Every RHTP dollar spent on programs creates an operating cost that outlives the funding. Only one state is using RHTP to change the payment model that makes rural healthcare structurally unsustainable. The evidence from Maryland, Pennsylvania, and Vermont suggests the rest are building fiscal cliffs.

Programs End. Payment Models Don't.

RHTP's $10 billion annual investment (CMS, December 2025) will produce two categories of outcomes: states that funded programs, and states that changed the economic model of rural healthcare. The first category will need re-funding in Year 6. The second will not. The evidence from Maryland, Pennsylvania, and Vermont tells us which approach works. One state — South Dakota — is applying that evidence. The other 49 are not.

Every time-limited federal health program faces the same structural question, and the question is always deferred until too late: what happens when the money stops?

HITECH spent $35 billion on electronic health record adoption. Hospitals adopted EHRs. The funding ended. Hospitals that had digitized their workflows now carried the ongoing costs of maintaining, upgrading, and securing systems they could not afford to operate without the subsidy that capitalized them. The Government Accountability Office documented the aftermath: systems degrading, interoperability stalling, and a new round of federal investment required to finish what HITECH started.

The Affordable Care Act's Medicaid expansion extended coverage to millions. States that expanded now carry the ongoing cost of coverage, with the federal match rate declining from 100% to 90%. Fiscal sustainability analyses from the Kaiser Family Foundation and Manatt have documented the political and budgetary pressure this creates — not because expansion was wrong, but because the program was designed as a permanent obligation funded by a temporary incentive.

SAMHSA's Community Mental Health Block Grant, the Certified Community Behavioral Health Clinic (CCBHC) demonstration, the State Innovation Models Initiative — the pattern is consistent. Federal dollars fund programs. Programs create staffing, infrastructure, and community expectations. Federal dollars end. The programs either collapse, are sustained through state general fund appropriation (politically difficult), or limp forward at reduced capacity.

RHTP is next.

The Arithmetic of the Fiscal Cliff

Washington State's RHTP plan allocates $181 million per year across six initiatives: hospital stabilization, community-based prevention, tribal health, technology modernization, workforce development, and behavioral health expansion. Consider what each initiative creates in ongoing operating costs.

Workforce recruitment (Initiative 5) funds loan repayment with 5-year rural service commitments, training pipeline expansion, and clinician housing assistance. Each physician recruited to a rural community at a cost of $150,000-250,000 in loan repayment and relocation becomes a salary obligation of $250,000-400,000 per year — an obligation the employing organization carries permanently. RHTP pays the recruitment cost. The organization pays the salary. If the organization's revenue model (fee-for-service at rural volume) cannot support the salary, the physician leaves when the practice economics become unsustainable, and the recruitment investment is lost.

Technology deployment (Initiative 4) funds EHR modernization, telehealth infrastructure, and cybersecurity. A telehealth platform costs $50,000-150,000 to deploy and $20,000-60,000 per year to maintain (licensing, bandwidth, technical support). An EHR upgrade carries annual maintenance contracts of $30,000-200,000 depending on the system. RHTP funds the deployment. The organization funds the maintenance. If the organization's operating margin is negative — as it is for 76% of Washington's rural hospitals — the maintenance cost is unfunded from the day the system goes live.

Behavioral health integration (Initiative 6) funds embedded therapists, crisis response teams, and MAT/MOUD expansion. Each behavioral health provider integrated into a rural primary care practice is a salary ($80,000-120,000) plus supervision, space, and administrative support. If Medicaid reimbursement for behavioral health encounters does not cover the cost of the position — and in most rural settings, it does not — the position is sustainable only as long as the grant that created it.

This is not speculative. It is arithmetic. Every program-dollar spent by RHTP creates an operating obligation that the recipient organization must fund from its own revenue after RHTP ends. If the organization's revenue model is structurally insufficient — and in rural healthcare, the fee-for-service model is structurally insufficient by definition at rural volume — then the programs funded by RHTP will contract or collapse within 2-3 years of the funding period ending.

The question is not whether this will happen. It is whether any state is designing its RHTP investment to prevent it.

The Evidence: Three Models of What Works

Three states — none of them RHTP states, because the evidence predates RHTP — have demonstrated that changing the payment model produces sustainable results where program funding does not.

Maryland: Hospital Global Budgets (2014-present)

Maryland's All-Payer Model, launched in 2014 and evolved into the Total Cost of Care Model in 2019, replaced fee-for-service hospital payment with prospective global budgets. Each hospital receives a fixed annual revenue budget, negotiated with the state's Health Services Cost Review Commission, regardless of volume. The hospital is paid to serve its community's health needs — not to generate encounters.

The results over a decade of operation:

Hospital financial stability improved. Rural hospitals that were losing money under fee-for-service stabilized under global budgets because their revenue was no longer hostage to volume fluctuations (CMS Innovation Center evaluation, 2023).
Avoidable hospitalizations declined. When hospitals are not paid per admission, the incentive to admit shifts to the incentive to prevent admission. Maryland's potentially avoidable utilization savings exceeded $1.4 billion cumulatively through 2022 (HSCRC Annual Report, 2023).
The model is self-sustaining. No ongoing federal subsidy is required. The global budget is funded by the same payers (Medicare, Medicaid, commercial) that previously funded fee-for-service — the payment mechanism changed, not the funding source.

Maryland's model required significant state infrastructure: a rate-setting commission (HSCRC) with decades of institutional capacity, all-payer authority that no other state possesses, and a waiver relationship with CMS that took years to negotiate. The model is not directly replicable. But the principle is: prospective, population-based payment stabilizes hospitals that volume-based payment destabilizes.

Pennsylvania: Rural Health Model (2017-2024)

Pennsylvania's Rural Health Model, a CMS Innovation Center initiative, tested global budgets specifically in rural hospitals — 18 participating facilities received prospective annual budgets with quality targets. The evaluation (Mathematica, 2024) found:

Participating hospitals maintained financial stability during a period when non-participating rural hospitals in Pennsylvania continued to deteriorate.
Quality metrics held steady or improved — the common objection that global budgets incentivize rationing was not supported.
The model demonstrated feasibility in low-volume rural settings where Maryland's urban-heavy hospital system provided limited precedent.

Pennsylvania's model ended in 2024 when the CMS Innovation Center did not extend it. This is itself a cautionary data point: even successful payment models require sustained federal partnership. But the evidence from 7 years of operation demonstrated that global budgets work in rural hospitals.

Vermont: All-Payer ACO Model (2017-present)

Vermont's All-Payer ACO Model extended population-based payment beyond hospitals to the full care delivery system — primary care, specialty care, and community health services. The model sets a statewide target for total cost of care growth and holds the ACO accountable for meeting it.

Vermont's model is the most ambitious and the most instructive for RHTP because it addresses the entire system rather than hospitals alone. The evaluation findings (CMS Innovation Center, 2023):

Total cost of care growth was constrained relative to national trends.
Primary care investment increased as a share of total spending — because the ACO has an incentive to invest in primary care that prevents expensive downstream utilization.
Community health integration improved because community-based services (behavioral health, social services, public health) contribute to the ACO's total cost of care target.

What RHTP States Are Actually Doing

Against this evidence base, how are RHTP states investing their funds?

We examined the published spending plans and solicitation documents from the nine states that have opened sub-grantee solicitations as of March 25, 2026 (per GrantBridges RHTP State Rollout Tracker and state agency sources cited in the References section). The categorization is based on whether funding is directed toward ongoing programs (creating operating costs that persist after RHTP) or toward structural changes (altering the economic model so that sustainability does not require continued subsidy). Award amounts are CMS official Year 1 figures. Program/structural splits are GrantBridges estimates based on published solicitation documents and state spending plans — see Methodology for classification criteria.

State	Total Year 1	Program Spending	Structural/Payment	Structural Share
Iowa	$209M	$203M	~$6M	2.9%
South Dakota	$189M	$126M	$62.7M	33.2%
Tennessee	$207M	$200M	~$7M	3.4%
Delaware	$157M	$113M	$42.5M*	27.1%
Indiana	$207M	$200M	~$7M	3.4%
Kansas	$222M	$216M	~$6M	2.7%
Nebraska	$219M	$210M	~$9M	4.1%
North Carolina	$213M	$207M	~$6M	2.8%
New Jersey	$147M	$143M	~$4M	2.7%

*Delaware's $42.5M medical school investment is categorized as structural because it creates permanent educational infrastructure — but it does not change the payment model. By a stricter definition (payment model reform only), Delaware's structural share is approximately 4%.

One state — South Dakota — is investing more than 5% of its RHTP budget in payment model infrastructure. South Dakota's Medicaid Primary Accountable Care Transformation (PACT) initiative allocates $62.7 million over five years to build the actuarial models, quality frameworks, and provider engagement infrastructure for population-based primary care payment. This is the only RHTP investment among the nine early-mover states that directly addresses the fee-for-service sustainability problem.

Every other state is spending 95-98% of its RHTP funds on programs that will require re-funding when RHTP ends.

Why States Default to Programs

The default to program spending is not irrational. It reflects three constraints that RHTP Directors face:

CMS's spending categories reward programs, not payment reform. RHTP's allowable spending categories — workforce, technology, chronic disease management, maternal health, behavioral health — are program categories. A state that proposes spending $60 million on actuarial infrastructure for payment model redesign must justify that expenditure against categories designed for clinical programs. South Dakota navigated this by framing PACT as a "value-based care transformation" initiative. But the framing required creativity that most states do not attempt.

Speed pressure favors programs over infrastructure. CMS recalculates each state's technical score annually based on disbursement speed, sub-grantee participation, and outcomes. States that disburse quickly in Year 1 receive higher scores — and potentially more Year 2 funding. Payment model redesign takes 2-3 years before the first dollar flows differently. Program sub-grants can be awarded in 90 days. The incentive structure rewards activity over architecture.

Political visibility favors programs over payment reform. A Governor can announce "50 new nurses recruited to rural communities" or "$66 million in medical equipment deployed to 36 hospitals." A Governor cannot announce "actuarial models for prospective payment methodology completed" with the same political return. Programs photograph. Infrastructure does not.

These constraints are real. They explain why 49 states are defaulting to programs. They do not justify it. The states that default to programs will produce 5 years of activity reports and a Year 6 fiscal cliff. The state that invests in payment reform will produce 5 years of transition and a durable economic model that outlasts the funding.

The Counter-Argument: Programs Create Capacity That Persists

The defense of program spending is that capacity — once built — persists even without continued funding. A physician recruited to a rural community stays (for some period). A telehealth platform, once deployed, continues to operate (with ongoing maintenance). A behavioral health provider, once integrated into a primary care practice, has an established patient panel that generates Medicaid revenue.

This argument is partially true and fundamentally misleading. Capacity persists only if the revenue model supports it. A physician stays if the practice generates enough revenue to pay the salary. A telehealth platform operates if the organization can afford the maintenance contract. A behavioral health provider remains if encounter-based billing covers the position.

In rural healthcare, the revenue model does not support the capacity that RHTP builds. That is the entire reason RHTP exists — rural healthcare is underfunded relative to cost. Adding capacity to an underfunded system does not make the system funded. It makes the system larger and still underfunded — with higher fixed costs, more staff to pay, more infrastructure to maintain, and the same inadequate revenue.

The physician recruited with RHTP loan repayment joins a practice that loses money on every Medicaid encounter. The telehealth platform deployed with RHTP funds connects patients to a system that is reimbursed below cost for the services delivered. The behavioral health provider integrated with RHTP funding generates encounters that Medicaid reimburses at rates that do not cover the provider's salary plus overhead.

Capacity without a sustainable revenue model is a larger version of the same problem.

What a Sustainability-Oriented RHTP Investment Looks Like

A state that takes the sustainability question seriously would restructure its RHTP investment along two tracks:

Track 1: Transitional Programs (60-70% of budget). These are the conventional RHTP investments — workforce, technology, behavioral health, prevention. They address immediate needs and produce the Year 1-2 activity metrics that CMS rewards. They are necessary. They are not sufficient.

Track 2: Payment Model Infrastructure (30-40% of budget). This is the investment that determines whether Track 1's programs survive Year 6. It includes:

Actuarial capacity for rural population health: total cost of care analysis, risk adjustment for small populations, prospective budget modeling. This expertise does not exist within most state health agencies. It must be built or contracted.
Payer engagement to bring Medicare (through CMS Innovation Center partnership), Medicaid (which the state controls), and commercial insurers to the table for alternative payment negotiation.
Provider readiness for prospective payment: financial management training, shared governance development, care coordination infrastructure. Providers accustomed to billing per encounter need 2-3 years to develop the operational capacity for prospective budgets.
Quality measurement frameworks that hold prospective payment accountable — because the legitimate concern about global budgets is that they incentivize underservice, and only robust quality measurement prevents that.
Transition risk mitigation that protects providers during the 2-3 year period when they are shifting from fee-for-service to prospective payment. RHTP funds the risk corridor that makes the transition financially safe.

This 30-40% allocation is not spending that competes with programs. It is spending that makes programs sustainable. A workforce investment paired with payment reform produces a physician who practices in a system that can afford to keep them. A technology investment paired with payment reform produces a telehealth platform that operates in a system that incentivizes its use. A behavioral health investment paired with payment reform produces an integrated provider whose position is funded by a payment model that values behavioral health, not by a grant that expires.

The Tribal Precedent

It is worth noting — with the respect that the observation requires — that the payment model RHTP should aspire to already exists in tribal health.

Indian Health Service funding and tribal self-governance compacts under P.L. 93-638 provide population-based, prospective funding to tribal health systems. The tribal health program receives a budget based on the population it serves, not the volume of encounters it generates. The program has authority to allocate that budget across clinical services, behavioral health, prevention, traditional medicine, and community health according to the community's self-determined priorities.

This is a global budget. It is community-governed. It has operated for decades. It is not perfect — IHS funding levels are chronically inadequate, and 638 compacting creates administrative burden — but the structural model is exactly what payment reformers advocate for the non-tribal system.

The non-tribal healthcare system is not innovating beyond tribal health financing. It is attempting to replicate what tribal health has always done — fund health systems based on the population they serve, not the services they bill. RHTP states that recognize this lineage, and that engage tribal health leaders as experts in population-based health financing rather than as recipients of a set-aside, will design better payment models for having done so.

Methodology and Limitations

Spending categorization is based on published RHTP plans, solicitation documents, and award announcements from the nine states that have opened sub-grantee solicitations as of March 25, 2026. The "structural/payment" category includes only expenditures explicitly directed toward payment model redesign, actuarial infrastructure, or permanent institutional creation (e.g., medical schools). General "value-based care" mentions without dedicated funding are not counted.

This categorization is necessarily approximate. Some states may be planning payment reform work that is not reflected in their published solicitations. Program spending may, in some cases, include components that contribute to payment model readiness (e.g., data infrastructure that supports quality measurement for future value-based contracts). The 95-98% program share for most states should be read as indicative of emphasis, not as a precise accounting.

The Maryland, Pennsylvania, and Vermont evidence is cited from CMS Innovation Center evaluations and state agency reports. These evaluations have known limitations, including selection effects (hospitals that volunteered for global budgets may differ from those that did not) and concurrent policy changes that make attribution difficult. The evidence is consistent and directional, not definitive.

What Happens Next

RHTP's five-year clock is running. Year 1 funds must be obligated by September 2027. States are under pressure to disburse — and disbursement pressure rewards program spending over infrastructure investment because programs move money faster.

The states that resist this pressure — that allocate meaningful budget to payment model infrastructure even at the cost of slower Year 1 disbursement — are making a bet: that CMS will value sustainability over speed when it evaluates Year 2-5 technical scores. That bet is informed by CMS's own stated priorities (the Total Cost of Care Model, the Innovation Center's portfolio, the Accountable Health Communities Model) and by the evidence from the three states that have demonstrated prospective payment in practice.

Whether the bet pays off depends on whether CMS evaluates RHTP on the basis of transformation — which takes years to demonstrate — or activity — which can be demonstrated in quarters. If CMS rewards activity, the program-heavy states win the technical score race. If CMS rewards sustainability, South Dakota wins.

For rural communities, the question is simpler: will the healthcare system that RHTP builds still be standing in Year 6? The answer depends on whether the money bought programs or changed the model.

Programs end. Payment models don't.

References

Centers for Medicare & Medicaid Services Innovation Center. (2023). Maryland Total Cost of Care Model: Evaluation Report. CMS.gov.

Centers for Medicare & Medicaid Services Innovation Center. (2023). Vermont All-Payer ACO Model: Annual Evaluation Report. CMS.gov.

Government Accountability Office. (2022). Electronic Health Records: HHS Needs to Improve Oversight of the 21st Century Cures Act. GAO-22-105367.

Health Services Cost Review Commission. (2023). Annual Report to the Governor. Maryland HSCRC.

Kaiser Family Foundation. (2024). Status of State Medicaid Expansion Decisions. KFF.org.

Mathematica. (2024). Pennsylvania Rural Health Model: Final Evaluation Report. CMS Innovation Center.

South Dakota Department of Health. (2026). Rural Health Transformation Program: Medicaid Primary Accountable Care Transformation Initiative. DOH.SD.gov.

State Health & Value Strategies. (2026). Innovating and Investing in Rural Health: How States Propose Spending the $50 Billion Rural Health Transformation Fund. SHVS.org.

GrantBridges. (2026). RHTP State Rollout Tracker. grantbridges.com/tracker.