Wyoming Department of Health updates lawmakers on $205 million rural health award and CMS talks

Wyoming's Department of Health told the Joint Appropriations Committee it is negotiating with the Centers for Medicare and Medicaid Services about the state's implementation plan for a major federal award intended to stabilize rural hospitals and EMS.

Stefan Johansen, director of the Wyoming Department of Health, said Wyoming submitted its application Nov. 4 and was awarded $205 million for the first year of a five-year Rural Health Transformation Program. The department has since engaged with CMS over technical questions and, "very recently... essentially its final, compromise offer," he said. "CMS acknowledged receipt of that, asked some follow-up questions this week, which we have answered, and that is under review."

Committee members focused on federal constraints, especially a 15% cap in guidance for "provider payments." Deputy Director Frans Dukes described the department's distinction between what the state proposed as payment-for-service provider payments and other categories the guidance calls "appropriate care availability" or incentives to change behavior. Dukes said the state has argued some of its proposals (for instance, incentive payments that encourage EMS regionalization or startup grants for swing-bed conversions) are not traditional provider payments but are allowable under other categories.

Johansen and Dukes said the department's compromise preserves the plan's "spirit": prioritizing small critical-access hospitals, EMS providers and targeted investments to restore or sustain services such as emergency departments and obstetrics in rural communities. Johansen cautioned the committee that if the federal financing vehicle Wyoming initially proposed is disallowed by CMS, the state will still be able to scale investments during the five-year period but that policy choices will surface about sustaining services after federal dollars expire.

Lawmakers pressed for clarity about capital costs, roofs or HVAC projects, and whether those costs would be treated as provider payments. Dukes replied that certain capital uses can be allowed within guidance but that CMS guidance also restricts uses that would substantially improve an asset's value. Johansen added that the department intends to design procurements and program requirements with provider input rather than imposing top-down solutions.

What happens next: The department has submitted a revised offer to CMS and awaits federal review. Committee members asked the department to continue briefing the legislature and to provide details on which program elements CMS accepts or rejects and the back-end choices state policymakers may face if federal funding ends.