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Empowering states: strategies for successful RHTP grant management

Authors

  • Allen Shank

    Partner, Forensics Insurance & Federal Claims Services, Ernst & Young LLP

  • Reena Panchal

    US Forensics Insurance & Federal Claims Services Leader

  • Robert Reeves

    US State, Local and Education Leader, Forensic & Integrity Services, Ernst & Young LLP

7 minute read 02 Apr 2026

RHTP funding helps states implement smart grant management strategies to enhance rural health and support local communities.

In brief
  • The RHTP provides states with US$50b to develop sustainable rural healthcare solutions, focusing on access, workforce capacity and telehealth integration.
  • The stage-gate funding model adds complexity, linking annual funding to states’ progress on rural health initiatives and CMS-approved performance measures.
  • Meeting CMS compliance is crucial for states. Failing to hit progress milestones can lead to financial penalties and jeopardize future rural health funding.

Introduction

The Rural Health Transformation Program (RHTP) is a groundbreaking five-year grant-funding opportunity with US$50 billion in federal funding aimed at improving healthcare in rural areas. This program, administered through the Centers for Medicare & Medicaid Services (CMS), provides competitive grants to state recipients, allowing them to implement innovative healthcare models that enhance access, strengthen workforce capacity and integrate digital and telehealth solutions. On average, states that secure RHTP funding can expect to receive approximately US$200 million annually from 2026 to 2030, enabling them to invest in sustainable, community-focused health systems.

How EY can help

The newly established federal Office of Rural Health Transformation (ORHT) within the Center for Medicaid and CHIP Services (CMCS) will oversee the RHTP, including oversight and performance monitoring.

 

The RHTP encourages innovation and collaboration across healthcare ecosystems, addressing the unique needs of rural residents. With strategic goals that include preventive health innovations, new care models and the recruitment of rural health providers, this program offers a significant opportunity for states to drive meaningful change. As with all federally funded grants, effective grant management is key to maintain funding levels and mitigate the risk of clawbacks for noncompliance.

Navigating significant challenges

Managing RHTP grants presents significant challenges for state leaders. While this federal investment aims to bridge gaps in rural healthcare access, the program’s unique stage-gate funding model introduces complexities that require careful navigation. Unlike traditional block grants, the RHTP ties annual funding to the progress states make on rural health initiatives and the performance measures outlined in their plans and budgets submitted to and approved by CMS.

States must meet strict compliance requirements set by CMS and federal regulations while safeguarding against fraud and misuse. Failure to achieve defined progress goals by milestone dates can lead to costly clawback provisions and reductions in future funding. The pressure to deliver tangible improvements in rural health access and equity adds another layer of urgency.

CMS and ORHT have made it clear that funding will be revoked or recouped if states do not meet programmatic, reporting or performance requirements.

Success in this venture demands more than just effort; it also requires the right experience, tools and strategies to launch programs effectively and meet the ambitious goals set forth by the RHTP, while still maintaining compliance with all grant requirements. As states prepare to tackle these challenges, they must act swiftly and decisively to utilize and enhance the benefits of this transformative funding opportunity.

Read on to uncover actionable insights and strategies for success.

1

Chapter 1

The Rural Health Transformation Program’s administrative requirements

States receiving RHTP grants should prioritize performance, invest in data analytics, foster collaboration, maintain clear communication with federal partners and develop skilled grant managers.

Meeting the RHTP’s administrative requirements

First and foremost, states need to focus on meeting performance requirements and verifying that funding is spent on eligible, approved purposes. Additionally, to successfully launch programs and achieve the goals of the RHTP, states should focus on the following key areas and make investments that align with their needs.

  • Federal grant administration: States should develop and implement strict financial management policies and internal controls so that grant funds are tracked separately, expenditures are identified and adequately documented, and grant spending can be transparently monitored and reported.
  • Data analytics: Investing in data analytics tools and talent is essential. States should analyze healthcare data to pinpoint service gaps and assess the impact of initiatives. This information will support informed decision-making and efficient resource allocation, as well as provide crucial data to measure and report on performance and demonstrate outcomes.
  • Collaboration: Fostering collaboration with local healthcare providers, community organizations and technology firms is crucial. Engaging stakeholders during planning and implementation will advance innovative solutions tailored to rural needs and enhance program sustainability.
  • Cooperation: The RHTP is structured as a cooperative agreement, meaning both states and federal partners have a role to play. CMS and ORHT will be providing Project Officers (POs) to states to provide technical assistance and ongoing feedback and support. States should proactively communicate with federal partners to prevent miscommunication or misunderstanding later in the grant lifecycle. Maintaining evidence of federal feedback, direction and guidance is key in avoiding misunderstandings years later.
  • Training and workforce development: States will require professionals experienced in federal grant management. These professionals understand compliance complexities and can navigate regulatory requirements to confirm full adherence.
2

Chapter 2

Insights for successful federal grant administration

To effectively manage RHTP grants, states should align with CMS guidelines, establish clear policies, invest in staff training, monitor subrecipients and confirm audit readiness.

Actionable insights for successful federal grant administration

Successful federal grant program administration requires a strategic approach to meet regulatory standards while effectively deploying funds to improve rural healthcare systems. Here are key tips to help guide the states’ efforts:

1. Program administration:

  • Start by aligning the grant administration framework with CMS guidelines and 2 Code of Federal Regulations (CFR) Part 200 standards. This alignment is essential for establishing compliance and maintaining the integrity of the programs.
  • Next, establish clear policies and procedures for eligibility, application review and award distribution. Well-defined guidelines streamline the process and promote transparency, making it easier for applicants to understand the requirements.
  • Implement real-time dashboards to monitor expenditures and track performance. These tools provide immediate visibility into how funds are being used, allowing for timely adjustments and confirming that resources are allocated effectively.
  • Invest in training and technical assistance for agency staff and subrecipients. Providing the right support equips the team with the skills needed to navigate compliance challenges and enhances overall program effectiveness.

2. Procurement, contracting and cost allowability:

  • Begin with standardized policies and procedures for procurement. Establishing clear guidelines helps verify that all purchasing activities comply with regulatory standards and promotes transparency throughout the process. 2 CFR Part 200 requires that states follow and comply with their own policies and procedures and do not deviate from normal practices for procurements funded through federal grants.
  • Conduct thorough reviews of contracts and grant agreements. This step is essential for confirming that all terms meet regulatory requirements and protects the state from potential compliance issues or payment disputes.
  • Implement due diligence and risk assessment practices. Evaluating potential collaborators helps minimize risks and facilitates engagement with reliable and qualified entities. This can also assist in designing monitoring plans that consider and mitigate identified risks.
  • Establish and document cost reasonableness proactively. Cost reasonableness may be established through competitive procurements that consider price as a factor, independent cost and price analyses and other relevant documentation. Costs under federal awards are required to be necessary, reasonable and adequately documented.
  • Prioritize cost validation, reasonableness and allocation analysis. Carefully assessing costs verifies that expenditures are justified and aligned with program objectives, as well as CMS-approved applications, enhancing the overall effectiveness of the funding.

3. Subrecipient monitoring:

2 CFR Part 200 requires recipients of federal funding to have adequate oversight of grant funding and to perform subrecipient monitoring.

  • Start by performing risk assessments to understand which projects and subrecipients pose the highest risks. Risk assessments should consider quantitative information, such as funding levels, alongside qualitative information, such as project complexity and subrecipient experience with federal funding.
  • Develop risk-based monitoring plans that are tailored to the size and complexity of the providers. This approach allows states to allocate resources efficiently and focus on areas that pose the greatest risk.
  • Utilize data-driven monitoring tools to detect irregularities early. These tools provide valuable insights that can help identify potential issues before they escalate so that programs remain on track.
  • Provide clear guidance on corrective actions and follow-up support. When irregularities are identified, having a structured plan in place helps address issues promptly and reinforces compliance.

4. Federal reporting:

  • Start by communicating with subrecipients and funding applicants on expectations and requirements for reporting. Proactively providing guidance on required data and information as well as collection procedures helps confirm that relevant reporting data is provided in a timely manner.
  • Start by preparing required CMS and federal reports in alignment with program requirements. Understanding the specific reporting requirements helps to stay compliant and avoid potential pitfalls.
  • Utilize standardized templates and workflows to streamline the submission process.
  • Implement data validation checks to confirm completeness and accuracy before submission. Taking this extra step enhances the reliability of the reports and strengthens the relationship with funding agencies.

5. Audit readiness and closeout:

  • First, maintain audit-ready documentation that clearly supports all grant activities and expenditures. Organized records make it easier to demonstrate compliance and facilitate a smooth audit process.
  • Prepare for potential audits by developing a solid response plan. This includes outlining steps for remediation if issues arise, preparing the team to address any findings promptly and effectively.
  • Finally, prioritize the completion of final financial and performance reports for federal submission. Timely and accurate reporting is crucial for closing out grants and maintaining good standing with funding agencies.

Conclusion

The RHTP presents a significant opportunity to enhance healthcare in rural areas. To fully leverage this funding, states must focus on effective grant management and compliance. Implementing standardized policies for grant administration, monitoring subrecipients and promoting audit readiness will strengthen program integrity.

States need to act now. By adopting these strategies, they can maximize RHTP funding and create meaningful improvements in rural healthcare.

Summary 

The Rural Health Transformation Program offers states a unique chance to enhance healthcare in rural areas with US$50 billion in federal funding over five years. To succeed, state leaders must navigate the complexities of the program’s performance-based funding model, verifying compliance with strict CMS regulations. Meeting progress goals is crucial to avoid funding clawbacks. With a focus on innovation and collaboration, states can drive meaningful change in rural health access and equity. By leveraging the right strategies and tools, they can maximize the benefits of this transformative initiative and build sustainable health systems for their communities.

About this article

Authors

  • Allen Shank
    Partner, Forensics Insurance & Federal Claims Services, Ernst & Young LLP
  • Reena Panchal
    US Forensics Insurance & Federal Claims Services Leader
  • Robert Reeves
    US State, Local and Education Leader, Forensic & Integrity Services, Ernst & Young LLP
Related topics
Forensic & Integrity Services

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