Montana subcommittee boosts provider rates, leaves larger hospitals out

By: - February 16, 2023 6:42 pm

The Montana Department of Public Health and Human Services (Photo by Eric Seidle/ For the Daily Montanan).

Underfunded Medicaid providers in Montana will get a bigger rate increase than the Gianforte Administration proposed, but they’ll still be an estimated $49 million short of their need for the biennium, according to initial votes Thursday in a legislative subcommittee and a consultant study of rates.

One group of providers didn’t get an increase, however.

The subcommittee voted to decline a proposed boost in funding for hospitals of $19 million during the biennium.

The committee’s vote to deny hospitals a rate increase, while giving a rate increase to every other provider group, is a blow to Montana’s community hospitals,” said Katy Peterson, with the Montana Hospital Association, in an email.

A national consultant recently evaluated rates for programs such as adult behavioral health, mental health, disabilities and senior and long-term care.

This week, the Joint Subcommittee on Public Health and Human Services started voting on funding for the health department, the state’s largest agency with a $7 billion total budget.

Adjustments to provider rates have been of particular interest this legislative session.

First of all, 10 nursing homes in Montana have closed in the last year, citing inadequate funding.

Secondly, a couple of exhaustive studies commissioned by the state show Montana needs to increase its reimbursement rates — generally by 22%, or $27.7 million a year, in state money — or risk being unable to provide services to vulnerable people.

The Gianforte Administration had proposed a budget that funded a portion of the gap between the current rates and the recommendation for providers.

The governor’s budget would have funded 58% of the gap in the first year of the biennium and 37% in the second year, an increase the Department of Public Health and Human Services said included $25 million of “historic” one-time funding.

State agency officials had said the proposed increase was a ramp up, but some members of the health care community called for fully funding reimbursement rates given results of the long awaited study.

On Thursday, the subcommittee rejected a proposal from Sen. Chris Pope, D-Bozeman, to fully fund the recommendations in a study by Guidehouse, the national consulting firm.

In a lengthy speech, Pope said the legislature had an opportunity to set Montana on the right course for Medicaid clients and for families and communities for the next generation.

“What we have is a fire on deck, and we’ve got to put it out so there’s some stability, so our providers are taken care of,” Pope said.

Fully funding those recommendations would have sent roughly $343 million — $107 million in state funds and $236 million in federal money — to providers for the biennium, according to a spreadsheet of new budget proposals the subcommittee considered.

Instead, the subcommittee approved a smaller increase proposed by Chairman Rep. Bob Keenan, R-Bigfork. It voted to allocate $294 million for the biennium — roughly $84 million in state funds matched with $210 in federal money.

That’s some $24 million less in state funds than the full recommendation, but it’s $22 million more than providers would have received under the governor’s proposal, according to the Montana Budget and Policy Center. 

“While the joint subcommittee took some encouraging steps to provide additional support for health providers serving Medicaid patients, the budget sits well below the state’s own independent analysis of what is needed to get reimbursement rates to the actual cost of care,” said Montana Budget and Policy Center Executive Director Heather O’Loughlin in an email.

However, legislators chose to make the $25 million of one-time only money the governor had proposed a permanent addition to rate increases instead. It will be spread evenly during the next two fiscal years.

Some groups that were not part of the Guidehouse study received 4% increases to provider rates, but in separate action, the subcommittee voted to exempt in-patient hospitals. The Governor’s Office had recommended they receive a 4% increase each year. 

In an email, Peterson from the Montana Hospital Association said larger hospitals are already in “dire financial situations.” When they hurt, she said, smaller ones do too. 

The subcommittee will continue its work Friday.

Editor’s note: This story has been updated to correct Heather O’Loughlin’s name.

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Keila Szpaller
Keila Szpaller

Keila Szpaller is deputy editor of the Daily Montanan and covers education. Before joining States Newsroom Montana, she served as city editor of the Missoulian, the largest news outlet in western Montana.