Through the Rural Health Transformation Program (RHTP), states have discretion to invest in strategies that improve rural healthcare access and quality, with the intent to strengthen healthcare outcomes. Participation in the program, whether as a subrecipient or contractor, is shaped by federal cost principles, CMS guidance, and program‑specific requirements that describe how funds may be distributed and used.
This article is the second in a series of four pieces covering key questions about the RHTP. This second article addresses common questions related to subrecipients’ and contractors’ eligibility for RHTP funds. The first article focused on how RHTP funds can and cannot be used. Future articles in this series will cover finance and financial management, and compliance and reporting.
1. Who can serve as subrecipients or contractors of the RHTP?
According to federal guidance,1 states have discretion to determine whether to issue subawards or contracts, and to whom those funds may be directed. Current federal guidance does not establish limits on the types of entities that may receive funds through subawards or contracts.
States do not have to name specific subawardees or contracts in their applications. However, states are expected to comply with procurement requirements related to contractor selection, and their RHTP applications should include the following related to subrecipient selection:
- Identify whether they plan to distribute funds to subrecipients
- Describe the intended purpose for distributing funds
- Outline the methodology, process, and specific criteria for selecting subrecipients.
Examples of entities that may be eligible include the following (per Public Law 119-21):2
- Federally Qualified Health Centers (FQHCs)
- Community Health Centers (CHCs)
- Rural Hospitals
- Rural Health Clinics (RHCs)
- Other Health Facilities Serving Rural Populations
In addition, states may award funds to individuals for participation in training programs focused on clinical workforce development, provided these individuals commit to serving in rural communities for a minimum of five years.
To identify which entities your state intends to fund, refer to your state’s RHTP application.
2. Does CMS have to approve subrecipients before states can contract with them?
According to CMS FAQ V.14, states have the discretion to determine recipients of subaward funds. If states planned on issuing subrecipient contracts, states were required to outline their methodology, process, and specific criteria of how subawards were to be given out.
While states have the discretion to determine who to subaward funds to, FAQ III.19 indicates that the use of funding by, and payment of, subrecipients will have oversight from CMS, but does not indicate that CMS approval is needed before selecting a subrecipient. It is important to note that this oversight differs from CMS approval requirements for each subrecipient. It is a post-award monitoring function to help ensure funds are used properly, rather than an upfront approval of specific subaward partners.
In the same vein, while CMS is not required to sign off on subrecipients, FAQ V.19 establishes that CMS review and approval are required if states make significant changes to initiatives, budgets, or subawardees.
3. Can hospitals be awarded funds under a beneficiary contract?
Current CMS guidance indicates that hospitals are treated as subrecipients rather than beneficiaries under the RHTP. CMS guidance for the RHTP indicates specifically that states can subaward or contract with entities, such as hospitals, to implement state initiatives and projects.3 This structure aligns with the 2 CFR 2004 definitions below:
- Subaward: “An award provided by a pass-through entity to a subrecipient for the subrecipient to contribute to the goals and objectives of the project by carrying out part of a federal award received by the pass-through entity.”
- Subrecipient: “An entity that receives a subaward from a pass-through entity to carry out part of a federal award. The term subrecipient does not include a beneficiary or participant.”
- The 2 CFR 200 does not include other provisions for beneficiaries of federal dollars.
Since hospitals receiving RHTP funds are expected to carry out components of the state’s rural health plan, such as delivering services, expanding access, or piloting care models, their role aligns with the definition of subrecipients rather than beneficiaries. Current CMS guidance does not indicate that hospitals may be treated as end‑user beneficiaries for the purpose of receiving financial assistance under the RHTP.
While the Treasury offered guidance that explicitly allowed for direct payments of federal dollars to individuals and organizations (who faced negative economic impact as a result of the pandemic) as beneficiaries for State and Local Fiscal Recovery Funds (SLFRF), that flexibility is not rooted in 2 CFR 200 guidance, and as such is not universally applicable to all federal funds. Unless CMS issues future guidance that explicitly allows beneficiary aid to hospitals, then hospitals should be treated as subrecipients and follow the applicable federal grant compliance requirements under 2 CFR 200 and 2 CFR 300.5
4. Can urban healthcare facilities receive RHTP funds as a subrecipient if they serve rural populations? If they are eligible, how should urban facilities approach funding initiatives?
Urban healthcare facilities can participate as subrecipients under the RHTP when selected by the state, and their work directly benefits rural communities. The Notice of Funding Opportunity (NOFO) allows states to subaward or subcontract to partners such as universities, local health departments, provider associates, and healthcare facilities, and does not restrict those partners to rural-located entities; what matters is that the funded activities advance healthcare access, quality, and outcomes for rural residents.
Urban facilities considering involvement may frame their work around clear rural impact, aligning their proposed activities with their state’s RHTP plan, and demonstrating how their capabilities may support efforts to address rural gaps or extend services into rural communities.
5. What can potential subrecipients do now to prepare for possible funding opportunities?
While waiting for funding opportunities to be released, there are several proactive steps that potential subrecipients can take to position their organizations for possible RHTP funding opportunities.
- Review your state’s RHTP application to understand its priority initiatives, target outcomes, and implementation approach, and assess where your organization’s existing programs or capabilities align with those priorities.
- Organize programmatic data that may be requested for a funding application, such as service populations, performance metrics, geographic reach, and demonstrated rural impact.
- Compile administrative and compliance documentation, including business designation (such as 501(c)(3) status if applicable), SAM.gov registration, and other standard certifications commonly required for federal subawards.
- Develop strategic partnerships with organizations that complement your services or knowledge, helping to enhance capacity, expand rural reach, and present a more competitive application when funding becomes available.
6. What are the anticipated responsibilities of a subrecipient of RHTP funds?
Since the RHTP is federally funded, subrecipients can refer to 2 CFR Part 200 Subpart D6for in-depth guidance on subrecipient responsibilities. Typical responsibilities include:
- Implement program activities designed to support the goals and objectives of the federal award.
- Demonstrate performance aligned with the outcomes identified for the program.
- Comply with federal statutes, regulations, and award terms, including:
- RHTP-specific requirements.
- Uniform guidance provisions that flow down from the pass-through entity (the states).
- Maintain financial management systems intended to support effective oversight and internal controls.
- Funds are required to be used for allowable, allocable, and reasonable costs, and be properly documented.
- Submit required financial and programmatic reports and comply with pass-through entity monitoring activities.
- Comply with audit and record retention requirements.
- This includes obtaining a Single Audit if expending $1,000,000 or more in a fiscal year.
Subrecipients should also be prepared to comply with state-specific guidance and requirements and responsibilities explicitly stated in their subawards.
7. What can potential contractors do now to prepare for possible solicitations?
While waiting for procurement opportunities to be released, there are several actions that potential contractors can take to prepare:
- Check your state’s RHTP application to understand priority initiatives and implementation strategies and assess where your organization’s services or knowledge align with anticipated procurements.
- Organize programmatic and operational information likely to be requested in a solicitation, such as relevant experience, references, staffing, and prior work supporting rural health or similar initiatives.
- Make required administrative and compliance documentation readily available (including business designation, SAM.gov registration, applicable wage determinations, and standard certifications).
- Develop or strengthen strategic partnerships with organizations that complement your capabilities, positioning your team to respond competitively to bundled or multidisciplinary procurement opportunities.
8. What are the anticipated responsibilities/compliance requirements for contractors being paid with RHTP funds?
Contractors of RHTP funds are subject to the requirements of the 2 CFR 200. Contractors are entities that provide goods or services through a procurement relationship, rather than carrying out a portion of the RHTP program. As a result, their compliance responsibilities are more limited than those of subrecipients and generally include:
- Delivering goods or services in accordance with the contract terms, with performance measured by contract deliverables rather than RHTP program outcomes.
- Complying with applicable federal requirements incorporated into the contract, including required federal contract clauses that are flowing down under 2 CFR 200 and the RHTP award terms.
- Complying with state guidance and specific requirements stated in executed contracts.
- Supporting invoices with adequate documentation and maintaining records necessary to support cost documentation, subject to review by the state.
- Adhering to applicable procurement‑related standards, such as pricing, cost allowability, and conflict of interest provisions, as specified in the contract.
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
Participation in the RHTP as a state, subrecipient, or contractor requires a clear understanding of statutory requirements, subrecipient and contractor roles, federal cost principles, and CMS oversight expectations. Our Healthcare Consulting team at Forvis Mazars brings experience at the intersection of federal grants management and healthcare transformation. Our team includes individuals skilled in supporting organizations to help interpret program requirements and apply them in practice as they support federally funded programs.
With a national team dedicated to grants management services, Forvis Mazars supports clients across the full grant life cycle, from application to award administration, compliance, monitoring, and close‑out. Whether you need targeted guidance on applying for funding, subrecipient responsibilities, contractor requirements, or broader support aligning funding structures with long‑term rural health transformation goals, our team is available to support your efforts.
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“Public Law 119–21,” congress.gov, July 4, 2025.
- 3“CMS-RHT-26-001: Rural Health Transformation Program – Notice of Funding Opportunity,” grants.gov, January 2026.
- 4“Code of Federal Regulations: 2 CFR 200,” ecfr.gov, January 29, 2026.
- 5Ibid.
- 6“Code of Federal Regulations: 2 CFR 2000 Subpart D,” ecfr.gov, January 29, 2026.