Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Medicaid topic
No spam. Unsubscribe anytime.
LDH budget centers on a large managed‑care adjustment, physician rate increases and work to replace legacy IT systems
Summary
Department of Health budget hearing focused on a $1.2 billion MCO adjustment, a two‑year plan to raise physician reimbursement toward Medicare rates, and an updated approach to the child‑welfare information system (CCWIS). Interim secretary Drew Maranto and House fiscal staff presented the numbers.
Baton Rouge — At the House Appropriations hearing on April 8, the Louisiana Department of Health explained several major Medicaid budget adjustments for FY26 that together reshape vendor payments and planned rate increases.
House Fiscal Division analyst Julie McGee briefed the committee on the department’s FY26 recommendation and highlighted a $1.2 billion net increase that the department attributes chiefly to a managed‑care organization (MCO) rate and utilization adjustment. McGee explained the three elements driving the adjustment: higher utilization, enrollment changes and reconciliation of directed payment models that await federal Centers for Medicare & Medicaid Services (CMS) approval.
Interim LDH Secretary Drew Maranto told the committee he will press for “accountability and transparency” as the department implements the changes. “A tax dollar is a tax dollar regardless of the source,” Maranto said, adding that the department will seek better program design with outcomes at the forefront.
Key budget items:
- MCO adjustment: McGee described a $1.2 billion net change driven by projected higher utilization (4.2% non‑expansion; 6.1% expansion populations) and by planned changes to hospital‑ and physician‑directed payment models. LDH said several models are still being finalized with CMS and will be updated if federal approval changes expected financing.
- Physician fee schedule increase: Senate Bill 190 (Act 306 of 2024) directed LDH to design a plan to raise Medicaid physician rates toward Medicare levels. LDH’s FY26 plan would move many Medicaid physician rates to roughly 85% of Medicare rates with a FY27 step to 100%; McGee estimated FY26 cost at roughly $258.4 million (mix of state, federal and statutory funds) with the FY27 increase adding more.
- CCWIS and legacy IT: Committee members pressed timeline and costs for replacing a long‑delayed child‑welfare information system (CCWIS). McGee and deputy officials said LDH has reorganized the project, moved it into the technology organization, recruited software and data specialists and intends an iterative rollout of modules (first module targeting foster‑parent onboarding within 12 months; full solution in 3–5 years). LDH reported a plan to digitize legacy paper records as a precursor step.
Behavioral Health and Cooper‑Jackson settlement: LDH described state general fund increases to support inpatient beds required to meet the Cooper‑Jackson court settlement; the budget moves some funds from Medicaid so the Office of Behavioral Health can directly manage three 60‑bed facilities (with a fourth expected later in the calendar year). The department said two of the facilities are open (Faraday and Bastrop), a third will open in June and the fourth — in the Baton Rouge area — is under development.
Public‑health grant reductions: LDH said it has identified up to eight federal grants (EPA, CDC, SAMHSA) that are ending or being rescinded; initial estimates put the top‑end exposure at about $86 million pending final invoicing. The department told lawmakers it will supply more precise figures as contractors submit final invoices.
Pharmacy and PBM costs: Lawmakers raised a rapid increase in pharmacy spending under the state’s single‑Pharmacy Benefit Manager (PBM). LDH officials confirmed pharmacy costs rose after switching to a single PBM in late 2024 and said they were taking steps (preferred drug list changes, prior‑authorization adjustments) to manage specialty drug and GLP‑1 costs.
About Medicaid size: McGee reminded the committee Medicaid is the largest item in the state budget (LDH FY26 recommendation of ~ $21.4 billion; Medicaid vendor payments about $19 billion). She said FY26 changes include both increases in nominal payments and realignments of means of financing (federal/state mix) as federal matching rates and state statutory revenues shift.
What’s next: LDH said it will follow up with the committee on CCWIS timelines and on finalized models for hospital/physician directed payments once CMS provides formal guidance. The department also said it will provide more detail on the federal grant exposure and on pharmacy‑cost trends.
Ending: Interim Secretary Maranto closed by reiterating the department’s focus on outcomes and stewardship as it implements large adjustments to payments and IT modernization plans.
