States have received their first-year awards under the Rural Health Transformation Program, a $50 billion federal initiative created through the One Big Beautiful Bill Act. The program runs for five years, through 2030, with $10 billion distributed to states each year. In year one, all 50 states received funding, with awards ranging from $147 million in New Jersey to $281 million in Texas.
Program Structure & Approved Uses
The Centers for Medicare and Medicaid Services (CMS) identified five goals for the program: improving health in rural America, supporting access to care, strengthening the workforce, encouraging new care models, and investing in technology. States are required to use funds across at least three of the below approved categories, including:
- Evidence-based prevention and chronic disease management
- Payments to providers for health care items and services
- Consumer facing technology for chronic disease management
- Training and technical assistance for technology adoption, including remote monitoring, robotics, and AI
- Recruitment and retention of clinical workforce, including minimum five-year rural service commitments
- IT infrastructure, including cybersecurity
- Right-sizing health care delivery systems across the care continuum
- Opioid, substance use disorder, and mental health services
- Value based care and alternative payment model development
Based on a review of state project abstracts, all states addressed the five CMS goals in some form. Common themes include workforce shortages, technology investment, value-based reimbursement, structural redesign, and chronic disease management.
Compliance & Reporting Requirements
Awards are subject to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, commonly referred to as Uniform Guidance. Providers and organizations receiving sub awards should understand the practical impact of those requirements.
Funds must be spent in the year of the award. Drawn funds must also be used within three working days, which suggests a reimbursement-based drawdown structure.
Procurement requirements under Uniform Guidance may require competitive bidding for purchases above certain thresholds.
Internal controls over compliance will be expected and may be subject to audit procedures.
Awards above applicable thresholds may trigger single audit requirements.
CMS clarified in April 2026 FAQs that it does not need to review individual RFPs or state level awards before they are issued. States will, however, need to submit contractual reporting information to CMS after awards are made.
The first annual report is due August 30, 2026. Future annual reports are due every 12 months. The first quarterly report is due November 29, 2026, with future quarterly reports due 30 days after each quarter. No quarterly report is required for the May 1 through July 31 period.
States will also establish their own reporting requirements for providers and other subrecipients. Those requirements are expected to align with the federal reporting obligations.
Performance Monitoring & Clawback Risk
CMS will evaluate states each year using a checkpoint model. That review will include outcome data compared to other states, progress against stated goals, and policy commitments included in each state’s application. States that do not meet their goals may be at risk of having funds clawed back.
For providers, this creates a very practical issue. Tracking and reporting meaningful metrics cannot be an afterthought. Access measures, quality outcomes, health outcomes, and financial performance will likely be key areas of focus. Providers that cannot show measurable progress may put their continued participation, and potentially their state’s overall award, at risk.
Sustainability: The Question Behind the Funding
The Rural Health Transformation Program is a five-year program. It is intended to support transformation, not permanently fill operating gaps.
Prior health care transformation programs have shown that organizations benefit most when they use this type of funding to build stronger, more durable operating capabilities. The funding can help support change, but it should not become a short-term solution for recurring financial pressure.
When the funding period ends, many of the structural and financial challenges rural providers face today will still exist. Providers should be asking a simple question now: what does our organization need to look like in year six?
That question should guide how funds are allocated, which initiatives receive priority, and what internal infrastructure gets built during the program period. Data systems, compliance controls, performance reporting, and financial monitoring will all matter.
State Examples & Provider Deadlines
Several states included significant structural transformation in their applications. Delaware focused on rebuilding health system infrastructure. Vermont emphasized right-sizing and reducing duplication. Wyoming focused on redefining the basic rural care model. Texas, which received the largest year one award, is prioritizing wellness and nutrition, workforce retention, technology security, and patient access.
Provider application deadlines vary by state and range from May through August 2026, with most deadlines concentrated in May. Organizations that have not started their application process should make that a priority.
If you need further guidance or have any questions on this topic, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
