Rural Health Transformation Program

NCDHHS will apply to receive funding from the federal Rural Health Transformation Program (RHTP). RHTP is part of H.R. 1, a federal reconciliation bill signed into law in July that includes significant cuts to Medicaid. RHTP is designed to address the gaps in rural health care that will increase due to those cuts. Funding for RHTP is temporary; the program provides $50 billion to be distributed in 10 payments to states over the next five years. It is not recurring funding.

To opt into the program, NCDHHS will submit its plan for the funding to the Centers for Medicare and Medicaid Services (CMS). The plan will outline how the State will: 

  • Improve access to rural hospitals and other health care providers;
  • Improve health care outcomes for rural residents;
  • Foster partnerships between rural providers; and
  • Strengthen the rural health care workforce.

Partner Feedback

Partners are encouraged to give feedback on what should be considered for North Carolina’s application. NCDHHS will hold several opportunities for partner input in the fall. NCDHHS will submit its application to the CMS, and approval is expected by Dec. 31, 2025.

Once the application is approved, a public notice will be issued to let providers and hospitals know when they are able to apply for a portion of the funding. NCDHHS will provide more information about the funding application process in early 2026. 

Provide Partner Feedback 

More on RHTP

Cuts to the Medicaid program due to H.R. 1 will result in approximately $1 trillion in losses nationwide in the next 10 years, including $49.9 billion in North Carolina alone, disproportionately impacting rural health care. 

The first $25 billion from RHTP will be split evenly between all 50 states and will equal about $100 million each year for the next five years for North Carolina. The second $25 billion will be split at CMS' discretion among all 50 states over the next five years. 

To receive funding, states must submit a Rural Health Transformation Plan to meet these objectives defined by CMS:

  1. To improve access to hospitals, other health care providers, and health care items and services furnished to rural residents of the State;
  2. To improve health care outcomes of rural residents of the State;
  3. To prioritize the use of new and emerging technologies that emphasize prevention and chronic disease management;
  4. To initiate, foster, and strengthen local and regional strategic partnerships between rural hospitals other health care providers in order to promote measurable quality improvement, increase financial stability, maximize economies of scale, and share best practices in care delivery;
  5. To enhance economic opportunity for, and the supply of, health care clinicians through enhanced recruitment and training;
  6. To prioritize data and technology-driven solutions that help rural hospitals and other rural health care providers furnish high-quality health care services as close to a patient’s home as is possible;
  7. That outlines strategies to manage long-term financial solvency and operating models of rural hospitals in the state; and
  8. That identifies specific causes driving the accelerating rate of stand-alone rural hospitals becoming at risk of closure, conversion, or service reduction.

States must also commit to using RHTP funds for three or more of the following allowable activities:

  1. Promoting evidence-based, measurable interventions to improve prevention and chronic disease management.
  2. Providing payments to health care providers for the provision of health care items or services, as specified by the CMS Administrator.
  3. Promoting consumer-facing, technology-driven solutions for the prevention and management of chronic diseases.
  4. Providing training and technical assistance for the development and adoption of technology-enabled solutions that improve care delivery in rural hospitals, including remote monitoring, robotics, artificial intelligence, and other advanced technologies.
  5. Recruiting and retaining clinical workforce talent to rural areas, with commitments to serve rural communities for a minimum of five years.
  6. Providing technical assistance, software, and hardware for significant information technology advances designed to improve efficiency, enhance cybersecurity capability development, and improve patient health outcomes.
  7. Assisting rural communities to right-size their health care delivery systems by identifying needed preventative, ambulatory, pre-hospital, emergency, acute inpatient care, outpatient care, and post-acute care service lines.
  8. Supporting access to opioid use disorder treatment services, other substance use disorder treatment services, and mental health services.
  9. Developing projects that support innovative models of care that include value-based care arrangements and alternative payment models, as appropriate.
  10. Additional uses designed to promote sustainable access to high-quality rural health care services, as determined by the CMS Administrator.
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