March 30, 2026

One Big, Beautiful, “Historic” Opportunity: The Impact of the Rural Health Transformation Program in Tennessee

Allyson E. Lynch Butler Snow LLP + Follow Contact LinkedIn Facebook X Send Embed

In late December 2025, the Centers for Medicare & Medicaid Services (CMS) announced Tennessee would be awarded $206.9 million as part of President Trump’s Rural Health Transformation Program (RHTP). The President’s RHTP is an initiative authorized under the One Big Beautiful Bill Act that promises to allocate $50 billion nationwide over the next five federal fiscal years (FFYs) to modernize, expand, and support rural healthcare.

Tennessee’s RHTP Application, which was submitted in early November 2025, focuses on bringing “better care closer to home” through investment in five key areas:

• Expanding Care Access and Capacity: Co-locating services, expanding telehealth services, addressing transportation needs, and expanding value-based care models to reduce fragmentation and improve access.
• Maternal and Child Health: Improving continuity of care before, during, and after pregnancy and addressing high maternal and infant morbidity and mortality in rural Tennessee.
• Prevention and Community Health: Expanding the impact of community-driven, prevention-focused initiatives that address chronic disease and social drivers of health.
• Health Technology and Infrastructure: Modernizing and improving care coordination, quality, and access through utilizing technology that eases provider burden and closes gaps in service delivery.
• Workforce Development: Recruiting, training, and retaining a skilled rural healthcare workforce. A key component of actualizing these goals will be supporting service providers through competitive funding opportunities. These opportunities will be administered through the Tennessee Department of Health. Rural hospitals and health systems, Federally Qualified Health Centers (FQHCs), non-profit organizations, community-based organizations, and other eligible healthcare partners registered with the State of Tennessee may apply for this reimbursement-based grant program. At this time, there are no fixed budget maximums, and entities may apply for more than one Healthcare Resiliency Program (HRP) opportunity.

To kick off the discussion, the Department of Health recently announced an information session and overview that will be held on Tuesday, March 31, 2026, at 10 am CT. In the webinar, the Department will provide a high-level overview of Tennessee’s vision for rural health transformation, highlight how upcoming funding opportunities align with the state’s broader strategy, and discuss next steps for applying for funds. Registration for the webinar can be found here.

With the $206.9 million meant to fund projects through October 30, 2026,* entities interested in applying should anticipate that the time to submit applications for funding will be expeditious, particularly compared to traditional grant opportunities. Investing time in coordinating with potential partners, planning initiatives, and considering how to ensure your application stands out is critical to being prepared when these opportunities become available.

There are several components to be mindful of when preparing for the application process to ensure the one you submit is as competitive as possible, including:

• While there are currently no budget maximums for the HRP opportunities, potential applicants should consider impact, scale, and feasibility. Initiatives with a broad impact and the ability to scale over the next several years will position themselves well.
• Rural Health Transformation funding lasts five years, but Tennessee is looking to invest in programs that are viable long-term and will create an impact that lasts for decades.
• Innovative care models and payment strategies that improve outcomes, coordinate services, and shift care to more efficient, cost-effective settings are the goal.
• There are several program limitations and unallowable costs, including funding for new construction, building purchases, cosmetic building upgrades, provider payments, and independent research and development. Applicants should ensure they are familiar with application limitations. As Tennessee Governor Bill Lee has expressed many times this year, “This is a historic investment in rural Tennessee and a major win for Tennessee families who deserve access to better care closer to home. From expanding access to care to strengthening our rural health workforce, this funding builds on the work we’ve done and positions Tennessee as a national leader in rural healthcare transformation.”

Aspiring applicants are encouraged to research and analyze more specific details and requirements to put themselves in the best position possible. The Tennessee Government Relations Team is working closely with the Governor’s Office, Department of Health, and General Assembly on the implementation of RHTP.

• The spending deadline for the first budget period is September 30, 2027.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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