H Approps SC Medicaid & Behavioral Health Sept 2026: Rural Health Transforrmation

The 5-year RHT Program administered by CMS is an odd mix of top-down control and change in the status quo. For example, no religion or gender data collection. 

On July 4, 2025, President Trump signed Public Law 119-21, which the Centers for Medicare &Medicaid Services (CMS) refers to as the “Working Families Tax Cut” (WFTC) legislation, intolaw. The legislation authorized the Rural Health Transformation (RHT) Program, marking asignificant federal investment of $50 billion over five years and is designed to empower as manyas 50 State awardees to catalyze transformative improvements within their rural healthcareecosystems. The principal objective is to enhance healthcare access, quality, and outcomesthrough innovative, system-wide change, thereby investing in the health of rural communities forfuture generations.Funding for approved State awardees is determined through a formal scoring and allocationprocess. The financial architecture of the program is composed of two primary streams: baselinefunding, distributed equally among all awardees, and performance-based workload funding,which is allocated based on the scoring of specific rural and technical score factors within eachState's application and their subsequent annual performance.
CMS Guidelines https://www.documentcloud.org/documents/28581718-cms-10949-supporting-statement-a-2026-version-7/?mode=document

This Louisiana story features a tech project. I've highlighted state/tech financial incentives.

https://kffhealthnews.org/rural-health/rural-health-tech-startups-funding-louisiana/

States Bet Big on Rural Health Startups, With a Silicon Valley Twist

Sarah Jane Tribble    |    Sept. 16, 2026

When Josh Fleig, Louisiana’s chief innovation officer, learned his state had set aside $20 million a year, for five years, to invest in startup rural health companies, his reaction was not surprising: “Wow!”

In rural America, where people are often reported to be sicker with poor access to healthcare, the cash influx is a relief. In the economic development space where Fleig operates, it’s an opportunity.

“Look, that’s a lot of money for what we do,” said Fleig, whose state-funded economic development office invests in corporate launches, ranging from software startups to shipbuilders.

Louisiana and a handful of other states set aside money from their share of the $50 billion federal Rural Health Transformation Program to quickly invest in new technologies, mirroring private industry moves. Lawmakers added the rural health program to offset more than $900 billion in reduced Medicaid spending expected over 10 years from Republicans’ sweeping 2025 tax and spending law.

But rather than filling the budget hole, the rural program’s assignment is to find new approaches for revitalizing rural communities where doctors are in short supply and hospitals have been downsizing and closing for decades. The federal government doled out the first-year rural health program awards to states this year, with pots ranging from $147 million in New Jersey to $281 million in Texas.

Modernizing technology infrastructure is a key pillar of the federal rural health program, and the catalyst money epitomizes the administration’s strategy to move fast and experiment with untested technology — much like the “move fast and break things” mantra during the heyday of Silicon Valley.

Instead of breaking things, though, the goal is to “move fast, fast-fail, innovate quickly, and move to sustainability,” said Aaron Bujnowski, a managing director with the healthcare industry group at the consultancy Alvarez & Marsal. “This is a transformation that is still meant to serve the people.”

Beyond Louisiana, Timothy Foster, a spokesperson for the Centers for Medicare & Medicaid Services, confirmed that Delaware, Georgia, Massachusetts, Nebraska, South Carolina, Virginia, and West Virginia are also creating rural health tech catalyst funds.

Every year, states must compete for rural funding in the five-year federal program. Federal regulators will take money away from states that do not meet the goals promised in their applications, including whether they designated money to companies for tech innovations.

CMS, which is overseeing the program, released a seven-step guidance document for states to follow when creating the tech catalyst operations. No more than 10% of each state’s award can be spent on a rural tech catalyst fund.

States’ initial annual progress reports for the rural fund were due at the end of August. CMS has declined to publicly post those reports; it plans to publish an annual report on state progress. States must show that first-year funds will be obligated — but not necessarily spent — by Oct. 30, according to the CMS guidance document.

Daniel X. O’Neil, a technology consultant who advocates for open data and open government, created a state tracker and parsed the original state applications to find dozens that mention catalyst awards and technology funds.

O’Neil said he is “looking forward to the clawbacks and the craziness of October because, you know, that’s serious stuff.”

For the rural health catalyst funds, CMS requires states to submit the list of finalists “at least 15 business days” before announcing winners, along with “sufficient information” for the agency to “assess each proposed project,” according to the guidance document.

The document outlines intellectual property and federal rights but does not provide guidance or standards for patient rights or protections. CMS spokesperson Foster stated in an email that the technology investments must comply with federal “privacy, security, interoperability, and patient safety” requirements.

Protecting Patients

Maya Sandalow, director of the health program at the Bipartisan Policy Center and one of the leading analysts watching the rural fund, said the catalyst funds are “public dollars” and has called for more transparency in the overall rural health program. The center is a nonprofit think tank in Washington, D.C.

Accurate and timely reporting must be done to ensure “the necessary guardrails are in place” to protect patients, she said, adding that the innovation needs to be “tested in a way that’s safe for the patients that they are going to be used on.”

To apply, startups must be less than 10 years old and have raised less than $50 million in early funding. Companies that win a portion of state catalyst funds must meet predetermined milestones before being paid — and federal officials will make “targeted reviews as needed,” according to the guidance document.

Louisiana officials announced the state’s tech catalyst fund with an event in rural Natchitoches, known as the filming location of the 1989 film Steel Magnolias. The fund quickly drew more than 200 companies competing for between $250,000 and $3 million in seed money.

Tiny startup Greens Health was invited to the event. The 2-year-old company analyzes Medicare claims to identify patients with chronic diseases, such as diabetes, and works with local home health nurses and senior facilities to improve care.

“We’ve been looking for a way to launch in Louisiana,” said Kehlin Swain, co-founder and chief executive of Greens Health. The company serves about 100 patients across Texas, Alabama, and Florida and hopes to get a $250,000 investment from Louisiana.

Louisiana’s Fleig said his state is “at a really interesting turning point.” The state secured $208.4 million for the first year of the rural health program and quickly created its catalyst fund using the state’s already established innovation department.

At the same time, nearly 1.1 million people live in Louisiana’s rural parishes and the state ranks as the “least healthy” in the nation, according to its own application. State rates of diabetes, obesity, and cardiovascular disease are among the highest in the nation.

Fleig believes Louisiana is an ideal place to test technology solutions. So, while Silicon Valley has “not needed much of what Louisiana has had to offer” for much of its existence, it does now, he said.

Caret Health is one of those companies. Co-founders Riya Pulicharam, who is a physician-researcher, and Kevin Zhao, an engineer, met in Silicon Valley. Together, they created a technology platform that identifies patients who need help getting to their appointments, having scans done, or picking up prescriptions. That technology flags a human, who then contacts the patient with a call or text.

Zhao said Caret had successful pilots at large health systems, but those places also had other vendors and “it was a pretty big uphill battle” to get in and scale. Then, in 2024, the company began paying attention to rural places.

“There wasn’t a lot of existing infrastructure. And that was really good for us because we were able to come in very quickly,” Zhao said. “A lot of the hospitals really needed this kind of service.”

Fast-forward to 2026: Caret Health is about 4 years old and has contracted with about 60 hospitals in 16 states. Pulicharam and Zhao hope to win $3 million to expand into Louisiana.

Louisiana’s Fleig said the state will take an equity stake in each company it invests in. “The dream” is that selected startup companies will also help the state make money to reinvest. If some companies fail — or fail fast — that’s to be expected, but the state should still make money because of “the law of averages,” he said.

“If we are good, we’ll make more money than we spent,” Fleig said. “Either way, it’s going to go back into improving healthcare outcomes.”

Rural Tech-Catalyst Funds: Fast-Moving, High-Pressure

First-year progress reports were due at the end of August. Using the annual report, federal officials will recalculate and potentially claw back money from underperforming states, according to reporting requirements created by the Centers for Medicare & Medicaid Services, which oversees the program.

States will be scored on a multitude of initiatives and plans, plus whether they earmark their first-year spending by Oct. 30. Year 2 funding will be determined by the end of October.

RHT is a result of the 2025 OBBBA Medicaid debates.

Previous OBBA /RHT posts include:

• Entrenched industry opposition:
  https://mihealthfreedom.org/community/dcoverreach/hospitals-appalled-by-u-s-senate-amended-reconciliation-obbb-bill/#post-1719
• Medicaid cost inflation:
  https://mihealthfreedom.org/community/medicaid/obbba-will-cap-state-directed-medicaid-payments/#post-1952
• OBBBA line by line provisions.
  https://mihealthfreedom.org/community/medicaid/health-provisions-of-the-one-big-beautiful-bill-act/#post-1796

THE BLIND SPOT IN MICHIGAN'S RESPONSE

"Referring to the State of Michigan's FY2000 and FY2024 CAFR's, it can be seen that health care services outlays have risen from $ 7.69 billion to $ 35.57 billion, a 363% increase over this 25 year period.

Michigan's population on April 1, 2000 was 9,938,444. Michigan's 2024 population was estimated to be 10,140,459, a 2.03% increase over the same period.

https://www.michigan.gov/-/media/Project/Websites/budget/Fiscal/Spending-and-Revenue-Reports/CAFR/ACFR-FY2000.pdf

https://www.michigan.gov/budget/-/media/Project/Websites/budget/Fiscal/Spending-and-Revenue-Reports/CAFR/ACFR-FY2024.pdf

Somehow, neither Governor Whitmer nor Director Hertel have addressed this staggering growth disparity."
https://mihealthfreedom.org/community/mshhs/governor-hhs-respond-to-u-s-house-reconciliation-bill/#post-1670

Michigan's RHT grant take is $173,128,201. 

Oakland and Wayne Counties are among the 75 "rural" counties Michigan plans to target with RHT funds.  
https://mihealthfreedom.org/community/mshhs/whitmers-mdhhs-declares-wayne-county-partially-rural-so-federal-rural-healthcare-funds-can-be-diverted-there/#post-2535

Michigan's proposal to CMS includes budget, supporting letters from stakeholders, and more. The RHT governance structure is reproduced here. 

Just check out the millions going to state administration.

https://www.documentcloud.org/documents/26364499-michigan_complete/

Components of the RHT governance structure include:

1. The MDHHS Executive Team
The MDHHS Executive Team provides strategic leadership and executive oversight for the Rural Health Transformation (RHT) Program. This team ensures that the program aligns with statewide health priorities, policy objectives, and legislative mandates, and serves as the final decision-making authority on key programmatic, financial, and operational matters.

2. Rural Health Transformation Advisory Committee
At the core of the governance model is the Rural Health Transformation Advisory Committee, a formal advisory body composed of representatives from key rural stakeholder groups, including patients, providers, hospitals, community leaders, and tribal partners. This Committee will meet quarterly to review implementation progress, monitor performance metrics, and provide actionable guidance to MDHHS leadership. Written progress reports and evaluation updates will be shared with members in advance of meetings to promote transparency and accountability.

3. Integrated Governance and Internal Coordination
The governance model emphasizes integration and alignment across MDHHS divisions and with external partners. An internal MDHHS Cross-Departmental Coordination Team—including representatives from Medicaid, Behavioral Health, Public Health, Human Services, Aging Services, and the Tribal Health and Human Services Liaison—will ensure policy, program, and funding alignment. Collaboration with the Michigan Department of Labor and Economic Opportunity (LEO) will support rural workforce strategies that reflect local needs and economic realities.

4. Workgroups and Annual Rural Health Summit
MDHHS will utilize existing workgroups focused on Workforce Development, Interoperability and Data Sharing, and Community Engagement and Partnerships for continuous process improvement. These workgroups will convene regularly to identify challenges, test solutions, and adapt implementation strategies based on feedback from both internal stakeholders and the rural communities served. Recommendations from the workgroups will be escalated to the Rural Health Transformation Advisory Committee, which will review, refine, and integrate insights into statewide planning to ensure initiatives remain responsive and effective.

The Annual Rural Health Summit will complement these efforts by providing a dedicated forum for ongoing engagement with rural residents, healthcare providers, community organizations, and policymakers. The summit will gather firsthand input on program effectiveness, identify emerging needs, and highlight opportunities for improvement. Feedback from the summit will directly inform the workgroups’ priorities and the Advisory Committee’s guidance, creating a continuous feedback loop that strengthens program design, drives adaptive improvements, and ensures that rural health initiatives meet the evolving needs of the communities they serve. Feedback from these workgroups and summits will ensures that rural voices are embedded in decision-making processes, and that MDHHS initiatives are responsive to the lived experiences of rural Michiganders.

Kaiser Family Foundation maintains a master page linking all states' applications, approvals, etc and color maps them by grant dollar amount.
https://kffhealthnews.org/rural-health/tracking-state-rural-health-transformation-plans/

MDHHS promised a lot in its press release.

https://www.michigan.gov/mdhhs/inside-mdhhs/newsroom/2025/12/30/rht-funding

Michigan awarded more than $173 million in federal funding to strengthen rural health

December 30, 2025

Funding comes from Rural Health Transformation Program

LANSING, Mich. – This week, the Michigan Department of Health and Human Services (MDHHS) was awarded $173,128,201 for FY 2026 by the Centers for Medicare & Medicaid Services under the Rural Health Transformation Program.

“Today’s investment will support access to health care for rural communities across Michigan as we deal with funding shortfalls caused by federal Medicaid cuts,” said Gov. Gretchen Whitmer. “This $173 million grant will help us connect more Michiganders to the care they need and provide essential wraparound supports. In Michigan, we have successfully worked together to protect quality, affordable health care, and we will continue finding ways to secure more federal funds, expand coverage and lower costs.”

The Rural Health Transformation Program is a $50 billion national commitment to improve the health and well-being of rural communities across the country. With this funding, states will implement comprehensive strategies to improve care delivery, support providers and advance new approaches to coordinating health care services across rural communities. Funding will be allocated over five years, with $10 billion available each year from 2026 through 2030.

“Michigan continues to support a resilient and innovative rural health system where every resident has access to high-quality care close to home,” said Elizabeth Hertel, Michigan Department of Health and Human Services director. “Our approved proposal for these federal funds focuses on enhancing the long-term sustainability of rural providers while supporting their growth and continued service to their communities.”

Before submitting its application, MDHHS hosted an online survey and two listening sessions to gather input on how the funding could help increase and improve sustainability for rural providers.

Based on this feedback, MDHHS requested funding to:

Support the development and strengthening of regional partnerships among rural hospitals, clinics and community organizations to improve care coordination, align service delivery, expand access points and promote financially sustainable care models.

Recruit and retain rural health professionals, behavioral health providers and community health workers. Funds will also promote prevention and chronic disease management training and integrated behavioral health care access.

Implement technology tools and advance rural interoperability, including establishing a rural technology catalyst fund to support expanding data exchange and increasing adoption of telehealth, remote patient monitoring and technology-driven care coordination tools.

Establish digital referral networks that connect residents to local care, prevention and wellness resources needed to live healthy lives.

For more information about Michigan’s plan for the funding, visit the MDHHS Rural Health Transformation Program website. Additional information about the federal Rural Health Transformation Program is available at Rural Health Transformation Program | CMS.

# # #

First round funding ends October 30, 2026. What results do you see in your area?

Recipient partners and more at the MDHHS> Medicaid> RTHP home page.

https://www.michigan.gov/mdhhs/assistance-programs/medicaid/rural-health-transformation-program

"The Rural Health Transformation (RHT) Program is part of H.R. 1, known as the One Big Beautiful Bill Act passed by Congress and signed into law July 4, 2025. The $50 billion grant program runs from Fiscal Year (FY) 2026 through FY 2030, with $10 billion allocated per year across 50 states. The goal is to increase access to rural health providers while improving outcomes for individuals living in rural communities.

The Michigan Department of Health and Human Services (MDHHS) was awarded $173,128,201 for Budget Period 1 (BP1; December 31, 2025-October 30, 2026) by the Centers for Medicare & Medicaid Services (CMS) under the RHT Program."