This year, the Centers for Medicare & Medicaid Services (CMS) will begin distributing funds from the Rural Health Transformation (RHT) Program, enacted last July as part of the One Big Beautiful Bill Act (OBBB).
Here are several takeaways that CFOs and other finance leaders at Texas rural and critical access hospitals need to know about the program.
Table of Contents
What are the strategic goals of the Rural Health Transformation Program?
CMS has announced six broad goals:
- Make rural America healthy again
- Sustainable access
- Workforce development
- Innovative care
- Tech innovation
What Is the Amount of Funding?
Total funding for the RHT program is $50 billion, which will be distributed over 5 years—$10 billion per year from 2026 to 2030.
Each state applied, and was approved, for funding. States are receiving awards ranging from $147 million to $281 million, with an average award of $200 million.
What Is the Structure of the Funding?
The funds are being distributed to states in two tiers.
In the first tier, each state receives an equal amount of approximately $100 million annually.
In the second tier, states receive funds allocated on a merit-based scoring system using such criteria as the size of the rural population, proposed policy actions that align with the administration’s health goals to enhance access and quality of care, and the potential for impact of these planned initiatives or activities.
How Much Will Rural Hospitals Receive?
Rural hospitals will not receive funds directly from CMS. Instead, the funds are allocated to individual states, which are managing deployment of the funds.
How Much Funding Was Allocated to Texas?
For 2026, Texas was awarded $281.3 million, the most of any state. This includes $105.1 million in baseline funding and $76.2 million in merit-based funding. This amounts to about $65 per rural resident, based on a population of 4.3 million rural residents, according to data by the Texas Health and Human Services Commission.
What Are the Priorities for the Funding in Texas?
State plans broadly include:
- Developing proactive wellness and nutrition programs
- Educating and attracting health professionals to rural towns
- Protecting health data and elevating technology in rural healthcare
In the Texas Health and Human Services Commission’s application for the federal funding, plans for the funds were divided among these six initiatives:
- Make Rural Texans Healthy Again:
- Performance objective: Reduce Texas non-metro ratio of population to dietitians
- Eligible institutions: Rural hospital districts
- Procurement process: Direct awards
- Rural Texas Patients in the Driver’s Seat:
- Performance objective: Increase remote patient monitoring
- Eligible institutions: Two or more clinically integrated networks, accountable care organizations or similar cooperative
- Procurement process: Request for proposal
- Lone Star Advanced AI and Telehealth:
- Performance objective: Artificial intelligence-based automation of fax processing/decrease percentage of rural Texas hospitals with human fax processing
- Eligible institutions: Two or more clinically integrated networks, accountable care organizations or similar cooperatives
- Procurement process: Request for proposal
- The Next Generation of The Small Town Doctor and Team:
- Performance objective: Reduce Texas’ non-metro ratio of population to community health workers
- Eligible institutions: Rural healthcare providers
- Procurement process Request for application
- Unified Care Infrastructure and Rural Cyber Protection:
- Performance objective: Increase percentage of rural Texas hospitals with automated quality reporting
- Eligible institutions: Vendors listed as a Managed Security Services Provider with the Texas Department of Information Resources
- Procurement process: Request for offer
- Infrastructure and Capital Investment for Rural Texas:
- Performance objective: Reduce Texas rural hospitals with less than 10 days cash on hand
- Eligible institutions: Rural hospitals, rural health clinics, behavioral health providers, opioid and substance abuse programs, emergency medical services, pharmacies, public health offices and other eligible providers
- Procurement process: Request for application
How Will Progress on Goals Be Monitored?
Each state is required to submit to CMS an annual progress report on its use of the funds. CMS will hold an annual rural health summit as part of its quality conference to share lessons learned and highlight effective models.
What Are the Risks and Rewards?
States have the opportunity to positively impact healthcare in their rural communities; however, states will be held accountable to progress. If states do not demonstrate a positive impact from their stated goals in their use of the funds, CMS will require the state to pay back all or a portion of the funds and the merit-based funding amount may be recalculated.
CMS also has restrictions on how the funds can be deployed. For example, payments to hospitals and other institutions for patient care cannot exceed 15% of total funds awarded to a state. Investments in existing buildings and infrastructure are restricted to 20% of total funds awarded.
Ready to learn how your organization can optimize opportunities with the Rural Health Transformation Program?
JTS Health Partners is ready to optimize your revenue cycle's operational and financial outcomes. Contact JTS today!
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