Tennessee health officials outline $206.8 million first-year federal award for rural health transformation
Loading...
Summary
Department of Health officials told the Finance, Ways and Means Committee that Tennessee was awarded about $206.8 million for budget period one of a five-year, $1 billion rural health transformation opportunity; officials described competitive grants, technology infrastructure, workforce investments and limits on Medicaid/Medicare payments.
Department of Health leaders presented details on Feb. 17 about Tennessee’s plan to spend a federal rural health transformation award after the committee recessed from routine business to hear an expansion request.
Commissioner John Dunn and Deputy Commissioner JW Randolph told the House Finance, Ways and Means Committee that Tennessee applied for $200 million in the first federal budget period and was awarded roughly $206.8 million. Randolph described the initiative as a $1 billion opportunity over five years, with states eligible for $200 million per budget period and a competitive portion that can increase a state’s share.
The department outlined five focus areas: expanding sustainable access (service expansion and colocation grants, care coordination, ‘‘last-mile’’ teams including EMS vehicles), maternal and child health investments (including value-based payments), technology infrastructure (health information exchange and the Tennessee Community Compass referral system), prevention and community health (county health councils and nutrition/active-living grants), and workforce development (education pipelines, residency incentives and recruitment incentives).
Randolph said the department will prioritize competitive awards that demonstrate sustainability beyond the five-year federal funding window and that projects must show financial viability. Dunn and Randolph emphasized there is no state match required for the award; however, applicants must include sustainability plans because the grant will sunset after the five-year period. Officials warned that the department cannot guarantee ongoing state funding at the end of the federal term.
Lawmakers pressed officials on several points: how the department defines "rural," whether funds could create recurring state obligations, administrative costs and procurement. Randolph said the department will use the precedent of previously funded rural resiliency programs and target service provision in 89 rural counties, while allowing partnerships with nonrural teaching hospitals when those hospitals support rural service delivery. He acknowledged the administrative cost line was not on hand and offered to provide that figure to members. The department said early-summer competitive solicitations are possible, pending CMS approvals and necessary legislative steps.
Officials also described constraints in the CMS Notice of Funding Opportunity: capital spending and some provider payments are limited or require specific fiscal vehicles; Medicaid and Medicare reimbursement rate increases are ineligible expenses under the grant. Tennessee’s plan includes a proposed $125 million capital component tied to TennCare shared-savings approaches, which the department says was explicit in its application.
Randolph described examples of intended local investments, including competitive grants ranging from as little as $12,000 to as much as $20 million for locally driven projects — from small behavioral-health conversions to hospital expansions — and a memory-care assessment network modeled after a Georgia example. The department said projects that can demonstrate long-term payer or operational sustainability will be more competitive.
Next steps: the department asked the committee’s review and approval to spend the federal award and offered to supply the committee with additional documentation on eligible and ineligible expenses, administrative cost details and procurement approaches. Committee members and department staff agreed to follow up on timing, fiscal vehicles and program rules as the department prepares competitive solicitations.
