Rural Health Transformation Dollars: A Rare Opportunity to Rebuild Behavioral Health Access Where It’s Needed Most
- ecbailly
- 2 hours ago
- 6 min read
Against that backdrop, the Centers for Medicare & Medicaid Services (CMS) announcement of $50 billion in Rural Health Transformation Program (RHTP) awards is more than a funding update. It is a signal. Not that all of rural healthcare’s problems are solved, but that the federal government is, at least temporarily, willing to invest in structural change, not just short-term relief. The question now is not whether these dollars matter. The question is how states choose to use them and whether behavioral health is truly embedded in those choices.
What CMS Is Actually Asking States to Do
At first glance, the CMS announcement emphasizes familiar priorities: chronic disease, obesity, diabetes, maternal health, and care coordination. But a closer look reveals something more important. CMS is not simply funding programs. It is funding systems.
States were asked to propose transformation strategies that:
Strengthen rural healthcare delivery over multiple years
Improve coordination across providers, payers, and community organizations
Address access barriers driven by workforce shortages and geography
Demonstrate measurable improvements in outcomes, not just activity
In practice, that means states that succeed will be those that understand a basic truth:
Rural health outcomes cannot be improved without addressing behavioral health.
Depression, substance use disorders, trauma, and social instability are not side issues. They are drivers of avoidable hospitalizations, poor chronic disease control, maternal complications, and workforce disengagement. CMS does not always say “behavioral health” in bold letters, but it is woven throughout the expectations.
Why Funding Levels Alone Don’t Tell the Full Story
Early analysis of the first-year RHTP awards shows wide variation in funding levels when measured on a per-rural-resident basis. Some states received less than $100 per rural resident. Others received more than $500. That variation has sparked understandable concern, and some frustration. But the more important distinction isn’t how much money a state received. It’s how intentionally that money is being deployed.
RHTP dollars will not fully replace looming Medicaid reductions, workforce losses, or hospital closures. CMS has been clear about that. What these dollars can do is help states:
Build durable care models that survive beyond the grant period
Test integration strategies that are difficult to fund through fee-for-service
Align behavioral health, primary care, and community supports under a shared strategy
Kentucky offers a useful example of what that can look like.
Kentucky: Using Chronic Disease as a Doorway to Behavioral Health Integration
Kentucky’s Rural Health Transformation strategy does not market itself primarily as a behavioral health initiative. Instead, it frames transformation around chronic disease management, maternal health, and community-based prevention.
That framing is intentional, and smart. Rather than treating behavioral health as a parallel system, Kentucky embeds it within Rural Community Hubs designed to coordinate care across medical providers, managed care organizations, community-based organizations, and local public health infrastructure.
Within that model:
Community health workers and peer-oriented roles support self-management, navigation, and engagement
Technology-enabled referral pathways connect physical health, behavioral health, and social supports
Maternal and infant health strategies incorporate behavioral health screening, support, and continuity of care
Prevention and chronic disease efforts are grounded in real community capacity, not just clinic visits
This is what integration looks like when it is taken seriously. Behavioral health is not siloed. It is part of how communities stabilize health, reduce avoidable utilization, and support long-term recovery.
A National Pattern Is Emerging
Kentucky is not an outlier. When you look across other states’ RHTP strategies, a clear pattern emerges, even when behavioral health is not the headline.
Minnesota: Distance, Workforce, and Access
My home state of Minnesota’s strategy acknowledges what many rural residents already know: distance is a clinical barrier. Rural Minnesotans often travel significantly farther for inpatient mental health and substance use treatment, while facing persistent workforce shortages.
The state’s RHTP approach focuses on:
Expanding access points through technology and community-based models
Addressing opioid and behavioral health needs outside the twin cities metro area
Supporting workforce pathways that make rural practice viable
This is behavioral health expansion by addressing the realities of geography.
California: Integration Over Duplication
California explicitly recognizes gaps in rural behavioral health capacity, including uneven access to Certified Community Behavioral Health Clinics (CCBHCs).
Rather than duplicating existing behavioral health funding streams, California uses RHTP dollars to:
Strengthen integration between primary care, maternal health, and behavioral health
Expand consultative and tele-behavioral health supports for rural providers
Improve access without requiring every rural county to build standalone specialty infrastructure
This is behavioral health expansion through smarter system design.
Montana: Building the Crisis Continuum
Montana’s plan is among the most direct in naming behavioral health needs. It focuses heavily on:
Community- and school-based behavioral health access
Expansion of crisis stabilization capacity
Statewide infrastructure like behavioral health bed registries
Workforce retention, including addressing provider burnout
Here, behavioral health is not an add-on. It is the transformation strategy.
West Virginia: Health, Recovery, and Workforce Participation
West Virginia explicitly ties addiction and mental health to workforce participation and economic recovery. Its RHTP strategy frames behavioral health as essential to helping people re-enter and remain in the workforce, particularly in rural communities hardest hit by substance use and chronic disease. This is behavioral health expansion as economic development.
What This Means for Providers, Payers, and Communities
Rural Health Transformation dollars create an unusual window of opportunity, but only if stakeholders understand what CMS is actually rewarding.
This is not about:
Launching disconnected pilot programs
Chasing short-term volume
Treating behavioral health as a compliance requirement
It is about:
Designing integrated models that blend physical health, behavioral health, and social supports
Aligning workforce strategies with reimbursement realities
Using data and technology to close referral loops and demonstrate impact
Building care models that remain viable after grant dollars sunset
For behavioral health providers in particular, RHTP represents a chance to move upstream and to become foundational partners in chronic disease management, maternal health, workforce re-entry, and community resilience.
A Final Thought
Rural communities have never lacked innovation. What they have lacked is sustained investment in systems that reflect how health actually happens.
The Rural Health Transformation Program does not fix everything. But it does something important: it invites states, providers, and communities to rethink how care is organized, and to finally acknowledge that behavioral health is not separate from rural health. It is central to it.
At NorthStar Behavioral Health Advisory, we work with organizations navigating this exact moment, helping them align policy, payment, data, and lived experience to build integrated systems that last. Because transformation is not about the dollars alone. It’s about what we design with them.
How NorthStar Behavioral Health Advisory Can Help
Rural Health Transformation dollars create opportunity, but opportunity alone does not produce impact. States, providers, and community organizations are being asked to move faster, coordinate more deeply, and demonstrate outcomes in an environment shaped by workforce shortages, tightening Medicaid margins, and growing behavioral health need. This is where NorthStar Behavioral Health Advisory works best. We support organizations that are trying to move beyond isolated programs toward integrated health and social systems that actually function in rural and underserved communities. Our work sits at the intersection of clinical practice, payer strategy, data analytics, and lived recovery experience.
Specifically, we help organizations:
Translate policy into operational strategy
Federal and state transformation initiatives are often written at a level that feels abstract to frontline organizations. We help teams understand what CMS and state agencies are truly prioritizing, and how to design service models that align with those expectations while remaining grounded in local reality.
Design behavioral health integration that payers will support
From Medicaid managed care to Medicare Advantage and commercial plans, we help organizations structure behavioral health services in ways that align with payer contracting, quality incentives, and value-based payment models rather than relying solely on grant funding.
Align data, outcomes, and reimbursement
Transformation requires more than good intentions. We work with organizations to leverage claims data, performance metrics, and operational analytics to demonstrate impact, improve contract execution, and strengthen reimbursement integrity across integrated service models.
Build sustainable workforce and community-based care models
Whether through peer support, community health workers, crisis response infrastructure, or technology-enabled care, we help organizations design workforce strategies that are realistic for rural settings and sustainable beyond time-limited funding.
Center equity and lived experience in system design
Effective transformation requires more than structural change. It requires trust. We bring both clinical licensure and lived recovery experience to help organizations design systems that are accessible, culturally responsive, and aligned with the real needs of the communities they serve.
Rural Health Transformation funding represents a moment to rethink what behavioral health can be not as a silo, but as a core driver of community health, economic stability, and long-term resilience. NorthStar Behavioral Health Advisory exists to help organizations navigate that moment with clarity, credibility, and purpose.
Reach out to eric@northstarbhadvisory.com to learn more about how we can help you and your organization reach its full potential.