Arizona Rural Health Transformation Program (RHTP)

Investing in healthier rural communities across Arizona

Governor Hobbs is working to bring better health care to rural communities – closer to home, easier to access, and built to last.

Through the Rural Health Transformation Program (RHTP), Arizona applied for $200 million in federal funds each year for 5 years to improve health care access, grow the rural health workforce, and strengthen rural health systems through 2030.

This effort focuses on the nearly 800,000 Arizonans who live in rural and Tribal communities and often face long travel times for care, fewer providers, and higher rates of chronic disease.

What is the Rural Health Transformation Program?

The RHTP is a nationwide initiative created under the One Big Beautiful Bill Act (H.R.1). Led by the Centers for Medicare & Medicaid Services (CMS), it will provide $50 billion in competitive grants nationally over five years to help states improve rural health care. RHTP supports practical, long-term solutions like telehealth and mobile care expansion, workforce training, service delivery modernization, and improvements to system coordination and patient continuity of care. These improvements will help rural communities access the care they need and reduce avoidable emergency department visits and hospitalizations.

Arizona’s Plan

Governor Katie Hobbs designated the Arizona Health Care Cost Containment System (AHCCCS) as the lead agency to apply for and administer RHTP funding.

On November 5, 2025, Arizona submitted its application to CMS after extensive collaboration with key stakeholders, including:

Rural doctors, nurses, and hospitals
Health care plans
Tribal leaders; and
Community-based organizations

Arizona’s Priorities

Arizona’s RHTP proposal focuses on four strategic goals:

Make health care easier to access in rural and tribal communities;
Grow and support the rural health workforce;
Improve care through technology and innovation; and
Strengthen rural health system so providers can stay open and sustainable

These efforts are designed to improve health outcomes while making care more affordable and reliable.

On December 29, 2025, CMS issued a Notice of Award, confirming Arizona’s allocation of $166,988,956.00 for fiscal year 2026. This funding will support Arizona’s rural health transformation plan, which is designed to address real community needs and deliver practical solutions for rural Arizona. The state is committed to successfully implementing the RHTP award and achieving long-term impact through 2030 and beyond.

How the Program Will Roll Out

Year 1 (2026): Build and Launch

The first year will focus on setting up the program and launching key initiatives including:

Establishing a central RHTP Program Office and hiring key staff to build the program and ensure coordination, accountability, and compliance
Releasing fund opportunities and contracts; and
Selecting and contracting with partners across the state

Years 2 through 5: Deliver Results

From 2027 through 2030, Arizona will:

Implement initiatives and improve service delivery across rural communities
Track progress and outcomes
Regularly engage stakeholders and drive continuous improvement of programs based on data and feedback; and
Report to CMS and the public

Key Initiatives

Rural Health Workforce Training and Development Program
Lead Agency: Governor’s Office of Economic Opportunity

Arizona will expand and strengthen the rural health care workforce pipeline by:

Expanding rural clinical rotations, residency slots, and accelerated education programs, prioritizing rural students and hard-to-fill specialties
Expanding clinical training capacity and specialty training programs to upskill rural health professionals; and
Providing financial incentives tied to five-year rural service commitments to support provider recruitment, well-being, and retention

Why this matters: More trained providers mean a stronger, more reliable health system.

Priority Health Initiatives Grants Portfolio
Lead Agency: AHCCCS and Arizona Department of Health Services (ADHS)

Targeted funding to address the most urgent health needs in rural Arizona:

Behavioral health and substance use services ($10 million per year)
Maternal and Infant health ($5 million per year)
Chronic disease prevention and treatment ($12 million per year)

Why this matters: Early detection and prevention lead to healthier families and lives saved.

Making Rural Healthcare Accessible
Lead Agency: AHCCCS

These investments focus on reducing barriers to care by:

Expanding telehealth services and deploying mobile units and satellite sites for primary, specialty, emergency, and preventative care to reach remote communities
Providing grants to modernize service delivery and expand clinical capabilities through piloting innovative care and alternative payment models; and
Improve care coordination by investing in secure, modern digital health systems that allow rural patients and providers to share information and facilitate patient-centered care

vWhy this matters: Arizonans will have access to the right care, at the right time, with fewer missed appointments and close to home.

Making Rural Healthcare Resilient
Lead Agency: AHCCCS

This initiative helps rural providers stay open and strong by supporting:

Upgrades to medical technology and equipment to improve service delivery and expand clinical capabilities
Create a rural provider liaison pilot program within AHCCCS, the Arizona Department of Insurance and Financial Institutions (DIFI), and the Arizona Department of Health Services (ADHS). These liaisons will focus on providing navigation for rural providers, reducing administrative burden, streamlining provider credentialing, and coordinating compliance activities
Core operating costs for rural clinics and hospitals transitioning to co-located facilities and shared back-office services to simplify care delivery and reduce overhead costs
Delivering technical assistance to rural health care providers to improve operational performance, efficiency, and viability

Why this matters: Stronger, more resilient providers mean reliable care for rural communities now and in the future.

What’s Next?

On December 29, 2025, Arizona received its official Notice of Award for $166,988,956.00 for fiscal year 2026 from CMS. The state is actively engaging with CMS to advance next steps.

The Notice of Award included a request for a downward budget modification, as Arizona’s FY26 funding allocation was lower than the state requested. Arizona has submitted a public records request to gain insight into the scoring and evaluation methodology used to determine the allocation.

Arizona anticipates feedback from CMS in early January and will submit a revised budget by January 30, 2026.

Staying Connected

Arizona is committed to transparency and collaboration throughout RHTP implementation, including:

Ongoing stakeholder engagement, with listening sessions, advisory groups, and regular updates
Community-centered implementation, including programs led by agencies with strong rural experience
Clear accountability, encompassing regular reporting and public updates on progress

Resources

Questions regarding Arizona’s RHTP proposal can be sent to INSERT APPROPRIATE EMAIL