Earlier this month, the Centers for Medicare & Medicaid Services (CMS) announced that all 50 states have applied for funding through the Rural Health Transformation Program (RHTP) established under the so-called “One Big Beautiful Bill Act” (OBBBA). As I discussed previously, RHTP is a one-time, $50 billion grant fund that was originally created to pacify lawmakers concerned about the political risk of supporting the law’s trillion-dollar cuts to Medicaid.
Since OBBBA’s enactment, the Administration and some Members in Congress have touted RHTP’s size and scope. But the numbers don’t lie: RHTP is equivalent to about 5% of OBBBA’s massive cuts to Medicaid. Moreover, the agency made it clear in the Notice of Funding Opportunity (NOFO) and subsequent guidance that states should not rely on award funding to shore up existing systems facing looming catastrophe. “We’re not talking about paying bills,” Administrator Mehmet Oz reminded hospital executives last month.
While that much is clear, Dr. Oz also claimed that states would be rewarded for “transformative big ideas.” However, only about 16% ($8 billion) of the total funding will be distributed based on CMS’s assessment of states’ initiatives. Half of all funding will be distributed evenly across all states with approved applications ($25 billion). Another quarter ($12.5 billion) will be awarded based on rural population and hospital data. 7.5% ($3.75 billion) will be distributed based on a state’s alignment with legislative and regulatory actions set forth in the NOFO, including some with little apparent connection to rural health, like deregulating short-term insurance or mandating the Presidential Fitness Test in all schools.
Nevertheless, state officials have been hard at work engaging stakeholders, designing initiatives, and drafting their proposals. Following the November 5 due date, many states posted excerpts or summaries of their applications. CMS will announce awards by December 31, 2025 but until then, these materials provide an intriguing, if limited, view into the types of programs that taxpayers could ultimately fund via RHTP.
RHTP Limits Drive Requests for Workforce and Tech Funding: Given RHTP’s restrictions on using funding for the actual provision of health care, it is unsurprising that all of the roughly two dozen states that released application information are requesting money for workforce development and health technology. Not only were these two funding categories encouraged in the NOFO, but they would allow states to spend significant funds in the short award period. Provider recruitment and retention incentives offer a temporary opportunity to entice clinicians to remain in rural communities in the face of Medicaid reimbursement cuts and hospital closures driven by OBBBA. Further, CMS has advised that states that fail to achieve rapid progress during the award period will be subject to reduced funding in future years, or even funding clawbacks. States may be reluctant to request funding for longer-term initiatives whose outcomes are more difficult to measure or guarantee in one-year increments.
State Examples:
- Alabama’s “Rural Workforce Initiative” would fund curriculum development and training equipment at a new residential high school, establish or expand Graduate Medical Education programs in rural areas, and provide free or reduced-cost education and training for people who commit to 5 years of practice in a rural area.
- Wyoming would use a portion of its technology funding to procure a centralized tele-specialty hub to enhance statewide access to specialists, initially focusing on psychiatrists and other behavioral health specialists to establish crisis stabilization telehealth capacity.
EMS Innovation is Popular: Straddling the worlds of ambulance transport and health care, emergency medical services (EMS) are a lifeline for rural residents. But rural EMS faces uniquely challenging circumstances, ranging from costly long-distance transports to long-term funding and staffing challenges, including heavy reliance on community fundraising efforts and volunteers. Traditional insurance payments, tied to mileage and transport to high-cost hospital settings, rather than health outcomes or services, have stifled the widespread adoption of community paramedicine or other innovative models of care. Recent federal efforts to address EMS funding and capacity have failed to deliver. CMS ended its EMS model two years early in 2023, citing low provider participation. And Congress excluded ground ambulance services from the protections enacted under the No Surprises Act, punting thorny policy questions to an advisory committee whose recommendations have stalled since being published last year. But EMS appeared prominently in the RHTP NOFO and more than half of states that posted application information included significant EMS-related proposals in their materials.
- State Examples:
- Kansas proposes multiple EMS-related initiatives in its RHTP application, including requesting funding for EMS to be paid for “treat-in-place” services furnished at the scene of a response, transports to locations other than hospital emergency departments, and a clinical advice line linked to the 911 dispatch system.
- Idaho plans to provide targeted funding to expand the “Community Health Emergency Medical Services” (CHEMS) program, targeting rural areas that lack full-time paid EMS providers. In addition to traditional EMS duties, CHEMS providers can conduct home-based preventive visits, follow-ups, and wellness assessments.
Sustainability Remains Murky: While states are clearly grappling with how they will fund RHTP initiatives on a long-term basis, most applications provide limited detail regarding how they will sustain effective programs in an era of broad Medicaid cuts. While some states indicate that they will consider integrating successful RHTP interventions into their Medicaid program, most do not commit to a final path to sustainability – undoubtedly aware that by the time RHTP funding runs out, they will be implementing OBBBA changes designed to permanently reduce Medicaid’s scope. Other states optimistically rely on local tax revenue or hope the interventions themselves will quickly reduce health costs.
State Examples:
- Arizona seeks RHTP funding to pilot the use of digital therapeutics for behavioral health conditions, with a long-term goal of covering the services in Medicaid.
- Texas proposes to fund start-up grants to local governments for community-based programs to reduce the prevalence of chronic conditions like diabetes and cardiovascular disease. According to its application, “these local solutions are sustainable because each community has a built-in financing mechanism through their ad valorem [property] tax revenue which will combine with decreased overall cost burden…as individuals improve chronic conditions.”
The application information released by some states underlines 2 simultaneous truths about RHTP. First, rural communities are facing urgent needs with ingenuity and optimism, seeking to step in with local solutions where federal policymakers have not succeeded. Second, RHTP remains utterly insufficient to reverse OBBBA’s systemic cuts, which will deprive millions of people of coverage while sharply reducing sustainable funding for health care services in rural areas.
