In July 2025, Congress passed H.R. 1, often referred to as the “One Big Beautiful Bill.” Among its many provisions, two stand out for rural providers: a major restructuring of Medicaid beginning in 2027 and the creation of the Rural Health Transformation Program (RHTP).
The RHTP is a five‑year, $50‑billion federal investment designed to help states redesign rural health systems rather than simply stabilize them. It requires states to submit multi‑year plans focused on prevention, chronic disease management, sustainable access, workforce pipelines, innovative care models and technology modernization, ultimately advocating for long‑term viability.
Cassling recently hosted a webinar, "Rural Healthcare at a Crossroads: What's at Stake and What's Next," with Siemens Healthineers to take a deep dive on the RHTP and examine some of the transformational issues affecting rural hospitals, including the evolution of telehealth and mobile imaging solutions, and how AI is reshaping the care conversation even in rural settings.
If you missed the live session hosted by Ali Murphy, Director of State and Local Government Affairs and Policy at Siemens Healthineers, it will be available on demand soon.
The Reality Against Rural Facilities
Across the country, rural hospitals are navigating unpredictable economics and mounting pressures. More than 720 hospitals nationwide (roughly one‑third of all facilities) are at risk of closure due to severe financial problems. In some states, 25% of rural hospitals are at risk, and in ten states, 50% or more face immediate danger.
Facilities most at risk share common traits:
- Reimbursement that does not reflect the cost of care.
Many rural hospitals operate under payment models that do not adequately account for lower patient volumes, higher per-patient cost and the need to maintain essential services around the clock. Some rural hospitals receive local tax support or government grants that may help offset these shortfalls. However, these resources are not available to every hospital and may be limited, temporary or restricted to specific uses. - Limited financial reserves.
Hospitals at greatest risk may have liabilities that exceed their assets or lack the reserves needed to manage unexpected expenses, replace aging equipment or invest in services needed by the medical staff and community. - Sustained losses on patient services.
Providing healthcare in a rural community often costs more per patient than it does in a larger market. When Medicare, Medicaid and commercial insurance payments do not cover the full cost of delivering care, hospitals can experience ongoing operating losses that threaten their long-term sustainability.
At the same time, rural communities are experiencing workforce shortages, demographic pressures and gaps in modality access. The strongest rural hospitals are innovating under these pressures, and both states and the Centers for Medicare & Medicaid Servies (CMS) want to capitalize on that momentum.
Government Response to Rural Health Challenges
Last year, federal and state governments shifted decisively from emergency stabilization toward state‑led, federally funded transformation.
At the federal level, the centerpiece is the Rural Health Transformation Program and major restructuring of Medicaid beginning in 2027.
In response to the RHTP, states spent the last few weeks of 2025 in intensive planning, submitting multi‑year proposals focused on prevention, chronic disease management, sustainable access, workforce pipelines, innovative care models and technology modernization.
What's Changing in Medicaid in 2027
Medicaid will undergo significant restructuring in 2027, with several changes poised to affect coverage, administrative burden and state budgets:
- Work requirements/community engagement.
Medicaid expansion adults must meet work or engagement hours to maintain coverage. - More frequent eligibility checks.
Annual checks move to six‑month intervals, adding strain to already stretched Medicaid departments. - Tighter financing.
Federal limits on financing mechanism, potentially impacting provider payments and patient care. - Multi‑state enrollment prevention.
Enrollees will be prohibited from applying for Medicaid in multiple states. - Deceased enrollee screens.
States must regularly remove deceased individuals from rolls.
These changes create substantial administrative and financial pressure, prompting the need for a “sweetener” to offset impacts on providers, hence the RHTP.
The RHTP Overview: A Five-Year, $50 Billion Transformation Effort
The RHTP appropriates $50 billion over five fiscal years, with $10 billion available each year and roughly $200 million per state annually; every state applied.
CMS established key pillars that states must address, including:
- Prevention and chronic disease management
- Sustainable access
- Workforce development
- Innovative care models
- Technology modernization
- Maternal and primary care access
- Infrastructure refresh
States submitted comprehensive plans in December 2025 and were notified of awards one day before spending began.
This created an extremely compressed first‑year window.
How the Money Moves
The funding flow is multi‑layered:
- CMS to States
States receive their allocation based on population, rural population and state size. - States to Providers
States run RFPs and procurement processes targeting hospitals, clinics, 501(c)(3)s and other sites of service. - Providers to Vendors / Partners
Providers work with vendors to implement programs, purchase equipment and deploy mobile units or new care models. - Reporting to States to CMS
Providers report metrics back to states; states report progress to CMS to secure next‑year funding.
Because states had a limited amount of time to develop their initial budgets, CMS may reallocate funding if a state does not demonstrate sufficient progress or use the funds as intended.
Funding Amounts Vary Widely
States requested roughly $200 million each, but awards differed significantly:
- Arizona requested $200M and received $167M
- Texas requested $200M and received $281M
Every state is using funds differently, and every state’s timeline is different.
Industry Priorities Emerging Across States
Despite variation, several themes are consistent across RFPs and state strategies:
Modality Refresh
States are emphasizing “best and brightest equipment” like with CT, mammography, ultrasound and other diagnostic upgrades. Iowa’s RFP, “Health Hometowns,” specifically focused on CT and mammography replacement and cancer prevention under their "Combat Cancer" initiative.
Mobile Care Models
Governors are highly interested in mobile solutions because they produce immediate, measurable population impact:
- Mobile mammography
- Mobile CT
- Mobile stroke units
- Mobile lung cancer screening units
Mobile programs offer clear screening numbers and patient counts which are valuable for CMS reporting.
Radiology & Health AI
States are exploring telemedicine, teleradiology and AI‑enabled workflows while simultaneously introducing bills regulating AI use. This creates a tension between innovation and regulation that will intensify in 2027.
Workforce Pipelines
Although workforce is the top challenge for facilities, workforce RFPs are less common in year one because the first budget window was tight, workforce initiatives require longer runways, and upskilling programs take time to build. We can expect to see these innovations come through in years two through five.
Point‑of‑Care & Maternal Health
Mobile ultrasound and point‑of‑care OB solutions are gaining traction as states prioritize maternal health access.
2027 and Beyond
The next year will be shaped by:
Elections
The next year will also be shaped by changes in federal and state leadership following the 2026 elections. Elections for Congress, governors and state legislatures could influence how rural health programs are funded, implemented and overseen.
Depending on the office and authority involved, leadership change could:
- Affect federal health care funding, policy and oversight
- Change state RHTP priorities and implementation strategies
- Influence RFP requirements and funding decisions
- Shift Medicaid policy and state budget priorities
- Affect certificate of need laws and other health care regulations
- Change how state resources are allocated to rural communities
These changes will not occur uniformly across states, but organizations should monitor both federal and state developments that could affect funding opportunities and implementation timelines.
Medicaid Funding Gaps
Reductions in the Federal Medical Assistance Percentage (FMAP).
The share of Medicaid costs paid by the federal government will increase the amount states must contribute to maintain Medicaid services. Because Medicaid represents a significant portion of most state budgets, changes in federal funding can create substantial pressure across the state’s entire budget.
Provider Shortage Legislation
Expect proposals around:
- Scope‑of‑practice expansion
- Credential transfer
- Interstate licensure compacts
- Telemedicine reimbursement parity
- Site‑neutral payment provisions
Certificate of Need (CON) Reform
States signaled willingness to revisit CON requirements as part of RHTP participation. Some may attempt rollbacks or streamlined amendment processes.
Health AI Regulation
States will continue introducing bills governing:
- Clinical decision‑making authority
- Data privacy
- AI transparency
- Use of AI in radiology and diagnostics
Resources to Stay Updated
Several organizations are tracking the RHTP developments closely:
- Cassling Account Executives: Reach out to your Cassling account executive for any state-specific updates and questions
- National Rural Health Association: Policy analysis and advocacy
- State Hospital Associations: Often the most up‑to‑date on state DOH activity
- CMS Rural Health Transformation Website: Official guidance, timelines and updates
- National Conference of State Legislatures (NCSL): Legislative trends, CON reform, AI regulation
- Council of State Governments (CSG): Nonpartisan analysis of state policy shifts
- Siemens Healthineers Government Affairs: Active monitoring of the RHTP, reimbursement and workforce issues
FAQ:
Q: Will some states lose RHTP funding next year?
A: Not entirely, but reallocation is likely. CMS may shift funds away from states that fail to demonstrate progress or spend appropriately.
Q: Will the program continue after the initial five years?
A: While future funding may not match the unprecedented initial levels, continuation is likely.
Q: Who applies for RHTP funding - facilities or patients?
A: Facilities. The RHTP targets sites of service: CAHs, hospitals, outpatient clinics, FQHCs, SNFs, labs and 501(c)(3)s.
Q: What’s the most important advice for rural facilities pursuing funding?
A: Two things:
-
Confirm eligibility criteria because every RFP is different.
- Understand reporting requirements; Metrics, patient data and performance expectations must be clear to avoid future clawback risk.
Q: Could clawbacks happen?
A: States have not yet clarified clawback provisions. Facilities should assume accountability will be strict.
Q: How can technologists influence RHTP participation?
A: Raise awareness internally. RFP windows can be as short as two weeks, and frontline staff often spot opportunities leadership may overlook.
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