RHTP Funding Guidance

Public Law 119-21, Section 71401 created a new Rural Health Transformation grants program administered by the Centers for Medicare and Medicaid Services (CMS), allocating $50 billion nationwide from federal fiscal years 2026 through 2030 — $10 billion annually. Funds will flow through states, which must submit a Rural Health Transformation Plan to CMS by Dec. 31, 2025, to access and manage these resources.

In the fall of 2025, North Dakota (ND) Health and Human Services (HHS) collected stakeholder feedback through statewide listening sessions and surveys. This information was compiled into an application that was submitted to CMS. ND HHS’s RHTP application was approved by CMS. RHTP funds must be used to carry out the submitted application plan.

1. Budget Template Guidance

The ND HHS-provided Excel budget template must be used to complete an itemized budget. Two versions of the itemized budget template exist: subrecipient and consultant/contractor. Please refer to the solicitation guidance to identify which budget template should be used.

A completed budget should demonstrate a high-level overview of the proposal. Each ND HHS approved budget is submitted to CMS for approval for the use of funds. In addition to the budget, CMS requires additional information to approve consultants/contractors and subrecipients. For consultants/contractors, this includes nature of services to be rendered, relevance of service to the project, number of days of consultation and method of accountability. For subrecipients, this includes period of performance, scope of work and method of accountability. This information must be included on the cover page of a completed budget.

CMS has guidance for applying for CMS grants. ND HHS encourages all applicants to use this information to develop an accurate and complete budget. This guidance was written by CMS for states’ use; however, the budget narrative descriptions for personnel, fringe benefits, travel, equipment, supplies and consultant should be used to develop subrecipient and contractor budgets for North Dakota’s RHTP.

Format

  • The Excel budget template should be downloaded, edited, saved and then submitted. Whenever possible, applicants are encouraged to use Microsoft Excel when editing the budget template.
  • A complete budget should be submitted in Excel format, which expedites the budget review and adjustment process.
  • When using the budget template, please do not manipulate column widths or merge cells. To ensure all text fits and is visible, text wrapping should be used.
  • All answers should be typed. Please do not paste pictures into the budget template.

Building the Budget

Complete all sections of the budget template including the cover tab, budget tab and Lease vs. Purchase tab.

Cover Tab

  • The cover tab includes information required by CMS and should be completed as a high-level overview of the narrative. As a reminder, please do not reference the narrative in the Excel budget template.
  • Provide detailed but concise information from the proposal.
  • Each question on the Excel budget template must be answered and cannot reference responses in the narrative or other documentation.

Budget Tab

Identify the costs by major category:

  • Personnel
  • Fringe Benefits
  • Travel, Food & Lodging (In-State)
  • Travel, Food & Lodging (Out-of-State)
  • Supplies (Medical/Laboratory, Office, Educational)
  • Rent/Utilities
  • Telephone, Internet
  • Postage, Printing
  • Information Technology
  • Equipment (>$10,000 per item)
  • Capital Improvements/Construction
  • Consultant, Contractual, Sub-Grantees
  • Other (examples include indirect costs, administrative costs)

For each cost, include a clear description of the cost, total cost for each item and a clear justification for each cost.

  • The CMS guidance can be used to identify information needed for the personnel, fringe benefits, travel, equipment, supplies and consultant costs.
  • Costs must be itemized, meaning each cost item is indicated separately. Multiple units of the same item can be grouped together. For each cost item, indicate the cost of a single unit, the total units requested and the total dollar amount.
  • Justifications must include a description of the cost and explanation of the link to the scope of work and program objectives. Justifications must also include the methodology for how the rate was determined, including comparable market rates, organization policy or vendor quotes.
  • The match column is for subrecipient and contractor use. A match is not required for subrecipients and contractors for the RHTP; however, a match can be included in the budget if the organization plans to use other funding sources for an identified cost. Organizations may choose to include a match as part of a sustainability plan.
  • Costs included in the personnel, fringe benefits and travel sections should only include applicant costs. Costs relating to consultant, contractual and sub-grantee personnel, fringe benefits and travel should be included in the consultant, contractual and sub-grantee costs. This is indicated in the CMS guidance.

Lease vs. Purchase

  • This tab must be completed for equipment purchases. Equipment purchases are those over $10,000.
  • If multiple equipment purchases are included in the budget, a copy of the Lease vs. Purchase tab should be completed for each equipment request.

 

2. RHTP Cost Guidelines

CMS included unallowable and limited costs in the Rural Health Transformation Program Notice of Funding Opportunity. All subrecipients and contractors of ND HHS’s RHTP must follow CMS’s requirements.

Please note: In addition to the RHTP unallowable and limited costs, each solicitation has specific allowable and unallowable uses and costs.

Unallowable Costs

  • Pre award costs
  • Meeting match requirements for any other federal funds or local entities.
  • Services, equipment, or supports that are the legal responsibility of another party under federal, state, or tribal law, such as vocational rehabilitation or education services.
  • Services, equipment, or supports that are the legal responsibility of another party under any civil rights law, such as modifying a workplace or providing accommodations that are obligations under law.
  • Goods or services not allocable to the project.
  • Supplanting existing state, local, tribal, or private funding of infrastructure or services, such as staff salaries.
  • Construction or building expansion, purchasing or significant retrofitting of buildings, cosmetic upgrades, or any other cost that materially increases the value of the capital or useful life as a direct cost.
  • The cost of independent research and development, including their proportionate share of indirect costs. See 2 CFR 300.477.
  • Funds related to any activity designed to influence the enactment of legislation, appropriations, regulation, administrative action, or executive order.
  • Purchase of covered telecommunications and video surveillance equipment (See 2 CFR 200.216) as well as financial assistance to households for installation and monthly broadband internet costs.

Meals, unless in limited circumstances such as:

  • Subjects and patients under study.
  • Where specifically approved as part of the project or program activity, such as in programs providing children’s services.
  • As part of a per diem or subsistence allowance provided in conjunction with allowable travel.

Activities prohibited under 2 CFR 200.450 and the HHS Grants Policy Statement, including but not limited to:

  • Paying the salary or expenses of any grant recipient, or agent acting for such recipient, related to any activity designed to influence the enactment of legislation, appropriations, regulation, administrative action, or executive order proposed or pending before the Congress or any state government, state legislature, or local legislature or legislative body.
  • Lobbying, but awardees can lobby at their own expense if they can segregate federal funds from other financial resources used for lobbying.
  • New construction is unallowable. Supplanting funding for in-process or planned construction projects or directing funding towards new construction builds is unallowable.
  • To replace payment for clinical services that could be reimbursed by insurance. CMS will not accept payments to clinical services if they duplicate billable services and/or attempt to change payment amounts of existing fee schedules.
  • Funding cannot be used for initiatives that fund certain cosmetic and experimental procedures that fall within the definition of a specified sex-trait modification procedure at 45 CFR 156.400 because that is beyond the scope of this program.
  • Clinician salaries or wage supports for facilities that subject clinicians to non-compete contractual limitations.
  • None of the funding shall be used by the state for an expenditure that is attributable to an intergovernmental transfer, certified public expenditure, or any other expenditure to finance the non-Federal share of expenditures required under any provision of law.

Limited/Capped Costs

  • Category J funding cannot exceed 20% of the total funding CMS awards states in a given budget period. Category J is capital expenditures and infrastructure. This indicates investing in existing rural healthcare facility buildings and infrastructure, including minor building alterations or renovations and equipment upgrades to ensure long-term overhead and upkeep costs are commensurate with patient volume, subject to restrictions in the funding policies and limitations.
  • Funding for provider payments, as described in category B of the program requirements and expectations use of funds section, cannot exceed 15% of the total funding CMS awards states in a given budget period. Category B costs are provider payments. This indicates providing payments to healthcare providers for the provision of healthcare items or services, subject to restrictions described in the funding policies and limitations.
  • No more than 5% of total funding CMS awards to a state in a given budget period can support funding the replacement of an EMR system if a previous HITECH certified EMR system is already in place as of September 1, 2025.
  • Funding towards initiatives similar to the “Rural Tech Catalyst Fund Initiative” (as described in the appendix) cannot exceed the lesser of (1) 10% of total funding awarded to a state in a given budget period or (2) $20 million of total funding awarded to a state in a given budget period, and funding is subject to all restrictions and requirements described in the example initiative.
  • The salary rate limitation in the current appropriations act applies to this program. As of January 2025, the salary rate limitation is $225,700.
  • Administrative costs (including direct and indirect) cannot exceed 10%.

Administrative Costs

There are two types of administrative costs: direct and indirect. These are defined in 2 CFR 200.1 & 2 CRF 200.412–2 CFR 200.414.

  • Direct costs are specifically identifiable to the federal award. They are tied to developing, planning or implementing a project. Direct costs are specifically identifiable to a project task or activity.
  • Indirect costs are organization-wide expenses that support overall operations and cannot be readily assigned to a single project. They include costs such as accounting, human resources, executive leadership or shared information technology support. These costs must generally be recovered through an approved indirect cost rate (or the 10% de minimis rate), rather than charged directly to a federal award.

Allowable Costs

  • Minor renovations or alterations are allowed if they are clearly linked to program goals. Please see Capital Expenditures for additional details.
  • Direct healthcare services may be allowable with justification of why they are not already reimbursable, how the payment will fill a gap in care coverage (such as uncompensated care or services not covered by insurance), and/or how they transform the current care delivery model.
  • RHTP funds can be used to purchase a new or used vehicle to fulfill objectives of ND’s RHTP. Vehicle purchase requests will be reviewed on a case-by-case basis by ND HHS and CMS and approval is not guaranteed. The order must be placed by the obligation deadline. Delivery must occur by the liquidation deadline.

3. Capital Expenditures

CMS RHTP Capital Expenditures and Infrastructure Fact Sheet

Category J funds are defined as costs for capital expenditures and infrastructure. Investments in existing rural healthcare facility buildings and infrastructure, including minor building alterations or renovations and equipment upgrades to ensure long-term overhead and upkeep costs are commensurate with patient volume are subject to restrictions in the funding policies and limitations.

There is a 20% spending cap on Category J funds, meaning expenditures under this category cannot exceed 20% of a state’s total award per budget period.

Capital expenditures and infrastructure costs cannot include:

  • Expansion, additions, or increases in square footage that cause a significant and substantial rise in property value or extend useful life.
  • Demolition activities.
  • Cosmetic improvements (painting, carpet upgrades, artwork, décor that enhances visual appeal without altering core structure).
  • Construction (new builds, breaking ground) is entirely unallowable under this grant program.
  • Replacement for expenditures already planned or obligated through other funding sources.

Capital expenditures and infrastructure costs must be identified as allowable within a North Dakota RHTP solicitation (funding opportunity or request for proposal) to be included within an application. If an entity includes capital expenditures in an application, it must provide:

  • Information detailing if the capital expenditure is new or a replacement.
  • Specific details on costs, including the methodology for how rate was determined.
  • Vendor sales quotes are supportive, but not mandatory.

4. Provider Payments

Provider Payment Fact Sheet

Provider payments are payments to healthcare providers for the provision of healthcare items or services not paid by insurers and/or other programs. These are Category B funds.

Provider payments must:

  • Directly support North Dakota’s RHTP initiatives
  • Be sustainable beyond the five-year RHTP
  • Support services not billable through Medicaid, Medicare, or commercial coverage
  • Not serve as supplemental salary

Provider payments must be identified as allowable within a North Dakota RHTP solicitation (funding opportunity or request for proposal) to be included in an application. If an entity includes provider payments in an application, it must provide information detailing:

  • How the payment fills a gap not covered by insurance
  • The direct link to RHTP transformation goals and initiatives
  • A clear method for determining payment amount
  • A sustainability plan beyond the 5-year RHTP

5. Service Commitments

5-Year Service Commitment (Workforce) Fact Sheet
5-Year Service Commitment Fact Sheet

Any individual financial incentive (bonus, relocation stipend, residency/fellowship funding, certifications) must include a minimum five-year service commitment, per CMS requirements.

If an entity includes individual financial incentives in an application, it must provide:

  • A plan describing how service commitments will be managed.
  • The names and positions of all staff members who are proposed to receive financial incentives in the completed Itemized Subrecipient Budget Template.

Once awarded, entities issuing financial incentives must provide:

  • A formal policy and procedure for managing service commitments.
  • A signed service agreement for each staff member who receives an incentive.
  • Documentation confirming that each staff member who received an incentive remains on the organization’s payroll for the entire five-year commitment.