Vermont receives $195M federal grant for rural health care transformation

Health Watch Minute December 30, 2025

A doctor provides remote neurological care to a Dartmouth Health patient in the hospital. Photo courtesy of Dartmouth Health

Vermont is set to receive $195 million from the Centers for Medicare and Medicaid, the federal body announced on Monday.

The money comes as part of the federal government’s new Rural Health Transformation grant program that Vermont’s Agency of Human Services applied for in November. The award is almost two times what the state had expected to receive.

“I was absolutely thrilled when I saw the number,” Jill Mazza Olson, the director of Medicaid and health systems at the Agency of Human Services, who oversaw the application process, said Tuesday.

Vermont bids for new federal money to boost rural health system

Now, she and her colleagues are rapidly mobilizing to utilize these funds.

The grant funding was allocated as part of the One Big Beautiful Bill Act, which passed in July, in an attempt to mitigate some of the harm Medicaid cuts are expected to have on rural hospitals. Nationally, the program will make $10 billion available each year from 2026 through 2030. Half of that will be distributed equally to states, while the other half is awarded based on additional criteria.

Nationally, the average award was around $200 million, and ranged from $147 million for New Jersey to $281 million for Texas, according to the Centers for Medicare and Medicaid. Compared to other rural states, Vermont received among the most money per-capita. New Hampshire was awarded $204 million while Maine was promised $190 million; though far less rural, Massachusetts is set to receive $162 million.

The Agency of Human Services had expected to receive the annual $100 million promised to every state, Olson told VTDigger after submitting the application in November, but the agency proposed a budget about twice that size.

Since the federal government has promised almost the entirety of what Vermont applied for, the state’s plan will require fewer revisions before being implemented. However, Olson said it’s too early to say exactly what the final plan for the funds will look like. The Agency of Human Services will work on building a more granular plan before the federal government releases the funds to the state, she said.

The grant includes funding to hire staff who can oversee the award’s implementation. Hiring a project manager is high on Olson’s to-do list, she said.

She expects some of the state’s proposals for workforce development and tuition assistance for providers like nurses and home health aides will be among the first things the state can put into action with these new funds, since many of their spending structures already exist.

Other initiatives will take more time to flesh out — like bolstering the use of telehealth to broaden speciality care in rural hospitals or in people’s homes, utilizing mobile health teams, or expanding models that incentivize primary care.

The funding is one-time money, so Olson said it’s important to treat it as a supplement to ongoing work, not a lifeline. She said the state intends to build on health care reform already in process under Act 167.

“This is not our health care reform plan,” Olson said of the grant. “This is an opportunity that we’ll use to support all of the health care reform work that we’re already doing in the state.”

Still, many see the money as a boon to the state as rural hospitals and patients face the persistent challenges of rising costs and declining access.

“This is good news for Vermont, and I’m appreciative to the Trump Administration for their partnership on this, as we work to advance our shared priorities of rural health transformation,” Governor Phil Scott said in a Monday press release. “While there are still implementation details to work out, this significant investment will help us build on the good work we’ve started to make rural health care more affordable and accessible.”

The Agency of Human Services will face pressure to spend all the funds in the coming year. Though the state can negotiate for more money in the future, this year’s allocation is not expected to roll over at the end of 2026.

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All gifts TRIPLED! We’re $190K from our goal. Together, we can close the gap by midnight.

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