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Syam Adusumilli
Federal Policy Architecture · RHTP-02.TD1

RHTP Funding Formula Methodology

Document Overview

By Syam Adusumilli · 6 min read
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Document Overview
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This technical document details the funding formula methodology for the Rural Health Transformation Program (RHTP) as established under Section 71401 of Public Law 119-21 (One Big Beautiful Bill Act), signed July 4, 2025. All data presented reflects verified sources from the CMS December 29, 2025 award announcement and supporting federal documentation.

Program Parameters
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ParameterValueSource
Total Authorization$50 billionP.L. 119-21 Section 71401
Annual Allocation$10 billionCMS Press Release 12/29/25
Program DurationFY2026 through FY2030CMS NOFO
Budget Period 1December 31, 2025 through September 30, 2026U.S. Chamber FAQ
Eligible Applicants50 U.S. States onlyP.L. 119-21
Ineligible EntitiesDistrict of Columbia, U.S. TerritoriesCMS NOFO

Two-Part Allocation Formula
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RHTP funding follows a statutory two-part formula as directed by Public Law 119-21.

Component 1: Baseline Funding (50%)
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$5 billion annually distributed equally among all 50 states with approved applications.

FY2026 Baseline per State: $100,000,000

This component provides each state with a guaranteed funding floor regardless of rural population size, health system metrics, or application quality. All 50 states received approval, resulting in equal $100 million baseline awards for FY2026.

Source: Hall Render legal analysis (January 6, 2026), CMS Press Release (December 29, 2025)

Component 2: Workload Funding (50%)
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$5 billion annually allocated by CMS based on multiple factors outlined in the Notice of Funding Opportunity.

FY2026 Workload Funding Range: $47,250,806 to $181,319,361

Allocation Factors (per CMS NOFO):

State Need Metrics

  • Rural population residing within metropolitan statistical areas
  • State’s percentage of total national rural health facilities
  • Proportion of hospitals receiving Medicaid DSH payments
  • Land area calculations
  • Population density thresholds

Application Quality Factors

  • Technical quality of transformation plan
  • MAHA policy alignment (SNAP restrictions, Presidential Fitness Test commitments)
  • Stakeholder engagement documentation
  • Prior rural health program performance

Source: CMS NOFO, Hall Render analysis, KFF analysis (January 6, 2026)

FY2026 State Award Data
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Complete Award Table
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All amounts verified from CMS announcement December 29, 2025 as published by U.S. Chamber of Commerce.

StateFY2026 AwardBaselineWorkload
Alabama$203,404,327$100,000,000$103,404,327
Alaska$272,174,856$100,000,000$172,174,856
Arizona$166,988,956$100,000,000$66,988,956
Arkansas$208,779,396$100,000,000$108,779,396
California$233,639,308$100,000,000$133,639,308
Colorado$200,105,604$100,000,000$100,105,604
Connecticut$154,249,106$100,000,000$54,249,106
Delaware$157,384,964$100,000,000$57,384,964
Florida$209,938,195$100,000,000$109,938,195
Georgia$218,862,170$100,000,000$118,862,170
Hawaii$188,892,440$100,000,000$88,892,440
Idaho$185,974,368$100,000,000$85,974,368
Illinois$193,418,216$100,000,000$93,418,216
Indiana$206,927,897$100,000,000$106,927,897
Iowa$209,040,064$100,000,000$109,040,064
Kansas$221,898,008$100,000,000$121,898,008
Kentucky$212,905,591$100,000,000$112,905,591
Louisiana$208,374,448$100,000,000$108,374,448
Maine$190,008,051$100,000,000$90,008,051
Maryland$168,180,838$100,000,000$68,180,838
Massachusetts$162,005,238$100,000,000$62,005,238
Michigan$173,128,201$100,000,000$73,128,201
Minnesota$193,090,618$100,000,000$93,090,618
Mississippi$205,907,220$100,000,000$105,907,220
Missouri$216,276,818$100,000,000$116,276,818
Montana$233,509,359$100,000,000$133,509,359
Nebraska$218,529,075$100,000,000$118,529,075
Nevada$179,931,608$100,000,000$79,931,608
New Hampshire$204,016,550$100,000,000$104,016,550
New Jersey$147,250,806$100,000,000$47,250,806
New Mexico$211,484,471$100,000,000$111,484,471
New York$212,058,208$100,000,000$112,058,208
North Carolina$213,008,356$100,000,000$113,008,356
North Dakota$198,936,970$100,000,000$98,936,970
Ohio$202,030,262$100,000,000$102,030,262
Oklahoma$223,476,949$100,000,000$123,476,949
Oregon$197,271,578$100,000,000$97,271,578
Pennsylvania$193,294,054$100,000,000$93,294,054
Rhode Island$156,169,931$100,000,000$56,169,931
South Carolina$200,030,252$100,000,000$100,030,252
South Dakota$189,477,607$100,000,000$89,477,607
Tennessee$206,888,882$100,000,000$106,888,882
Texas$281,319,361$100,000,000$181,319,361
Utah$195,743,566$100,000,000$95,743,566
Vermont$195,053,740$100,000,000$95,053,740
Virginia$189,544,888$100,000,000$89,544,888
Washington$181,257,515$100,000,000$81,257,515
West Virginia$199,476,099$100,000,000$99,476,099
Wisconsin$203,670,005$100,000,000$103,670,005
Wyoming$205,004,743$100,000,000$105,004,743

Distribution Statistics
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MetricValue
Total FY2026 Allocation$10,000,000,000
Average State Award$200,000,000
Minimum Award$147,250,806 (New Jersey)
Maximum Award$281,319,361 (Texas)
Workload Funding Range$47.3M to $181.3M

Source: CMS Press Release December 29, 2025; U.S. Chamber of Commerce compilation

Top 10 Recipients by Total Award
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RankStateFY2026 Award
1Texas$281,319,361
2Alaska$272,174,856
3California$233,639,308
4Montana$233,509,359
5Oklahoma$223,476,949
6Kansas$221,898,008
7Georgia$218,862,170
8Nebraska$218,529,075
9Missouri$216,276,818
10North Carolina$213,008,356

Bottom 10 Recipients by Total Award
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RankStateFY2026 Award
41Maryland$168,180,838
42Arizona$166,988,956
43Massachusetts$162,005,238
44Delaware$157,384,964
45Rhode Island$156,169,931
46Connecticut$154,249,106
47New Jersey$147,250,806

Workload Funding Subcomponents
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Per KFF analysis (December 5, 2025), the 50% workload allocation breaks down as follows:

Factor CategoryPercentage of WorkloadPercentage of Total
Equal Distribution50% of total50%
Rurality and State NeedVariable25%
Technical Application ScoresVariable25%

KFF Rurality Factor Breakdown
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From the 25% allocated based on state need:

FactorWeightNotes
Land area (5 largest states)12% of workloadBenefits AK, TX, CA, MT, NM
Share of population in rural areas12% of workloadPercentage-based, not absolute
Share of population in frontier regions12% of workloadExtreme isolation criteria
Number of rural health facilitiesVariableCount of CAHs, RHCs, FQHCs
Medicaid DSH hospital share20% of workloadBased on 2021 data

Source: KFF State Awards Analysis (December 5, 2025)

Technical Score Component
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Per UNC Sheps Center analysis (January 2026):

Highest Technical Score Recipients: Alaska, Texas, Nebraska, New Hampshire, Hawaii

Lowest Technical Score Recipients: New Mexico (less than 10% of award from technical score)

Source: KFF Health News (January 14, 2026) citing Sheps Center data

Annual Recalculation Process
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Funding Continuity Rules
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From CMS NOFO and U.S. Chamber FAQ:

  • States with approved FY2026 awards remain eligible for all four remaining budget periods (FY2027 through FY2030)
  • Annual awards may be adjusted based on demonstrated progress and compliance
  • CMS may reduce future funding if states fail to implement committed policy actions
  • Unspent funds will be redistributed in the following fiscal year

Budget Period Structure
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Budget PeriodStart DateEnd DateAmount
Period 1December 31, 2025September 30, 2026$10B
Period 2October 1, 2026September 30, 2027$10B
Period 3October 1, 2027September 30, 2028$10B
Period 4October 1, 2028September 30, 2029$10B
Period 5October 1, 2029September 30, 2030$10B

Re-evaluation Timeline
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Per CMS announcement:

  • States must submit revised budgets by January 30, 2026
  • CMS has 30 days to respond to budget submissions
  • FY2027 funding levels announced by end of October 2026
  • Annual CMS Rural Health Summit during CMS Quality Conference (2026)

Source: KFF Health News (January 14, 2026)

Spending Restrictions
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Statutory Limitations
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Use CategoryMaximum PercentageSource
Provider payments for patient care15%CMS NOFO
Capital investments (buildings, infrastructure)20%CMS NOFO
Minimum approved uses required3 categoriesP.L. 119-21

Non-Backfill Rule
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RHTP funds cannot be used to replace lost Medicaid revenue, pay for services already covered by insurance or other payers, or duplicate existing reimbursement sources.

Source: CMS NOFO, U.S. Chamber FAQ

Methodology Notes
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What This Document Contains
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  • Verified award amounts from official CMS announcement
  • Formula structure as defined in statute and NOFO
  • Allocation factor categories from CMS guidance
  • Timeline and process requirements from official sources

What This Document Does Not Contain
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  • Derived per-capita calculations (require external population data verification)
  • Projected five-year totals (subject to annual recalculation)
  • Formula weighting coefficients (not publicly disclosed by CMS)
  • State-specific rurality metric values (not itemized in award announcement)

How this article connects to others in Blue Gray Matters.

RHTP-03.03 Medicaid Math by State related
Award calculations and state allocations documented here provide the numerator for the Medicaid Math ratios 3C derives, showing how per-capita funding levels vary across states.
RHTP-01.TD2 Rural Classification Reference Guide related
RHTP funding formula weights depend directly on RUCC and FAR classifications documented in 1-TD-B; the rurality-weighted half of the formula traces to these classification systems.
RHTP-17.PRE Where the Analysis Lands technical
The preface to Series 17 interprets funding disparities that trace directly to the formula methodology documented here — per-capita variation, rurality weighting, and baseline score interactions explain why some states receive high per-capita allocations while states with similar rural health burden do not.
RHTP-16.05 Sustainability Beyond 2030 technical
Sustainability beyond 2030 in Series 16 must account for the award structure documented here — understanding which states received allocations large enough to capitalize endowments requires the formula methodology that determined allocation levels.
RHTP-03.TD1 50-State Constraint Reference technical
50-state constraint reference in Series 3 uses the per-capita allocation figures derived from this formula methodology as the resource dimension of state constraint profiles.
RHTP-10.SYN Does State Administration Fit Regional Reality? technical
Regional reality versus state administration in Series 10 has a funding dimension this document illuminates — the rurality-weighted formula rewards geographic sparsity over rural population scale, meaning states with the most rural residents may receive lower per-capita funding than states with fewer but more dispersed rural residents.

Sources cited in this article.

  1. Centers for Medicare and Medicaid Services. "CMS Announces $50 Billion in Awards to Strengthen Rural Health in All 50 States." Press Release, 29 Dec. 2025.
  2. Centers for Medicare and Medicaid Services. *Notice of Funding Opportunity: Rural Health Transformation Program*. 15 Sept. 2025.
  3. Hall Render. "CMS Announces $50 Billion Rural Health Transformation Program Awards to All 50 States." 6 Jan. 2026.
  4. Kaiser Family Foundation. "First-Year Rural Health Fund Awards Range From Less Than $100 Per Rural Resident in Ten States to More Than $500 in Eight." 6 Jan. 2026.
  5. Kaiser Family Foundation. "State Awards From Most of the Rural Health Fund Could Vary Only Modestly Despite Large Differences in Rural Needs." 5 Dec. 2025.
  6. One Big Beautiful Bill Act. Public Law 119-21, Section 71401. 4 July 2025.
  7. U.S. Chamber of Commerce. "Rural Health Transformation Program: FAQs for States." Updated 29 Dec. 2025.
  8. UNC Sheps Center for Health Services Research. Technical score analysis cited by KFF Health News. 14 Jan. 2026.