Several states have had to revise their Rural Health Transformation Program plans under federal pressure, KFF Health News reported June 16.
State officials and healthcare leaders say CMS has used the program to push specific policy changes, with agency staffers working alongside state health departments over the past six months to alter or eliminate certain initiatives. The agency can rescind existing funding or reduce future awards if states fail to follow program rules or meet stated goals, according to KFF Health News. The program uses cooperative agreements rather than typical grants, giving CMS ongoing involvement in how states design and spend their programs, the news outlet reported.
Maine is among the states that had to rework its approach. State health officials had sought to direct a portion of $190 million in awards toward helping hospitals and clinics absorb cuts to federal health programs — including covering care for low-income, uninsured patients. Federal program leaders rejected the plan.
“It was not our decision,” Lisa Letourneau, MD, a senior adviser at Maine’s health department, said during a March webinar of healthcare providers, advocates and community groups, according to KFF Health News.
In Tennessee, federal officials told the state it would be “more competitive for more funding through policy change,” and that some first-year funding could be clawed back if certain policies were not enacted, KFF Health News reported.
CMS Administrator Mehmet Oz, MD, said at a Washington, D.C., event in June that states that fail to deliver on their commitments will face consequences. “We will take the money back” if states “don’t abide by what they wrote, if they don’t do a good job,” he said, according to the news outlet.
On a December call with reporters, Dr. Oz called the clawback mechanism “one of the smartest things the president and Congress” built into the program, saying it gives governors leverage to push state legislatures toward Trump administration priorities.
Alan Morgan, CEO of the National Rural Health Association, said the threat of clawbacks has created fear and confusion among rural health organization leaders, with some potentially avoiding grant applications altogether. He called clawbacks both a “necessary, important tool” and a “dangerous” one, according to KFF Health News.
States must submit progress reports by the end of August, commit first-year funding by Oct. 30 and spend it by Sept. 30, 2027. Progress varies widely: Iowa began awarding funding in January, while 11 states have not posted any funding opportunities, according to a tracker from the National Rural Healthcare Association.
CMS did not respond to multiple requests for comment from KFF Health News.
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