North Carolina to Apply for the Rural Health Transformation Program

The North Carolina Department of Health and Human Services (NCDHHS) has announced that it will submit an application for funding from the federal Rural Health Transformation Program (RHTP). The program is part of H.R. 1 (One Big Beautiful Bill), which was signed into law on July 4, 2025.  The program was established to address rural health concerns due to federal cuts to the Medicaid program.

NCDHHS is inviting input and has set up a website for providers to give input on North Carolina’s application and will also host several opportunities in the coming months for partner organizations to provide input for the state’s RHTP application.

The Medicaid program will see cuts resulting in approximately $1 trillion in losses nationwide in the next 10 years as a result of H.R. 1. The impact in North Carolina is projected to be $49.9 billion.  The cuts are anticipated to especially impact those living in rural communities.

“We are rooted in our commitment to improve the health and well-being of all North Carolinians, and that includes the more than 3 million people who live in our rural communities,” said NCDHHS Secretary and NCMS Past President, Dr. Dev Sangvai. “As we navigate changes at the federal level, we will not lose sight of the mission to create a healthier North Carolina for all, despite the steep cuts to Medicaid and rural health.”

RHTP funding would help relieve the anticipated financial strain of rural providers, including hospitals.  The program would provide temporary funding over the next five years but would not replace the funds North Carolina’s rural hospitals and providers would have received if H.R. 1 had not been enacted. RHTP would replace approximately half of the $3.7 billion in anticipated losses that North Carolina rural hospitals will face due to the Medicaid cuts in H.R.

RHTP funding will total $50 billion nationally and will be issued in 10 payments to all 50 states over the next five years.

• $25 billion will be disbursed evenly between all 50 states each year for the next five years.
• The second $25 billion will be distributed among all 50 states at CMS’ discretion.

As part of the plan North Carolina submits to CMS to opt into the RHTP, NCDHHS will specify how it will:

• Improve access to rural hospitals and other health care providers;
• Improve health care outcomes for rural residents;
• Foster partnerships between rural providers; and
• Strengthen the rural health care workforce.

CMS expects to approve state plans for participation in the RHTP by December 31, 2025. Once the application is approved, a public notice will be issued to advise providers and hospitals when they are able to apply for a portion of the funding.