Maximize your impact: guidance for RHTP grant subrecipients

What Rural Health Transformation Program grant subrecipients and other awardees need to know to safeguard funding and maximize impact.

In brief

• With US$50 billion for rural healthcare, the RHTP is a game changer. Subrecipients must grasp program details, fulfill compliance and work with state partners.
• Success in the RHTP hinges on understanding program requirements and collaborating with state partners. Strong compliance can lead to increased funding.
• To avoid clawbacks and funding cuts under the RHTP, organizations need proactive governance and strong internal controls. Compliance is crucial for success.

Introduction

The Rural Health Transformation Program (RHTP) presents a historic opportunity to strengthen healthcare delivery in rural communities, with US$50 billion in federal funding available over five years. Administered by the Centers for Medicare & Medicaid Services (CMS) and implemented in partnership with US states, the program is designed to modernize rural healthcare infrastructure, expand access to care, support workforce development and advance innovative care models nationwide. On average, each state can expect to receive approximately US$200 million annually from 2026 to 2030, with half of the funding distributed equally and the other half allocated based on rural health metrics.

Understanding how the RHTP is governed

The RHTP operates under a cooperative agreement between CMS and state recipients, meaning both parties share responsibility for program oversight. CMS establishes program requirements, approves state transformation plans and budgets, and monitors performance and compliance throughout the award period.

In December 2025, CMS launched the Office of Rural Health Transformation (ORHT) to oversee the program. The ORHT is responsible for monitoring performance, reviewing reporting submissions and enforcing compliance. CMS also assigns Project Officers (POs) to each state to provide ongoing technical assistance, feedback and coordination.

At the state level, the lead agency manages program design, fund administration and stakeholder engagement. States are also responsible for monitoring subrecipients and verifying compliance with federal grant management, audit and reporting standards. Although states carry primary accountability, subrecipients and other funding recipients play a critical role in meeting program objectives and must be prepared to support compliance efforts.

CMS retains the authority to reduce or terminate funding if award conditions are not met or performance issues persist. On the contrary, states that demonstrate consistent progress and effective use of funds may receive an increased share of funding over time — benefiting high performing subrecipients.

In addition to programmatic requirements and the terms of the cooperative agreement and the states’ approved plans, the RHTP is governed by the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200), along with applicable provisions of 2 CFR Part 300 and the Department of Health and Human Services Grants Policy Statement. Accordingly, RHTP funds must be managed with the same diligence as other federal grants, including compliance with procurement standards, cost principles, procurement and subaward monitoring requirements.

For subrecipients, this means that RHTP funds must be managed with the same rigor as other federal awards. Expenditures must be allowable, allocable, reasonable and properly documented. Procurement activities must follow federal guidelines, and subaward requirements must be clearly defined and executed.

Understanding both the regulatory framework and the program’s operational expectations is essential to maintain eligibility throughout the award period.

Eligible activities under the RHTP

RHTP funds may be used only for activities approved by CMS and aligned with the state’s transformation plan. Eligible categories include but are not limited to:

• Prevention and chronic disease management
• Provider payments
• Consumer technology solutions
• Training and technical assistance
• Workforce development
• Health IT advancements
• Expanding access to appropriate care
• Behavioral health services
• Innovative care models
• Capital expenditures and infrastructure

Subrecipients must confirm that funded projects not only fall within these categories but also directly support approved objectives and produce measurable outcomes. Spending on unapproved or misaligned activities can trigger compliance findings and potential fund recoupment through clawbacks.

Key risks: clawbacks and funding interruptions

One of the most significant risks under the RHTP is the potential for clawbacks, which may occur if funds are not used in accordance with approved purposes or documented adequately. CMS may also interrupt or reduce future funding if stakeholders fail to comply with reporting, performance or administrative requirements.

These risks underscore the importance of proactive governance, strong internal controls and ongoing communication with state recipients and CMS. Organizations that treat compliance as an afterthought may struggle to sustain funding across the five year program period.

Safeguarding compliance: leading practices for subrecipients

Grant subrecipients and other awardees can reduce compliance risk and strengthen program outcomes by adopting several leading practices:

Moving forward with confidence

The RHTP offers a powerful opportunity to drive meaningful improvements in rural healthcare — but success is not automatic. Grant subrecipients and other awardees must balance innovation with accountability, verifying that program goals are met while complying with complex federal and programmatic requirements.

By strengthening governance structures, using funds as approved and collaborating effectively with state recipients and CMS, subrecipients and other funding applicants can protect their funding, enhance program performance and position themselves as trusted partners in this transformative initiative.