The state office charged with drafting California’s application to the federal Rural Health Transformation Program told the Office of Care Affordability and Care board on Aug. 28 that it will begin stakeholder outreach in September and is preparing for a limited federal application timeline.
The program, included in the federal budget reconciliation bill HR 1, “provides $50,000,000,000 over 5 years to strengthen health care access in rural areas,” the director said during the board’s executive update. The director added that roughly half of those funds will be distributed equally among states with an approved application, and the remaining half will be apportioned by competitive scoring of state proposals.
Why it matters: the Rural Health Transformation Program is a new, large federal funding opportunity that could change service delivery and workforce investments in rural California if the state wins an award. California staff said they need input from rural providers and communities to shape the application’s priorities and to meet the federal timeline.
State staff said the Centers for Medicare & Medicaid Services will publish a Notice of Funding Opportunity and that CMS is required by the statute to approve or deny state applications by Dec. 31, 2025. The law requires state proposals to describe how projects will improve access to care, strengthen the rural workforce, promote use of technology, support system sustainability and identify causes of rural hospital closures, among other goals. Proposals must propose at least three of ten enumerated activities, which include technology-enabled care, recruitment and retention programs with a five-year service obligation for clinicians, support for substance use disorder treatment, and investments to promote value-based care.
California’s Health Care Affordability Institute (HCAI) is overseeing the state submission, staff said, and the state office of rural health will lead the proposal. A stakeholder webinar is scheduled for Sept. 4, 2025, followed by a survey and additional listening sessions through September; staff urged interested parties to sign up for the rural health mailing list and to send questions to the state office of rural health.
In public comments, Janice Rocco of the California Medical Association offered to share practice-level data to support the state’s application and urged the agency to collect as much data as possible. Victoria Valencia of the California Hospital Association asked OCA to “use [the program] to sustain access to care in rural communities” and asked for close engagement with rural hospitals. Beth Capelle of Health Access California said she supported using median-income-based affordability measures and noted the proposed federal funding will not replace the larger cuts to programs cited earlier in the meeting.
Discussion vs. decision: the board’s discussion was informational. Staff did not present a final application and asked the board and public for input as staff develops the state proposal.
Ending: Staff said they will integrate stakeholder feedback into the state’s priorities and will provide additional webinars and listening sessions through September; CMS guidance and the NOFO will provide further application detail.