The Health and Human Services Department said Brownback's decision is a setback for his constituents.
"We are disappointed that Kansas has given up an opportunity to be a leader in the development of technology for state exchanges, which could have benefitted the citizens of Kansas as well as those in other parts of the country," an HHS spokesman said.
Kansas had said it would use its grant to link its Medicaid system to the state's insurance exchange — one of the biggest logistical undertakings that states face as they move toward setting up exchanges.
It also said it would study a regional exchange that would combine part of Kansas' exchange with Missouri's, though that approach fell out of favor after a closer look.
Kansas is the second state to return an early innovator grant. Oklahoma returned its $54 million grant in April.
The seven states that received early innovator grants were the only ones to apply.
— This post was updated at 4:15 p.m.