You'll need to do quite a bit of train transferringFrom Naganohara-Kusatsuguchi Stn (Which is the nearest JR stn from Kusatsu)
take the JR agatsuma line or the Ltd Exp Kusatsu train to Shinmaebashi Stn
From here transfer to the JR Ryomo Line to Tochigi Stn.
This part is not covered by the JR pass
From here transfer to the Tobu Ltd Exp Kinu train and take to Kinugawa Onsen.(costs 1500yen)
Takes about 4hrs to 4.5hrs depending on your connection times.