The clock is ticking for Arizona to submit a plan to use money from the new Rural Health Transformation Program that was created by Congress to blunt the political fallout from cuts to Medicaid enacted under HR1.
When HR1 was signed into law on July 4, 2025, it extended big tax breaks for high income households and corporations while reducing federal funding for Medicaid, SNAP, and other core public health programs.
Those cuts (especially to Medicaid) will eventually have long-term bad impacts on rural hospitals (urban hospitals are less exposed because they have less exposure to Medicaid and a more diverse payer mix).
In the coming years, the HR1 cuts will weaken rural hospital finances. Some will cut or end services like labor and delivery. Others will be forced to close altogether.
To offset those coming effects (or I would argue to provide political cover) Congress set up the Rural Health Transformation Program. The program gives $10B per year for five years across the US (FY 2026–2030). Arizona’s share is $100M per year (for 5 years).
The plans are due soon – on November 5
Governor Hobbs has tasked the Governor’s Office (rather than AHCCCS or ADHS) to develop Arizona’s plan.
CMS released the Notice of Funding Opportunity on September 15 and state plans are due November 5, 2025 — less than three weeks from now. CMS is supposed to approve or deny each proposal by December 31, 2025.
Note: States are prohibited from using RHTP dollars to finance the non-federal share of Medicaid expenditures, and administrative costs can’t exceed 10% of the total state allocation. Annual expenditure reports will be required each federal fiscal year (October 1–September 30).
To support Arizona stakeholders, the UA Center for Rural Health made a Rural Health Transformation Program Toolkit. The site includes a Policy Brief that outlines the program’s structure, funding restrictions, and key considerations for shaping Arizona’s proposal.
See the UA Center for Rural Health 2-Page Policy Brief
With the plan due in less than a month, now is the time for rural health leaders, hospital administrators, and community advocates to review the materials and provide input to the Governor’s Office.
I believe the point person for the Plan in the Gov’s Office is Meaghan Kramer… so that appears to be the person to contact to try to influence how AZ plans to allocate the funds.
