Wyoming reports $25 million first-year RHT award, submits alternate plan after CMS balks at perpetuity fund

Stephan Johansson, director of the Wyoming Department of Health, told the Joint Labor, Health & Social Services interim committee on May 14 that Wyoming received a $25 million notice of award for year one of the federal Rural Health Transformation (RHT) program and has submitted an alternative budget after negotiations with the Centers for Medicare & Medicaid Services (CMS).

Johansson said the RHT program was newly established in federal legislation and that CMS issued guidance in mid-September 2025. "We submitted our application for Wyoming on November 4th of last year," he said, describing a bottom-up drafting process built from town halls in nine to ten rural communities and an online survey that drew about 1,300 responses.

Why it matters: the award is year one of a five-year grant. Johansson said the state's original proposal included two notable innovations: a state-created "rural health transformation perpetuity fund" designed to stretch federal dollars over a longer horizon, and a plan to direct roughly half of year-one funds to critical access hospitals and emergency medical services (EMS) tied to simple, measurable deliverables. "It looks like that perpetuity fund has to be off the table," Johansson told lawmakers, adding that the department had negotiated to preserve the amount of funding and the focus on hospitals and EMS even after removing the perpetuity mechanism.

CMS review and next steps: Johansson said Wyoming has been negotiating with CMS since mid-January on which costs are allowable and that the department recently submitted a final alternative budget proposal. He said the state is optimistic but cannot guarantee federal approval. "CMS is currently reviewing that alternative budget proposal," he told the committee.

If CMS approves, the department plans to run its usual implementation steps: the federal award would move through the state's B11 process (budget office, governor's office and the legislature), after which the department expects to issue requests for applications and requests for proposals for program components such as a critical access hospital incentive program and an EMS incentive program.

Deadlines and constraints: Johansson reminded lawmakers the RHT rules require year-one funds to be obligated by approximately Oct. 30; obligation means contracts or agreements are in place. Year-one money does not all need to be spent immediately, but obligated funds must be spent within the federal timeframe extending into the following October.

Legislative context and sustainability: Johansson and Deputy Director France Fuches emphasized that Wyoming sought to design the program to sustain basic rural services (247 emergency coverage, OB/labor and delivery where feasible, financially viable ambulance services and accessible primary care, including telehealth integrated with behavioral health). They also acknowledged the department and the governor's office had worked with the state's congressional delegation during negotiations. Johansson said the loss of the perpetuity concept raises sustainability questions that the legislature will need to revisit during and after the five-year grant period.

What lawmakers asked: committee members pressed for details about obligation and spending deadlines and whether the federal agency's review could be protracted. Johansson and Fuches described working with legislators and providers to preserve the spirit of Wyoming's application while conforming to federal rules, and said additional state-level options could be explored should federal constraints remain.

The committee did not take formal action on the proposal during the meeting. Implementation would depend on CMS approval of the alternative budget, a successful B11 process in the state, and subsequent procurement and awards to Wyoming providers.