The state of play
Budget Period 1 of the Rural Health Transformation Program (RHTP) closed on October 30, 2026, ten months after CMS announced first-year awards to all 50 states. States have obligated their Year 1 dollars, but for many hospitals, Year 1 subawards are only now arriving, and recipients generally have until September 2027 to spend them. Progress also varies widely by state.
Some states have signed subgrants and are already scoping Year 2 projects. In others, rural hospital CEOs are still waiting for meaningful dollars to reach their facilities. Either way, the hospitals best positioned for the long term will invest RHTP funds in capabilities that keep returning value after the program ends in 2030.
Where do states stand on RHTP funding?
States spent October working to obligate Year 1 funds before the deadline. Unobligated dollars can be reallocated to other states and can reduce a state's future awards (Idaho Press via NCWLife).
Moving into execution. Utah reports that CMS confirmed it obligated 100% of its Year 1 funding (Utah DHHS). Kansas has shifted its focus to Year 2 budgets (KDHE), and Mississippi is executing subawards from its first round of technology grants (VMG Health). In late October, CMS highlighted $233 million in California funding and $39.7 million for 26 rural Missouri providers (The Money Overview).
Still waiting. In Michigan, rural health executives have questioned how little of the state's $173 million is reaching hospitals; one health system received $83,333 (U.S. News). A Northern Light Health executive in Maine put it this way: "It's hard to think about transformation when you're thinking about survival" (STAT). Direct provider payments are capped at 15% of a state's annual funds, so most dollars go to projects rather than operating support (Medical Daily, citing Chartis).
Year 2 amounts are still being set. Each year's award can rise or fall based on state progress (United States of Care). As of late October, some states were still awaiting updated Year 2 Notices of Award (Idaho Press via NCWLife). Hospitals should confirm amounts and timing with their state RHTP office.
How will Medicaid changes affect rural hospitals in 2027?
RHTP was created by the same law that changes Medicaid eligibility. Six-month redeterminations began July 1, 2026, and work requirements take effect January 1, 2027 (Clay County, MO summary). Analysts estimate the law's Medicaid changes reduce rural funding by roughly $155 billion over ten years, about three times RHTP's total (Becker's).
Patients who lose coverage often delay care and arrive in the ED later and sicker (WPSU, KJZZ). The Commonwealth Fund projects that rural hospitals in Ohio could see uncompensated care costs rise roughly 19% to 22% (Ohio Capital Journal). For CAHs, that likely means ED volume and acuity that shift month to month, not a simple decline.
Why do ED physician time studies matter for Critical Access Hospitals in 2027?
Medicare pays CAHs on a cost basis, and ER provider standby time is a meaningful line on the cost report. When ED volumes are stable, a manual or periodic time study can approximate reality. When volumes swing, estimates drift. Underreported standby time leaves Medicare reimbursement uncaptured, and poorly documented time creates audit exposure.
Automated capture records standby and direct-care time across every shift, so the cost report reflects actual activity. In 2025, VersaBadge clients averaged more than $150,000 in additional annual Medicare reimbursement, and Little Colorado Medical Center recaptured roughly $700,000 after replacing manual ED time studies. Unlike a grant, that benefit recurs with every cost report filed.
How does VersaBadge align with the RHTP pillars?
VersaBadge's Bluetooth RTLS platform was co-developed with Critical Access Hospitals and is deployed at more than 300 rural hospitals and clinics. One platform supports three RHTP priorities.
Installation typically takes one to two weeks, and core functions need no EHR integration (VersaBadge). Allowable uses vary by state, so confirm eligibility with your state RHTP office.
How should hospitals plan for life after RHTP ends in 2030?
RHTP funding is time-limited. Sanford Health's chief operating officer said at a Newsweek forum that he does not see the fund "as necessarily saving rural hospitals" (Newsweek), and NRHA has called for long-term, sustainable rural health funding (NRHA).
A useful question for any RHTP project: will it still pay for itself in 2031? Projects that generate recurring revenue, reduce recurring cost, or help retain staff are strong candidates. CMS also weighs measurable progress when setting each year's award (Minnesota Department of Health), so projects with clear baselines help both the state and the hospital.
What should CAH leaders do next?
- Confirm your state's Year 2 plans, including amounts, upcoming solicitations, and allowable uses.
- Spend Year 1 funds on schedule. Subrecipients generally have until September 30, 2027.
- Review how ED standby time is captured and whether it will hold up as volume and acuity shift.
- Favor projects with a recurring return after 2030.
RHTP was not designed to cover rural hospitals' operating losses. It can fund infrastructure that helps hospitals document the care they deliver, retain staff, and run more efficiently after the program ends.
To learn how VersaBadge supports RHTP planning, visit our RHTP Resource Hub or schedule a discovery call.
