Rural Health Transformation Program - What’s Fundable (and What Isn’t): Approved Uses, Sub-awards, and the 10% Admin Cap

The Rural Health Transformation (RHT) Program is a landmark $50 billion CMS initiative running from FY2026–FY2030. It is designed to stabilize, modernize, and transform rural healthcare delivery. Its purpose is to help states build sustainable systems that address long-standing rural challenges: hospital closures, workforce shortages, behavioral health deserts, and outdated technology, by channeling funds into approved uses. Providers, while not direct applicants, play a pivotal role as sub-award partners delivering projects that transform care at the ground level.

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Why clear rules matter

The RHT program is not an open-ended grant. CMS requires states to select at least three approved use-of-funds categories in their applications. Providers must shape their proposals around those categories if they want to be competitive. The dollars are meant for transformation: creating infrastructure, pipelines, and models that endure after 2030. Funds cannot replace routine reimbursement or cover operating losses.

States will be judged on compliance and program design.

Providers must demonstrate they can execute measurable, sustainable projects aligned with state priorities.

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Approved uses: where states and providers should focus

CMS outlines several approved uses. States must select at least three; providers should map proposals to them.

• Prevention and chronic disease management. States can prioritize high-burden conditions in rural areas such as diabetes, hypertension, COPD, and heart failure. Providers can propose nurse care manager programs, rural wellness hubs, and patient education models to reduce preventable admissions.
• Technology and cybersecurity upgrades. States may focus on broadband and statewide EHR integration. Providers may use funds for local upgrades—secure telehealth platforms, cybersecurity compliance, and reliable IT systems.
• Telehealth and Remote Patient Monitoring (RPM). States may emphasize virtual care networks. Providers can expand rural telehealth platforms, equip patients with RPM devices, and train staff in virtual workflows.
• Workforce recruitment and retention. States can design loan repayment or scholarship programs with a five-year rural service commitment. Providers can sponsor local residency slots, expand training sites, and attract specialists to underserved counties.
• Behavioral health and substance use disorder (SUD) access. States can allocate funds to expand behavioral health networks. Providers can integrate behavioral health into rural primary care and launch telepsychiatry programs.
• Right-sizing care delivery. States can redesign service models. Providers may establish community paramedicine programs, regional urgent care centers, or EMS-led care aligned with frontier realities.
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What’s not fundable: the guardrails

CMS draws hard lines:

• Funds cannot cover services already reimbursable by insurance. Provider salaries for routine visits are ineligible.
• States may not use funds to cover hospital operating deficits.
• Administrative costs are capped at 10% of the total award (direct + indirect) for both states and sub-awardees.
• No duplication with existing federal funding streams (e.g., HRSA workforce programs, FCC broadband subsidies).

These guardrails ensure dollars fund lasting transformation, not short-term fixes.

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Sub-awards: how providers fit in

States apply once and receive funds; providers receive sub-awards and are the engines of transformation.

• States are responsible for selecting sub-awardees, ensuring compliance, and reporting to CMS.
• Providers must prepare shovel-ready, outcomes-driven proposals. Expect federal award terms (HIPAA, cybersecurity, financial tracking) to flow down to sub-recipients. Sub-award opportunities may include direct allocations to anchor institutions, competitive RFPs for local projects, and consortium-based awards for regional networks.

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Implementation strategy: how to build fundable proposals

Providers should start now, not wait until states announce RFPs.

1. Assess rural needs. Collect data on disease prevalence, ED overuse, maternal care gaps, and broadband deficits.
2. Map to approved uses. Clearly indicate which use(s) your project fits so states can insert it into their application.
3. Define outcomes. For example: reduce uncontrolled diabetes by 20%, cut HF readmissions by 15%, or add 2,000 new behavioral health visits.
4. Design sustainability. Show how programs transition to reimbursement (e.g., CCM/RPM CPT codes) or value-based care beyond 2030.
5. Build coalitions. FQHCs, EMS, universities, and public health departments strengthen your proposal and show statewide reach.
6. Budget wisely. Keep admin under 10%. Prioritize staff, devices, and infrastructure that directly improve rural care access.
7. Post-award readiness. Register on your state’s procurement portal, maintain eligibility documents, and prepare a proposal packet with problem statement, staffing, platform plan, metrics, and compliance documentation.

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ROI and financial impact

For states: CMS will distribute $50B across five years ($10B/year), split between equal share and competitive allocation. At least one-quarter of approved states must receive a portion of the competitive pool.

For providers: Sub-awards could bring $1-2 million for targeted projects or $10-20 million for regional networks. In rural contexts, even modest awards can finance telehealth expansion, sustain a clinic, or recruit critical staff.

The often-cited ~$100M per state/year is illustrative, as itdepends on how many states are approved and how competitive funds are distributed.

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Real-world scenarios: how RHT could apply

Scenario 1 – Critical Access Hospital in Mississippi

• Context: A Critical Access Hospital (CAH) in the Delta serves an aging, low-income population with high hypertension and diabetes rates. Broadband is weak; the nearest cardiologist is 90 miles away.
• Proposal: Deploy cellular-enabled RPM for BP/glucose, integrated with Lara Health, and hire nurse care managers to run CCM.
• Benefit: Lower preventable hospitalizations, improved chronic disease control, new CCM/RPM revenue streams.

Scenario 2 – Frontier FQHC in Montana

• Context: A Federally Qualified Health Center with four-county coverage, no behavioral health providers, suicide and opioid death rates far above average.
• Proposal: Recruit three behavioral health specialists on five-year commitments; expand telepsychiatry via broadband upgrades.
• Benefit: More mental health access, reduced ED psychiatric visits, integration of BH into rural primary care.

Scenario 3 – Community health network in North Carolina

• Context: County lost its hospital; remaining rural health clinics (RHCs) and public health department must cover maternal and urgent care.
• Proposal: Create 24/7 urgent care hub, expand EMS community paramedics, add OB teleconsults with a university partner.
• Benefit: Access restored, reduced reliance on urban EDs, EMS-led sustainable rural model.

Conclusion

The Rural Health Transformation Program is not a blank check. It is a structured, rules-driven investment in the future of rural healthcare. States must design strategic applications around approved uses and manage compliance. Providers must bring shovel-ready, outcomes-driven proposals tied to rural needs and ready for sub-award inclusion.

Lara Health is the partner to help providers succeed. Our platform unifies Chronic Care Management, Remote Patient Monitoring, and telehealth workflows; automates documentation and time capture; embeds care plan templates; and delivers dashboards that align directly with state and CMS reporting metrics. We provide audit-ready security and compliance, help craft outcome frameworks for proposals, and support device logistics tailored for rural broadband constraints. Whether piloting in 60 days or scaling to thousands of patients, Lara Health ensures rural providers can deliver measurable results and stay compliant. Book a consultation with Lara Health to learn how we can help turn RHT funding into lasting, compliant, and sustainable transformation for rural communities.

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FAQs

What are the approved uses of RHT funds?

Prevention and chronic disease management, technology and cybersecurity, telehealth/RPM, workforce recruitment with a five-year service commitment, behavioral health and SUD, and right-sizing care delivery.

Can funds cover provider salaries?

Not for billable services. Salaries for routine clinical work are ineligible.

How much can be spent on administration?

No more than 10% of total award funds.

Who receives the funds directly?

Only states apply and receive funds. Providers participate via sub-awards.

How can providers prepare now?

Assess local rural needs, map to approved uses, define outcomes, build coalitions, and engage state leaders immediately.

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The $50 Billion Rural Health Transformation Program: What Providers Can Do Before Nov. 5, 2025

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Sources

CMS. “CMS Launches Landmark $50 Billion Rural Health Transformation Program.” 2025.

CMS. “Rural Health Transformation Program NOFO and Guidance.” 2025.

U.S. House Energy & Commerce Committee. “CMS Releases Guidance on Rural Health Transformation (RHT) Program Funding.” 2025.

American Hospital Association. “CMS opens application period for Rural Health Transformation Program.” 2025.