The RHTP Funding Landscape: Everything States Need to Know
With the Rural Health Transformation Program (RHTP) well underway, more and more states — and providers — are left with questions about the program’s funding mechanisms, what state flex authority looks like, and how planning decisions will create or eliminate financial opportunity for rural providers. These aren’t small questions, and the uncertainty is understandable.
Unlike past health initiatives, the RHTP isn’t a simple program with a fixed application and a predictable payout. It’s a flexible funding structure that puts real decision-making power in states’ hands, which means the outcomes will look different depending on how that authority is used — and that flexibility is exactly why the details are worth understanding now.
As states move from planning to execution in Year 1, the conversation is no longer centered solely on proposal development. Instead, leaders should focus on connecting existing initiatives to federal and state performance goals, identifying gaps, and developing Year 2 strategies that maximize both impact and available RHTP funding opportunities.
How Does RHTP Funding Split Between States?
According to the Centers for Medicare & Medicaid Services (CMS), each state has been approved for RHTP funding. The $50 billion program will follow a two-track allocation over five years, with $10 billion available each fiscal year. Half of the funding will be distributed equally to all approved states as baseline funding. The other half will be distributed as workload funding based on rural facility and population metrics, as well as current and proposed state policy outlined in each state’s RHTP application.
States should note that initial funding amounts are calculated from the same application and approval process. These are not separate funding awards — just separate calculations — which means they will be awarded together each fiscal year. However, the total amount states receive may vary each year, as the workload funds will be recalculated annually based on each state’s demonstrated progress toward its approved plan.
The Timeline from Approval to Actual Dollars
With $10 billion available each fiscal year, the RHTP’s Notice of Funding Opportunity (NOFO) already outlines the timeline for states to receive funding. Initial amounts were announced on December 29, 2025, and subsequent amounts will be announced on the following schedule:
FY 2027: October 31, 2026
FY 2028: October 31, 2027
FY 2029: October 31, 2028
FY 2030: October 31, 2029
From there, the timeline for states to actually receive funding each year is a little more vague. For example, while Year 1 funds were announced in December 2025, states needed to finalize spending plans, receive CMS approval, and finalize formal cooperative agreements before receiving any funds, which began flowing to states in early 2026.
Moving forward, states will need to submit annual non-competing continuation (NCC) applications — as well as annual progress reports — sixty days before the end of each budget period to be considered for additional funding each year.
What State Flex Authority Means for RHTP Funding
One advantage of the RHTP, compared to other federal health initiatives, is the state-level flexibility to address the challenges of rural health transformation. While there are specific federal requirements outlined in the NOFO — including 11 categories outlining how funds must be used across areas like prevention & chronic disease, IT advances, and innovative care — each state only needs to invest in three categories. This means individual states choose which initiatives to pursue and how to allocate funds within those categories.
States also have the freedom to choose which organizations will receive the funding downstream. There’s no limit on which types of providers or facilities can receive funding, nor is there a limit to the number of subawards or contracts that a state can give. Plus, the RHTP’s technical scoring incentivizes changes to state policy, meaning states can score higher — and receive more funding — by planning and implementing policies that expand who can deliver care, reduce regulatory barriers to new facilities, and set new standards for provider training.
Two Risks States Overlook: Now & After 2030
As states continue to move forward with the Rural Health Transformation Program, there are two major areas of risk to keep in mind:
The Clawback Risk. Progress reports and NCC applications must be completed annually to receive funding for the following fiscal year, and failure to demonstrate satisfactory progress could lead to a decrease or total loss of funding.
The 2030 Funding Cliff. RHTP will only last for five years, which means states that focus on short-term or flashy investments may not be able to sustain them once funding ends.
The solution? States should think about this program the way they would think about seed money. Start by building programs with an eye toward sustainability and use each year’s funds to gradually build toward the next. In Year 1, for example, we’re seeing many early movers spend on infrastructure — including technology, facilities, and some workforce development — to build the foundation necessary to make Year 4 and Year 5 funding successful.
It’s also important for states to note that the risk of clawback also presents a future funding opportunity. Since workload funding is recalculated annually based on each state’s demonstrated progress toward its approved plan, states that design and execute programs well — and can produce meaningful results — have a real opportunity to increase their funding share in later years.
4 RHTP Planning Decisions for States to Keep in Mind
The Rural Health Transformation Program offers a critical opportunity for states to engage meaningfully with rural healthcare. While most states already have funds flowing at this point, early adoption is key. Those who wait will find themselves struggling to design programs under compressed timelines — leading to less room for iteration, higher risk for clawback, and a shorter runway heading into 2030.
From there, the success of the program depends on a few key factors:
Give providers a seat at the planning table. As states design their programs over the five years, clinicians must be involved early and often. States that don’t build provider insights into their RHTP planning process risk creating policies that sound great on paper but fail to deliver results at the point of care.
Tie programs to state-level community health needs assessments (CHNAs). Many rural hospitals already conduct CHNAs as part of their nonprofit reporting requirements, and this data often goes underused. By referencing this existing work, states can avoid duplicating efforts, build stronger cases for proposed initiatives, and show that new investments respond to real, documented needs rather than starting from scratch.
Build with sustainability in mind. The strongest initiatives are ones designed to strengthen existing systems, whether that’s building rural provider networks, expanding value-based care models, or investing in technology and workforce pipelines that create lasting capacity. Consider asking: can this initiative be supported through existing payment systems, state budgets, or other funding streams? Or does it disappear the moment RHTP funding does?
Choose the right partner for success. States have full discretion over who receives RHTP subawards, but that flexibility comes with a cost. Someone must design and run the RFP process, collect and score applications, and make defensible recommendations on which projects deserve funding. This isn’t a small administrative task, and it’s often where a dedicated program manager — whether that’s an internal team or an outside partner — is what ensures RHTP dollars end up with the providers and projects best positioned to deliver results.
How Arcadius Health Can Help
Understanding the Rural Health Transformation Program’s mechanics is one thing. Acting on them, correctly, on a five-year timeline with real money and real consequences attached is another. Most states don’t lack the will to get this right; they often lack the bandwidth to do it alongside everything else.
This is where Arcadius Health fits in. We help states design and implement a fair RFP process, evaluate provider applications against program goals, and help states deliver defensible recommendations on which providers and projects are best positioned to deliver results. Our advisory work is grounded in real clinical experience, which means we understand these decisions from the exam room, not just the funding formula. And, as more states move forward with RHTP, we can help answer questions like which policy commitments are worth making, how to structure initiatives for sustainability beyond 2030, and how to keep provider voices in the room throughout this process.
If you’d like to learn more about how Arcadius Health can support your state’s rural health initiatives, contact us today to get started. Rural healthcare transformation is too important to get wrong. We’re here to help states get it right.
