Opportunities and Legal Considerations for Data Modernization Through the Rural Health Transformation Program
June 4, 2026
Overview
Part two of a series of articles exploring how law and policy are a cornerstone of public health data modernization.
The Rural Health Transformation Program (RHTP), a federal grant initiative authorized in 2025, provides an opportunity for states to invest in data modernization to improve access to health care and public health services. In general, states and rural health care providers modernizing data systems will need to ensure compliance with applicable information sharing and privacy requirements. Grounding data modernization in clear legal frameworks and strong data governance will reduce legal risk, protect privacy, foster transparency, and promote effective data exchange.
Rural communities are more likely than their urban counterparts to experience poor health outcomes, driven in part by limited access to health care, inadequate public health services, and higher rates of poverty. The Rural Health Transformation Program (RHTP), a federal grant initiative authorized in 2025, seeks to address these disparities through a $50 billion investment in rural health systems. Under the program, approved states are allocated funds over the course of a five-year period to advance strategic goals like innovative care, sustainable access, and tech innovation. All 50 states applied for RHTP grants, and, in December 2025, the Centers for Medicare & Medicaid Services announced that every state will receive an award.
The RHTP provides an opportunity for states to invest in data modernization to improve access to health care and public health services. Systems for health information collection and exchange can support informed, effective, and efficient care, but these systems are often outdated in resource-strapped rural communities. The RHTP Notice of Funding Opportunity accordingly encouraged projects that invest in technological advancements to strengthen data sharing and security. In line with this directive, a significant majority of states proposed using RHTP funding for initiatives related to advancing data sharing, improving interoperability, and upgrading health information technology.
Many of these initiatives aim to launch or modernize health information exchanges (HIEs) and health information networks (HINs) to improve communication across rural providers and promote efficient, informed care. The expansion and enhancement of Electronic Health Record (EHR) systems in rural health settings are also common goals. For example, Hawaii proposed developing a Rural Health Information Network connecting rural providers statewide through interoperable EHRs and integrated data hubs to improve care delivery and coordination. Some states plan to develop structures to support rural health providers with implementation of these data modernization efforts. California, for instance, proposed using funds to operate a Rural Technical Assistance Center to provide support for upgrades like EHR and HIE enhancements.
States have additionally proposed initiatives to improve care coordination among cross-sector partners, which will necessitate upgraded infrastructure for information sharing. For example, Rhode Island proposed using funds to develop community clinical care hubs and rural community health networks linking clinical providers, social services, and community organizations and infrastructure to deliver holistic care enabled by interoperable data exchange.
Other proposed initiatives related to data modernization include uses of artificial intelligence (AI) and efforts to enhance the cybersecurity of health data systems. North Carolina, for example, proposed developing a Rural Digital Health Collaborative to support rural providers in adopting AI tools and navigating resultant safety and privacy risks. States also proposed projects to expand the use of telehealth, remote patient monitoring (where patients collect and share their own health data to monitor conditions), and consumer-facing technologies like wearables. Information collection, maintenance, and disclosure will be central components of these projects.
By enabling these initiatives, the RHTP functions as an important policy lever for promoting data modernization. Additionally, it gives rise to a host of legal and policy issues that states will likely encounter as they implement their proposed initiatives. In general, states and rural health care providers modernizing data systems will need to ensure compliance with applicable information sharing and privacy requirements. These include federal laws ranging from familiar protections in the Health Insurance Portability and Accountability Act (HIPAA) to the Information Blocking Rule’s more recent prohibitions on information blocking by health care providers, HIEs, HINs, and health IT developers. State laws building on top of federal protections will likewise necessitate analysis and application.
Some of these federal and state requirements are continuously evolving and others have been in place for decades, with both types posing compliance challenges. Evolving laws call for diligent monitoring and analysis of new issues while applying older (and, at times, outdated) requirements in a modernized technology landscape can be its own source of frustration.
In addition to these general considerations, some types of proposed initiatives will raise unique legal and policy challenges. Cross-sector data sharing initiatives like care hubs that support integrated, multidisciplinary teams are one example. Because the entities involved operate in different sectors, they are often governed by distinct legal requirements, take different data governance approaches, and lack preexisting contractual relationships. Building a sound legal framework for compliant information sharing and robust data governance will be a crucial component of these initiatives.
Efforts to advance AI use may similarly introduce complex legal and ethical issues. AI implicates novel compliance risks stemming from emerging laws specifically regulating AI, as well as HIPAA and other preexisting requirements. Consumer-facing technologies like wearables and other systems for remote patient monitoring may also be subject to legal requirements as states increasingly explore consumer privacy protections affecting health apps and similar companies that have historically fallen outside the scope of health privacy laws.
Across all of these initiatives, approaches to legal and policy issues will be informed—and potentially complicated—by the distinctive character of rural settings. Reasonable privacy safeguards, for example, may look different in rural communities where privacy concerns are often heightened due to small population size. More generally, identifying, understanding, and complying with laws and policies requires capacity and resources that may be limited in rural communities with inadequate funding and workforce shortages.
As states develop systems for technical assistance and other implementation support, these legal and policy needs should not be overlooked. Grounding data modernization in clear legal frameworks and strong data governance reduces legal risk, protects privacy, fosters transparency, and promotes effective data exchange. With time, resources, and attention dedicated to law and policy, the RHTP can catalyze critical data modernization efforts, improving access to quality health services and mitigating disparities in rural communities.
If you have legal or policy questions related to the implementation of your proposed initiatives under the RHTP, contact Stephen Murphy, Network Director—Mid-States Region.
This article was written by Emma Kaeser, Senior Attorney, Network for Public Health Law—Mid-States Region.
The Network promotes public health and health equity through non-partisan educational resources and technical assistance. These materials are provided solely for educational purposes and do not constitute legal advice. The Network’s provision of these materials does not create an attorney-client relationship with you or any other person and is subject to the Network’s Disclaimer. Support for the Network is provided by the Robert Wood Johnson Foundation (RWJF). The views expressed in this post do not represent the views of (and should not be attributed to) RWJF.