States face an unprecedented timeline presented by the Centers for Medicare and Medicaid Services (CMS) in developing a comprehensive approach to Rural Health Transformation (RHT) Program projects emphasizing state-wide improvements across rural workforce, care delivery, and health infrastructure. Many states worked to develop project narratives and budgets that were responsive to both the community needs statewide and the federal requirements laid out in both the One Big Beautiful Bill Act (OBBBA) and CMS’s RHT Program Notice of Funding Opportunity (NOFO).
The timelines established through the program leave little room for delays or deviation, particularly given requirements for states to obligate and assess funding on an annual basis. Funds must be obligated during the active budget period, with a September 30, 2026, spending deadline, Budget Period 1 closing October 30, 2026, and Budget Period 2 beginning October 31, 2026 (OBBBA, Section 71401). These requirements place significant pressure on states to maintain compliance while moving quickly to implement complex initiatives.
This post outlines key timelines in the RHT Program reporting process, safeguards designed to protect states’ dedicated funding, and how Hagerty has helped clients navigate similar programs and establish a path forward.
Timelines for Success: Reporting
The month of August is critical for states to remain eligible to continue receiving funding for subsequent budget periods. Hagerty is aware that many states are still releasing Requests for Application (RFAs) to select projects that will drive funds in Fiscal Year (FY) 2026 and in future FYs, with many awards announced before end of the month. We have mapped the following reporting needs and guidelines based on annual vs quarterly reporting:
| Key Components | Annual Reporting | Quarterly Reporting |
| Due Dates | Due 60 days before the end of the budget period – by end of August each FY; a large, final report will be due February 27, 2031, following program end | 30 days after the following periods: August 1-October 1, October 31-January 30, January 31-April 30; no report will be due May 1-July 31 to reduce administrative burden/leading up to annual reporting |
| First Report Due | August 30, 2026, summarizing 7-month period of FY26 | November 29, 2026, summarizing August 1-October 30 activities |
| Timeframe Covered | Subsequent reports cover 12 months; final report will contain all activities accomplished from FY2026-2031 | Each report covers only the relevant quarter; no cumulative reporting |
All reports shall be submitted in GrantSolutions, with current submissions in an Excel template and future submissions through a web-based reporting tool. Within these reports, states are encouraged to report on Initiative Progress, inclusive of milestones and metrics laid out in the initial project narrative, as well as State Policy Actions, including policy advancements such as links to State websites and press releases. These areas will be the main drivers of rescoring undertaken by CMS.
Rescoring and Mitigating Potential Clawbacks
States should also consider the following actions during this time:
- Redistribution of Unobligated Funds. This is the nearest-term risk and the only one that requires no finding of fault. A State’s authority to obligate funds — including committing them to a contract or subaward — exists only during the active budget period. Once that period closes, remaining unobligated funds cannot be committed or spent, are ultimately classified as unexpended at the end of the spending window, and are redistributed by CMS to other states under 42 U.S.C. 1397ee(h)(1)(B). The statute directs the Administrator to make these redistribution determinations beginning no later than March 31, 2028, and annually thereafter through March 31, 2032. A State that performs a deliberate, well-documented procurement past its obligation deadline loses the money anyway. Speed is the defense here, and it is the reason the current RFA cycle matters so much.
- Annual Rescoring. Rescoring does not recover money already awarded; it resets a State’s share of future workload funding. CMS completes rescoring in the September–October window following each annual report, with initiative-based and policy-action factors recalculated each budget period while data-driven factors remain fixed. Documentation quality is the defense here, and two features deserve more attention than they typically get:
- Rescoring is relative: Scores are reassessed annually based on progress toward milestones and policy commitments, meaning a state’s share can shift based not only on its own performance, but also on how other states perform. A state can execute effectively and still lose ground relative to its peers.
- The first year understated the stakes: Initiative-based factors carried only 50 percent weight in the first year, while baseline funding was distributed equally among states. Beginning in FY27, performance will play a greater role in funding allocations, creating more meaningful differentiation among states.
- Recovery for Misuse of Funds. This is the mechanism that most closely reflects a “clawback.” Under OBBBA Section 71401, if a state does not use its funding as described in its approved application, the CMS Administrator may withhold or reduce future payments or require the state to return funds it has already received. The key issue is not how quickly a state spends its funding, but whether it uses those funds as approved. Staying aligned with the state’s revised project narrative and budget is therefore critical to avoiding potential clawbacks. Sticking closely to the revised project narrative and budget is the defense here.
Hagerty Can Help
Our team has supported clients through the full lifecycle of grant funding, including project planning and grant readiness, grant research, application development, and grant management. We also understand procurement under compressed timelines, drawing on extensive work supporting emergency preparedness and response activities, where obligation deadlines and federal documentation standards are routine conditions rather than exceptions.
At the state level, we support award administration by helping states meet CMS requirements and prepare for annual scoring. This includes developing documentation to demonstrate progress against key milestones, establishing procurement and subaward processes that meet federal requirements, and managing projects to keep agreements and funding on track ahead of obligation deadlines. We also help states establish processes to oversee subrecipients and ensure they meet federal requirements, including reporting obligations.
At the subrecipient level, these same requirements often fall on organizations with fewer resources and less experience managing federal grants. Hagerty helps rural hospitals, health systems, community-based organizations, and local health departments turn funding into actionable programs. This can include establishing governance and project management structures, developing work plans and milestone schedules, defining performance measures, and maintaining the documentation states need to demonstrate progress to CMS. For initiatives involving workforce development, changes to care delivery, telehealth expansion, or electronic health record (EHR) and health information technology (IT) modernization, we provide implementation planning and program management support to keep projects moving forward.
Across both levels, we help clients meet CMS grant requirements, including Uniform Guidance, allowable costs and uses of funds, procurement standards, subrecipient monitoring, and records retention. The goal is straightforward: help states and subrecipients move quickly enough to meet funding deadlines while maintaining the documentation and compliance necessary to protect their awards.