ADECA Director Kenneth Boswell speaking to lawmakers about the Rural Health Transformation Program on Feb. 4, 2026, in the Alabama State House in Montgomery, Alabama. Boswell said that for the federal grant to be "transformational" and sustainable, the state, hospitals and physicians will have to think outside the box. (Anna Barrett/Alabama Reflector)
A state official Wednesday briefed lawmakers on the state’s plans to spend just over $200 million in federal grants meant to partially offset Medicaid cuts, mostly on rural health and workforce.
Kenneth Boswell, director of the Alabama Department of Economic and Community Affairs (ADECA), told a group of lawmakers that make up the Alabama Rural Health Transformation Advisory Group the distribution of the awarded funds between the 11 initiatives the state submitted in its November application.
The state will receive $203.4 million from the program, part of the One Big Beautiful Bill Act (OBBBA) that was signed into law last summer. It distributes $50 billion in grants through the U.S. Centers for Medicaid and Medicare Services (CMS) to the states over five years for rural health care.
“This was resubmitted on January 30, 2026, and they have up to 30 days to respond to this,” Boswell said of the distribution plan and CMS. “We did have a technical assistance call with them last week. They said that they would do their best, CMS, to expedite as soon as they can.”
According to a brief from KFF, a national health policy research organization, the fund could partially offset just over a third (37%) of the estimated federal Medicaid spending cuts in rural areas, which are projected to be $137 billion over ten years.
According to the University of North Carolina’s Sheps Center, nine rural hospitals have closed in Alabama since 2009. Only 30% of the state’s rural hospitals have labor and delivery units, leaving many expectant parents to drive long distances for care. Alabama is one of ten states that has not expanded Medicaid.
Alabama’s hospitals have long pushed for expansion, saying it would help hospitals on the brink of collapse survive, but Republican leaders have resisted it.
While Alabama House leaders have signaled openness to a public-private hybrid approach to expansion, the Senate has been hostile, and removed a provision from a 2024 gambling bill that could have provided money for the program.
Boswell said Wednesday in an interview that the state will reapply for the funds every year, and it can request different amounts for the initiatives as they progress. The state has until Sept. 30 to spend the money awarded by the federal government.
“In the application, after it’s awarded, if we saw that we were not going to be able to move or get rid of that money in those pots, then we can ask to move that to another pot, but CMS would have to approve it,” Boswell said.
The state originally applied for $200 million in first year funds, but CMS awarded Alabama $203.4 million. Boswell said the state had to resubmit a plan for the additional funds and had not heard back from CMS as of Wednesday morning.
Boswell said that ADECA is also in search of a consultant that is familiar with federal processes. Once a consultant is selected, hospitals can apply for funds to be directed to them so long as their needs align with the initiatives, Boswell said. The Legislature is not appropriating the money, he said, it is completely controlled by the federal government.
“Pretty much, your hands are tied. It’s going to be what the federal government allows,” House Speaker Nathaniel Ledbetter, R-Rainsville, said. “It’s gonna be spread out based on what the federal law allows us to do. I think it’s important that we all understand that.”
After Gov. Kay Ivey announced the state’s awards for the first year, the Medical Association of the State of Alabama (MASA), a group representing Alabama’s doctors, asked for some of the money to be directed to addressing the state’s physician shortage. The largest distribution of funds in the first year will go to the Rural Workforce Initiative. A message seeking comment from the MASA was left Wednesday afternoon.
Boswell said in an interview that the goal of the program is to transform rural health care and to do so sustainably.
“I think it’s a good start. You can’t do the same old thing, expecting different results,” Boswell said. “I think these dollars can be transformative if people start thinking outside of the box, I think that’s key to it. Once you start thinking outside the box, then you’ve got to think about the component of how you’re going to sustain that with one time money.”
A message seeking comment from the Alabama Hospital association was left Wednesday afternoon.
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Author: Anna Barrett