Nebraska has a billion-dollar opportunity to invest in rural health care. Here’s how the money will be spent
Just before the new year, Nebraska discovered it would enter 2026 with $218 million in federal funds to strengthen rural health care.
The money is part of nearly $1.1 billion in total Rural Health Transformation Program (RHTP) funding Nebraska will have access to through 2030. Newly revealed documents from the Nebraska Department of Health and Human Services (DHHS) detail how the state may spend its allocation.
For a state where 95% of counties are classified as rural or frontier, this federal funding is a rare chance for Nebraska to invest in communities where specialty care is sparse, emergency rooms are a long drive away and hospitals struggle to stay afloat.
Nebraska’s DHHS collaborated with the state’s health care leaders to create the application for the new federal program. However, few people outside of Nebraska’s state government saw a complete application before it was submitted.
Nebraska’s application for RHTP funding was previously not released in full, though a project description and a project narrative that excluded budgetary information was released by Nebraska DHHS in early December. The state initially denied a public records request to health publication KFF, saying a full release was “proprietary or commercial information” that “would give advantage to business competitors.”
Nebraska Public Media News obtained the full, 150-page application from Nebraska DHHS via a public records request earlier this month.
Nebraska's need for rural health care expansion
The One Big Beautiful Bill cut nearly $1 trillion in federal Medicaid spending between 2025 and 2034. In the same bill, legislators implemented the RHTP fund to funnel $50 billion into rural health care.
According to the Centers for Medicare & Medicaid Services (CMS), RHTP funds cannot be used to cover services provided by Medicaid. States will be unable to use RHTP funds to fill gaps left by federal cuts to the program.
Rural residents and hospitals depend on Medicaid at higher rates than in urban areas. A KFF analysis from last July showed those cuts will pull $137 billion in federal Medicaid spending away from rural areas, leaving an $87 billion deficit despite potential boosts from RHTP funds. A state-level report shows Nebraska’s Medicaid spending will decrease between $2 billion and $4 billion over the next 10 years.
In the face of those cuts, Jeremy Nordquist, president of the Nebraska Hospital Association, said the budget left out or underfunded investments that Nebraska’s rural hospitals and health policymakers believed to be important.
“I think the public was told, and I think our federal delegation believed, that these dollars were going to go help solve that problem -- go help strengthen our hospitals -- so they're there in our communities for the long run,” Nordquist said. “At this point in time, those dollars aren't headed in that direction.”
According to the application’s project narrative, Nebraska chose seven initiatives to focus its RHTP efforts on:
- Lowering obesity risk and providing whole foods
- Developing regional health care partnerships
- Strengthening the health care workforce
- Implementing remote and mobile care
- Expanding access to behavioral health care
- Improving access to services for Nebraskans with disabilities
- And helping rural healthcare providers become financially sustainable
In an endorsement letter attached to the final application to the Centers for Medicare & Medicaid Services, Gov. Jim Pillen expressed how grateful he was for the RHTP opportunity.
“I understand what it means when a family must drive hours for care or when a rural hospital struggles to keep its doors open,” Pillen wrote. “We owe those families better. With CMS as our partner in this cooperative agreement, Nebraska will lead the way in building a rural health system that is innovative, efficient, accountable, and built to last.”
Awards were announced on Dec. 29. All 50 states were given funding for each year from 2026 through 2030. Nebraska received $218.5 million per year – the eighth-largest award in the country.
Nebraska’s submitted application planned only $200 million a year in funding. In a statement, Nebraska DHHS said CMS required a revised budget plan to reflect the additional $18.5 million per year.
“Those revised application documents were submitted to CMS for approval on Jan. 30, 2026. The revised application documents must be approved by CMS before funds are distributed and work can begin,” the statement read.
Additionally, DHHS said it will begin “internal assessment, planning, and infrastructure building to ensure strategic implementation and appropriate funding distribution” once the final budget is approved by CMS.
Nordquist said money can be shifted between initiatives, but the time for new ideas has passed. Nebraska has until this fall to spend the $218 million in first-year funds.
Nebraska DHHS CEO Steve Corsi spoke at a Feb. 9 Legislative Appropriations Committee hearing.
“It’s exciting and a little bit terrifying all at the same time,” Corsi said. “Now, there are a lot of people who would be happy to get that spent, but we do have to remember that if we don't spend it well that there is a good likelihood that we don't receive it again -- at least the parts that we didn't spend well. So, we want to make sure that we spend it well -- all of it well -- and use the next five years to truly transform health care across rural Nebraska.”
Though one application locks in funding to states for the five-year period, some funds can be withheld if states are found to be misusing them or not accomplishing their application’s stated goals.
What’s in the budget
Nebraska’s budget proposal details 35 projects costing $885 million in total over the five-year timeline. These are the projects with the highest funding allocations:
| Project | Cost | Description |
|---|---|---|
| Chronic Disease Management/Remote Patient Monitoring | $119,822,481 | A contractor or nonprofit will be selected to design and implement technology solutions to manage chronic disease and remote patient monitoring in rural areas. This project plans for the development of “consumer-facing solutions” – like AI-assisted wearables – and the implementation of cutting-edge technology in rural hospitals. This project will closely align with the following “NETECH” initiative. |
| Community Paramedicine Regionalization | $55,000,000 | Nebraska has planned to train 100 more Community Paramedics by 2030. Funds will help train staff, standardize care protocols, manage supplies and integrate technology. |
| Critical Access Hospital (CAH) to Rural Emergency Hospital (REH) Conversion | $50,000,000 | When a CAH cannot stay financially solvent, converting to an REH may be the best option to preserve emergency care in a rural community. Inpatient care and other services must be sacrificed in the process. There are currently two REHs in Nebraska – one in Friend, and the other in Oshkosh – and up to 10 more are budgeted for conversion with RHTP funds. |
| Farm-to-School Procurement and Policy Technical Assistance | $42,500,000 | Nebraska plans to partner with 40 local food suppliers and producers each year to develop food supply chains and upgrade equipment. This initiative aims to promote healthy eating, prevent chronic disease and facilitate access to whole, fresh foods in rural schools and health care facilities. |
| Mobile Maternal Care and Training | $25,000,000 | Three mobile clinics to provide prenatal/postpartum care, pregnancy monitoring, STI screenings, immunizations, referrals and more will be deployed in maternity care deserts, Eventually, six will be in operation. Each mobile clinic will cost $1.5 million, plus staff and operation costs. |
| Nebraska Rural Health Technology Catalyst Fund and Partnership Initiative | $100,000,000 | This initiative – also called NETECH -- creates an investment fund to support health care technology start-up companies. They will create innovations that benefit Medicaid and low-income Nebraskans, manage and prevent chronic disease, increase affordability and fulfill other unmet rural health needs. No single company can receive more than $3 million in grant funding. |
| Oral Health Nebraska Teeth Forever (NTF) and Emergency Department Diversion - Mobile Expansion | $25,000,000 | Health care organizations will receive up to $170,000 in grant funds to address oral health needs through prevention, education and mobile clinics and carts. Each mobile dental unit will cost $1.2 million. |
| Regional Food Pantry Development | $50,000,000 | Grants will be awarded to 120 nonprofit groups and co-ops to promote healthy food options in rural food pantries. Each partner can receive up to $80,000 a year. |
| Rural Health Hubs – Regional Coordination | $65,000,000 | A nonprofit will be selected to create a patient referral hub, providing more collaboration between rural health providers. A shared mobile imaging unit will be purchased, and investments in cybersecurity are planned. |
| Rural Health Hubs and Community Health Worker (CHW) Network | $81,600,000 | Community Health Workers (CHWs) are public health workers who conduct outreach for health facilities and help decrease health disparities. At least 230 CHWs will be hired to focus on improving “chronic disease prevention, care coordination, oral health, and maternal/child health.” |
| Rural Provider Recruitment and Retention Incentive Program & Rural Health Hubs and Statewide CHW Network | $88,400,000 | Stipends up to $75,000 will be awarded to workers in the health care field as an incentive to live and work in rural and remote areas of the state. Nebraska plans to give out around 235 scholarships a year, and those who receive awards will have a 5-year service commitment. |
Table: Macy Byars
Other unique projects include:
- Creating a pharmacy app that tracks medication adherence and helps providers conduct medication reviews
- Grants to rural school districts to expand equipment for fresh and whole food storage
- Short-term subsidized housing for health care workers moving to rural areas
- $100,000 grants to incentivize rural health clinics to integrate behavioral health services
- Telehealth-based crisis response integrated with the 988 Suicide & Crisis Line
- And equipment and safety modifications for nursing homes/assisted-living facilities
The NETECH fund is a unique RHTP project.
“It's really a venture capital fund for health care startups that think they have innovative solutions to help the rural health ecosystem,” Nordquist said. “It isn’t proven technologies that are working today or coming from larger, reputable companies.”
Part of the NETECH initiative will require companies to create “impact assessments” and create a sustainability plan, presumably to measure effectiveness and actual technology implementation.
Other documents made public through Nebraska Public Media News’ request include emails between Nebraska DHHS and RHTP coordinators. These messages show questions and communication clarifying how to submit the application, which materials can be included and restrictions on funds.
On Dec. 31, Nebraska DHHS sent an email to CMS explaining it was working on requested budget revisions. The agency said it could not provide all requested information on the NETECH funding by the Jan. 30 revision deadline.
CMS responded on Jan. 15, saying the funding would be restricted until more detail could be provided. The DHHS representative said Nebraska may not have more detail on the contractor or scope of work for NETECH “until later in the year.”
Other expenses
Nebraska DHHS plans to add reimbursement coverage for behavioral health and memory/complex care services in assisted-living facilities. These funds create an incentive for facilities to accept patients with challenging health needs. In total, $24.6 million is allocated to these reimbursement funds over five years, with a large majority going to the second fund for memory and complex care.
Additionally, about $1.5 million is budgeted for DHHS personnel for the first year.
RHTP legislation caps administrative spending at 10%. Nebraska’s hypothetical application budget states that 7.2% of grant funds will cover administrative costs. Nebraska DHHS said some positions were already filled, and others have been posted.
Twenty-six full-time positions are budgeted, including a program director, contract specialists, federal aid administrators, and program coordinators. Around $535,000 will be allocated for their benefits, and $105,000 is budgeted for travel reimbursement for planned RHTP conferences and outreach.
Half a million dollars is set aside for “personnel-related supplies,” such as computers and IT equipment for program staff and health care partners. The application clarifies that medical supplies will be covered under contractor budgets.
Money is also set aside for training, material creation and strategic oversight to ensure Nebraska is on track with its RHTP goals and is compliant with all legal and grant requirements.
What’s missing
In previous conversations with Nebraska Public Media News, multiple Nebraska health care leaders – some who had direct conversations with state leaders to provide input on Nebraska’s application – said they did not see the final application before it was submitted to CMS.
The NHA only obtained a copy in early February. Nordquist said many were unaware of budgetary specifics.
“We have this infusion of money, and unfortunately, it's not going to where we needed to go to preserve services,” Nordquist said.
He said investments in the rural workforce are lacking, and Nebraska is already behind on recruitment compared to other states.
“The concern is here, by not directing enough, we're not going to be able to recruit a limited pool of providers that's out there nationally to Nebraska,” Nordquist said. “By the time we get our dollars out, that probably could be several more months.”
Despite large investments in tech startups, Nordquist said funds for basic technology were missing. For example, many rural hospitals have not upgraded outdated electronic medical record systems because of high cost.
“This gave us an opportunity to help underwrite some of that cost, but we're not investing in it,” Nordquist said. “And if you look at other state applications, I haven't found one yet that doesn't make some investment in that space for rural hospitals.”
Direct payments to hospitals were another top priority for health care leaders that Nordquist said didn’t pan out as planned.
“I kind of scratch my head, and I know I've talked to some of our members of our federal delegation, also, who have asked, ‘why are we putting $20 million a year towards this venture capital startup fund when we're only putting $10 million in the bucket that we see as the preserving hospitals bucket?’” Nordquist said. “We're putting twice as much money into venture capital for startups than we are to actually preserve our rural hospitals.”
CMS put a 15% cap on payments made directly to rural health providers. Nebraska will spend 9.7% of the yearly budget on provider payments – about $19 million.
Nordquist said that cap was largely arbitrary, but Nebraska had to follow CMS guidelines.
Ivan Mitchell is the CEO of Great Plains Health, a rural hospital system in North Platte. He says other rural hospital leaders believe block grants to hospitals would be the best way to spend RHTP funds. Hospitals would spend money on Nebraska’s proposed initiatives, then be reimbursed. Mitchell said many rural hospital leaders have proposed this idea to Nebraska DHHS, but it is unlikely that they will take the block-grant route.
Regardless, any payments funded by the RHTP to rural health facilities won’t come until after they spend the money. Nordquist said that could prevent rural hospitals with tight budgets from taking advantage of funding.
“We're trying to get absolute clarity from CMS on whether there is any flexibility there,” Nordquist said. “Certainly, if there is, we want to try to change how we're approaching that. If there isn't, then that's something we're going to work with our federal delegation on as well, as a potential change.”
For struggling rural hospitals, Nordquist said RHTP funds could have meant the difference between reducing their services and continuing to serve their communities at current capacity.
“Over the next five years, as these dollars are out there, we're going to absorb these Medicaid cuts. So, it's going to make the financial challenge of preserving services even more challenging than where we are today,” Nordquist said.
Nordquist said changes to the budget are possible, but substantial alterations likely won’t happen.
“We're going to keep talking about it and trying to be good partners with the state and working to change some of the direction there and at CMS in terms of where the dollars are ultimately spent,” Nordquist said.
This story has been corrected to note that the amount of money budgeted for travel reimbursement for planned RHTP conferences and outreach is $105,000. A previous version had an incorrect amount.
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