On September 15, 2025, the Facilities for Medicare & Medicaid Companies (“CMS”) revealed a extremely anticipated Discover of Funding Alternative (“NOFO”) announcement (the “Announcement”) to implement the Rural Well being Transformation (“RHT”) Program (“RHTP”) established by the One Massive Lovely Invoice Act (“OBBBA”) to allocate $50 billion over a five-year interval (fiscal years 2026 to 2030) to accredited states that meet relevant statutory and CMS necessities. The Announcement gives new insights to states and different stakeholders concerning how CMS will consider functions from states for RHTP funding, in addition to detailed software directions, eligibility requirements, scoring methodology, strategic objectives, coverage priorities, and examples of strategic initiatives that align with the objectives of the RHTP.
Beneath, we describe a number of key updates and insights from the Announcement. CMS held two informational webinars for candidates on September 19, 2025 and September 25, 2025. An non-obligatory Letter of Intent could also be submitted by September 30, 2025. Purposes are due by November 5, 2025.
I. Background
Part 71401 of OBBBA allocates $50 billion to be distributed to states that submit a CMS-approved RHTP software, which should embody an in depth Rural Well being Transformation Plan (“RHT Plan”). The statute establishes minimal necessities for RHT Plans (e.g., the plan should specify how the state will enhance entry to suppliers and enhance well being care outcomes in rural communities), imposes sure necessities on using RHTP funds, and identifies sure standards that CMS should take into account in distributing funds to accredited states, resembling the proportion of rural inhabitants and proportion of rural well being amenities within the state relative to the remainder of the nation.
II. Rural Well being Transformation Plan Necessities
A. 5 “Strategic Objectives”
Within the Announcement, CMS recognized the next 5 “strategic objectives” for RHTP funding, that are aligned with the statute’s accredited makes use of of funds. RHTP functions should determine which strategic purpose is supported by every proposed initiative and use of funds that’s included within the state’s RHT Plan:
- Make rural America wholesome once more: Help rural well being improvements and new entry factors to advertise preventative well being and tackle root causes of ailments. Initiatives will use evidence-based, outcomes-driven interventions to enhance illness prevention, persistent illness administration, behavioral well being, and prenatal care.
- Sustainable entry: Assist rural suppliers turn into long-term entry factors for care by enhancing effectivity and sustainability. With RHT Program assist, rural amenities work collectively—or with high-quality regional techniques—to share or coordinate operations, know-how, major and specialty care, and emergency companies.
- Workforce improvement: Entice and retain a high-skilled well being care workforce by strengthening recruitment and retention of healthcare suppliers in rural communities. Assist rural suppliers follow on the high of their license and develop a broader set of suppliers to serve a rural neighborhood’s wants, resembling neighborhood well being staff, pharmacists, and people educated to assist sufferers navigate the healthcare system.
- Modern care: Spark the expansion of revolutionary care fashions to enhance well being outcomes, coordinate care, and promote versatile care preparations. Develop and implement fee mechanisms incentivizing suppliers or Accountable Care Organizations (ACOs) to scale back well being care prices, enhance high quality of care, and shift care to decrease price settings.
- Tech innovation: Foster use of revolutionary applied sciences that promote environment friendly care supply, information safety, and entry to digital well being instruments by rural amenities, suppliers, and sufferers. Initiatives assist entry to distant care, enhance information sharing, strengthen cybersecurity, and spend money on rising applied sciences.
B. Function of Stakeholders
CMS supplied sure tips and necessities for involving stakeholders within the RHT software course of:
- The state should certify that its software was developed in collaboration with no less than the next stakeholders: state well being company/division of well being; state Medicaid company; the state workplace of rural well being; the state’s tribal affairs workplace or tribal liaison, as relevant; Indian well being care suppliers, as relevant; and some other key stakeholders recognized within the planning course of.
- The applying should describe how the state has concerned and can contain rural stakeholders and should embody any proof of assist from stakeholders, resembling resolutions or letters of assist, as attachments to the applying.
- The state should present an engagement framework that specifies how the state can have a proper course of to interact stakeholders regularly, resembling by a stakeholder advisory committee, common workgroups, or open door boards for suggestions.
- The engagement framework should tackle how the state will coordinate recurrently with the required stakeholders on deploying funds, monitoring milestones, and assessing affect metrics by a brand new or current council, workgroup, or construction.
- States might seek the advice of and contain companions like universities, native well being departments, and supplier associations when designing and implementing the actions in its RHT Plan.
- States might subaward or subcontract RHT Program funds to such companions for varied actions, however should make the method and standards for choosing such subawardees and subcontractors clear to CMS.
C. Different Necessities
As well as, states should embody the next for every proposed initiative included within the RHT Plan:
- Outcomes: States should determine no less than 4 quantifiable metrics the state will use to evaluate the affect of any initiative, together with each baseline information and targets for the measurable outcomes the place potential. States should embody no less than 4 outcomes within the Plan. One consequence have to be at a county or neighborhood stage of granularity. CMS gives the next non-exhaustive checklist of examples of potential varieties of metrics:
- Entry metrics: Variety of major care visits in rural clinics, journey time for sufferers to nearest hospital, and specialist appointment wait instances in rural areas.
- High quality and well being outcomes: Rural hospital readmission charges, charges of diabetes or hypertension in rural areas, toddler/maternal well being indicators in rural populations, and rural opioid overdose loss of life charges.
- Monetary metrics: Working margin of rural hospitals in mixture, discount in uncompensated care at rural hospitals, and variety of rural hospitals that turn into financially sustainable.
- Workforce metrics: Ratio of physicians to residents in rural areas, clinician emptiness charges in rural areas, and new suppliers recruited to ship telehealth in rural areas by affiliation agreements.
- Expertise use: Proportion of rural sufferers with entry to telehealth, and digital well being report (EHR) interoperability scores for stakeholders in rural areas.
- Program implementation: Counts of latest applications launched, rural populations served by new companies (telehealth encounters delivered, sufferers in persistent illness applications), and coaching periods held.
- Implementation plan and timeline: For every initiative and for actions related to basic program set-up, the state should present estimated dates and milestones, legislative or regulatory actions the state has dedicated to enact, and a governance and mission administration construction.
- Subawards: The state should present a story rationale for any anticipated or deliberate funding allocations like subawards, subgrants, or subcontracts to particular supplier teams, well being care techniques, hospitals, well being care amenities, organizations, or different entities. The state should clearly define its methodology, course of, and particular standards for number of who receives these allocations.
- Sustainability plan: The state should describe its “technique to make sure lasting change vs. non permanent infusions of funding.”
- Program duplication evaluation: States might not use RHTP funding to exchange or duplicate present funding actions and should submit as an attachment to the applying a program duplication evaluation that features a finances evaluation to determine present funding streams the state proposes to use to state actions and that identifies new and distinct actions towards which the state may apply RHTP funding. Pattern questions states ought to take into account:
- Is that this expense paid for by one other federal, state or native program, resembling Medicaid, Medicare, Title V block grant funds, the native well being division, or one other innovation mannequin?
- Is the exercise a service already supplied on to an attributed beneficiary, resembling underneath present Medicaid advantages?
III. Necessities for Fund Distribution and Analysis Standards
OBBBA requires RHTP funds to be distributed by a system that allocates 50 p.c equally amongst accredited states (the “Baseline” funding) and 50 p.c based mostly on rural inhabitants metrics, facility counts, and some other components the administrator deems applicable (the “Workload” funding). Beneath the statute, Workload funding have to be supplied to no less than one-fourth of the accredited states, based mostly on the next standards:
- the proportion of the state inhabitants that’s situated in a rural census tract;
- the proportion of rural well being amenities within the state relative to the quantity nationwide;
- the scenario of “deemed disproportionate share” hospitals within the state; and
- some other components the administrator deems applicable.
Within the Announcement, CMS described the way it will consider state eligibility for the Workload funding by calculating a weighting of things in a points-based scoring system. Every issue (A.1. to F.3., as described in additional element beneath) has a complete factors rating of 100 throughout all 50 States. A state’s whole factors rating for every finances interval is the weighted sum of the factors rating of every issue. For every state, CMS will calculate: (1) a “Rural Facility and Inhabitants Rating” (components A.1. to A.7.); and (2) a “Technical Rating” (components B.1. to F.3.). Whereas Technical Rating Elements might be re-calculated every year based mostly on the state’s required annual reporting, the Rural Facility and Inhabitants Rating is calculated solely as soon as throughout This autumn 2025, based mostly on information obtainable in the course of the preliminary software course of.
A. Rural Facility and Inhabitants Rating Elements
The state’s Rural Facility and Inhabitants Rating is predicated on the next components, that are immediately tied to the worth of the state’s metric compared to different accredited states:
- A.1. Absolute measurement of rural inhabitants in a state.
- A.2. Proportion of Rural Well being Amenities within the state.
- A.3. Uncompensated care in a state.
- A.4. % of state inhabitants situated in rural areas.
- A.5. Metrics that outline a state as being frontier.
- A.6. Space of a state in whole sq. miles.
- A.7. % of hospitals in a state that obtain Medicaid DSH funds.
B. Technical Rating Elements
A state’s Technical Rating Elements (and corresponding Workload funding) might be recalculated every year based mostly on the state’s annual reporting, specializing in the state’s progress in direction of objectives and commitments made by the state in its cooperative settlement. Technical Rating Elements are categorized as based mostly on a number of of the next issue sorts:
- Information-Pushed Elements: Primarily based on metrics in comparison with different states.
- Initiative-Primarily based Elements: Primarily based on a qualitative evaluation of the programmatic initiatives outlined within the state’s software and subsequent follow-through.
- State Coverage Motion Elements: Primarily based on the state’s current coverage stances and any proposed coverage actions the state commits to in accepting an award. As described by CMS, State Coverage Motion Elements don’t use funding and are non-obligatory to pursue, however “might be complementary to and significantly improve the affect of initiative-based investments and their advantages to well being care in rural communities.” Elements embody the next:
- B.2. Well being and way of life: Incentivizes states to require colleges to reestablish the Presidential Health Check.
- B.3. SNAP waivers: Incentivizes states to undertake the USDA SNAP Meals Restriction Waiver, which prohibits the acquisition of non-nutritious gadgets (e.g., soda, sweet, vitality drinks, fruit and vegetable drinks with lower than 50% pure juice, and ready desserts).
- B.4. Diet Persevering with Medical Training: Incentivizes states to undertake a requirement for diet to be a element of continuous medical schooling.
- C.3. Certificates of Want: Incentivizes states to remove certificates of want (CON) legal guidelines.
- D.2. Licensure compacts: Incentivizes a state’s participation in interstate licensure compacts for specified clinician sorts.
- D.3. Scope of follow: Incentivizes states to broaden the scope of follow of non-physician practitioners resembling nurse practitioners, doctor assistants, pharmacists, and dental hygienists, to extend entry to major care choices.
- E.3. Quick-term, limited-duration insurance coverage (STLDI): Incentivizes states to supply STLDI plans, as outlined in 45 CFR 144, to assist tackle points related to being uninsured.
- F.1. Distant care companies: Incentivizes states to undertake broadly supportive insurance policies to advertise entry to distant care and telehealth companies.
IV. Instance Initiatives: Eligible Suppliers and Alternatives
CMS confirmed within the Announcement that “[al]ll 50 U.S. States are eligible, even when they don’t have a big rural inhabitants or any rural hospitals.” The statutory definitions don’t restrict eligibility to obtain RHTP funds to rural hospitals. Different healthcare suppliers and suppliers are additionally eligible to obtain funds. For instance, a state’s RHTP plan might embody:
- City educating hospitals, which give specialty tertiary, trauma and significant care to rural residents (whether or not by transport, telemedicine or in any other case); and
- Emergency medical companies suppliers and suppliers important to the supply of lifesaving companies to rural communities and transporting sufferers to definitive care.
The RHTP creates many alternatives for brand spanking new funding to stream in direction of revolutionary care fashions to assist rural entry:
- New and inventive fashions of care;
- Collaboration between varied varieties of suppliers, together with cellular companies, educating applications, acute and significant care;
- Air to floor networks;
- Built-in care;
- Group paramedicine, hospital at house; and
- Regional partnerships (city and specialties partnering with rural companies).
Within the Announcement, CMS described numerous “instance initiatives” that contain alternatives for different varieties of suppliers and stakeholders, together with a inhabitants well being infrastructure initiative and a distant care companies initiative.
V. Timeline
The applying interval opened on September 15, 2025 and can shut on November 5, 2025. Importantly, that is the one software interval and alternative for states to use for RHTP funding over this system’s five-year interval of implementation underneath OBBBA. CMS held two informational webinars for candidates on September 19 and September 25, 2025. CMS will announce awardees by December 31, 2025.