Lawmakers debated how to structure incoming federal Rural Health Transformation (RHT) funds and whether to deposit a large initial share into a perpetuity fund to preserve the program beyond the federal award term.

Staff presented the Department of Health’s initial allocation table (DOH proposed 69.5% of RHT receipts to a perpetuity fund). Committee members expressed concern about flooding the market with one-time federal money and about creating ongoing programs that cannot be sustained after funds expire. Committee co-chair and members advocated a larger initial deposit to perpetuity — a working figure of about 80% was discussed for year one — to allow grants and programs to be paced and evaluated.

Deputy DOH director Franz Fuchs said the DOH can refine the CMS submission and, if directed, approach CMS to reallocate percentages. Members also proposed state safeguards: prohibitions on state-run medical insurance without specific legislative authorization, performance-based accountability for any rural-hospital financing, and clawback provisions if grantees fail to meet agreed operating metrics.

Committee members emphasized transparency, recommended clear reporting and milestones (operating margin targets, days cash on hand, staffing and volunteer impacts), and asked LSO and staff to draft bill language reflecting those guardrails. The committee paused deliberations for lunch and scheduled further drafting work to continue in the afternoon.