Officials brief Health & Welfare on $195 million RHT award, CMS oversight and spending limits
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Summary
State Health & Welfare presenters outlined the first-year Rural Health Transformation cooperative agreement (~$195 million), explained CMS approval requirements, described a 15% cap on provider payments that held several projects, and reiterated obligation and spending deadlines.
State Health & Welfare officials told the committee on April 9 that Vermont’s first-year Rural Health Transformation (RHT) cooperative agreement award is roughly $195 million and carries substantial federal oversight that will shape how the state spends the funds.
Jill Olsen, Medicaid and health systems director, told the committee the RHT initiative was created in the federal reconciliation package and that Vermont received one of the nation’s higher per-capita awards. "Rural health transformation is not a grant; it is known as a cooperative agreement," Olsen said, adding that CMS will review and approve every subrecipient grant, contract and payment model the state proposes.
That oversight matters because CMS must release line-item funding before the state can issue RFPs or obligate awards. Sarah Rosenblum, interim director of health care reform, said the team had focused this week on getting CMS to lift holds so the state can execute procurement. "We think we're gonna submit a budget revision this week," Rosenblum said, adding that if approved the revision would lift restrictions that have held back several projects.
Officials described deadlines and limits that affect planning. The presenters said the state must obligate first-year funds by Oct. 30 and can spend them through Sept. 30 of the award year; any unspent first-year dollars return to a federal pool for redistribution in year two. The award is structured so that states are rescored annually and can receive new awards each year based on progress.
Presenters also described a provider-payment cap that imposed a major constraint on which projects could be released. The team said CMS interprets many payments that go "to take care of a person" as provider payments; the guidance capped provider payments at 15% of the first-year award, which the presenters estimated would be roughly $25 million in year one. That definition delayed approval of three projects while the state sought clarification about which per-member-per-month (PMPM) payments count toward the cap.
Officials said the award was intended primarily as one-time funding to launch or transition services and warned the dollars cannot be used to supplant state budget items. They also noted limits on construction spending tied to increases in property value, saying major capital projects are unlikely to qualify. The team emphasized that plan commitments in the application are binding: CMS expects states to execute the activities they described when they applied.
A committee member asked about sustainability beyond five years; presenters said sustainability planning was included in the application and remains a top priority. Another member raised concerns about geographic inclusion and whether projects would reach Chittenden County; presenters said project-by-project reviews will determine fit within CMS-approved activities and that they expected to provide more detail in one to two weeks.
The committee did not take formal votes at the meeting; presenters said they would follow up with updated budget revisions and RFP schedules as CMS clarifications are received.
