CHICAGO — It’s crunch time for states seeking to take advantage of a once-in-a-generation federal rural health grant program, state health officials and rural health experts said here last week.

States have only a matter of months to award the $200 million, on average, they received in the first year of the Rural Health Transformation Program, a fund created by Congress in 2025 and administered by the Centers for Medicare and Medicaid Services to reverse what is widely understood to be a crisis in rural healthcare.

States that fail to show they made progress risk losing some of their share next year — or even seeing the money they already received clawed back by federal officials. 

“This moved at the fastest pace I’ve ever seen a federal grant program move,” Carrie Cochran-McClain, chief policy officer for the National Rural Health Association said at the National Conference of State Legislatures annual summit. 

The panel featured state lawmakers and officials from North Dakota, Alaska and Oklahoma — all states with large rural populations that have taken slightly different approaches during the program’s first year. 

Recent reports have indicated that states are moving at vastly different paces. Some states have reported that they are deep in the process of awarding grants. That includes Iowa, the first state to publicly issue Requests for Proposals, or RFPs, the first step in competitive bidding for a project, Cochran-McClain said. 

Other states have faced delays, including requests from federal officials for revised budgets and proposals before their money is released. Cochran-McClain said some states have yet to release any public information about their plan to distribute the funds. 

Congress created the $50 billion Rural Health Transformation Program amid concerns about the impact Medicaid cuts in the One Big Beautiful Bill Act would have on rural healthcare. 

States receive their share through annual allocations over five years. They must meet progress-reporting and spending-obligation deadlines or risk having future awards reduced or unspent funds clawed back and redistributed.

States have until the end of August to submit their first progress reports. They have until Oct. 30 to commit to their first-year funding.

North Dakota Sen. Brad Bekkedahl, a Republican, said lawmakers acted early to ensure they were involved in every stage of the process. 

The Legislature created a special committee that devoted six months toward reviewing the program guidelines, determining the state’s most pressing healthcare needs — behavioral health, chronic disease, workforce shortages, and gaps in technology and care coordination — and drafting legislation to improve the way federal officials would score their application.

The Legislature passed five core bills during a three-day January special session. The state also took advantage of the Bank of North Dakota — the country’s only state-owned bank — to issue loans to grant recipients so they could purchase equipment or start projects without waiting for the federal funds to be dispersed.  

The state will allocate all of its grant funding by the September deadline, Bekkedahl said. 

Alaska Rep. Genevieve Mina, a Democrat, highlighted the extreme geographic and logistical challenges facing the state, where 82% of the communities are off the road system. 

Mina said the award process has been slowed by nearly 1,800 applications, many of them from small nonprofits with little experience participating in a similar program. The state has approved more than 400 applications, she said. That includes a project using drone technology to deliver medical supplies to remote, off-road villages. 

“As CMS continues to provide more guidances, I think that’s caused a little bit of a ripple with our Department of Health,” Mina said. “Even though they were able to create a pretty good plan and get a jump start on creating this grant process, it’s been tricky to try to acquire more information from all of these entities who have been applying for these awards.”

Mina said the executive branch did not initially consult with the Legislature when it created its plan, causing some tension among lawmakers tasked with passing specific bills required under the proposal. Nevertheless, five out of the six policy commitments in the state’s application were eventually approved, she said. 

In Oklahoma, the Legislature and the state Department of Health collaborated on core initiatives, said David Crall, a legislative staffer. The application was designed to enhance primary care access, expand telehealth and non-emergency transportation, embed community health workers in hospitals, and establish a clinically integrated network for small health systems, he said. 

“This really presents a real opportunity for us,” Crall said. “Our vision is that every community, no matter how small, has access to high-quality healthcare that is grounded in clinical decision making, that is innovative, that has technology support, and is sustainable.”