California awarded $233.6 million from CMS to support rural health transformation

California's Office of Health Care Affordability (OCA) told its advisory committee that the state received a provisional notice of award from the Centers for Medicare & Medicaid Services for $233,600,000 under the Federal Rural Health Transformation Program.

Director of the Office said the notice arrived Dec. 29 and OCA will submit a revised budget to CMS to reflect the larger award. "California got our notice of award from CMS," staff told the committee. The office originally budgeted $200 million per year and must now update the budget; CMS will have 45 days to respond and may disallow certain costs.

OCA described three core components of the proposed California program: (1) transformation and stability payments for rural providers, (2) workforce initiatives including more detailed analyses for primary care and maternity care, and (3) investments in technology and tools such as EHR modernization and data exchange to support hub-and-spoke connections between specialty and rural providers. Staff emphasized the award will not fully offset other federal program reductions and that final use of funds is contingent on CMS approval and the Office's revised budget decisions.

Committee members asked how the additional $33.6 million would be allocated. OCA responded that workforce and transformative care-model investments are near-term priorities but cautioned many details must be cleared with CMS and that the award notice contains language that may restrict certain costs.

Next steps: OCA will post budget updates and additional details on HCAI's website as it refines the plan and seeks CMS approval.