STATE NEWS (MT) – Amendment to fund Medicaid provider rates to benchmark fails

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[MM Curator Summary]: Turns out they didn’t just do what the consultants said. Still increased the provider payments by $88M (but of course providers say that’s still not enough).


Clipped from:

An amendment to further increase Medicaid provider reimbursement rates failed in a 13 to 10 vote Tuesday before the House Appropriations Committee.

Carried by Rep. John Fitzpatrick, R-Anaconda, the amendment would have brought provider rates in line with the benchmarks suggested by Guidehouse, the team commissioned by the state to assess reimbursement falls short in four essential human services departments.

The amendment also added a 3% inflationary increase for each year between 2021 and 2024. An additional 3% increase would have covered 2025.

“The concern I have with this issue is that we’re making a big bet. And the bet is this: we’ve either provided them with enough money so that they can continue on and go through the next biennium and survive. Or two, we’ve short changed them and we’re going to lose service providers,” Fitzpatrick said.

Over the last two years, providers serving a large population of Medicaid recipients reported a 14% increase to their expenditures, much greater than the typical 2% inflation seen in a typical biennium, Fitzpatrick said.

Inflation, provider shortages and wage pressures have pushed services to the brink of closure in the years since the pandemic.

Perhaps the most significant being the 11 nursing homes that closed in 2022. The sudden decrease in skilled nursing beds has created a bottleneck in Montana’s hospital systems, creating a significant financial burden.

Rep. Bob Keenan, R-Bigfork, defended the work done in the Human Services Subcommittee where legislators voted to increase provider rates from the governor’s proposed budget, but did not opt to fully fund rates to the benchmarks.

“We had an opportunity this session to help (with the traditionally low reimbursement rates) and I was pretty excited about it because it’s been fairly lonely trying to advocate for these providers across the state,” Keenan said. “…I resist this amendment just for the simple fact that I’m really proud of what our subcommittee has done at this point in time,” Keenan said.

With the subcommittee’s budget vote, $87.5 million is directed to provider rates. With the Medicaid match, that amounts to $305 million directed into the Medicaid system.

Benchmark rates ‘foundational’

While the infusion of cash marks a historic budgetary increase for these Medicaid providers, dozens of leaders representing organizations for SUD treatment, children and adult behavioral health, nursing homes, in-home care providers, aging services, developmental disabilities, and more encouraged lawmakers to bring reimbursement in line with the benchmark rates.

“Funding these rates is not a fix for everything but it really is foundational. It’s what needs to happen first before we can begin to make a lot of those other fixes within the system,” said Erin McGowan, who spoke in support of fully funding the benchmark rates at an appropriations committee meeting last Thursday. McGowan is a lobbyist for various provider groups across the state including Homecare Montana and Confluence Public Health.

What’s missing from the subcommittee’s budget, said McGowan, is a regular cost of living adjustment that would prevent future underfunding of these services.

Many of the services included in the rate study are highly sensitive to inflation. Group home providers, for example, provide food and transportation to residents. When grocery and gas prices go up, so do the group home’s expenses.

Joshua Kendrick, CEO of Opportunity Montana, said that the rate increase would equate to a wage increase for staff.

Many who spoke during public comment explained that the staffing shortages are, in part, due to the inability to offer a competitive wage to current and future employees who could make better money working in food service.

Over the course of the pandemic, Youth Dynamics, which provides mental and behavioral health services for kids, lost 56 full-time employees and 83 part-time employees, said Dennis Sulser who represented the organization at the hearing.

Since July 1, 2022, 43% of the employees who provided a reason for their departure from Youth Dynamics said it was due to low wage or better job opportunities elsewhere, according to Sulser.

Countless providers expressed to lawmakers that the benchmark rate would just barely bring reimbursement rates up to their current costs.

Nonetheless, health department director Charlie Brereton, again pushed for the governor’s initial budget proposal in the Thursday meeting. The proposal mostly consists of one-time-only funding that would close 58% of the gap between current rates and the benchmark in 2024. In 2025, the rates would decrease, covering only 36% of the gap in 2025.

Brereton said the proposal centered on being responsive.

In an effort to address questions about not fully funding the benchmark rate, Brereton read a statement.

“The benchmark is average costs and reflects a wide array of provider practices. The average costs are important in identifying the accuracy of a rate but ultimately reflect an average of the costs. It’s a compass that shows where we should be headed, but not necessarily a minimum of what is needed to stabilize any provider type,” Brereton said.