Federal, State, and Stakeholder Perspectives on the Rural Health Transformation Fund

September 15, 2025 | Catherine Jones

In early July, ahead of final votes on the One Big Beautiful Bill Act (full text H.R.1), Senate Majority Leader John Thune (R-SD), joined by Senators Susan Collins (R-ME) and Lisa Murkowski (R-AK), secured a $50 billion funding line for a new Rural Health Transformation Program (RHTP). This five-year mandatory fund is designed with two primary goals:

1. To stabilize vulnerable rural hospitals, health centers, clinics, and their workforces.
2. To improve access, affordability, modernization, and health outcomes for rural residents, who on average experience higher rates of chronic disease, shorter lifespans, and lower earning power compared to urban populations.

To help states better understand how to apply and utilize RHTP dollars, ASTHO partnered with Cornerstone Government Affairs to host a discussion on Sept. 4 featuring two expert panels. Participants included representatives from Centers for Medicare & Medicaid Services (CMS) and HRSA, congressional staff, state health departments, and experts from the National Rural Health Association and National Association of Medicaid Directors. Lively discussions provided valuable insights into the application process, how states might deploy funds to build and sustain rural health programs, and the realities of delivering care on the ground.

Panel One: Federal Perspectives

Application Tips

The first order of business was to provide potential applicants with essential information they need to apply. CMS is working quickly to release the Notice of Funding Opportunity in early September. Applications will be due in November, with funding decisions finalized by Dec. 31. This is a one-time application for the five-year mandatory fund, with dollars allocated evenly across FY26 to FY30 ($10 billion per year). Importantly, the RHTP fund is separate from — and unaffected by — FY26 Labor Health and Human Services, and Education discretionary appropriations outlined by the Senate and House, and any continuing resolutions.

The $50 billion program will be divided into two parts. $25 billion will be distributed evenly among states that apply and have successful applications. The remaining $25 billion will be allocated at CMS’s discretion based on factors such as a state’s rural population, the number of rural health care facilities, and state policies and policy commitments. States will not be required to provide matching funds.

In anticipation of the application deadline, many state health departments have been mobilizing over the past weeks. Health officials are convening task forces, launching working groups and public hearings, and issuing Requests for Information and surveys to shape projects and spending plans. These efforts are focused on aligning with CMS’s strategic goals, including making rural America healthy again, providing sustainable access to care, workforce development, innovative care delivery, and technology modernization.

Program Insights

Panelists also highlighted how RHTP differs from existing rural health programs. The Federal Office of Rural Health Policy, for example, funds initiatives focused on quality improvement, hospital technical assistance programs for operational challenges, and targeted pilot programs to test the feasibility of ideas related to community needs. By contrast, RHTP will provide states with a large, flexible infusion of funds to augment existing and novel rural health care efforts. States will also be permitted to use RHTP dollars for one-time investments (e.g., electronic health record systems, diagnostic equipment, and network-building initiatives). Panelists emphasized the importance of tailoring approaches to state and community needs, noting that Tribal communities face especially severe challenges, requiring intentional engagement.

The first session concluded with a focus on Alaska, where 73.7% of hospitals are in rural areas — a key driver of Senator Murkowski’s strong advocacy for the fund. Her legislative director noted the state’s persistent struggles with connectivity, limited primary care access, workforce shortages, and low patient volume. Previous funding formulas, which relied heavily on hospital bed counts or numbers of health care facilities, often disadvantaged Alaska and similar states.

RHTP, structured as a cooperative agreement, gives states both predictability and flexibility: dollars they can count on, combined with broad authority to design solutions in partnership with CMS protocols and assistance. CMS has existing protocols for grant management, and Congress will likely ask for clear reporting requirements as they monitor the successful implementation of the fund.

Panel Two: State and Stakeholder Perspectives

Rural Health Challenges

To align visions with on-the-ground realities, health department leaders from Pennsylvania and Mississippi described their extensive efforts underway to gather input and identify priorities that are both sustainable and impactful, underscoring the importance of community engagement in shaping state strategies. Panelists noted that states are working through a broad list of rural health challenges, including:

• Maternal and child health.
• Behavioral health.
• Substance use disorder.
• Emergency medical services.
• Transportation barriers.
• Aging populations.
• Specialist shortages.
• Data modernization (including cybersecurity, AI, broadband, training, and administrative support).
• Telehealth.
• Workforce shortages.
• Hospital, clinic and federally qualified health care center closures.
• Payment models (public and private).

Improving health information exchanges and electronic heath records were also mentioned as universal goals. RHTP is designed with flexibility to tackle these issues and to craft solutions (some of them can be shelf-ready, such as technology or prevention kits) to respond to the diverse needs of rural communities.

Aligning Programs

Panelists were asked how they are working with partners to achieve alignment for their programs. All concurred that strategic planning is essential, with an emphasis on local partnerships and regional collaborations. It was stressed that rural health care should ideally be delivered as close to the community level as possible, supported by a robust ecosystem. Speakers agreed that the financial health of rural areas is inseparable from the health of their hospitals and clinics. It was underscored that local residents are deeply invested in their communities and want to see them thrive. Transforming rural health care systems will require large-scale collaborations at a local level, which are built on trust, a shared vision, and a clear understanding of the long-term goals.

The challenges of chronic disease, which occurs and leads to death at significantly higher rates in rural areas, surfaced. Panelists agreed that tackling this issue requires major investments in ancillary professions — such as nutritionists, physical therapists, and community health workers — alongside a renewed emphasis on primary care services and alleviating the acute shortage of primary care physicians. According to the American Medical Association, roughly 65% of rural areas face a shortage of primary care providers, and only 4%-5% of incoming medical students now come from rural backgrounds. Some solutions noted by the panelists were extending medical student rotations in rural settings from a few weeks to 12 or more, coupled with financial and professional incentives. Encouragingly, research shows that students from rural areas are far more likely to return home as practicing physicians.

Final Words

Panelists overwhelmingly agreed that RHTP represents an unprecedented opportunity for states — though, notably, not for U.S. territories or Washington, D.C. — to expand access, raise the quality of rural health care, and ultimately improve both quality of life and life expectancy for their rural residents. The $50 billion fund is not only a lifeline but also a testing ground, and if implemented successfully, it could serve as a model to pave the way for future federal investments of this magnitude in rural health.

For more information on RHTP, please email MAHARural@cms.hhs.gov.

Participants

Part One: Federal

• Senator Lisa Murkowski and Angela Ramponi, MPH, Legislative Director
• Emily Chen, MBA, Senior Advisor, Office of the Administrator, Centers for Medicare and Medicaid Services, U.S. Department of Health and Human Services
• Tom Morris, MPA, Associate Administrator for Rural Health Policy, Health Resources and Services Administration, U.S. Department of Health and Human Services

Moderated by

• Carlos Jackson, Principal, Cornerstone Government Affairs

Part Two: State and Stakeholder

• Daniel Edney, MD, FACP, FASAM, State Health Officer, Mississippi State Department of Health
• Debra Bogen, MD, FAAP, Secretary of Health, Pennsylvania Department of Health
• Zil Joyce Dixon Romero, State Government Affairs Manager, National Rural Health Association
• Lindsey Browning, Deputy Executive Director of Programs, National Association of Medicaid Directors

Moderated by

• Susan Kansagra, MD, MBA, Chief Medical Officer, ASTHO