CMS Launches Highly Anticipated Rural Health Transformation Program NOFO

As federal agencies continue to implement new requirements included in the One Big Beautiful Bill Act (OBBBA, H.R. 1), the Centers for Medicare and Medicaid Services (CMS) unveiled highly anticipated details on Sept. 15 outlining how states can apply to receive funding provided through the $50 billion Rural Health Transformation Program (RHTP) in a 124-page Notice of Funding Opportunity (NOFO).

CMS will allocate the $50 billion to states with approved applications over five years, with $10 billion available each year starting in fiscal year (FY) 2026 and ending in FY 2030. Half of the funding will be evenly distributed to all states with an approved application through “Baseline Funding.” The second half will be awarded to states based on individual state metrics and applications that reflect the greatest potential for and scale of impact on the health of rural communities through “Workload Funding.” A detailed breakdown of the RHTP’s structure and requirements included in H.R. 1 can be found in a July 21 Brownstein alert here. The new NOFO provides additional details that were lacking in the OBBBA, including the definitions and points scoring methodology that CMS plans to utilize for the second tranche of funding, as well as the goals and strategies of the RHTP.

Tight Timeline

The RHTP NOFO invites all 50 states to apply for funding to address each state’s specific rural health challenges. The deadline for states to apply is Nov. 5, 2025. There is only one opportunity to apply for funding and one application period for the program. CMS will announce awardees by Dec. 31, 2025, and will partner with states over the program period to ensure oversight and successful implementation of initiatives.

Many stakeholders have already raised concerns about the program’s accelerated timeline. The compressed schedule leaves states with limited time to prepare comprehensive applications, heightening fears about the potential lack of clear guardrails and sufficient guidance. This rushed process could complicate states’ efforts to design effective initiatives tailored to the unique needs of their rural communities, putting added pressure on states to balance speed with thorough planning and stakeholder engagement.

Aligning with CMS’s Strategic Goals

The RHTP aims to focus on promoting innovation, strategic partnerships, infrastructure development and workforce investment. The NOFO emphasizes that the funding will drive CMS’ five strategic goals and priority areas, all rooted in the statutorily approved uses of funds, which states should consider as they pull applications together:

1. Make Rural America Healthy Again: Support rural health innovations and new access points to promote preventive health and address root causes of diseases.

2. Sustainable Access: Help rural providers become long-term access points for care by improving efficiency and sustainability.

3. Workforce Development: Attract and retain a highly skilled health care workforce by strengthening recruitment and retention of health care providers in rural communities. Help rural providers practice at the top of their license and develop a broader set of providers to serve a rural community’s needs, such as community health workers, pharmacists and individuals trained to help patients navigate the health care system.

4. Innovative Care: Ignite the growth of innovative care models to improve health outcomes, coordinate care and promote flexible care arrangements. Develop and implement payment mechanisms incentivizing providers or Accountable Care Organizations (ACOs) to reduce health care costs, improve quality of care and shift care to lower cost settings.

5. Technological Innovation: Foster the use of innovative technologies that promote efficient care delivery, data security and access to digital health tools by rural facilities, providers and patients.

As part of the RHTP application, states must include a detailed Rural Health Transformation Plan. The NOFO includes questions that states must address covering the following elements: (1) improving access; (2) improving outcomes; (3) technology usage; (4) partnerships; (5) workforce; (6) data-driven solutions; (7) financial solvency strategies; and (8) cause identification. States are also required to include key performance objectives, discuss the states’ alignment with CMS’s strategic goals and provide future commitments to change specific legislation or regulations, among other required information.

CMS Tranche II Scoring – “Workload Funding”

Outside of the baseline $25 billion in funding that will be evenly distributed to states that apply, CMS will allocate the other $25 billion based on the information states provide CMS in the application and government data sets. Included in the guidance are additional details about how CMS will allocate this $25 billion in “Workload Funding” through a point system. CMS highlights that total points will be determined by two sets of factors: (1) rural facility and population score factors and (2) technical score factors. CMS provides detailed definitions and points scoring methodology in the NOFO. See Table I below for additional details, and the appendix included in the NOFO for further definitions and points scoring methodology.

The Workload Funding factor types are as follows:

• Data-Driven Metrics: Points are awarded based on the value of states’ metrics compared to other states.

• Initiative-Based: Points are awarded based on a qualitative assessment of the programmatic initiatives that states will outline in their application and subsequent follow-through.

• State Policy Actions: Points are awarded based on current state policy, informed by third-party resources accessed by CMS and validated by states attesting to their current policy stance in the application, proposed policy action that they commit to by accepting the award and subsequent follow-through in meeting their policy action commitments. CMS believes these state policy actions will be complementary to and greatly enhance the impact of initiative-based investments and their benefits to health care in rural communities.

State Reactions

Before CMS issued the NOFO, many states were already laying the groundwork for their RHTP applications by issuing Requests for Information (RFIs) and conducting outreach to educate the public and gather stakeholder input. To help track these efforts, Brownstein has created a comprehensive 50-State Tracker documenting ongoing state activities and information requests. Stakeholders should seize this opportunity to make their voices heard, as states will rely on this input to shape how they allocate funds once CMS approves their applications.

It is important to note that there is only one application window and one opportunity for states to apply for funding under the program. Moreover, states will have no recourse to appeal if their applications are denied or if the funding awarded falls short of their requests.

Several states, including Arizona, Delaware, Idaho, Louisiana, Minnesota, Missouri, Nevada, Rhode Island and others, currently have open RFIs outlining their specific rural health priorities and soliciting public feedback on key focus areas. While these RFIs do not guarantee funding, they provide a critical opportunity for states to identify pressing rural health challenges and prioritize resources accordingly. Meanwhile, states like Wyoming and Utah are engaging stakeholders through working groups, town halls and other public meetings. Some states have yet to launch formal RFIs or public engagement efforts, but we anticipate increased feedback opportunities now that the formal NOFO has been released.

On the Horizon

CMS will hold two webinars on Sept. 19 and Sept. 25 for RHTP applicants. States will have until Nov. 5 to apply for funding, with awardee decisions being announced by Dec. 31. In 2026 and onward, CMS will continue to monitor and provide states and stakeholders with support.

Appendix

Table I. Rural Facility and Population Score and Technical Score Factors

Rural Facility and Population Score Factors	Factor Type
A. 1. Absolute size of rural population in a State	Data-driven
A. 2. Proportion of Rural Health Facilities in the State	Data-driven
A. 3. Uncompensated care in a State	Data-driven
A. 4. % of State population located in rural areas	Data-driven
A. 5. Metrics that define a State as being frontier	Data-driven
A. 6. Area of a State in total square miles	Data-driven
A. 7. % of hospitals in a State that receive Medicaid DSH payments	Data-driven

Technical Score Factors	Factor Type
B. 1. Population health clinical infrastructure	Initiative-based
B. 2. Health and lifestyle	Initiative-based and State policy actions
B. 3. SNAP waivers	State policy actions
B. 4. Nutrition Continuing Medical Education	State policy actions
C. 1. Rural provider strategic partnerships	Initiative-based
C. 2. EMS	Initiative-based
C. 3. Certificate of Need	State policy actions
D. 1. Talent recruitment	Initiative-based
D. 2. Licensure compacts	State policy actions
D. 3. Scope of practice	State policy actions
E. 1. Medicaid provider payment incentives	Initiative-based
E. 2. Individuals dually eligible for Medicare and Medicaid	Initiative-based and Data-driven
E. 3. Short-term, limited-duration insurance	State policy actions
F. 1. Remote care services	Initiative-based and State policy actions
F. 2. Data infrastructure	Initiative-based and Data-driven
F. 3. Consumer-facing tech	Initiative-based

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THIS DOCUMENT IS INTENDED TO PROVIDE YOU WITH GENERAL INFORMATION REGARDING A CMS NOFO OF RURAL HEALTH CARE PROGRAMS. THE CONTENTS OF THIS DOCUMENT ARE NOT INTENDED TO PROVIDE SPECIFIC LEGAL ADVICE. IF YOU HAVE ANY QUESTIONS ABOUT THE CONTENTS OF THIS DOCUMENT OR IF YOU NEED LEGAL ADVICE AS TO AN ISSUE, PLEASE CONTACT THE ATTORNEYS LISTED OR YOUR REGULAR BROWNSTEIN HYATT FARBER SCHRECK, LLP ATTORNEY. THIS COMMUNICATION MAY BE CONSIDERED ADVERTISING IN SOME JURISDICTIONS.