Vermont receives $190M in the second year of federal rural health awards

Vermont is set to receive nearly $190 million in 2027 from the federal Centers for Medicare and Medicaid Services in the second year of the federal rural healthcare transformation program. 

In 2026, CMS awarded Vermont $195 million, which the state has just finished awarding to more than 200 projects statewide. 

The second year of the five-year program is expected to look a lot like the first, according to Vermont’s Medicaid and health systems director, Jill Mazza Olson, who oversees the project in the state. 

Olson and her colleagues said they submitted the state’s year-two proposal hewing closely to its first-year application, which prioritized projects under four broad categories: bolstering the healthcare workforce, strengthening primary care, moving care outside of hospitals and investing in how healthcare providers share services.  

“It’s not an opportunity to start from scratch again,” Fran Hodgins, the deputy director of rural health transformation for the state, told state lawmakers during a special October meeting of the Healthcare Reform Oversight Committee. “CMS has been pretty clear that what we’ve been awarded for in our original application, those are the activities that we’ve been awarded for. We don’t have a lot of flexibility to add or remove things from that list.” 

But some lawmakers are skeptical about how the second year will look, given the first year’s emphasis on concrete, one-time work, such as infrastructure upgrades or investments that allow clinicians to buy technology.

“I’m struggling to realize how on Earth we’re going to spend that much money on the same things,” said Rep. Alyssa Black, D-Essex Town, who chairs the House Health Care Committee, during that same October meeting. 

The federal government gives the state some wiggle room to award money to different groups under the same project umbrella, said Samantha Hefferon, director of the rural health transformation for the state. 

“It doesn’t necessarily mean that we’re giving the same amount of money to the same amount of people for the same thing every year. It can adjust,” she said. “What has to remain the same is our initiatives and the activities to go towards those initiatives.” 

Hefferon said that she and her team intend to look at different geographic areas, provider types and where there are gaps that need to be filled. 

The first year’s projects include $32.3 million for facility upgrades at clinics, rehab centers and hospitals, millions for clinicians to adopt telehealth technology, AI scribing tools and remote patient monitoring. Additional funds have been allocated for workforce development, through projects such as tuition benefits, the establishment of training hubs and development of the Maple Mountain primary care residency program.

The federal funding is only set to last for five years, so Olson, the state’s Medicaid director, has stressed the importance of treating it as a supplement to ongoing work rather than a sustaining source of money.

The federal dollars were included in 2025’s One Big Beautiful Bill Act as a response to the impact Medicaid cuts are expected to have on rural hospitals — a cut that many analysts  expect to dwarf the $50 billion the rural health transformation program plans to distribute among states in annual allotments of $10 billion between 2026 and 2030. One estimate from the health research group RAND said state Medicaid funds are set to lose $665 billion between 2025 and 2034 with the cuts. It’s a loss that rural hospitals, which rely on Medicaid dollars, are expected to feel the most. 

Read the story on VTDigger here: Vermont receives $190M in the second year of federal rural health awards.