ND Department of Health and Human Services details $500M–$1B rural health transformation plan; committee backs application

Sarah Aker, executive director of the Division of Medical Services at the North Dakota Department of Health and Human Services, told the Rural Health Transformation Committee that the department will submit a federal Rural Health Transformation application by the Nov. 5 deadline and outlined draft allocations and allowable uses.

The committee voted to endorse the application during the meeting. Representative Sid Nelson moved to accept the department’s report; Representative Mitscog seconded the motion, and the roll call vote carried.

Aker said the state is preparing a plan built on stakeholder listening sessions and surveys. "We are going to receive at least a $100,000,000 a year or 500,000,000 over the first... 5 year period," she said, and noted that the Centers for Medicare & Medicaid Services (CMS) asked states to submit a hypothetical $200,000,000‑per‑year budget (a $1 billion, five‑year total) for scoring purposes. She told members the department expects the final federal award will fall between the $500 million baseline and the $1 billion hypothetical and asked the committee to focus on percentage allocations rather than fixed dollar amounts because the award amount is not yet known.

Why it matters: the federal program allows states to reshape rural health delivery with multi‑year funds that could be devoted to workforce, telehealth, safety‑net services and infrastructure. North Dakota’s draft priorities and allocation percentages will guide how the department invites applications and awards funds to providers, tribes and community organizations.

Key priorities, draft allocations and examples - Strengthen and stabilize the rural health workforce (draft ~16.2% of allocations). Aker said this bucket would include expanding residency training, "train in place" opportunities, recruitment and relocation grants, and technology used as workforce extenders. - Bring high‑quality health care closer to home (largest share). The department said most infrastructure spending — for example, facility re‑tooling to shift a hospital from a critical access model to a rural emergency hospital, telehealth hubs and support for EMS — is in this category. - Make North Dakota healthy again (~8.6%). This prevention‑oriented category covers nutrition, physical activity and behavioral‑health prevention programs including senior meals and partnerships with schools and extension services. - Connect tech, data and providers (~16.8%). The draft includes cooperative purchasing for electronic health records (EHRs), population‑health software, cybersecurity services and limited investments in artificial intelligence and consumer applications.

Aker gave dollar examples tied to the percentage allocations to make the scale tangible: under a $500 million award, the workforce bucket translates to about $81 million over five years; under a $1 billion award it equates to about $162 million.

What CMS said is allowed and not allowed Aker repeatedly cited CMS guidance as the determinant of allowed uses. She told the committee that certain items discussed at earlier stakeholder meetings were added to the draft where CMS permits them — for example, expansion of telehealth, mobile services, scholarships tied to service obligations, and limited technology upgrades — but that other requests are not allowable. Specific points from the presentation: - Advance grants or lump‑sum payments for providers that would supplant typical federal or insurance benefits are generally not allowable; states must follow CMS rules for allowable uses and timing. Aker said states cannot duplicate payments covered by another insurance source (for example, Medicaid non‑emergency medical transportation). - Vehicle purchases (notably helicopters and fixed‑wing aircraft) are subject to case‑by‑case review by CMS; "vehicle purchase requests will be reviewed on a case by case basis," Aker said. - Construction and demolition of unoccupied health‑care buildings are not allowable because they are considered construction costs under CMS rules. - Loan repayment programs as structured previously were removed where CMS indicated loaner payments are not allowable; the department revised the framework to emphasize recruitment and relocation grants in lieu of the disallowed loaner payments. - Electronic medical record (EHR) replacement or optimization is included but subject to limits; Aker told the committee there is a 5% cap on EHR software optimization in the tech budget when a provider already uses a certified EHR and seeks a replacement.

On recruitment incentives: Aker said CMS has distinguished between loan repayment and recruitment bonuses. She explained that while loan repayment programs operate by paying a loan holder directly, a recruitment or sign‑on bonus can be paid directly to a provider and is therefore a different administrative treatment; providers could use the bonus to pay loans but the department must ensure compliance with applicable tax and reporting obligations.

Stakeholder engagement and awards process Aker described plans for public outreach: a project webpage, stakeholder webinars and listening sessions, quarterly tribal consultation meetings, and use of existing HHS advisory committees and associations. She said many awards will be made as grants rather than formal procurements; some cooperative purchasing or complex technology procurements will use requests for proposals.

Tribal engagement and set‑aside request Multiple tribal leaders submitted letters asking the department to establish a 5% tribal set‑aside within the plan. Aker said the department has flagged tribes and tribal health systems throughout the draft as priority partners. After receiving the tribal request the department asked CMS whether a block grant to tribes would be allowable; Aker said CMS staff indicated a block grant model was not allowable. "It is their expectation that funding be attributable to specific, allowable uses within the plan," Aker said.

Aker and committee members discussed alternative mechanisms: the department agreed it can explicitly prioritize tribal applicants or include weighting in scoring criteria to increase the likelihood that tribal health systems receive awards. Representative Davis asked that the department pursue language that strengthens tribal inclusion; Aker said the department would refine the application narrative and consider weighting criteria so tribal applicants are prioritized within the award process.

Timeline and next steps - The department finalized the budget narrative and planned to submit the application by Nov. 5. Aker said CMS expects to announce awards before the end of the year. - The committee voted to endorse the department’s application report and asked the department to return with the submitted application at a tentative committee meeting on Dec. 4 to brief members before any special session and appropriation decisions.

Discussion and oversight Committee members pressed on audit and compliance mechanics, long‑term sustainability of programs, and how the department will balance administrative burden for small providers against equitable distribution. The department said it plans internal monitoring, subrecipient monitoring and to incorporate reporting requirements in award contracts. The department also acknowledged the possibility of moving dollars between categories with CMS approval but warned that CMS expects states to deliver on the commitments in the approved plan.

Ending Aker closed by urging the committee to focus on the plan’s percentage allocations and the department’s commitment to prioritize rural and tribal needs in issuing awards. The committee recessed and scheduled a Dec. 4 briefing when the department will present the submitted application.