On September 15, 2025, the Centers for Medicare & Medicaid Services ("CMS") published a highly anticipated Notice of Funding Opportunity ("NOFO") announcement (the "Announcement") to implement the Rural Health Transformation ("RHT") Program ("RHTP") established by the One Big Beautiful Bill Act ("OBBBA") to allocate $50 billion over a five-year period (fiscal years 2026 to 2030) to approved states that meet applicable statutory and CMS requirements. The Announcement provides new insights to states and other stakeholders regarding how CMS will evaluate applications from states for RHTP funding, as well as detailed application instructions, eligibility standards, scoring methodology, strategic goals, policy priorities, and examples of strategic initiatives that align with the goals of the RHTP.
Below, we describe several key updates and insights from the Announcement. CMS held two informational webinars for applicants on September 19, 2025 and September 25, 2025. An optional Letter of Intent may be submitted by September 30, 2025. Applications are due by November 5, 2025.
I. Background
Section 71401 of OBBBA allocates $50 billion to be distributed to states that submit a CMS-approved RHTP application, which must include a detailed Rural Health Transformation Plan ("RHT Plan"). The statute establishes minimum requirements for RHT Plans (e.g., the plan must specify how the state will improve access to providers and improve health care outcomes in rural communities), imposes certain requirements on the use of RHTP funds, and identifies certain criteria that CMS must consider in distributing funds to approved states, such as the percentage of rural population and proportion of rural health facilities in the state relative to the rest of the country.
II. Rural Health Transformation Plan Requirements
A. Five "Strategic Goals"
In the Announcement, CMS identified the following five "strategic goals" for RHTP funding, which are aligned with the statute's approved uses of funds. RHTP applications must identify which strategic goal is supported by each proposed initiative and use of funds that is included in the state's RHT Plan:
- Make rural America healthy again: Support rural health innovations and new access points to promote preventative health and address root causes of diseases. Projects will use evidence-based, outcomes-driven interventions to improve disease prevention, chronic disease management, behavioral health, and prenatal care.
- Sustainable access: Help rural providers become long-term access points for care by improving efficiency and sustainability. With RHT Program support, rural facilities work together—or with high-quality regional systems—to share or coordinate operations, technology, primary and specialty care, and emergency services.
- Workforce development: Attract and retain a high-skilled health care workforce by strengthening recruitment and retention of healthcare providers in rural communities. Help rural providers practice at the top of their license and develop a broader set of providers to serve a rural community's needs, such as community health workers, pharmacists, and individuals trained to help patients navigate the healthcare system.
- Innovative care: Spark the growth of innovative care models to improve health outcomes, coordinate care, and promote flexible care arrangements. Develop and implement payment mechanisms incentivizing providers or Accountable Care Organizations (ACOs) to reduce health care costs, improve quality of care, and shift care to lower cost settings.
- Tech innovation: Foster use of innovative technologies that promote efficient care delivery, data security, and access to digital health tools by rural facilities, providers, and patients. Projects support access to remote care, improve data sharing, strengthen cybersecurity, and invest in emerging technologies.
B. Role of Stakeholders
CMS provided certain guidelines and requirements for involving stakeholders in the RHT application process:
- The state must certify that its application was developed in collaboration with at least the following stakeholders: state health agency/department of health; state Medicaid agency; the state office of rural health; the state's tribal affairs office or tribal liaison, as applicable; Indian health care providers, as applicable; and any other key stakeholders identified in the planning process.
- The application must describe how the state has involved and will involve rural stakeholders and must include any evidence of support from stakeholders, such as resolutions or letters of support, as attachments to the application.
- The state must provide an engagement framework that specifies how the state will have a formal process to engage stakeholders on a regular basis, such as through a stakeholder advisory committee, regular workgroups, or open door forums for feedback.
- The engagement framework must address how the state will coordinate regularly with the required stakeholders on deploying funds, tracking milestones, and assessing impact metrics through a new or existing council, workgroup, or structure.
- States may consult and involve partners like universities, local health departments, and provider associations when designing and implementing the activities in its RHT Plan.
- States may subaward or subcontract RHT Program funds to such partners for various activities, but must make the process and criteria for selecting such subawardees and subcontractors clear to CMS.
C. Other Requirements
In addition, states must include the following for each proposed initiative included in the RHT Plan:
- Outcomes: States must identify at least four
quantifiable metrics the state will use to assess the impact of any
initiative, including both baseline data and targets for the
measurable outcomes where possible. States must include at least
four outcomes in the Plan. One outcome must be at a county or
community level of granularity. CMS provides the following
non-exhaustive list of examples of possible types of metrics:
- Access metrics: Number of primary care visits in rural clinics, travel time for patients to nearest hospital, and specialist appointment wait times in rural areas.
- Quality and health outcomes: Rural hospital readmission rates, rates of diabetes or hypertension in rural areas, infant/maternal health indicators in rural populations, and rural opioid overdose death rates.
- Financial metrics: Operating margin of rural hospitals in aggregate, reduction in uncompensated care at rural hospitals, and number of rural hospitals that become financially sustainable.
- Workforce metrics: Ratio of physicians to residents in rural areas, clinician vacancy rates in rural areas, and new providers recruited to deliver telehealth in rural areas through affiliation agreements.
- Technology use: Percentage of rural patients with access to telehealth, and electronic health record (EHR) interoperability scores for stakeholders in rural areas.
- Program implementation: Counts of new programs launched, rural populations served by new services (telehealth encounters delivered, patients in chronic disease programs), and training sessions held.
- Implementation plan and timeline: For each initiative and for activities associated with general program set-up, the state must provide estimated dates and milestones, legislative or regulatory actions the state has committed to enact, and a governance and project management structure.
- Subawards: The state must provide a narrative rationale for any anticipated or planned funding allocations like subawards, subgrants, or subcontracts to specific provider groups, health care systems, hospitals, health care facilities, organizations, or other entities. The state must clearly outline its methodology, process, and specific criteria for selection of who receives these allocations.
- Sustainability plan: The state must describe its "strategy to ensure lasting change vs. temporary infusions of funding."
- Program duplication assessment: States may not
use RHTP funding to replace or duplicate current funding activities
and must submit as an attachment to the application a program
duplication assessment that includes a budget analysis to identify
current funding streams the state proposes to apply to state
activities and that identifies new and distinct activities toward
which the state could apply RHTP funding. Sample questions states
should consider:
- Is this expense paid for by another federal, state or local program, such as Medicaid, Medicare, Title V block grant funds, the local health department, or another innovation model?
- Is the activity a service already provided directly to an attributed beneficiary, such as under current Medicaid benefits?
III. Requirements for Fund Distribution and Evaluation Criteria
OBBBA requires RHTP funds to be distributed through a formula that allocates 50 percent equally among approved states (the "Baseline" funding) and 50 percent based on rural population metrics, facility counts, and any other factors the administrator deems appropriate (the "Workload" funding). Under the statute, Workload funding must be provided to at least one-fourth of the approved states, based on the following criteria:
- the percentage of the state population that is located in a rural census tract;
- the proportion of rural health facilities in the state relative to the number nationwide;
- the situation of "deemed disproportionate share" hospitals in the state; and
- any other factors the administrator deems appropriate.
In the Announcement, CMS described how it will evaluate state eligibility for the Workload funding by calculating a weighting of factors in a points-based scoring system. Each factor (A.1. to F.3., as described in more detail below) has a total points score of 100 across all 50 States. A state's total points score for each budget period is the weighted sum of the points score of each factor. For each state, CMS will calculate: (1) a "Rural Facility and Population Score" (factors A.1. to A.7.); and (2) a "Technical Score" (factors B.1. to F.3.). While Technical Score Factors will be re-calculated each year based on the state's required annual reporting, the Rural Facility and Population Score is calculated only once during Q4 2025, based on data available during the initial application process.
A. Rural Facility and Population Score Factors
The state's Rural Facility and Population Score is based on the following factors, which are directly tied to the value of the state's metric in comparison to other approved states:
- A.1. Absolute size of rural population in a state.
- A.2. Proportion of Rural Health Facilities in the state.
- A.3. Uncompensated care in a state.
- A.4. % of state population located in rural areas.
- A.5. Metrics that define a state as being frontier.
- A.6. Area of a state in total square miles.
- A.7. % of hospitals in a state that receive Medicaid DSH payments.
B. Technical Score Factors
A state's Technical Score Factors (and corresponding Workload funding) will be recalculated each year based on the state's annual reporting, focusing on the state's progress towards goals and commitments made by the state in its cooperative agreement. Technical Score Factors are categorized as based on one or more of the following factor types:
- Data-Driven Factors: Based on metrics compared to other states.
- Initiative-Based Factors: Based on a qualitative assessment of the programmatic initiatives outlined in the state's application and subsequent follow-through.
- State Policy Action Factors: Based on the state's existing
policy stances and any proposed policy actions the state commits to
in accepting an award. As described by CMS, State Policy Action
Factors do not use funding and are optional to pursue, but
"will be complementary to and greatly enhance the impact of
initiative-based investments and their benefits to health care in
rural communities." Factors include the following:
- B.2. Health and lifestyle: Incentivizes states to require schools to reestablish the Presidential Fitness Test.
- B.3. SNAP waivers: Incentivizes states to adopt the USDA SNAP Food Restriction Waiver, which prohibits the purchase of non-nutritious items (e.g., soda, candy, energy drinks, fruit and vegetable drinks with less than 50% natural juice, and prepared desserts).
- B.4. Nutrition Continuing Medical Education: Incentivizes states to adopt a requirement for nutrition to be a component of continuing medical education.
- C.3. Certificate of Need: Incentivizes states to eliminate certificate of need (CON) laws.
- D.2. Licensure compacts: Incentivizes a state's participation in interstate licensure compacts for specified clinician types.
- D.3. Scope of practice: Incentivizes states to expand the scope of practice of non-physician practitioners such as nurse practitioners, physician assistants, pharmacists, and dental hygienists, to increase access to primary care options.
- E.3. Short-term, limited-duration insurance (STLDI): Incentivizes states to offer STLDI plans, as defined in 45 CFR 144, to help address issues associated with being uninsured.
- F.1. Remote care services: Incentivizes states to adopt broadly supportive policies to promote access to remote care and telehealth services.
IV. Example Initiatives: Eligible Providers and Opportunities
CMS confirmed in the Announcement that "[al]ll 50 U.S. States are eligible, even if they do not have a large rural population or any rural hospitals." The statutory definitions do not limit eligibility to receive RHTP funds to rural hospitals. Other healthcare providers and suppliers are also eligible to receive funds. For example, a state's RHTP plan may include:
- Urban teaching hospitals, which provide specialty tertiary, trauma and critical care to rural residents (whether by transport, telemedicine or otherwise); and
- Emergency medical services providers and suppliers critical to the delivery of lifesaving services to rural communities and transporting patients to definitive care.
The RHTP creates many opportunities for new funding to flow towards innovative care models to support rural access:
- New and creative models of care;
- Collaboration between various types of providers, including mobile services, teaching programs, acute and critical care;
- Air to ground networks;
- Integrated care;
- Community paramedicine, hospital at home; and
- Regional partnerships (urban and specialties partnering with rural services).
In the Announcement, CMS described a number of "example initiatives" that involve opportunities for other types of providers and stakeholders, including a population health infrastructure initiative and a remote care services initiative.
V. Timeline
The application period opened on September 15, 2025 and will close on November 5, 2025. Importantly, this is the only application period and opportunity for states to apply for RHTP funding over the program's five-year period of implementation under OBBBA. CMS held two informational webinars for applicants on September 19 and September 25, 2025. CMS will announce awardees by December 31, 2025.
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