Indiana unveils multi-year rural health plan in newly released federal application

Indiana’s application for a share of the federal government’s $50 billion Rural Health Transformation Program lays out a sweeping, multi-year plan to stabilize struggling hospitals, expand essential local services and overhaul primary care in health systems across the state’s 64 rural counties.

The 167-page submission — obtained by the Indiana Capital Chronicle — details the state’s strategy, branded “GROW: Cultivating Hoosier Health.”

The plan is described as a “collaborative effort” to be jointly led by the Indiana Family and Social Services Administration and the Indiana Department of Health.

It outlines 12 major initiatives, including a statewide patient-transfer coordination hub, significant upgrades to Indiana’s health information exchange, and large new regional grants intended to reshape how rural care is delivered.

The proposal was submitted to the Centers for Medicare and Medicaid Services on Nov. 4, one day before the deadline for all 50 states, as required under the law creating the program. Awards must be issued to states by Dec. 31.

The Rural Health Transformation Program is a five-year federal initiative, with states receiving annual allocations of both formula and competitive funding throughout that period.

Half of the annual $10 billion in federal funding will be divided evenly among states with approved plans. The rest will be awarded competitively based on need, program design and federal scoring criteria.

Urgent needs in rural communities

Indiana has 52 rural hospitals, 25% of which have already cut services, according to the Centers for Healthcare Quality and Payment Reform. Rural Hoosiers experience higher rates of chronic disease, fewer local specialists and repeated closures of maternity and emergency services.

The state also conducted a large rural health survey — drawing more than 2,100 responses — to assess local challenges around access, provider shortages, technology gaps, food insecurity and transportation barriers.

Respondents cited long travel times to care, lack of specialty access, difficulty managing chronic conditions and limited behavioral health services as top concerns.

Indiana’s proposal is organized around 12 multi-year initiatives aimed at expanding care access, modernizing technology, improving outcomes for chronic disease, strengthening emergency and maternity care, supporting behavioral health workforce development and distributing large regional grants.

Proposed “Make Rural Indiana Healthy Again Regional Grants” are the plan’s largest investment. The state’s application proposed awarding $600 million over five years across eight regions, with each receiving $40 million to $100 million.

The grant program would require each regional coalition to file a unified application that includes a needs assessment, data-sharing plans, service-delivery innovations, detailed budgets, letters of support and measurable health-performance objectives.

Required outcomes include improved maternal health, reduced preventable emergency department visits, increased telehealth utilization and better chronic disease control.

Regions would be judged competitively, with awards based on population served, strength of partnerships, evidence of innovation and sustainability and plans to reduce duplication in services. A dedicated state support team would train regions, review data, and provide ongoing technical assistance.

Improved technology and training

A different initiative would create a Medical Operations Coordination Center, described in the state’s application as a “24/7 hub for day-to-day hospital operational reporting, patient transfer coordination, and EMS resource alignment.”

The initiative also includes analysis of a Medicaid payment model tailored to rural hospitals.

The estimated cost is $56.2 million over five years, according to the application.

Another initiative seeks to modernize Indiana’s health information infrastructure. The state’s health information exchange, or HIE, is the central network that allows hospitals and providers to share patient records electronically. It currently connects about 120 hospitals but leaves roughly 700 rural facilities outside the system, creating major gaps in care coordination.

Indiana officials proposed connecting 450 of those facilities and testing artificial intelligence tools for predictive analytics, natural language processing and reducing medical errors.

The initiative carries an estimated cost of $66.5 million over five years, which includes incentives to help rural facilities adopt required technology and fully integrate with the HIE.

The application further outlines a plan to launch eight rural cardiometabolic care sites statewide through a “collaborative care model” and training programs, targeting Indiana’s high rates of diabetes, hypertension and obesity. The initiative is budgeted at $15.3 million over five years, covering staffing, care-team development and the establishment of new rural treatment sites.

Amid widespread loss of maternity units, a different part of the plan supports hospitals and EMS agencies seeking “Pediatric Ready” and “OB Ready” designations.

Pediatric Ready status means an emergency department has the staff, equipment and protocols to stabilize and treat critically ill children, and the OB Ready designation reflects similar preparedness for obstetric emergencies and coordination with perinatal centers, according to state health officials.

The application noted that pediatric readiness is associated with a reduction in pediatric mortality risk by up to 76%.

The effort would cost an estimated cost of $45.4 million over five years.

Also in the pitch is an expansion of Indiana’s rural behavioral health training tracks and workforce stipends. The goal, according to state officials, is to increase the “local hire rate in rural communities” and support graduates who “work locally post-graduation for the required five-year period.” The behavioral health workforce initiative is budgeted at $5.3 million.

An emphasis on collaboration

The application repeatedly stressed stakeholder involvement and cited application input from multiple Hoosier offices and groups, including Indiana’s Office of Community and Rural Affairs, Department of Transportation, Department of Homeland Security, tribal groups, managed care entities, the Indiana Rural Health Association, hospital systems and numerous clinical and community organizations.

The federal rural health program was created alongside sweeping federal Medicaid reductions.

Federal spending is projected to fall by about $1 trillion over 10 years, with rural areas expected to lose $155 billion. Nationally, more than half of rural hospitals are operating at a loss, and states across the country are submitting similarly expansive proposals as they compete for the same pool of competitive federal funding.

Health groups warn that Indiana’s rural hospitals rely heavily on Medicaid and often operate on thin margins due to low reimbursement rates.

If the federal government approves Indiana’s plan, grants and formula funds will begin flowing in 2026. The state’s internal schedule shows regional grant applications opening in March 2026, with awards finalized by October.

The Indiana Capital Chronicle is an independent, nonprofit news organization that covers state government, policy and elections.