Redesigning Rural Health: How States Can Craft a Winning Application
With the Nov. 5 deadline fast approaching, states should balance bold initiative planning with the need for implementation success when applying for rural health funding.
Authors: Patti Boozang and Anne O’Hagen Karl
Editor: Amanda Eisenberg
tl;dr
Manatt Health hosted an Ask Manatt Anything session for 80 Million subscribers on Sept. 29, with a panel including Manatt Health’s Anne O’Hagen Karl, Deputy Secretary for North Carolina Medicaid Jay Ludlam and Dr. Jennifer Schneider, co-founder and CEO of Homeward Health, discussing the Rural Health Transformation (RHT) program and how states can set themselves up for success.
Among other tips, our panelists advise states, in coordination with their partners, to: approach the $50 billion RHT program as a once-in-a generation transformation opportunity; focus on “shovel-ready” projects that balance innovation with reasonable expectation of success in execution; integrate sustainable payment models into regional infrastructure; prioritize building a resilient rural health workforce through collaboration.
The 80 Million Impact
In case you need a recap, Congress ideated the $50 billion RHT program in the last hours of budget reconciliation negotiations as a way to offset H.R.1’s trillion-dollar health care cut. The program, which will span fiscal years 2026-30, aims to bolster rural health care delivery and access through a set of bold initiatives aligned with “making rural America healthy again,” creating sustainable access to services and strengthening the workforce. The Centers for Medicare and Medicaid Services (CMS) dropped a Notice of Funding Opportunity (NOFO) memo in September outlining new ways states can apply for funding, which will be awarded by Dec. 31. With applications due to CMS on Nov. 5, states are working at a breakneck pace to get their applications together.
Half of the money will be allocated equally to states with approved applications (aka “baseline funding” in the NOFO), and we expect all states will submit applications for funding; whether all states will have their applications approved remains to be seen. The other $25 billion in “workload funding” will be awarded on 23-factor scoring methodology that takes into account technical factors that reflect a panoply of priorities the Administration expects to see addressed in states’ applications — including certain state policy commitments, along with a state’s rural facility and population features. Karl noted that half of the “points” in scoring a state’s application for the workload funding are tied to the latter, which are measures that states can’t influence or change headed into this process.
CMS will also award points to states based on a qualitative assessment of the programmatic initiatives outlined in the application and the subsequent follow-through on implementing initiatives and policy reflected in the application. So implementation follow through matters here and will influence the level of awarded funding that actually flows to states; CMS can pull funding from states that fall short of hitting their marks on initiative implementation and reallocate it to other, more successful initiatives in other states.
Ludlam shared his perspective that among the biggest issues states face is how to curate their applications with shovel-ready projects, building on existing initiatives in which they are already investing. The challenge is exacerbated by the nexus of the fast turnaround to submit a successful plan, the imperative to demonstrate competence and success in implementing the plan, along with the ultimate need for sustainability.
“It’s not enough to simply win on a project but it’s important for us to win on the right projects that we can show sustainable improvement or growth,” Ludlam said. “We’ve been thinking through strategically what are some of those early initiatives that we want to be promoting and driving as our lead initiatives so we can demonstrate competence and success to claim additional funding over the next couple of years.”
Some examples may be rural health providers moving to hybrid and remote care delivery, which hasn’t reached peak penetration in rural parts of the country, or integrating AI and augmentation to support providers, Schneider said.
“There’s a chance for us to really strip away administrative work. Think about taking out scribing, think about taking out outreach, documentation,” she said, adding that providers will be able to spend more time with patients instead of these documentation burdens.
Ludlam added that North Carolina, which is the second-most rural state in the country, will need to rely on its existing rural health workforce to execute these goals. He cited the Healthy Opportunities Pilots (HOPS) as a model, which lowered Medicaid enrollees’ health care costs by as much as $1,020 a year.
Likewise, states should talk to their partners to ensure they deeply understand provider workflows and work across systems in rural health when designing for integration, Schneider said. Local teams will need to own the infrastructure to keep these efforts sustainable beyond the RHT program, including linking sustainable payment models across Medicaid, CHIP and commercial/employer sponsored insurance to this work.
States should consider what behaviors they want to pay for, Karl added. For example, “if a state wants to upskill a family practice provider in a rural community, it’ll need to ensure that the payment model pays both the family practice provider and the specialist consultants that need to be engaged in that communication.”
“It’s an investment, there’s no doubt … but the investment pays off and reaps dividends,” Schneider said. “So, the question is: Can we make the investment in the technology and the people?”
If those challenges are not met, states risk losing their funding to other states that are succeeding under the RHT program and investing in infrastructure that can’t be sustained once the RHT funding dries up. The cooperative agreement that outlines this escalation pathway will provide further clarity, including the potential for struggling states to access technical assistance.
The Bottom Line
To secure RHT funding and drive lasting change, states must act with urgency, champion bold and innovative initiatives, and demonstrate a clear capacity for successful implementation. But the true measure of success will be sustaining these transformations long after the federal dollars are gone. States that balance visionary planning with practical execution — and build for durability beyond the grant period — will be best positioned to deliver meaningful, long-term improvements in rural health.