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HHS outlines rural health transformation plan; CMS approvals and sustainability top priorities
Summary
HHS described its application for rural health transformation funds, the planned subaward process and CMS deadlines: states must obligate funds by Sept. 30, 2026 and CMS will review subawards; HHS will prioritize sustainability and rural/tribal impact and expects to release first subaward opportunities in January.
Krista Framing of the Health and Human Services medical services division briefed the Budget Section on the state’s rural health transformation application to the Centers for Medicare and Medicaid Services and the planned grant administration approach.
Framing said the state submitted its application on Nov. 3 and is awaiting a CMS notice of award (expected by Dec. 31). She described draft funding allocations (largest buckets for 'care closer to home') and said the state anticipates multiple distribution mechanisms — direct contracts (for universities or state entities where procurement allows), grant application processes, and requests for proposals where competition exists. "CMS has indicated ... they must approve every sub award we enter into," she said, underscoring an added layer of federal review that will affect subaward timing.
The department emphasized sustainability: CMS will score state sustainability plans and is discouraging awards for projects that create ongoing state obligations without clear long‑term funding. Framing said HHS will prioritize projects with demonstrable sustainability paths (Medicaid billing, multiple revenue streams, or community financing) and that obligations must be made by 09/30/2026 with spending windows into the following federal fiscal year.
Framing described outreach and stakeholder engagement (surveys, listening sessions, an HHS landing page and listserv) and noted HHS plans to limit administrative burden while balancing speed and thoroughness. She told the committee HHS expects to release subaward opportunities starting in January and will coordinate with the rural health transformation interim legislative committee during implementation.
Legislators asked about the state’s role in reviewing and whether other agencies or stakeholders will be formally included in subaward review; Framing said HHS will consider adding external reviewers where useful but currently plans most reviews internally while maintaining robust stakeholder engagement.
