The Rural Health Transformation Program (RHTP) gives states flexibility to invest in initiatives that help strengthen healthcare in rural communities and improve health outcomes. The flexibility is balanced by federal cost principles, program-specific limitations, and guardrails that shape how funds may be used in practice.
This article is the first in a series of four articles providing details on RHTP frequently asked questions (FAQs)1. This first article explores questions about how RHTP funds can and cannot be used. The other articles in this series will cover subrecipient and contractor eligibility, finance and financial management, and compliance and reporting.
1. What are the standard allowable uses of RHTP funds?
The following is a table summarizing the allowable use categories, according to the Notice of Funding Opportunity2 (NOFO):
| Allowable Use Category | Category Details |
|---|---|
| Prevention & Chronic Diseases | Advancing evidence‑based practices and measurable strategies that strengthen prevention efforts and improve chronic disease management. |
| Provider Payments | Delivering financial payment to healthcare providers for delivering healthcare items or services, within the limitations described in FAQ #3 below. |
| Consumer Technology Solutions | Supporting technology‑driven, patient‑facing tools that enhance prevention efforts and chronic disease management. |
| Training & Technical Assistance | Supplying education, training, and hands‑on assistance to advance the development and implementation of technology‑enabled solutions in rural hospitals, including remote monitoring, robotics, artificial intelligence (AI), and similar advanced tools. |
| Workforce Development | Attracting and retaining clinical professionals in rural areas, with required commitments to serve rural communities for at least five years. |
| IT Advances | Providing software, hardware, and technical assistance to support major IT enhancements that improve operational efficiency, strengthen cybersecurity, and advance patient outcomes. |
| Appropriate Care Availability | Supporting efforts for rural communities to evaluate and strengthen their healthcare delivery systems by assessing needs across preventive, ambulatory, emergency, inpatient, outpatient, and post‑acute care services. |
| Behavioral Health | Expanding access to services for opioid use disorder, other substance use disorders, and mental health conditions. |
| Innovative Care | Designing and implementing new care models, including value‑based arrangements and alternative payment structures where appropriate. |
| Capital Expenditures & Investments | Funding upgrades to existing rural health facilities and infrastructure, such as minor renovations, improvements, and equipment purchases. Long‑term operating costs are expected to reflect projected patient volumes. See the applicable limitations outlined in FAQ #3 below. |
| Foster Collaboration | Building and strengthening strategic partnerships among rural facilities and other healthcare providers to help improve quality, enhance financial stability, and expand access to care. |
It is important to remember that the RHTP is a federal program and RHTP funding is subject to federal cost principles, found at Title 2, Code of Federal Regulations, Part 200, Subpart E (2 CFR 200 Subpart E),3 which guides how expenses may be treated.
2. What are the unallowable costs under the RHTP, and what costs are subject to specific spending caps or limitations?
Unallowable costs under the RHTP include the costs unallowable under 2 CFR 200 Subpart E, as well as the specific unallowable costs listed below:
- Pre-award costs
- Services or supports that are the legal responsibility of another entity
- Independent research and development
- Cosmetic or experimental procedures under 45 CFR 156.4004
- Expenditures used to finance the non-federal share of other federal programs
- Supplanting existing state, local, tribal, or private funding
- New construction or major capital improvements
- Payments for clinical services reimbursable by insurance
- Salaries or wage supports for clinicians at facilities with non-complete clauses
- Services prohibited under Social Security Act (SSA), Section 2105(c)5
3. What costs under the RHTP are subject to specific spending caps or limitations? What are those caps or limitations?
The following costs are permitted under the RHTP, but are subject to spending caps or limitations. Any expenditures outside of these caps or limitations are not an eligible use of RHTP funds.
| Expense Type | Limitation or Spending Cap |
|---|---|
| Administrative Costs |
|
| Electronic Medical Record (EMR) System Replacement |
|
| Rural Tech Catalyst Fund |
|
| Salaries & Wages |
|
| Provider Payments & Payments for Medical Services |
|
4. Under what circumstances may RHTP funds be used to make payments to healthcare providers for healthcare items or services?
The NOFO prohibits RHTP funds from replacing payment for any clinical services that could be reimbursed by insurance. If a state applied to fund direct healthcare services, it was required to justify why they are not already reimbursable, how the payment would fill a gap in care coverage (such as uncompensated care or services not covered by insurance), and/or how they would support changes to the current care delivery model. Further, funding for payments for healthcare services is capped at 15% of the funding a state receives in each budget period.
CMS, in FAQ V.33 notes as an example that if the provision of new technology and services results in uncompensated care, then RHTP funds can be used to cover that care in accordance with the restrictions in the NOFO.
5. What is defined as IT Infrastructure under the RHTP?
The RHTP NOFO defines IT infrastructure broadly, covering the systems, software, hardware, and data-sharing tools that enhance efficiency, care coordination, and patient outcomes. This includes platforms for referrals, population-health management, remote monitoring, and other advanced technologies. It is not tied to any single type of technology, as CMS allows for a wide range of technology-enabled solutions that support rural health.
What ultimately qualifies also depends on how each state prioritized and described its technology-related initiatives in its RHTP application. States determine which IT investments are consistent with their rural transformation plans.
6. Is there a role for public health and prevention‑focused activities within the RHTP, in addition to support for traditional healthcare providers?
Yes. The NOFO allows for space for public health and prevention-focused activities. CMS identifies prevention, chronic disease management, lifestyle and nutrition initiatives, and community-based outreach as allowable uses of funds within the RHTP.
However, states have already submitted their applications, and each state’s plan determines how they chose to prioritize and allocate their funding. So, while the federal framework permits prevention-oriented approaches, the extent to which they are funded moving forward depends on what each state included in their rural health transformation plan, and how they plan on executing it.
7. Can RHTP funds be used to scale or expand existing programs, and if so, under what conditions?
Yes. According to CMS’ FAQs, Questions V.6 and III.61,6 the RHTP funds may be used to expand or scale existing programs to better serve rural communities, but only for new elements. Funds cannot duplicate or supplant existing funding sources. Allowable expansion includes:
- Serving new populations or geographic areas
- Adding new services, activities, or milestones
- Covering incremental costs tied specifically to expansion
Unallowable uses include:
- Paying for existing staff, services, or infrastructure already funded by other sources
- Replacing state, federal, or private funding for ongoing operations
8. What documentation is expected to support that costs are reasonable and allocable to RHTP initiatives?
Per CMS’ FAQs, Question III.45, states and subrecipients must maintain detailed budget documentation, demonstrating that costs are:
- Necessary
- Reasonable
- Allocable to specific RHTP initiatives
- Consistent with the NOFO and 2 CFR Part 200
Required documentation includes:
- Itemized budget narratives explaining how each cost was calculated
- Clear linkage between costs and approved initiatives
- Subrecipient budgets broken down by standard cost categories (personnel, equipment, travel, etc.)
For additional information on specific compliance requirements on subrecipients, see “RHTP Funding Preparedness: Essential Subrecipient Requirements.”
Note: This content reflects our interpretation of CMS, HHS, and applicable federal guidance (including 2 CFR 200 and 2 CFR 300). Additional state‑specific or organization‑specific guidance and requirements may also apply.
How Forvis Mazars Can Help
Understanding how federal funds may be used under the RHTP requires careful navigation of statutory requirements, CMS guidance, and federal cost principles. Our Healthcare Consulting team at Forvis Mazars brings experience at the intersection of federal grants management and healthcare transformation, helping organizations interpret program rules, consider funding strategies, and apply requirements in practice.
With a national team dedicated to grants management services, Forvis Mazars supports clients across the full grant life cycle, from upfront planning and program design to compliance, monitoring, and close‑out. Whether you need targeted guidance on allowable uses of funds or broader support aligning funding decisions with long‑term transformation goals, our team is here to help.
If you have questions or would like to discuss the rural health transformation plan and how it could apply to your organization, please reach out to a professional at Forvis Mazars.
Learn more about how healthcare organizations can navigate RHTP opportunities:
- Rural Health Transformation Program: Implications & Opportunities
- Rural Health Transformation Program: Compliance & Oversight
The information set forth contains the analysis and conclusions of the author(s) based upon his/her/their research and analysis of industry information and legal authorities. Such analysis and conclusions should not be deemed opinions or conclusions by Forvis Mazars or the author(s) as to any individual situation as situations are fact-specific. The reader should perform their own analysis and form their own conclusions regarding any specific situation. Further, the author(s)’ conclusions may be revised without notice with or without changes in industry information and legal authorities.
- 1“RHT FAQs,” cms.gov, October 2025.
- 2“CMS-RHT-26-001: Rural Health Transformation Program – Notice of Funding Opportunity,” files.simpler.grants.gov, January 2026.
- 3“Code of Federal Regulations: 2 CFR 200 Subpart E,” ecfr.gov, January 29, 2026.
- 4“Code of Federal Regulations: 45 CFR 156.400,” ecfr.gov, January 29, 2026.
- 5“Social Security Act: Section 2105(c),” ssa.gov, 2026.
- 6“RHT FAQs,” cms.gov, October 2025.