Good afternoon everybody, I'd like to go ahead and call the Senate Finance Committee to order for the afternoon meeting of Thursday, February 12th, 2026, with me today as Senator Olson. Senator Merrigg, Senator Cronk, and Senator Stedman here. Senator Kauffman and Senator Keel are off at another meeting. So, we have one item on the agenda this afternoon, and we're going to talk about the Rural Health Transformation Program overview by the Department of Health. And before I get into that, I need to correct a warning record. We had a hearing concerning Monashkum High School and a pet rat that was mislabeled. Not twinkle toes. I guess it degraded the rat. It's tip toes The name of the pet rat is tip tose fat Mount Edge comes gymnasiums until such time they catch him in the trap Then they might have another name for him but with that I'd like to have Heidi Hittberg come forward to Commissioner. She's got some trusty aids to help her. This is a Very large significant multi-year challenge Emily Riese, Deputy Commissioner, Betsy Wood, Associate Director, Office of Health Savings. And welcome to Senate Finance. If you can introduce yourself and walk us through your presentation, please. Good afternoon for the record. My name is Heidi Hedberg, Commissioner for The Department of health. So I'm going to start with just a brief high-level overview of the Rural Health Transformation Program on slide two and then I'll transition to slide three and four and just talk about what is this federal grant opportunity and then we'll transitioned to Deputy Commissioner Emily Ritchie and to Betsy Wood, Associate Director for the Office of Health Savings that will provide more details of So on July 4th HR1 was signed into law and it created the Rural Health Transformation Program is a five-year federal investment to improve the care delivery models, to improved health outcomes, and to stabilize our workforce across Alaska. And as I describe, or you hear in future conversations, provider stabilization, what I want you to imagine is currently our providers across the state. They experience low patient volumes, high operating costs, and there's workforce shortages, and they have limited technology infrastructure. all of those really create this very systemic perennial problem that has been very difficult to address. And now we have an opportunity for us to really address those perennial issues that our state has facing. This was a one-time competitive application that is for five years. From the beginning, we have worked very closely with our health care providers across the state, including our tribal partners in developing the grant application. This summer, we should request for information. We had over 160 different entities that responded, that represented well over 400 different ideas, and that really helped shape our application. Our goal has been very simple, that Alaskans would see themselves in this application and Alaska healthcare partners play a critical role in shaping the grant application process. It was an incredibly intensive six-week period of time as we co-wrote this application. We submitted this application to the Centers for Medicare and Medicaid Services in November. And on December 29th, all states were awarded the Notice of Grant Award, Alaska received the award of $272 million. And it is the second highest award. And if you look at per capita, the highest in the US. I think before us, we have a significant opportunity to apply our lessons learned from past reform efforts and work differently to strengthen the health care system. So the next two slides, again, brief overview of the federal grant opportunity and how In other words, what are the guardrails? The Rural Health Transformation Program is a federal cooperative agreement. It's important to note that the Department of Health has experienced managing federal grants. The department currently manages over 170 grants and it's also important to know that there are different types of federal grants that we currently manage and I'll just highlight just a couple of them so you you know, remember the different types of grants the department manages. So there's formula grants. So we have the Child Care Development Grant. Those funds are distributed based off of a formula. We have block grants, so the temporary assistance for needy families. It's a broad based funding with flexibilities for states to design programs within the federal. guardrails. There's also competitive discretionary grants, so we just received an award for preschool development grants. Many agencies can apply. It's competitive. The feds will review, score, and issue awards. And then there's a cooperative agreement that is before us. In the cooperative, we do have other cooperative agreements within the department, public health emergency preparedness, hospital prepared-ness program, the epidemiology and laboratory capacity, the state opioid response. So again, were used to managing these cooperative agreements. They are different, though, that the feds have a substantial involvement in the oversight and implementation. And then there's also been a lot of comparisons to this Rural Health Transformation Fund and the CARES Act or the ARPA funding. Though the Cares Act and ARP were one-time federal During the pandemic and they were very broad from the appropriation that went to the state and I know the legislature had a role in that In wrap-up as you look at slide three what you can see with this cooperative agreement It seems as really involved with regular communication and planning yesterday We met our project officer. They're very familiar with Alaska They are going to be reviewing and approving our key activities budget performance measures and our staffing They'll provide some technical assistance. They will also be evaluating us. And we will be working together as we adjust the work plans over the course of the five years. And then finally, just to highlight for you, you know, the Rural Health Transformation Program, again, is a federal cooperative agreement. These terms are outlined with conditions and federal oversight and how these funds may be used. They are restricted to the federal scope of work so that one-time application that we submitted in the fall really outlines the work plan and the proposed funding uses that is posted on our website. Another common question that get is, does the department have the authority to change the funding structure? We do not, that is within the purview of CMS. And again, I've already acknowledged that this funding opportunity is very different from ARPA and the CARES Act. I'll now transition to D.C. Emily Ritchie. For the record, my name is Emily Richey, Deputy Commissioner with the Department of Health. Looking at slide five, you see six different key performance objectives. And the department developed these as part of the grant application. They tie to the three overarching goals of the program, which is to promote lifelong health and well-being for rural, remote, and frontier Alaskans to build sustainable outcomes driven systems and to drive workforce and technology innovations. They also tie back to six proposed funding uses that we will talk about in the next two slides. The state is not evaluated annually on its progress towards these key objectives. There are over 25 targeted metrics within the application, and the state will be reporting on progress toward those metrics at key intervals throughout the grant awards. But these Key Objectives do outline a vision for where we want to focus the health care system in the future and use of this program. And these are bold objectives, but they reflect the key They reflect our goals of supporting maternal and infant health. Addressing the alarming disparities between infant and maternal morbidity and mortality in rural Alaska. In the northwest and southeast regions of the state, the infant mortality rate is twice that of Matsu. We want to reduce risk factors related to chronic disease. This impacts both quality of life for Alaskans, but also the states' health care spend. Looking at the most recent Medicaid data, the average spending for a recipient with one or more chronic conditions. is nearly six times that of an individual without. So long term, when we think about our healthcare spend and the health of our population, slowing the progression of chronic disease is very important. We know that seniors don't have adequate access to primary care, and as our populations ages, we want to make sure that they can access primary care to avoid unnecessary emergency remutilization and hospital readmissions. We know that there's a need for more specialty services in rural hub communities And we've had some pretty interesting conversations about different ways that we can support that We also know this is a priority for tribal health organizations Health care workers continues to be the largest challenge that. We hear from health care providers We, know the people are the backbone of our health, care system and a recent study by the Alaska Healthcare and Hospital Association showed a 20% they can see rate for health. Care workers in Alaska As our demographic trends continue, we anticipate further pressure in this area, and we need to build out ways where we can address that. And then finally, a long standing goal from the department in the state is to shift healthcare spending from more acute to preventive care. So moving to slide six, those key objectives outlined to a certain degree are vision. But they represent six different proposed funding uses and these slides are dense The proposed-funding uses in the application are actually a 19-page long table But, they are important because they outline the framework and the boundaries for what can be funded through this program These were developed with strong public input you heard the commercial commissioner earlier speak about issuing a request for information in July The projects that were part of that request for information formed the basis of the proposed fund use initiatives that you see in this slide in the next two. The division, the department, when we developed the first draft as a proposed funds use initiative, we sent it out to dozens of stakeholder organizations, individuals, and health care providers around the state. We posted it publicly online and we wrote into the Proposed Fund uses in many cases word for word line edits from the feedback that we received. You see here the first two proposed fund use initiatives, they focus on our people, healthy beginnings, and healthcare access. One item I want to highlight in healthcare Access is at a starting point, something the department plans to launch very quickly. Is a provider gap analysis so that we can better understand where we might have gaps and specialty or primary care around the state. We can build off of existing studies and we could use that to help inform some of our focus areas in future years. The next slide on slide seven identifies two additional proposed funding uses. These are healthy communities and pay for value. So one of the first actions the department will initiate under healthy community is to develop community-led regional health care delivery plans. We plan to launch those in quarters two and three of this calendar year. The goal is bring entities within the community or region together to share the work they do, And this reflects some of our recent experience in the last two years with some of behavioral health regional planning and some of the work that is happening in Fairbanks. We found that when some of different groups came together, whether they were healthcare providers, cities, school districts, or social services organizations, many of them were not always aware of other activities that were occurring within their region. And as we think about improving the system and as we focus on efficiencies within the These community development plans will be important to gain alignment so that we can move forward in a coordinated way. We have also heard a very strong desire to facilitate partnership between organizations, particularly in the last month as organizations begin to think about the projects that might be appropriate for them or to help within their community. They have asked us to identify areas where they may be pursuing something similar to another partner or organization either in their region or the state. And again, we want to helped facilitate that so that we can be efficient in how we're moving forward with our system. and right now the way that we pay for care in many cases does not result in more efficient care and I know that this committee sees this every year between our Medicaid spend numbers as well as our state and employee retiree health plan numbers. I've also seen the recent health insurance numbers across the nation and we have had some of the hardest health insurances increases in terms of years that I have seen in almost a decade. It is expensive and with our aging population At the same time, while our expenses are increasing for patients and providers, we know that in rural communities providers still struggle to be reimbursed in a way that meets the needs that they are providing. The Rural Health Transformation Program, and specifically this proposed funding use, allows both the state and the providers a chance to design and pilot alternative payment methodologies that reflect the outcomes we want to see in our systems. Evaluate the readiness for those initiatives, provide the infrastructure necessary to test and pilot them. And then to provide fiscal support if those initiative end up in a financial loss. Frequently we talk a lot about health transformation, health evolution, and payment reform. But that requires significant upfront investment and it's not often that we have the opportunity to provide that investment when we want to think about changes. Moving to slide eight, these are the last two proposed funding initiatives and they highlight two areas that I think about as the tools or the resources that we need to achieve the first four. So the 1st is workforce and we know again that with our demographic shifts there will continue to be pressure in this area. So, some of the proposed fund uses highlighted here focus on things like developing reskill or upskill programs for Alaskans who may be in mid-career and want to move into the health care sector. Expanding our residency programs, because those residency programs results in physicians coming and staying in Alaska for their career. And then expanding the training capacity for community health aid programs that we know is important and vital to the tribal system. Technology is another powerful tool and the opportunities there are changing quickly. I think about technology and opportunities in about three different buckets. The first is how to improve information and access. Today's electronic health system records is highly fragmented. People can't effectively access their information, and providers can share it. It's especially problematic in Alaska where people are traveling around the state to receive care. So that will be an The next bucket is about new tools. Technology is changing and advancing quickly, and there may be new options available for providers and patients that help identify risk earlier, share more information outside of the office setting, and make it easier for provider to see when a patient is decompensating or experiencing acute issues. That technology is only effective if it works, and we know in Alaska we have the opportunity to challenge technology because our remote locations provide that challenging environment. And then the third bucket is related to data analytics. To support any shift in payment or to think about outcomes, we have to build and advance our data analytics capacity at both a state and a provider level. So moving to slide nine, core focus for the department, and I know for legislature as well, will be sustainability. This is one-time funding. It is meant to shift our system to one that is more efficient with better outcomes It has not intended to replace operating funds or to create a future cliff In every presentation we have we've been trying to focus on sustainability and we will be requiring a sustainability plan for each project But sustainability can look different depending on the project and outlined on this slides are several different categories of projects Next to those are some potential sustainability approaches Some of the projects are time limited. There is a natural end and there will not be the need for ongoing maintenance or operations. So these include things like planning and technical assistance. Others may require ongoing support. And I want to highlight that would be particularly important for things capital improvements, workforce or service lines. And we will talk about this more in future slides, but right now capital improvements are pretty limited just due to the nature of this grant. This is not considered a federal construction grant, this is considered a Federal non-construction grant and as we are learning very quickly there are specific federal regulations that apply to what a non construction grant means. So any capital improvement or renovation will need to be reviewed in advance by our And they will be looking to see if it clearly aligns with program goals. Thinking about technology, service lines or programs, often those are supported through reimbursements of some kind, either third party payers, Medicaid or other types of consistent reimbursement. But often, I think we come to the committee and we ask for permission and authorization to cover new services without having had the chance to pilot those to demonstrate that they do result in cost savings. We rely on evidence from other areas that have implemented this, and that's not a bad approach. But with the Rural Health Transformation Program, we have the opportunity now to test and pilot. some of these approaches before we determine that they should be covered through other types of reimbursement. So this, I hope, provides a framework for how we're thinking about sustainability. For the record, Heidi Hedberg. So on slide 10, the notice of funding opportunity, they went out to all states by the Centers for Medicare and Medicaid Services. Outlined eight different technical policies score policies, and that's what you see on this slide These are not policies that states created. This is something that was created and I did well not created, identified by centers for Medicare and Medicaid services. States needed to identify if they were already implemented, if there was a commitment to implement, or no plan to implemented. And as I had mentioned earlier, we had robust engagement with our health care providers across the state. And there is a resounding request for the Department of Health to be as competitive as possible. when we were submitting this application. And so what I highlight for you is a status update on these eight different policies. Two of which engage the legislature to have a conversation around compact licensing that include five different provider types and scope of practice for pharmacists. There is legislation that has been introduced for some or parts of pieces related to compact licensing and scope of practise. The other policies will be leveraged through changes just funding through the Rural Health Transformation Program. One more note, I should say, with these policies, when we made that commitment, it did relate to an increase award amount to the state. So, on slide 11, as has been alluded to, there are unallowable uses of the Rural Health Transformation funding, and so what we'd like to highlight for the committee and what This federal cooperative agreement is a non-construction grant, so no new construction. CMS will allow for renovations. We do not have the definition of how far that renovation can go. We are still waiting to understand what those definitions are. And the third bullet points, funding clinical services that are already covered by insurance, you cannot use rural health transformation funding to cover something that is already covered in insurance. So, if there's an existing program, you cannot supplant those existing funds. However, there are many very successful programs in Alaska that can expand, and you can use funding to expand those established programs that are working really well. We cannot use the funding for broadband infrastructure internet installation costs and certain telecommunication equipment nor provider loan Repayments so we cannot usus fund to pay off or reimburse on student loans that said D.C. Ritchie talked about strengthening the workforce, and you may recall that we did put in initiatives around recruitment and retention. They do come with a commitment that that individual would work in that community for five years. We are working to understand if that person can move within communities, if they can stay in state, and to the degree of what that five-year commitment looks like, but there's a lot of focus that have on workforce recruitment, and retension. And then finally, we cannot use this funding for direct payments, so cash assistance or gift cards, and it cannot supplant state contribution to the Medicaid program. And finally no food purchases, so we can not use the funding to purchase food. For the record, my name is Betsy Wood, and I'm the director of the Office of Health Savings with the Department of health. Slide 12 summarizes the federal limits on how much of a state's total Rural Health Transformation Program award may be used for certain types of costs. These caps apply across all Rural health transformation program funded activities, both at the state level and for community-based subrecipients combined. The state is responsible for tracking expenditures and ensuring compliance across of these funded activity. So, first, administrative expenses, including both direct and indirect costs, are limited to no more than 10% of the total award per budget period. Provider payments, such as payments to test or pilot new or expanded services, cannot Third, electronic medical records system replacement costs are capped at 5% of the total award per budget period. It's important to note that this cap only applies if an electronic medical record system is being fully replaced and the existing system was already high-tech certified as of September 1, 2025. So that high tech certified means that the electronic medical systems in place would already be meeting federal standards for security, data basic functionality. So our understanding is that upgrades or enhancements to an existing high-tech certified system are allowable and are not subject to this 5% cap. Funding for emerging health technology investments is capped at the lesser of 10% of the total award per budget period, or $20 million, whichever is lower. And I'd like to note that the slide reflects the percentage cap, but inadvertently admitted This is also a fairly narrowly defined cost category. It's intended to support early stage health technology solutions such as those that address chronic disease management or access to care in rural communities that are unlikely to be developed through traditional government funding or private market investment. And finally, as the commissioner noted, there are limitations around capital expenditures In addition to those limitations on what that means, expenditures in this category are capped at up to 20% of the total award per budget period. Slide 13 shows the federal funding timeline for the Rural Health Transformation Program and how and when funding flows to the state over time. As we've noted before, this program was awarded by CMS through a one-time competitive federal application. But funding is provided as five separate annual awards, each are tied to a distinct budget period. The first budget is shorter than the others. It's 10 months, while each of the remaining four budget periods are 12 months. These budget periods align with federal funding. That's been appropriated for this program from federal fiscal year 2026 through federal fiscal years 2030. For each budget period, the state has, until the end of the following fiscal year, to spend the funds that are awarded. So, in practical terms, this creates a two-year spending window for each annual award. The state, has one year to obligate the fund, and then a second year to finish spending them, which means that projects need to get underway quickly after the funds are rewarded. Beginning in March of 2028, CMS will begin sweeping unspent funds All of the Rural Health Transformation Program funds, including any redistributed funds must be fully spent by the end of federal fiscal year 2032. So maybe before we go on to that next page, help me with on page 10, referring to the policy commitment of a presidential fitness. It's got to be some regulations, I think, made, established and if we miss that deadline or how hard is that dead line? to the chair for the record, Heidi Hedberg. So we have been engaging in conversations with the entities that are responsible for updates to regulations and the administration as well aware of the timelines. And so right now, I think that we're gonna be on track. And then if you don't make it, do we also have to, is there a penalty to have the painting back or? To the chair there, it depends on the different policy commitment, but yes, there could be a clawback the percentages differ for each of the different policies and There's a sub stack because this was a competitive application whether it was at commitment to or the state already had it So it's hard to say what exactly that claw back amount will be per policy and then do we have to do? Other regular is there regulations or or statutes that you need to change in the committed to in your application? It helped me with that because this is all new to us. We're trying to figure this out. Yeah to the chair so compact licensing does require a conversation with the legislature looking at the five different types of licensed health care providers, physicians, physician assistants, psychologist, emergency medical services, and nursing. The second is around scope of practice for pharmacists. So it was a deadline tomorrow or when's the deadline? We have to have the stun. To the chair, the headline would be December 31st of 2028, 2027. 2027. I stand corrected. The dates are listed on the slide deck. Okay. Thanks. And for the record, this is Betsy Wood with the Office of Health Savings on slide 14. It's important to understand that future rural health transformation funding awards may vary Although this was a one-time federal application, CMS does not automatically release funding each year. Each year's award is contingent on how the state is performing against its approved rural health transformation plan articulated in our application and how we're progressing towards our goals. So in general, CMS is looking at several things. Are we implementing the program as approved? Are me meeting the timelines and the milestones and commitments being included in the application? And are we using the funds appropriately and on schedule? CMS will be monitoring our progress in several ways, including regular check-ins with the department's program team, required data submissions, and formal programmatic and financial reporting. Throughout the life of the grant, the state will submit quarterly and annual programatic reports along with regular required financial reports. Our first annual programmatic progress report is due August 30th of 2026 of this summer and it covers activities from December 29th 2025 through July 31st of twenty twenty six in addition to that this regular reporting each year the state must submit an annual non competing continuation or NCC application to the Centers for Medicare and Medicaid Services, also at the end of August to request the next budget periods funding. This application will summarize our progress to date, confirm our continued compliance with federal requirements, and update budgets and timelines as needed. CMS will review that submission before releasing the following year's Finally, CMS will be evaluating state's progress in comparison to other states, so we'll be graded on a curve effectively. Their states are reviewed alongside one another, and that comparative progress can influence future funding decisions, particularly as unspent funds are redistributed later in the program. So moving on to slide 15, I think it's important to understand that the majority of the Rural Health Transformation Program funds are intended to go out to Alaskan communities through subrecipient grants to local organizations and entities that are really doing the work on the ground. To support that, the department has contracted with the Alaska Community Foundation to help administer our sub-recipient awards, and we've structured four funding pathways to distribute Readiness grants will help organizations at an early stage such as when an idea is still forming or when basic capacity needs to be built out Such as administrative and report and reporting systems that are needed to manage federal funds Planning grants. We'll support projects at the clear idea that still need time or resources to refine the design Build partnerships and establish a work plan before launching project implementation grants will fund projects that are fully developed, that are aligned with the Rural Health Transformation Program goals, ready to start right away, and have the people and systems in place to move forward. Targeted innovation projects are a little bit different from these other pathways. These will be state directed projects designed by the department to address high impact needs or projects for a coordinated statewide approach may be most appropriate. The department's immediate focus is on building out the first three pathways with targeted innovation projects likely to fall a little later in the program. Slide 16 provides a high-level overview of the planned funding pathway process for community-based entities. The registration is planned to open February 17th, that's next Tuesday, and this initial round will close on March 11th is the current plan and all applicants leave the same online portal hosted through the Alaska Community Foundation regardless of the type of funding that they're seeking. These letters of interest will help us understand what organizations are trying to do, their level of readiness and alignment with program goals, and help identify which funding pathway may be the best fit. Based off of that information projects may move in one of several directions Readiness and planning grants will likely be awarded in April. These grant pathways are designed to move quickly and support early work Implementation grants would require a full proposal which we expect to request in March with anticipated awards in May and our targeted innovation grants Will follow a separate timeline which is still to be determined We'll be communicating with the public as we move forward through information on our website as well as continued webinars about the process and I do want to note that underpinning all of this is that coordination and cooperation with The Centers for Medicare and Medicaid Services and collaboration with our program team to ensure that we're on board with how this process is unfolding. Slide 16 highlights the types of entities that may apply for rural health transformation program funding. This list is intentionally broad. It's not exhaustive, but it is meant to give a sense of the type of applicants that we expect to see, including healthcare providers, tribal health organizations, emergency medical services, schools, local governments, community organizations and non-profits. Organizations in any community across Alaska are eligible to apply so that includes entities based in urban or hub communities. We know that in Alaska, many non rural areas provide healthcare to Alaskans that are living in remote or frontier communities, so what matters most is how the project benefits Alascans, strengthens Alaska's healthcare system, and aligns with the Strong proposals will be Alaska-led and clearly show how they build capacity in state and deliver direct benefit to Alaskans and keep the impact infrastructure and value here in the state For the record Heidi Hedberg, so our final slide is to stay informed. This is an incredibly rapidly evolving program When you think about six weeks to submit a competitive application, it's been about 6 weeks since we received our notice of award and we have a contract with the Alaska Community Foundation and were opening up our portal. So we are on time and the goal is that we work in partnership together across the state so that we truly can strengthen the healthcare system. And so I think information is incredibly valuable. on our new Department of Health website for those listening to this hearing. I would really encourage you to go to the Department of health website in the search bar, just type in rural health transformation and it will take you this page or on this slide, it's health.alaska.gov, including our convenings, a list of, and it's 19 pages of the initiatives that proposed funding uses and are frequently asked questions that we continue to update on our website. For those that have questions specifically about their project ideas, they can submit it to doh.rhtpatalaska.gov and we will do our As they come through the inbox We have questions Thank you mr. Chair Specifically, I'm looking at EMS does that go to volunteer EMS and and how could that help our volunteer? MS that serve everybody out there, right? But with very little funding Through the chair, Senator, I am personally really excited about the work that we can do strengthening the emergency medical services across the state. I know that there are limited resources for EMS and so we did a specific webinar last week for EMS providers and that recording is on our website in addition that I met and presented with the fire chiefs last week and educated them about this opportunity. Specifically, we're looking at how we can support volunteer EMS agencies in strengthening their staffing, educating them on billable services and helping them stand up that space. I think that there's some policy considerations that we need to evaluate right now EMS is only reimbursed if they transport to an emergency department, but not all patients need to go to the emergency department and so we needs to explore transport to alternate destination like a clinic. And treat in place when EMS is called out, maybe that they can provide the care under medical direction from their EMS medical director there on scene and have it reimbursable. So we're really looking forward to using the RHTP funding to really step into that space and be innovative and how we can support our rural EMS agencies. Thank you. We're near the questions. Seeing none, I'd like to go ahead and thank the department for coming forward. I'll be coming back many, many times over the next few years because this is quite a sum of money and programs you have to stand up ASAP and then we're a challenge here with trying to get our arms around just our role as appropriators in this grant process. Thank you for putting this together and coming forward. So that will conclude the meeting today. Monday morning February 16th at 9 a.m. We'll be posting the schedule later as we figure out what it is We are adjourned at Clock you look at 215 Yeah, we're adjourn