Lawmakers prepare to vote on health department’s $7 billion budget request

Lawmakers on two key committees plan to take preliminary votes this week on major funding requests for Montana’s health department, the largest state agency, which is tasked with running the state psychiatric hospital, child welfare services, state Medicaid programs and much more.

In total, the Department of Public Health and Human Services is requesting a more than $7 billion allocation over the next two years, according to Gov. Greg Gianforte’s executive request released in November, a roughly 17% increase in funds over the current budget cycle. On the first day of the Legislature’s health and human services budget subcommittee, chair and Rep. Bob Keenan, R-Bigfork described navigating the agency’s requests as an “awesome $7 billion worth of responsibilities.”

While many of those requests are expected to filter through Keenan’s committee and eventually appear in House Bill 2, the state’s primary budget bill, others dealing with long-term infrastructure and technology needs will be included in House Bill 5 and House Bill 10. 

Over the next several weeks, lawmakers steering those respective appropriations committees will begin to advance the Gianforte administration’s budget requests they agree with — and sideline or revise the proposals they find less favorable.

MEDICAID PROVIDER RATES

With more than 300,000 Montanans on Medicaid, the state’s reimbursement rates for medical providers that accept that public insurance are a critical cornerstone of the state’s health care industry. A state-commissioned study released in 2022 found that Montana’s reimbursement rates are significantly lower than the standard cost of providing those services, validating long-standing complaints from mental health, addiction treatment and disability service providers and senior and long-term care institutions that say the current rates hamstring their ability to provide services. 

Across all divisions, the Gianforte administration’s health department budget proposes $243.6 million in new spending over the biennium to boost provider rates. That mix of state and federal funds would break down to a roughly 16% increase in rates during the first budget year, dropping to about 10% the year after. 

Health department Director Charlie Brereton has touted the rate increases as “historic,” even while that proposal would not fill the entire gap between current and benchmark standards identified by the 2022 study. The governor’s budget would close 58% of the differential in the first year of the biennium and 36% of the differential the following year.

Coy Jones, a consultant with Guidehouse, the group that conducted the reimbursement study, told budget committee lawmakers that the first year increase would serve as a “temporary stabilizing increase” for the beleaguered industry. 

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“In many cases, the benchmarks are significantly higher than the current rates,” Jones said.

Some Republican and Democratic lawmakers, including Keenan and one of the committee’s vice chairs, Rep. Mary Caferro, D-Helena, have said the department’s proposed rates are insufficient in light of provider needs, setting the stage for a possible divergence between lawmakers and the department this week. 

“It’s a 10 foot rope for a 20 foot hole,” said Caferro in a Monday interview. “They spent millions of dollars studying it and now they’re ignoring the outcome of the study.”

INFRASTRUCTURE AND BEHAVIORAL HEALTH SYSTEMS

The health department has also requested multimillion dollar investments in brick and mortar institutions, including the state psychiatric hospital in Warm Springs, veterans homes, and the Montana Mental Health Nursing Care Center in Lewistown. 

In total, $29 million in HB 5 spending would go toward facility roof replacements, wastewater treatment system repairs, finishing covered walkways at the Southwest Montana Veterans Home in Butte, and other physical upgrades. Some of those allocations would go toward finishing existing projects and renovations that state employees have testified foundered over the last two years while inflation surged. Roughly $16 million would help fund upgrade and “deferred maintenance” at the state hospital in an effort to seek federal recertification, which authorities pulled in 2022 citing patient safety hazards.

“What we’re doing here is trying to address long-overdue capital challenges and issues,” Brereton said in a February meeting with lawmakers on both the health and infrastructure budget committees.

Other parts of the department’s infrastructure plans received a less than warm response. 

One $113 million proposal would go toward establishing two new behavioral health facilities in different parts of the state to help scale back the pressure on the hospital in Warm Springs. In a February presentation, the health department said it intends to contract for “clinical management and operations of such facilities” and would consider acquiring new buildings or repurposing existing structures to achieve the project’s goals, but did not specify where the facilities would be built or who would manage them. Lawmakers proceeded to grill Brereton about the department’s estimate for the proposal.

“I think you’ve got a real credibility problem, at least on [the long-range planning committee]. The folks on that committee are businessmen and women and I don’t think anybody’s convinced that the price that you’re proposing here for these facilities is anywhere in the ballpark, it’s not realistic whatsoever,” said Rep. John Fitzpatrick, R-Anaconda.

If lawmakers agree to allocate large sums of money to the department to expand the state’s behavioral health system, Keenan said Monday, there will be discussions about creating a type of oversight committee made up of lawmakers and department representatives to help guide the distribution of those funds. A bill to create that committee has not yet been introduced.

After each committee advances its budget priorities, lawmakers will get several other opportunities to tweak, add, strike or otherwise overhaul departmental appropriations as the funding bills work their way through the Legislature. 

Keenan said the health department’s budget committee is scheduled to vote on the department’s list of proposals on Wednesday and Thursday morning.