###
Tory Starr, RN, is worried about the people who get medical care at Open Door Community Health Centers along California's North Coast.
"They're the folks that work at restaurants. They're the teacher's aides," said Starr, who became Open Door's chief executive more than 6 years ago. Those patients, he said, are "really the heart and soul of rural America."
Yet, small community healthcare providers, such as Open Door, may find they are sharing the billions with an army of corporate giants before it reaches their patients.
Months after federal leaders announced that all 50 states won first-year awards, ranging from $147 million for New Jersey to $281 million for Texas, state plans reveal that a heavy dose of prescribed spending will go to companies that can increase the use of electronic health records, strengthen cybersecurity, and improve state and health system technology platforms.
States Stare Down Reporting Deadlines
Federal regulators were "really interested in seeing digital health investments" when they crafted the 5-year rural health program rules last year, said Maya Sandalow, MPH, an associate director at the Bipartisan Policy Center, a think tank based in Washington, D.C. She co-authored a recent report on how the 50 states plan to invest in technology, including modernizing healthcare infrastructure and expanding virtual care options such as telehealth and remote patient monitoring.
"The rural health fund isn't really designed to directly replace or offset the lost Medicaid funding," Sandalow said, noting that the federal staffers in charge of the program capped provider payments -- money that could help rural hospitals and clinics pay for patient care -- at 15% of the total funding awarded to a state.
Federal regulators also established tight reporting deadlines, forcing states to move quickly.
States must file progress reports by the end of August and obligate all first-year funding by Oct. 30, according to the Centers for Medicare & Medicaid Services (CMS). States could see their awards decreased or terminated at any time if they fail to follow federal requirements, according to the CMS notice of funding opportunity.
As of early April, CMS had not approved or had only partially approved some state budgets, including those of Wyoming, Colorado, and Vermont, according to state officials. CMS spokesperson Catherine Howden, who declined to say which states still needed revised budgets approved, said the agency does not provide "state-by-state updates."
Working with consulting companies is an established way for states to "quickly and effectively" meet federal deadlines and roll out grant money, said Morgan McDonald, MD, national director for population health at the Milbank Memorial Fund, a nonprofit focused on state health policy work.
Upgrading Technology, Modernizing Rural Health
Science Applications International Corp. (SAIC), a Fortune 500 government contractor, pulled together the Alliance for Advancing Rural Healthcare. SAIC does a variety of technology work such as cybersecurity and engineering support. The alliance also includes Walgreens and Mission Mobile Medical, which turns RVs into primary care clinics. A data analytics company, a telemedicine and software company, and a company that helps place medical graduates in health systems are also part of the coalition.
The SAIC alliance offers "an ecosystem" of companies that can coordinate the work states have promised, said Suresh Soundararajan, SAIC's Rural Health Transformation Program lead and a former chief information officer for the Virginia Department of Health. Each of the companies has representatives focused on the rural program, he said.
A lack of digital infrastructure -- such as electronic health records at different clinics and hospitals that can talk to one another -- has been a consistent barrier for rural medical care teams, said the Bipartisan Policy Center's Sandalow.
"The funding hasn't always been there in order for rural areas to create the infrastructure that's needed to fully adopt remote patient monitoring, telehealth, artificial intelligence in ways that will really be supportive," Sandalow said. "It takes things like updating infrastructure, changing workflows."
Sandalow's recent report found that Maine and Utah are investing in cybersecurity; Indiana, Missouri, and New Mexico plan to modernize their electronic health records; Oklahoma plans to buy hardware and software, subsidize subscriptions, and give technical support to rural providers; and states such as Arizona and South Carolina will use funds to create telehealth hubs or buy remote patient monitoring equipment.
Federal regulators, when creating the rural program's spending rules, also said no more than 5% of a state's total funding awarded could be used to replace electronic medical records systems that already meet federal standards. Sandalow said that means states will focus on enhancements and upgrades to their current systems.
Gainwell Technologies, which operates the systems for dozens of state Medicaid programs, is spearheading another coalition. Rushil Desai, a Gainwell senior vice president, said states' detailed spending plans are "changing in real time."
Maine's Medicaid plan contracts with Gainwell, and the state's initial application listed four contracts worth more than $16 million over 5 years for the company. The state confirmed it has received federal approval for only its first year of spending, which includes a $250,000 contract to implement changes to the state's Medicaid claims system.
James Lomastro, PhD, a senior-care advocate in rural Massachusetts with the nonprofit Dignity Alliance, said he worries that large vendors and health systems will get the state's transformation dollars.
Clinics, home care agencies, and nursing homes that "actually provide day-to-day support in the community are mostly on the margins" of state discussions about how to spend the money, he said. A spokesperson for Massachusetts' Executive Office of Health and Human Services, Olivia James, said state officials would "ensure that everyone has a seat at the table" with training, financial incentives, and direct investments.
Arizona's rural fund budget, which is $167 million for the first year, allocates up to about $30 million for medical diagnostic equipment and technology upgrades, including to electronic health records, specifically for rural healthcare facilities.
But it also prioritizes grants for county public health departments, said Pima County Public Health Director Theresa Cullen, MD. The approved budget includes up to $4 million for grants to support community health workers.
"In these rural communities, you need to be present," Cullen said.
For his patients, Starr said, money is needed for technology upgrades. After all, he said, updated electronic health systems could operate seamlessly and store the documentation needed to keep a patient enrolled in Medicaid.
Updated technology could be exactly what Open Door and other area clinics need to "help keep people covered," Starr said.
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF -- an independent source of health policy research, polling, and journalism. Learn more about KFF.
