The Rural Health Transformation Program (RHTP) is not a pilot, a demonstration, or a grant cycle with uncertain renewal. Established under Public Law 119-21, it is a $50 billion federal commitment structured to strengthen and modernize how rural Medicaid populations receive care over the next five years.
It is worth noting the scale of what the RHTP is offsetting: independent analysis estimates that federal Medicaid spending in rural areas will decline by $137 billion over the next decade. The $50 billion in RHTP funding covers just over a third of that projected loss, which makes the efficiency and targeting of every dollar spent on transformation even more consequential.
The program's emphasis on building enduring transformation plans rather than short-term interventions is a deliberate signal. States are expected to build infrastructure that outlasts the five-year funding window. That framing has real implications for managed care partners, because it means state program offices are not looking for vendors and analytics platforms that can meet a one-time reporting requirement. They are looking for partners who can support sustained operational transformation.
For managed care organizations, those goals translate into concrete operational outcomes: measurable reductions in avoidable utilization, more stable provider reimbursement through accurate risk adjustment and clinical movement in the chronic disease and preventive care metrics that RHTP program reporting will increasingly demand.
For Medicaid agencies and managed care organizations operating in rural markets, this additional funding provides a unique opportunity to positively impact a potentially underserved population. The question is whether your population health infrastructure is positioned to support the capabilities your state agreed to in exchange for this funding.
Five Strategic Goals for Rural Transformation
All 50 states applied for and were awarded funding in 2025, averaging $200 Million per state, with funding starting in 2026[i]. CMS structured the RHTP around five strategic goals, each of which maps directly to the structural challenges that have made rural Medicaid populations difficult and expensive to manage:
The underlying problem is familiar to anyone who manages these populations. Rural Americans face longer travel times to specialists, higher rates of chronic disease, persistent workforce shortages and a hospital infrastructure under serious financial strain, with nearly 44% of rural hospitals operating at negative margins[ii].
Repeated Priorities in State Applications
State Health and Value Strategies (SHVS) has been tracking publicly released state applications, and the patterns that emerge across them are striking in their consistency[iii]. Despite significant variation in state size, rural population density and existing healthcare infrastructure, the same priorities appear repeatedly.
Risk stratification and proactive care management for high-need members top the list. States recognize that a relatively small proportion of rural Medicaid members, those carrying multiple chronic conditions and limited access to coordinated primary care, account for a disproportionate share of costs and utilization. Identifying those members before they cycle through emergency departments is a foundational requirement across nearly every state plan.
Workforce integration and team-based care models also appear throughout, with states recommending community health workers, paramedics operating in expanded roles and telehealth-enabled care teams as the practical solution for a chronic problem: physician supply in rural areas is insufficient, and it will remain insufficient for the foreseeable future. The program also encourages states to develop a broader set of providers to serve rural communities, including pharmacists and patient navigators who can help members move through the system more effectively.
Community health center (CHC) investment is another consistent theme. NACHC analysis confirms that health centers are identified as key delivery partners in most state applications, with meaningful funding allocated towards expanding that capacity in rural service corridors[iv]. For health plans, that means community health centers are a central piece of the network in RHTP-funded programs.
Data infrastructure and interoperability round out the recurring priorities. A Bipartisan Policy Center analysis of state applications found that all 50 states have included technology innovation initiatives in their RHTP plans, centering on four areas[v]:
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Modernizing health IT infrastructure |
Expanding virtual care via telehealth and remote patient monitoring |
Scaling artificial intelligence |
Seeding innovation through rural technology catalyst funds |
Rural health facilities face persistent barriers to adopting health IT, including tight budgets that leave many with limited interoperability, fragmented data systems and aging infrastructure. These gaps create the exact conditions where population-level analytics can have the greatest impact: providers and care managers are operating without the longitudinal data they need to identify and act on risk.
For rural health specifically, the highest-value application of that technology investment is intelligent automation: reducing the administrative friction that keeps a limited workforce in spreadsheets rather than with patients.
These priorities are not aspirational. They represent the operational commitments states have made to CMS in exchange for receiving their awards. And the timeline is already in motion: state reporting on first-year funding is scheduled to begin in August 2026, with spending for the next fiscal year beginning in October.
The Population Health Capabilities RHTP Demands
The Johns Hopkins ACG® System provides the population health analytics and validated segmentation methodology required to meet the core commitments states have made to CMS. The analytics capabilities of the ACG System correspond directly to the operational gaps revealed in state plan after state plan. SS&C Health is the exclusive distributor of the ACG System for US health plans.
Population segmentation as a strategic foundation
Before a Medicaid agency or managed care organization can design a care management program, a value-based contract or a targeted access intervention, it needs to know what its population actually looks like. The ACG System segments the full Medicaid population into analytically distinct groups based on condition burden, utilization patterns, pharmacy complexity and predicted resource needs. That segmentation is the strategic layer that makes everything else actionable: it determines where to concentrate care management investment, which programs to build first and how to size expected impact before a dollar of program spend is committed. States accountable to CMS for measurable RHTP outcomes cannot afford to design programs without this foundation.
Risk stratification and effective resource allocation
The ACG System uses diagnosis and pharmacy data to assign predictive risk scores to individual members, enabling care management programs to direct capacity where it will have the greatest impact. For a rural Medicaid population spread across dozens of counties with limited primary care access, this kind of stratification is the foundation of effective resource allocation. It replaces broad outreach with targeted prioritization, so the members who most need proactive intervention are identified before a high-cost event occurs.
Identifying patterns of potentially avoidable emergency department utilization
In rural markets where primary care access is constrained, the emergency department frequently becomes the default point of entry into the healthcare system. Population-level analytics can surface the members and the utilization patterns most likely to reflect avoidable ED use, distinguishing high-frequency utilizers who lack adequate primary care access from those with acute needs that ED visits are appropriate to address. That distinction is what allows healthcare organizations to design access interventions that are targeted and measurable, rather than broad and difficult to evaluate.
Rising risk identification and early intervention
Not all high-cost utilization is predictable from a current high-risk score. A meaningful share of cost and utilization growth comes from members who are trending upward: individuals whose condition burden is increasing but who have not yet crossed into the highest risk bands. The ACG System identifies these rising-risk populations, giving care management programs the opportunity to intervene at a point when outreach is more likely to change the trajectory. In a value-based contract environment, early identification of rising risk is as important as managing members who are already high-cost.
In rural markets where clinicians are overextended, the more consequential analytical question is not which members are highest risk, but which members are most impactable. The ACG System isolates modifiable risk factors, ensuring that the limited rural workforce is deployed toward the members where outreach will actually change the clinical trajectory rather than directing resources toward members whose cost burden is no longer modifiable.
Organizations can expect to see that shift in concrete terms. In one implementation, moving to ACG-based emerging risk logic reduced the target cohort by 32% while producing significantly better results, because the system surfaced a meaningfully different population: members at the inflection point of risk rather than those already driving high costs.
Beyond the financial impact, organizations should expect measurable clinical movement in chronic disease management, specifically in areas like HbA1c and blood pressure control, alongside improved adherence to critical preventive milestones such as prenatal and postpartum care visits. These are the outcome categories that RHTP program reporting will increasingly demand, and they are the areas where precise targeting produces results that population-wide outreach programs cannot.
Pharmacy complexity as a signal for targeted intervention
Pharmacy data is one of the most reliable signals available in Medicaid claims environments, and the ACG System uses it as a primary input for population segmentation. Members with complex, multi-drug regimens, particularly those managing multiple chronic conditions simultaneously, represent a distinct population segment where targeted medication management programs can reduce adverse events, hospitalizations and duplicative care. Identifying that segment analytically, before program design, allows states and their managed care partners to size the opportunity and build programs with realistic outcome targets.
Risk-adjusted provider and program performance measurement
States committing to value-based arrangements with rural providers will need performance benchmarks that account for case mix variation. The ACG System enables risk-adjusted comparisons across provider panels, so performance differences reflect actual care quality rather than the fact that one provider sees a sicker or more complex patient population than another. As states move from fee-for-service into the value-based models that RHTP explicitly encourages, this capability becomes a contract management necessity.
Health equity, disparities analysis, and social determinants of health
Rural Medicaid populations carry a disproportionate share of health disparities, and RHTP state applications reflect a strong federal expectation that transformation plans address equity explicitly. The ACG System supports this work by enabling disparities analysis across population segments, surfacing differences in utilization, condition burden and outcomes by geography, race, ethnicity and other demographic dimensions. Layering social determinants of health data into the segmentation framework extends this further, identifying members whose clinical risk is compounded by housing instability, food insecurity, transportation barriers or other social factors that drive avoidable utilization in rural markets. That integrated view is what allows a Medicaid agency or managed care organization to move from identifying a disparity to designing an intervention with a plausible mechanism for closing it.
To understand how advanced patient segmentation and risk stratification translate into operational population health programs, download SS&C’s white paper: Modeling Excellence: Quality Patient Segmentation for Targeted Health Care Solutions.
Getting Positioned Before the Window Closes
CMS has established a dedicated Office of Rural Health Transformation to administer and oversee the program, signaling a long-term institutional commitment to accountability for what states deliver[vi]. Implementation planning is underway now, and the organizations that will be positioned to participate meaningfully in RHTP-funded programs are those that can demonstrate their population health capabilities when state program offices start engaging managed care partners and community providers.
A practical readiness inventory for your organization:
If any of those elements are partial or absent, the 2026 implementation calendar is short. State reporting on first-year funding begins in August, and the next fiscal year's spending cycle opens in October. The organizations that engage now, align their infrastructure to state RHTP goals and can demonstrate analytic readiness will be the ones at the table when program structures are finalized.
The right next step is a direct conversation about where your current infrastructure aligns with your state's RHTP commitments and where SS&C can close the gaps with automated workflows and population health analytics.
[i] CMS Announces $50 Billion in Awards to Strengthen Rural Health in All 50 States. Centers for Medicare and Medicaid Services. cms.gov
[ii] A Closer Look at the $50 Billion Rural Health Fund in the New Reconciliation Law. KFF. kff.org
[iii] Tracking State Releases of Rural Health Transformation Program Applications. State Health and Value Strategies. shvs.org
[iv] Rural Health Transformation Program State Applications Include Health Center Investments. National Association of Community Health Centers. nachc.org
[v] Advancing Technology Innovation through the Rural Health Transformation Program. Bipartisan Policy Center. bipartisanpolicy.org
[vi] CMS Announces Establishment of the Office of Rural Health Transformation. cms.gov