Alaska details $272 million federal Rural Health Transformation award and launch plans

Heidi Hedberg, commissioner of the Alaska Department of Health, told the Senate Finance Committee on Feb. 12 that Alaska has received a five‑year cooperative agreement from the Centers for Medicare and Medicaid Services worth $272,000,000 for the Rural Health Transformation Program (RHTP). “Alaska received the award of $272,000,000,” Hedberg said, describing the grant as a chance to address low patient volumes, high operating costs, workforce shortages and limited technology infrastructure in rural communities.

The department framed RHTP’s goals around three priorities: promoting lifelong health and well‑being in rural, remote and frontier communities; building sustainable, outcomes‑driven systems; and driving workforce and technology innovations. “We developed six key performance objectives and over 25 targeted metrics,” Emily Ricci, deputy commissioner, said, summarizing the application’s outcome measures and the program’s focus on maternal and infant health disparities, chronic disease management and access to primary and specialty care.

Officials said the award was the result of a competitive, one‑time federal application created by HR 1 and awarded via a cooperative agreement on Dec. 29, 2025. Because the award is a cooperative agreement, CMS will have substantial involvement: the agency will review and approve the state’s key activities, budgets, performance measures and staffing, provide technical assistance and evaluate progress over the five‑year period.

State staff outlined the types of projects the RHTP will fund and the application pathways. The department expects to open a registration and short letter‑of‑interest portal hosted by the Alaska Community Foundation on Feb. 17, with the initial round closing March 11. Readiness and planning grants are anticipated to be awarded in April, full implementation proposals requested in March with awards in May, and a later competitive pathway planned for targeted innovation projects designed by the department.

Betsy Wood, director of the Office of Health Savings, summarized federal limits and the funding timeline. Administrative expenses are capped at no more than 10% of the total award per budget period, and provider payments for pilots or expanded services are capped at 15% per budget period. Full replacement costs for an electronic medical record system are capped at 5% of the total award per budget period if the existing system was high‑tech certified as of Sept. 1, 2025. Emerging health technology investments are capped at the lesser of 10% of the award or $20 million; capital and infrastructure expenditures are limited and may be subject to a cap up to 20%.

Wood outlined the award’s timing: CMS splits the total into five annual budget periods (the first budget period is 10 months and subsequent periods are 12 months). For each annual award the state generally has one year to obligate funds and a second year to spend them, creating a two‑year practical spending window for each tranche. The first annual programmatic progress report to CMS is due Aug. 30, 2026, covering activity from Dec. 29, 2025 through July 31, 2026. Officials warned that beginning in March 2028 CMS may redistribute unspent funds among states, and all RHTP funds must be committed by federal fiscal year 2032.

Department staff also emphasized limits on unallowable uses. Hedberg and staff said the cooperative agreement does not allow purchases of land or buildings, cannot be used to fund clinical services already covered by insurance, and cannot supplant existing state contributions to Medicaid. The department said funds cannot be used for broadband installation or certain telecommunications equipment, provider loan repayment reimbursements, direct cash assistance or food purchases. Some workforce recruitment and retention awards will include service commitments — the department is working to define whether those staff can move within communities or remain elsewhere in state while honoring commitments.

On policy commitments that were part of Alaska’s application, Hedberg said two items will require legislative action: compact licensing across five provider categories (physicians, physician assistants, psychologists, emergency medical services and nursing) and pharmacists’ scope of practice. When asked about deadlines, Hedberg said the dates are listed in the application materials and stated the policy commitment deadline as Dec. 31, 2028.

An unnamed senator asked whether the program could support volunteer emergency medical services. Hedberg said the department has been engaging EMS providers and fire chiefs, hosted an EMS webinar and expects RHTP funding could help strengthen volunteer EMS staffing, educate agencies about billable services and explore policy changes to allow reimbursement for treat‑in‑place care or transport to alternate destinations instead of only reimbursing transports to emergency departments.

The chair thanked department staff, noted the program’s scale will require frequent future briefings, and adjourned the committee. The department directed applicants to the RHTP page on the Department of Health website (search “Rural Health Transformation”) and to the Alaska Community Foundation portal for LOIs and application instructions.

What’s next: registration for community applicants opens Feb. 17 and closes March 11; the first programmatic progress report to CMS is due Aug. 30, 2026.