What Happens After You Win an RHTP Sub-Grant: The First 90 Days

You got the award notice. Congratulations — your organization just secured Rural Health Telehealth Program funding, and the work you proposed is going to make a real difference for your community.

Now put the champagne down. You have about seven days before the compliance clock starts running, and the decisions you make in the first 90 days will determine whether this grant becomes a success story or an audit finding.

This guide walks you through what needs to happen, in what order, starting today. Not next week. Not after the board meeting. Today.

Day 1-7: Read the Grant Agreement — The Actual One

The first thing you need to do is read the sub-grant agreement. Not skim it. Read it.

Here is the distinction that trips up first-time sub-grantees: the solicitation told you what to propose. The sub-grant agreement tells you what you must do. These are not the same document, and they do not always say the same thing.

The sub-grant agreement is the governing document. It supersedes the solicitation, your application narrative, and anything a program officer told you on the phone. If there is a conflict between what you proposed and what the agreement says, the agreement wins.

Read it with a highlighter and look for these specific provisions:

• Payment mechanism. Are you on advance payments or reimbursement? This determines your cash flow for the entire grant period. If reimbursement-based, you will be spending your own money for 60-90 days before you see a dollar back.
• Reporting cadence. Quarterly? Monthly? What are the exact due dates? Some states use calendar quarters; others use federal fiscal year quarters. Get this wrong and you will miss your first deadline.
• Allowable cost categories. The budget you submitted had line items. The agreement may further restrict what is allowable within those categories.
• Indirect cost rate treatment. Does the agreement honor your NICRA? Does it cap indirect costs? Does it require the 15% de minimis election if you lack a NICRA?
• Equipment thresholds. At what dollar amount does a purchase become "equipment" requiring prior approval? The federal default under 2 CFR 200 is $10,000, but your state pass-through entity may set a lower threshold.
• Subcontracting rules. If your budget includes contractual costs, what prior approval or documentation requirements apply? Some agreements require written subcontracting plans before you issue any contracts.
• Prior approval requirements. Which budget modifications require prior written approval from the state? Most agreements allow some flexibility between line items but require approval for changes above a threshold (often 10% of the total budget or the budget category, whichever is less).

Make a one-page summary of these terms. Share it with your finance team, your program director, and anyone who will authorize spending against this grant. Everyone who touches RHTP money needs to know the rules.

Day 1-14: Set Up Financial Tracking

Before you spend a single dollar against the RHTP award, your financial infrastructure needs to be ready. Retroactive setup is where compliance problems are born.

Create the Funding Stream

Set up the RHTP grant as a distinct funding source in your chart of accounts. This is not optional, and "we'll track it in a spreadsheet" is not acceptable. Every transaction charged to RHTP must be identifiable, traceable, and separable from your other funding.

If your accounting system uses fund codes, create a fund. If it uses project codes, create a project. If it uses grant codes, create a grant. Whatever your system's architecture, RHTP needs its own silo.

Configure Cost Categories

Federal grants track spending by category: personnel, fringe benefits, travel, supplies, contractual, and indirect costs. Your accounting system needs to produce reports that break expenditures down by these categories — because that is exactly what your quarterly financial reports will require.

Map your existing account codes to the federal spending categories. If your chart of accounts does not support this mapping cleanly, add sub-accounts now. You do not want to be doing manual reclassifications every quarter at reporting time.

Set Up Time-and-Effort Documentation

Every staff member who will charge any portion of their time to the RHTP grant needs a time-and-effort documentation system in place before they start working. Not after. Not "once we get settled." Before.

Under 2 CFR 200.430, charges for salaries and wages must be based on records that accurately reflect the work performed. For employees who work on multiple funding sources — which is nearly everyone in a rural health organization — this means documenting how they split their time across funding sources, based on actual activity.

The requirements are straightforward:

• Records must reflect an after-the-fact distribution of actual activity (not budget estimates)
• Records must account for the total activity for which each employee is compensated
• Records must be prepared at least monthly and must coincide with one or more pay periods
• Records must be signed by the employee or a supervisor with firsthand knowledge of the work

If you do not already have a time-and-effort system, build one now. If you have one for other grants, extend it to cover RHTP. For more on this, see our guide on time-and-effort certification.

Document Your Indirect Cost Rate

You need to know — right now, in writing — what indirect cost rate you are using and on what basis.

If you have a Negotiated Indirect Cost Rate Agreement (NICRA): Confirm that it is current, confirm that the RHTP agreement accepts it, and file a copy with your grant records.

If you do not have a NICRA: You may elect the 15% de minimis rate under 2 CFR 200.414(f). This election must be documented. Write it down, date it, have an authorized official sign it, and file it. The de minimis rate is applied to Modified Total Direct Costs (MTDC), which excludes equipment, capital expenditures, patient care charges, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward exceeding $25,000.

If you are unsure: Figure it out this week. Charging indirect costs without a documented rate basis is one of the fastest paths to an audit finding.

For a deeper treatment of cost allocation under federal awards, see our cost allocation methodology guide.

Day 1-30: Staffing Against the Grant

Most RHTP budgets have personnel as the largest line item. You may be hiring new staff, shifting existing staff, or both. Either way, the compliance requirements start on day one of charging.

New Hires

If you are hiring against the grant, start the process immediately. Recruitment takes time in rural markets, and every month of vacancy is a month of underspending that you will need to explain or reallocate.

Post the positions. Get them into your HR pipeline. And make sure the job descriptions reflect the work described in your grant application — because if an auditor compares the funded position description to the work the person actually does, they need to match.

Existing Staff Reallocations

If you are shifting existing staff to partially work on RHTP, make sure the reallocation is documented. Update their position descriptions. Adjust their time-and-effort documentation to reflect the new funding split. Notify payroll so that the correct percentage of their compensation is charged to the correct funding source.

The Cardinal Rule

Time-and-effort documentation starts the day the person starts charging time to RHTP. Not the day you "get the system set up." Not the day you "get around to it." The day they start.

If an employee works 20 hours on RHTP activities in March but you do not start tracking time until April, those March charges are unsupported. Unsupported charges get disallowed. Disallowed charges get returned to the funder.

Day 30-60: First Reporting Cycle

Your first reporting deadline is coming faster than you think.

Most state RHTP programs require quarterly reports — both financial and programmatic. The financial report is typically an SF-425 (Federal Financial Report) or a state-equivalent form. The programmatic report covers what you actually did with the money.

Financial Reporting

Your first quarterly financial report will cover the first quarter of your grant period. If your grant started on January 1, your first report covers January 1 through March 31, and it is probably due 30 days after quarter-end — April 30.

Here is what first-time sub-grantees get wrong: they assume that if they have not spent much yet, they do not need to file. Wrong. You must file on time, even if you are reporting zero expenditures. A report showing $0 in spending is a valid report. A missing report is a compliance violation.

Your financial report must reconcile to your accounting records. The numbers you report on the SF-425 must match — exactly — the expenditures recorded in your general ledger for the RHTP funding source. This is why you set up proper financial tracking in week one.

Programmatic Reporting

The programmatic report describes what you accomplished during the reporting period. Even in early quarters, there is something to report: staff hired, systems configured, partnerships established, training completed, protocols developed. Do not leave sections blank. If an activity has not started yet, say when it will start and why.

The Most Important Rule

Submit on time. Every time. No exceptions.

Late reports can trigger holds on future payments. Repeated late reports can trigger enhanced monitoring or, in extreme cases, suspension of the award. Treat reporting deadlines with the same urgency as payroll deadlines.

Day 60-90: First Reimbursement Request

If your award uses a reimbursement payment mechanism, you have now been spending money for 60-90 days without receiving any federal funds. Your first reimbursement request is critical — it sets the pattern for every request that follows.

Getting It Right

Your reimbursement request must include:

• Accurate expenditure amounts that match your accounting records
• Proper categorization by federal cost category (personnel, fringe, travel, supplies, contractual, indirect)
• Supporting documentation as required by your agreement (some states want invoices and payroll registers attached; others want them available upon request)
• Correct indirect cost calculations using your documented rate applied to the correct base

Common First-Request Errors

These are the mistakes that delay payment and flag your organization for closer scrutiny:

Charging unallowable costs. Review 2 CFR 200 Subpart E (Cost Principles) and your agreement. Common unallowable costs that sneak onto first requests include alcohol, entertainment, lobbying, fundraising, and fines or penalties. Less obvious: first-class travel, memberships in organizations that primarily lobby, and goods or services for personal use.

Misallocating indirect costs. Applying your indirect rate to the wrong base. If you elected de minimis at 15% of MTDC, make sure you are actually calculating MTDC correctly — excluding the items listed above.

Submitting without supporting documentation. Even if the state does not require you to submit documentation with your request, have it organized and ready. If they ask for backup, you should be able to produce it within 24 hours.

Period errors. Every cost on your reimbursement request must fall within the grant period. Costs incurred before the award start date or after the award end date are unallowable, regardless of how reasonable they might seem.

Ongoing: The Compliance Calendar

Once you survive the first 90 days, grant compliance becomes a rhythm. Here is what that rhythm looks like:

Monthly

• Cost allocation reconciliation. Verify that all costs charged to RHTP are allowable, allocable, and reasonable. Review the general ledger detail for the RHTP fund/project code.
• Time-and-effort record collection. Collect, review, and file time-and-effort records for all staff charging time to RHTP.

Quarterly

• Financial reporting. Submit the SF-425 or state equivalent by the deadline. Reconcile to your general ledger before submitting.
• Programmatic reporting. Submit the narrative progress report by the deadline.
• Reimbursement requests. If reimbursement-based, submit with complete documentation.

Annually

• Single Audit. If your organization expends $1,000,000 or more in federal awards during the fiscal year, you must have a Single Audit conducted in accordance with 2 CFR 200 Subpart F. The RHTP award counts toward that threshold, along with every other federal award your organization receives — including Medicare and Medicaid if applicable under your circumstances.
• Indirect cost rate renewal. If you have a NICRA, confirm it is current. If it expires during the grant period, start the renewal process early.
• Equipment inventory. If you purchased equipment (items over $10,000, or your organization's lower threshold), conduct and document a physical inventory at least once every two years. Maintain records that include description, serial number, funding source, acquisition date, cost, location, and condition.

For a comprehensive view of how these cycles interact with your other obligations, see our guide on managing three fiscal calendars.

What Triggers Audit Findings

If your organization has never managed a federal sub-award before, here are the five findings that auditors identify most frequently in first-time sub-grantees. Every one of them is preventable.

1. No Written Cost Allocation Methodology

You are required to have a written methodology for allocating costs across funding sources. "We just split it evenly" is not a methodology. "We charge what seems right" is not a methodology. A methodology is a documented, consistently applied approach that allocates costs based on the relative benefit received by each funding source.

If you do not have one, write one. If you have one, dust it off and make sure it covers RHTP. See our cost allocation methodology guide for a framework.

2. Time-and-Effort Records Missing or Budget-Based

Budget-based time allocation means you charge 40% of someone's salary to RHTP because the budget says 40%, regardless of whether they actually spent 40% of their time on RHTP activities. This does not comply with 2 CFR 200.430. Charges must be based on actual activity, documented after the fact.

3. Indirect Costs Charged Without a NICRA or De Minimis Election

You cannot charge indirect costs to a federal award without a documented basis. If you have a NICRA, use it. If you do not, elect de minimis at 15% and document the election. If you charge indirect costs without either, every dollar of indirect charged to the award is a questioned cost.

4. Equipment Purchased Without Prior Approval

Under 2 CFR 200, equipment is defined as tangible personal property with a useful life of more than one year and an acquisition cost of $10,000 or more (or your organization's capitalization threshold, if lower). Equipment purchases from federal awards generally require prior written approval from the awarding agency or pass-through entity. Buying first and asking permission later results in a finding.

5. Costs Charged to the Wrong Period

The grant period is not a suggestion. If your award runs from January 1 to December 31, a cost incurred on December 28 of the prior year is not allowable — even if you ordered the item specifically for the grant. Similarly, costs incurred after the grant end date are not allowable, even if they relate to grant activities. Pre-award costs are allowable only if specifically authorized in the agreement, typically up to 90 days before the award start date.

The Braided Funding Trap

If your organization is adding RHTP to an existing portfolio of federal grants, Medicaid reimbursement, and state contracts, you have just created a braided funding environment. This is common in rural health — and it is where compliance gets genuinely complicated.

Braided funding means that multiple funding sources pay for different components of the same service or program. The compliance challenge is ensuring that no cost is charged to two funding sources (supplanting or double-dipping) while every allowable cost finds a home.

This requires:

• A cost allocation methodology that covers all funding sources
• Time-and-effort records that account for all of each employee's time — not just the RHTP portion
• Financial systems that can track and report by funding source
• Staff who understand which costs go where

If this describes your situation, read our guide on the braided funding operations problem. The compliance risks multiply with each additional funding stream, and the time to get your methodology right is now — not during your next audit.

Your First 90 Days: The Preflight Checklist

Before you move on to the programmatic work — the telehealth expansion that got you this funding in the first place — confirm that every item on this list is complete:

• Sub-grant agreement read, summarized, and shared with finance and program staff
• RHTP funding source created in chart of accounts
• Cost categories mapped to federal spending categories
• Time-and-effort documentation system in place for all charging staff
• Indirect cost rate documented (NICRA on file or de minimis election in writing)
• Reporting calendar built with all deadlines
• Staff hiring/reallocation underway with updated position descriptions
• Cost allocation methodology written or updated to include RHTP
• First quarterly report submitted on time
• First reimbursement request submitted accurately and on time

If you can check every box, you are in solid shape. If you cannot, you know exactly what to work on next.

Next Steps

The compliance infrastructure you build in these first 90 days is not busywork — it is the foundation that lets you focus on the actual mission: expanding telehealth access in your community. Get the systems right now, and the ongoing compliance becomes routine. Skip the setup, and you will spend the entire grant period playing catch-up.

Start with the agreement. Set up the tracking. Document everything from day one.

Related Guides

• Cost Allocation Methodology for Federal Awards
• Time-and-Effort Certification Under 2 CFR 200
• Managing Three Fiscal Calendars
• The Braided Funding Operations Problem
• RHTP Tracker: Find Your State's Solicitation Status