Virginia Awaits Decision on $1 Billion Rural Health Grant 

Virginia could soon learn whether it has secured a coveted federal award from the Rural Health Transformation Fund.

Dubbed “VA Rural Vitality,” the proposal submitted by Gov. Glenn Youngkin’s administration calls for investing $1 billion to address rural health care access challenges and persistent health care disparities across large swaths of the state.

Outdated technology, provider shortages, long travel times to care, and high rates of chronic disease are among the issues the application aims to address. To tackle those challenges, the administration proposes directing any awarded funds into four integrated initiatives it has developed.

Under an initiative called CareIQ, Virginia would direct $282 million to help localities modernize electronic health records, expand remote care options for rural patients, and support early-stage health technology startups.

Another initiative, Homegrown Health Heroes, would put $132 million toward funding medical residencies at rural hospitals, expanding health care apprenticeships, and investing in community college programs. The proposal also includes expanding high school pathways into health care professions.

A third initiative, Connected Care, Closer to Home, would focus on telehealth and mobile health clinics, with a proposed $412 million investment aimed at expanding access through telehealth services and mobile care units.

The fourth initiative, dubbed Live Well, Together, would support wearable technology for chronic disease management, children’s physical activity initiatives, and “food-as-medicine programs,” with a total proposed investment of $124 million.

If awarded, Virginia would also allocate about $49 million to establish a centralized program management office to oversee grant administration, track dat,a and evaluate progress.

Regionally-specific ideas for how the funding could be directed also emerged during listening sessions around the state in recent months, as well as proposals submitted to a public email account.

Those ideas ranged from outfitting EMS trucks in Southwest Virginia with satellite broadband to establishing mobile maternal health clinics for high-risk pregnancies in Southside Virginia, where a growing maternal health care desert exists.

“We think we have an opportunity not just to plug a few of the holes, but to transform in a lasting way the rural health care system in this country,” Centers for Medicare and Medicaid Services administrator Mehmet Oz emphasized on a press call when the applications opened up this fall.

CMS is expected to announce grant recipients by the end of this year.

If Virginia’s application is awarded the full $1 billion it requested, that funding would come from a $10 billion pool available to states this year through the Rural Health Transformation Fund.

The fund totals $50 billion overall, with $10 billion made available annually over the next five years. It was created during negotiations over Congress’ reconciliation bill, passed this summer, and has been hailed by President Donald Trump’s administration as a critical investment in rural health care.

Health officials in former President Joe Biden’s administration, however, have characterized the fund as a “band-aid” — a measure that could help in the short term but was ultimately a “political solution” aimed at securing passage of the reconciliation bill passed after pushback from Republicans representing states with large Medicaid or rural populations.

That criticism stems from broader challenges in the reconciliation bill — formally called the One Big Beautiful Bill Act at its time of passage — which include forthcoming adjustments to Medicaid eligibility and hospital funding mechanisms. Those changes are expected to strain hospitals and could lead to millions of Americans losing health insurance coverage.

Ballad Health government affairs manager Stacy Ely told The Mercury in an interview this summer that the Rural Health Transformation Fund is a “$50 billion plug for a $300 billion hole.”

The hospital chain, which operates in rural parts of Virginia and Tennessee, is bracing for lower profits and shrinking operating margins. At Lee County Community Hospital in Southwest Virginia, for instance, about 20% of patients have private insurance, while the remainder rely on Medicaid or Medicare. Of Virginia’s roughly 1.9 million Medicaid enrollees, several hundred thousand could be at risk of losing coverage when eligibility changes take effect.

Those Medicaid provisions were a point of contention for Democratic members of Congress and some Republicans.

U.S. Reps. Jenn Kiggans of Virginia Beach and Rob Wittman of Westmoreland County opposed earlier versions of the bill before ultimately voting for it. As Virginia’s application is reviewed by CMS, they joined other Republican members of Virginia’s congressional delegation in signing a letter backing the state’s proposal.

Still, the funding could help address long-standing challenges in a state where 60% of localities are considered rural. Residents often face lengthy travel times for preventative or emergency care, limited access to specialists — including in Virginia’s growing maternal health deserts — and heavy reliance on Medicaid at a time when hundreds of thousands could lose coverage.

As patients and providers brace for insurance disruptions tied to other provisions of the reconciliation bill, Virginia’s network of free clinics is preparing for a surge in patients while seeking additional funding support from the state.

Efforts to address rural health disparities have already been underway in Virginia through initiatives supported or launched by Youngkin, as well as legislation passed by state lawmakers.

Last year, House Speaker Don Scott, D-Portsmouth, assembled a bipartisan group of lawmakers to tour rural communities to hear directly from patients and providers. That effort resulted in multiple bills, some of which were approved by the General Assembly and signed into law by Youngkin.

Virginia is among 16 states that appear to have submitted full applications to CMS for the fund. Because CMS did not publicly disclose all applications, the Kaiser Family Foundation compiled a tracker based on public records requests and states that voluntarily posted materials. Mississippi, Oklahoma, and Nebraska have not shared application materials, though KFF reports that most states have at least made portions of their applications available.

With applications closing in early November, CMS is expected to notify awarded states by Dec. 31.

by Charlotte Rene Woods, Virginia Mercury

Virginia Mercury is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence. Contact Editor Samantha Willis for questions: info@virginiamercury.com.