By Melissa Patrick, Kentucky Health News · August 31, 2026

State officials are scrambling to avoid losing federal funds meant to support innovative health solutions in rural areas that were authorized in the “One Big Beautiful Bill Act,” or H.R. 1.

As part of the Rural Health Transformation Program, Kentucky was awarded almost $213 million to be distributed over the next five years through the Centers for Medicare and Medicaid Services (CMS).

In testimony given June 3, Dr. Steven Stack, secretary of the Cabinet for Health and Family Services, told the Interim Joint Bbudget Rreview Subcommittee on Health & Family Services that in the nine months since the funding opportunity was released, “the pace is obscenely brisk” and that work being done to achieve the goals of the RHTP — to keep the grant money secured — is multi-pronged and immense.

Stack told the committee that “the federal government has defined how it wants the program to be run – very rigidly,” adding that more than 100 pages of instructions were received.

“We’re moving quickly,” he said. “We are obligated to spend all of the money by the end of the fiscal year this year, or we will lose it. … They can claw back the money, which is a unique aspect to this grant. It’s a real risk that all states incur by being a partner.”

The grant comes with what many call a performance trap since CMS mandates that states are re-scored annually. If Kentucky fails to meet the aggressive data benchmarks, the federal government can take the money back – even if it has already been spent.

Scottie Ellis, communications director for Gov. Andy Beshear, said the governor and his administration have made it a priority to submit Kentucky’s Rural Health Transformation Plan to fight for funding to support the state’s rural communities, especially following the passage of devastating Medicaid cuts.

“Team Kentucky’s community-driven plan was accepted in full, providing $212.9 million to help deliver rural Kentuckians with the care they need and deserve. While this funding is important, it certainly does not fix the full range of harmful impacts Medicaid cuts will have across rural America – and right here in our commonwealth,” Ellis said.

Tom Walton, Kentucky’s RHTP director, said, “We want to transform systems, and we’re working with a lot of partners with innovative ideas. We meet weekly to make sure we’re on schedule, since there’s a risk of payback if the funds are not spent or obligated.”

Walton used the aftermath of the American Rescue Plan Act (ARPA), the $1.9 trillion pandemic stimulus package, as a cautionary tale.

“We’re looking at what that act funds. There was a lot of great work that was done, then it went away. We want to avoid that,” he said, referring to the “budget cliffs” states were forced into, watching new programs vanish because the funds expired or were no longer available.

For example, ARPA  increased premium tax credits to lower health insurance costs, and the Inflation Reduction Act extended it. But those protections were lost at the end of 2025, when Congress refused to renew them, and many insurance premiums spiked drastically.

The goals

In a phone call, Stack outlined the five major focuses of Kentucky’s RHTP: maternal health deserts, the EMS crisis, a mobile recovery/behavioral health network, Appalachian oral health and chronic care innovation.

The emphasis on Kentucky’s plan, he said, is tackling the root causes of disease and enacting a community-wide shift from emergency reactions to proactive, preventive wellness.

Kentucky’s plan emphasizes not only keeping emergency rooms, obstetrics and behavioral care essential services operating, but also attracting skilled clinicians and expanding provider types. The plan also aims to create rural community hubs for chronic care innovation, using collaborations to focus on things like obesity and diabetes prevention or management.

Stack said the plan also involves the EmPaTH model, which stands for emergency psychiatric assessment, treatment and healing. “There are several programs under this, and behavioral health is one of them — we must do a better job referring people for a timely follow-up.” The model has worked across the country and is used in Lexington, he said.

The EmPATH model involves deploying technology-enabled crisis stabilization and mobile behavioral health response teams to get people connected with community-based treatment and support. “This will allow us to get more focused on a higher quality of behavioral health,” Stack said.

In the area of dental health, Stack said there simply are not enough oral health professionals in rural areas. “We’re hoping we can find ways to use this money to invest in training and education for hygienists, so they can be located more across the state.”

Stack said Medicaid already offers an oral health benefit for adults and children. “There’s just not enough access in the communities to provide it. If we can train more dental people, find places where they can work – whether that’s public health or clinics or hospital-associated buildings, and people can go get those cleanings and get covered for that, Medicaid would be an ongoing funding service. It’s already paid for; there’s just not enough delivery for it.”

Currently, action plans like the deployment of regional, telehealth-enabled maternal teams directly into the state’s poorest counties are in process. Stack said this is being accomplished with the creation of maternal health hubs linked to rural clinics, where teams will use an “OB-Nest” model, distributing Bluetooth blood pressure cuffs and remote monitoring technology to homes of high-risk pregnant women living in maternity care deserts.

Stack said they are also working with doula networks in some areas. A doula provides non-medical support to women during pregnancy. The plan is to directly fund and certify community-based doula organizations to act as “mobile patient navigators,” handling non-medical care barriers like rural transit.

Little support for hospitals

RHTP was created by Republicans and the Trump Administration as a political compromise over the intensive cuts in the massive budget bill.

Gov. Andy Beshear said, “The passage of Trump’s ‘big, ugly bill’ risks coverage for 200,000 Kentuckians, the jobs of 20,000 healthcare workers and the closure of 35 rural hospitals.”

He said that, combined with what providers face “because the Kentucky Republican supermajority shorted our Medicaid budget by over $1 billion, (this) puts our state in a dangerous situation.”

Beshear said healthcare is a basic human right. “But it’s clear we need Republicans at both the state and federal level to believe that, too. Unfortunately, their actions are risking the lives of our people.”

“H.R. 1 is a very harmful bill,” Stack said. “It literally takes $1 trillion out of Medicaid and nutritional assistance for SNAP (Supplemental Nutrition Assistance Program) for very vulnerable people. That less money going into the system will cause additional crises.” He cited maternal health as an example. “We know it’s a challenge in Kentucky, and it will be very different if we have more wards closed, which is a risk due to that bill.” Not to mention, he said, other concerns like tens of thousands of jobs lost with additional closures of labor/delivery units and rural hospitals.

According to the governor’s office, as well as independent research data, one in six women of childbearing age in Kentucky lives in a maternity care desert — that’s four times the national average.

“(RHTP) was rolled out for rural areas, but very specifically not a support for rural hospitals,” Stack said. “In fact, federal leadership has said it has to be transformative. This money is not going to specifically prop up or support (hospitals).”

The Centers for Medicare and Medicaid Services strictly caps direct patient spending care – meaning actual, hands-on medical services or daily hospital operations — at 15% of a state’s total award.

Stack said in reference to the threat of multiple hospital and clinic closures in Eastern Kentucky, RHTP “is not going to save them.”

In an Aug. 25 press release, Republican U.S. Rep. Andy Barr of Lexington, who represents Kentucky’s  6th Congressional District and is running for the U.S. Senate, called on Beshear to explain why his administration isn’t using its portion of the Rural Health Transformation funds to protect the 35 rural hospitals that have been reported to be at risk of closing. Beshear responded at length during his Aug. 27 news conference, saying that the rules of the RHTP are clear that the funds cannot be used to help struggling hospitals, and that any plan to use the money in that way would not be approved.

Critics of the plan point out that the math is fundamentally flawed, and that the move is more about political damage control. RHTP provides $50 billion nationally over five years, which will replace less than 5-10% of the severe Medicaid funding cuts.

The Kaiser Family Foundation researchers point out that the multi-year grant divided across dozens of state initiatives cannot financially offset the massive permanent reductions in ongoing federal matching funds.

The National Association of Rural Clinics warned that while the cash is welcome, the funding is a soft cushion for temporary projects and fails to fix the economic realities – high chronic disease rates with lower incomes and lower operating margins, which are forcing rural facilities to close.

The Kentucky Center for Economic Policy agrees, saying that because the millions for Kentucky are spread out over five years, it’s only a brief shield, and that once the grant concludes, H.R. 1 will have left a “massive structural deficit in its wake.”

Stack said because of the reporting guidelines, a quarterly update on RHTP in Kentucky can be found at ruralhealthplan.ky.gov.

Bobbie Curd is a freelance journalist based in Danville, Kentucky. Her stories appear in a variety of area publications, and her experience includes reporting and editing duties at both daily and weekly newspapers. This story is part of a package about health care issues in Eastern Kentucky produced with a grant from the Foundation for a Healthy Kentucky.