In addition to initiatives aimed at improving access to care and direct service delivery, many states also emphasized the importance of upstream investments in prevention and community health, focusing on food and nutrition security, physical activity, and preventive screenings. For example, Arkansas, Pennsylvania, Texas, and West Virginia’s applications highlighted Food Is Medicine strategies, with Arkansas’ Healthy Eating, Active Recreation, & Transformation (HEART) initiative focusing on physical activity by expanding access to fitness trails. Maryland’s proposed “Eat for Health” initiative includes a range of activities, including improving post-harvest infrastructure, expanding grocery access and mobile markets, providing targeted nutrition education, and implementing a rural food coordination program. North Dakota’s “Make North Dakota Healthy Again” initiative proposed supporting shared-use agreements with fitness centers and providing community physical activity challenge grants. Some states, including Alaska, Idaho, North Dakota, and South Carolina plan to utilize health kiosks in community settings for activities such as routine screenings or automated prescription pickup, with states like Kansas and Iowa specifically prioritizing cancer screening programs. Many states see these broader community health strategies as crucial to addressing upstream drivers of health and improving population outcomes.

Stakeholder Engagement

Engaging stakeholders early and consistently is imperative to the success of the Rural Health Transformation Program (RHTP). For most states, stakeholder engagement has been an integral component of the application process from the outset. To prepare their submissions, states solicited public input through surveys and requests for information (RFIs) and conducted virtual and in-person community listening sessions. Further, many states also established dedicated RHTP websites or webpages to share updates and resources with the public. As part of the application, states were required to describe how they will approach stakeholder engagement throughout program implementation.

Proposed stakeholder engagement strategies varied across states but common strategies included maintaining or establishing dedicated websites/webpages where updates would be regularly shared; hosting webinars, listening sessions, and townhalls; forming advisory committees or workgroups; and creating dedicated email addresses or web portals for community input and questions. For example, New Mexico will facilitate a quarterly RHTP Stakeholder Advisory Committee, while Massachusetts plans to establish a community advisory council supported by initiative-specific workgroups. Additionally, Iowa plans to engage a technical assistance vendor to host both in-person and virtual collaboration sessions and connect state staff and policymakers with feedback from rural healthcare providers.

Looking Ahead

By statute, CMS must award funds by December 31, after which states must quickly begin utilizing the funding to implement their proposed projects. As states transition from application to implementation, continued collaboration, ongoing evaluation and transparent and intentional stakeholder engagement will be essential to ensure that implemented activities and initiatives effectively address the needs of rural communities and drive transformational improvements in access to and delivery of healthcare. While the funds in the RHTP are not sufficient to make up for the deep healthcare cuts in H.R.1, it nonetheless represents an important one-time investment in strengthening rural health systems.