Illinois will seek $1 billion in federal funds intended to support rural healthcare, with a focus on transformation, barriers to care and building the workforce. [Health News Illinois]

Department of Healthcare and Family Services Chief of Staff Dana Kelly told members of the Medicaid Advisory Committee that the application focuses on those three pillars through written public comments from over 100 organizations and other stakeholders, as well as public listening sessions and calls with organizations affected by the federal cuts.

“This whole strategy, robust as it was… was done in six weeks,” she said.

The Department of Health and Human Services said last week that all 50 states submitted applications for the $50 billion in rural healthcare funding. 

Award winners will be announced by the end of the year, and funding will support rural health innovations that promote preventative care, improve sustainability, test new models of care delivery and support technology innovations.

The first $25 billion will be awarded to all states that submit an approved application. The second $25 billion will be allocated based on factors that include rural data and other policies that align with the Trump administration.

The funds will be given out over five years, with Illinois hopeful to receive $200 million annually.

Kelly said the transformation funds are focused on hospitals and other providers in rural communities, with the hope that the dollars can support efforts to integrate care across regional communities where there may be limited options to services like primary care and behavioral health.

The agency also wants to look at ways to support emergency medical services in rural communities through the funds.

Kelly said they also want to look at technology to address barriers to care. That can include programs that connect specialists from other parts of the state directly to rural patients.

She said there are several aspects to improving the rural workforce. Along with investing in programs like community health workers, the state is also looking to support programs that create apprenticeships and bring high school students into their local providers to build interest in a healthcare career.

Illinois officials have repeatedly stressed the funds are far from what is needed to make up for the loss of funds that rural providers are expected to see as part of the cuts to the Medicaid program and other federal reductions.

In other business, HFS Policy Director Emma Watters Reardon told members they continue to work toward the implementation of the federal tax and spending bill in a way that minimizes the loss of coverage and service reductions.

Most changes to Medicaid will not take place for at least another year, such as the work requirements coming in 2027.

Reardon said they are also focused on how to meet the federal law’s requirement to reduce hospital state-directed payments, as well as the restructuring of the nursing home and managed care organization taxes to be in compliance with new uniformity laws.

“We plan to pursue (state) legislation here at HFS — pending further guidance from federal CMS — on how we can do that in an allowable way,” she said.

Phasing down the hospital and MCO taxes to meet the federal hold harmless threshold will likely not require legislation, Reardon said.

Illinois will be required to reduce the state-directed payments to hospitals by about three-and-a-half billion dollars over five years.

To replace all of this lost federal funding associated with the changes, the state’s budget allocation to the Medicaid program would have to increase by $1.7 billion annually by fiscal year 2031.

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