What is the Rural Health Transformation Program?

On July 4, 2025, President Trump signed H.R. 1, the budget reconciliation law, which makes changes to Medicaid and creates the Rural Health Transformation Program.

The changes to Medicaid will have a significant impact on the program, affecting states differently based on their Medicaid programs. Medicaid is a vital source of health insurance coverage for Americans living in rural areas, including children, parents, seniors, individuals with disabilities and those who are pregnant. 

Federal changes to Medicaid are complex, and the bulk of the changes will take place after the 2026 election cycle. Federal Medicaid spending in rural areas is expected to decrease by $155 billion. Health care facilities that serve Medicaid patients will need to use this time to prepare. The National Health Law Program has developed a timeline of implementation for the proposed changes, which is available here.  

This program will be administered by the Centers for Medicare and Medicaid Services (CMS). CMS has developed a website with program information, available here.

How much money is available in the Rural Health Transformation Program?

The fund was appropriated at $50 billion to be spent from fiscal year (FY) 2026 to 2030. $25 billion will be allocated to states that apply and are approved equally. The other $25 billion will be allocated based on the number of eligible facilities in each state and at the discretion of the CMS Director. The CMS Director has discretion as to where the second tranche of funds will be allocated, but must provide the funds to at least 25% of the states that apply for the RHTF.

• Funding Period: $10 billion will be distributed annually from FY 2026 through FY 2030, totaling $50 billion over five years.
• Fund Expenditure Deadline: States are allowed to spend the funds they receive through the end of the fiscal year following the year in which the funds were allotted. For instance, funds received in FY 2026 must be used by the end of FY 2027.
• Overall Fund Expenditure Deadline: All funds must be spent before Oct. 1, 2032. 

What can funds from the Rural Health Transformation Program be used for?

RHTP funds cannot be used to offset cuts to federal Medicaid payments. Amounts allotted to a State must be used for three or more of the following health-related activities:

• “(A) Promoting evidence-based, measurable interventions to improve prevention and chronic disease management.
• (B) Providing payments to health care providers for the provision of health care items or services, as specified by the Administrator.
• (C) Promoting consumer-facing, technology-driven solutions for the prevention and management of chronic diseases.
• (D) Providing training and technical assistance for the development and adoption of technology-enabled solutions that improve care delivery in rural hospitals, including remote monitoring, robotics, artificial intelligence, and other advanced technologies.
• (E) Recruiting and retaining clinical workforce talent to rural areas, with commitments to serve rural communities for a minimum of 5 years.
• (F) Providing technical assistance, software, and hardware for significant information technology advances designed to improve efficiency, enhance cybersecurity capability development, and improve patient health outcomes.
• (G) Assisting rural communities to right size their health care delivery systems by identifying needed preventative, ambulatory, pre-hospital, emergency, acute inpatient care, outpatient care, and post-acute care service lines.
• (H) Supporting access to opioid use disorder treatment services (as defined in section 1861(jjj)(1)), other substance use disorder treatment services, and mental health services.
• (I) Developing projects that support innovative models of care that include value-based
• care arrangements and alternative payment models, as appropriate.
• (J) Additional uses designed to promote sustainable access to high quality rural health care services, as determined by the Administrator.”