Awards for the Rural Health Transformation Fund (RHTF) were released on December 29, 2025, and state applications with proposals for the funds have been made public, covering a range of activities aiming to increase access to care, develop infrastructure, and enhance workforces. As we’ve written about previously, community health workers (CHWs) are a critical workforce connecting individuals and communities to needed services, improving health literacy, and building trust with health systems. According to the National Academy of State Health Policy, CHW-related initiatives were included in 32 states’ RHTF applications. Cross-walking these states with Medicaid reimbursement for CHW services, either via SPA or 1115 waiver, reveals that ten states (AK, CT, IA, ID, NE, NH, OH, SC, TN, WI) do not currently reimburse for CHW services. Ideally, states can leverage this as an opportunity to build a foundation for reimbursement, such as by measuring return on investment or developing SPA language. Two states are explicitly heading toward Medicaid reimbursement according to their RHTF application, with a third state indicating movement in that direction:
- Nebraska by stating “Obtain legislative authority for State CHW certification; Implement by CY2026-2027. Create a Medicaid SPA to reimburse defined CHW services (e.g., education, navigation, integration/coaching); Submit no later than Q4 2027,”
- Wisconsin by stating “DHS will commission a study to measure the effectiveness and efficiency of CHW integration. The study will inform development of a Medicaid state plan amendment to sustain services. Grantees will be required to participate in the study to demonstrate the impact and scope of CHW services,” and,
- Tennessee signals movement by stating “RHT[F] funds will support rural providers to launch evidence-based CHW programs, obtain accreditation, and receive short-term bridge support while TennCare explores sustainable reimbursement pathways for CHW services.”
Other uses of the new federal funds include developing career pathways and other training programs for CHWs (21 states), seeking legislative authority for a state CHW certification program (NE), and some maternal health initiatives. For example, North Carolina is planning to use the RHTF awards to “train and certify doulas for rural deployment and integrate them with CHWs to provide culturally appropriate perinatal support in rural communities,” and Massachusetts is planning to implement a Rural Maternal Health Continuum of Care Project, which includes training rural doulas and specialized CHWs.
Community health workers’ services have been shown to have a significant impact on patient populations, including rural populations, while saving money for the healthcare system as a whole. However, community health workers must often work on short-term grants and have only recently been able to have their services reimbursed by Medicare. While the RHTF is a fairly generous, medium-term grant, this funding will no longer be available by 2031. Thus, leveraging this opportunity to plan for the sustainability of CHW services through Medicaid is a smart use of the funds.
However, the Trump administration unilaterally imposed a 15% cap (full announcement, p. 19) on state spending for direct patient care programs with RHTF funds despite this limit not appearing in the legislation creating the RHTF. This limitation applies to all “provider payments,” which the administration defines as “payments to health care providers for the provision of health care items or services” (full announcement, p. 11). Our interpretation of this provision is that some of the CHW initiatives outlined in state applications would be subject to the cap, but some would not. For example, training and recruitment activities and effectiveness studies are likely exempt from the cap, but hiring new CHW providers to provide direct patient services would fall under the cap. So, not only is obtaining funding for rural health efforts involving CHWs beyond the five-year program limit challenging, the additional low limitation on the use of RHTF funding for the provision of health care services adds another impediment to state efforts to protect access to care for rural residents.
The legislation that created the RHTF, formerly known as the “One Big, Beautiful Bill” and now referred to as H.R.1, included the largest cuts in Medicaid’s history, both through financing changes and restrictions on eligibility. The Medicaid cuts and anticipated increase in uninsured residents in rural areas will make it harder for patients to pay bills and impact the finances of rural health providers, risking the closure of rural hospitals or other services. Additionally, problems still remain for this effective workforce with Medicaid reimbursement due to low reimbursement rates, a particular issue for rural health as Medicaid does not reimburse CHW’s for their transportation time or costs who are often required to travel long distances to meet their patients.
CHWs are an effective workforce that can and do make important contributions to the provision of healthcare in rural areas. Their role will become even more important as loss of Medicaid coverage will impact rural areas significantly as a result of the permanent Medicaid cuts in H.R.1. However, the RHTF funding, while not sufficient to replace the federal cuts to Medicaid that affect rural areas, can be used over its five-year lifespan in ways to improve other aspects of rural health. Improvement of the system of care is an important part of improving rural health, so strengthening the CHW workforce and taking steps toward Medicaid reimbursement of CHW services are two beneficial uses of the funds for long-term system improvements.