Kentucky outlines $213 million rural health transformation plan, warns funds are at risk if not obligated by Oct. 30, 2026

Secretary Steven Stack and Tom Walton, director of Kentucky's Rural Health Transformation Program, told the Interim Joint Committee on Health Services that Kentucky was awarded approximately $212.9 million from the Centers for Medicare & Medicaid Services and must show rapid progress to keep the funding.

"If we don't demonstrate that we've obligated the funds and gotten them deployed then we are at risk for losing the funds," Secretary Stack said, summarizing federal deadlines tied to a July 31 reporting milestone and an Oct. 30, 2026 obligation deadline.

The cabinet presented five integrated program areas the grant will fund: community hubs for chronic disease innovation; a perinatal "Power" initiative offering wraparound maternal-infant teams; expansion of short-stay behavioral health units (EMPath); increased rural dental access including mobile units and training; and EMS/trauma improvements including community paramedics and "treatment-not-transport" protocols. Officials emphasized cross-cutting priorities such as workforce development, telehealth, data interoperability and sustainability.

Tom Walton described the hub model and early geography for pilots, saying the program will start in three area development districts'Big Sandy, Lake Cumberland and Purchase'with plans to scale to all 15 districts. "This is a hub-and-spoke model," Walton said, noting lead organizations in each region will assemble locally led coalitions to design interventions and receive funding.

Officials said CMS'which expects states to pursue systems transformation rather than simply expanding existing services'has strict limits on allowable uses (no new construction; limited salary/incentive support; no supplanting of existing state-funded services). The cabinet also stressed it is building measures (outcomes and key results, or "OKRs") and a public-facing vitality dashboard with the University of Kentucky to report progress and regional variation.

Committee members pressed for detail on the immediate "quick wins" required by federal timelines and on procurement pathways. Representative Fleming asked which partners were already under contract and whether private and nonprofit entities could compete; presenters listed early partners that include Mountain Comprehensive Health, Baptist Deaconess and public universities, and said nonprofits and public universities can be engaged more quickly while for-profit organizations will go through full RFP procurement when required. "We intend to follow the rules," Walton said, adding that the cabinet intends to use the fastest, legally available procurement pathways where appropriate.

Members also raised access questions: Representative Callaway asked whether perinatal teams could reach incarcerated pregnant people; presenters said the design does not preclude inclusion and they would follow up to explore practical steps. Senator Burke cautioned against patient-facing vendor platforms that could advertise or steer patients to certain providers and urged a focus on basic interoperability such as medication lists.

Officials said roughly 84% of the first-cycle funds have identified spend destinations or contracting paths and that final contracting complexity is the primary obstacle. They urged legislators to articulate priorities and pointed stakeholders to the program website (ruralhealthplan.ky.gov) for RFAs, application materials and contacts.

The cabinet repeatedly framed the grant as both an opportunity and a risk: it aims to produce sustainable improvements in rural access and workforce while ensuring initiatives can continue after federal funding lapses. Officials said they are building sustainability into digital upgrades (Kentucky Health Information Exchange, Connect Resources), workforce pipelines and potential payer mixes rather than relying solely on ongoing federal grant dollars.

Next steps include executing contracts and launching early pilots; the cabinet expects more detailed OKRs and contract-level deliverables to be available as pilots and agreements are finalized in late 2026 and into 2027.