News68th Session


Lawmakers take first steps on adjusting DPHHS provider rates as Montana budget work goes forward

Montana DPHHS
Posted at 7:16 PM, Feb 21, 2023
and last updated 2023-02-21 21:16:20-05

HELENA — With the 68th session of the Montana Legislature approaching its halfway point, state lawmakers are starting to put their stamp on the state budget.

Over the last week, six joint House and Senate subcommittees – each specializing in one section of the state budget – have been holding the first votes to reshape House Bill 2, the main state budget bill.

“This is the first step in what more than likely is a five- or six-step process,” said Rep. Bob Keenan, R-Bigfork.

Keenan chairs the subcommittee that handles by far the biggest section of the budget: the Montana Department of Public Health and Human Services, which is set to include more than $7 billion over two years.

“I love being in House Bill 2, because I feel like you can direct the money to take care of people that can’t take care of themselves or struggle taking care of themselves,” he said. “Where you draw that line in the sand is what we’re going to be debating over the next ten weeks.”

One of the biggest topics of discussion in the DPHHS budget is a proposed increase in the reimbursement rate the state pays to Medicaid providers for services like behavioral health, senior and long-term care and care for people with disabilities, as well as nursing facilities. Advocates say the current rates are far below the actual costs of providing these services, and that’s making it tough for them to recruit workers – and, in some cases, to maintain their operations.

DPHHS commissioned studies from the consulting firm Guidehouse, to determine “benchmark rates” for continued quality services. Those studies showed the current rates for each type of service varied wildly in how close they were to benchmarks, but they averaged over 20% lower.

In Gov. Greg Gianforte’s initial budget proposal, DPHHS proposed raising rates by a portion of the difference between the current rate and the benchmark. In addition, they called for adding $25 million in one-time-only funding for the first year of the two-year budget cycle, as a way to stabilize the systems of care. Overall, the department said they would cover 58% of the rate gap for the first year and 36% in the second year.

During executive action last week, Republicans on the subcommittee instead voted to take $23.5 million of the one-time-only funding, spread it between the two years and make it part of the base funding. Keenan said that would bring reimbursement rates well over 90% of the benchmark by 2025.

Keenan said it didn’t make sense to essentially raise rates in the first year, then cut them. He said GOP members wanted to be cautious and felt that going all the way to the benchmark rate would lead to some providers being overpaid.

“I’m satisfied right now that, here we are on Day 32, 33 of the Legislature, we’ve made a good-faith effort to put some grease on a squeaky wheel,” he said.

But Democrats on the subcommittee remained disappointed with the outcome. Rep. Mary Caferro, D-Helena, is vice-chair of the House Appropriations Committee and sits on the subcommittee on health and human services. She said during a news conference Tuesday that what Republicans allocated simply wasn’t enough, especially in light of ongoing closures of nursing homes and other facilities scaling back services.

“There’s community providers, and they are an important part of the continuum of care – people want to live in their homes “It’s silly to say, ‘Okay, we’ll fund you, but leave a big gap.’”

Caferro said it would have taken another $12 million per year to fully fund providers to the benchmark level, as Democrats called for. She’s introduced House Bill 649, which would require the state to raise rates to the full benchmarks from the studies and add an annual adjustment for inflation.

Caferro said anything less than the full rates would still leave providers behind.

“Every time Democrats tried to raise provider rates or get money into workers’ pockets, the department kept saying, ‘We need data, we need data, we need data,” she said. “Well, we got data, and we spent a lot of money to get it, and now they’re ignoring it.”

Most of the budget subcommittees have now completed their work. The next step will be for all of the sections to be combined into House Bill 2, which will then go before the full House Appropriations Committee. That’s likely to happen in the next few weeks. The budget can still be amended in committee, on the House and Senate floor and potentially in a conference between the chambers, so the work is far from over.