Legislative finance panel approves $415.2 million in FY2025 Medicaid supplementals, advances $674.2 million FY2026 package

The Joint Finance-Appropriations Committee on a bipartisan vote approved one-time fiscal year 2025 Medicaid supplementals totaling $415,226,800 and advanced a separate fiscal year 2026 Medicaid package that would add $674,192,600 in new appropriations and ongoing funding.

The FY2025 supplemental package, offered as a single consolidated motion by Senator Wintrow and seconded by Representative Handy, included $1,350,000 for the managed-care external quality review required by the Centers for Medicare & Medicaid Services (CMS); payments tied to configuration and implementation costs for the Idaho Behavioral Health Plan; a $113,849,300 adjustment to the Medicaid forecast for accrued entitlement costs; increased capitation payments for the Idaho Behavioral health plan; and $77,243,700 in dedicated hospital assessment funds to enable federal drawdown under the upper payment limit methodology. The committee recorded 13 ayes and 6 nays with one member absent and excused; the motion will go forward as a bill with a new-pass recommendation.

Alex Williamson, budget and policy analyst with Legislative Services, reviewed the package for the committee and said the managed-care external quality review is “a CMS federal requirement,” and described the supplemental as covering implementation and residual costs that accrued in the fiscal year. She also explained the hospital assessment item as enabling the state to draw additional federal funds that ultimately flow back to hospitals: “that allows the state to draw down on behalf of the hospitals the federal funds that are then remitted back to the hospitals to try and get them closer to that Medicare rate.”

The FY2026 package, moved by Representative Furness and seconded by Senator Burkey, bundles ongoing funding and program maintenance items: ongoing hospital assessment fund appropriation ($190,510,600 ongoing in committee motion language), additional ongoing funds for required CAHPS survey work ($67,600), $200,000 for the adult developmental-disability (DD) resource allocation model tied to the KW lawsuit settlement, $1,100,000 to expand the actuary contract, $1,350,000 ongoing for the external quality review, $117,200,400 for the Medicaid Management Information System (MMIS) procurement from funds already set aside, and a $376,124,900 population-forecast adjustment that reflects caseload, utilization and FMAP changes. The motion also moved 3 FTP and approximately $3.54 million in general funds to place extended employment services in the Division of Medicaid and shifted $1.5 million from trustee and benefit payments to operating for HB 345 implementation; the committee approved the package by the same 13–6 margin with one member absent and excused.

Committee members debated several elements before voting. Representative Furness said actuarial services are essential because “the capitation rate has to be considered actuarially sound,” and warned that forecasts can be wrong but are needed to set rates. Senator Cook and others described the hospital-assessment item as a funding flow that “fronts” assessment dollars so the state can draw federal matching funds under an updated upper payment limit calculation. Senator Burkey characterized part of the year-over-year increase as driven by utilization and rising health-care costs; he noted the total Medicaid budget increase in the packet equated to roughly an 11.5% rise.

The committee also adopted budget language attached to the FY2026 package. The language directs the Department of Health and Welfare and the Division of Medicaid to explore a value-based payment model for outpatient addiction treatment and report findings to JFAC no later than Jan. 15, 2026; to transition Medicaid contract periods to align with the state fiscal year and report progress by Jan. 15, 2026; and to produce an annual emergency Medicaid report by Sept. 15 following each fiscal year showing clients served and total expenditures reimbursed. The committee accepted that language by unanimous consent.

Multiple committee members flagged implementation considerations. Senator Wintrow noted the new reporting requirements would add workload without new staff funding; Williamson confirmed many of the items reflect federal or court requirements (for example, the CAHPS surveys and KW-related resource-allocation work). Several members emphasized that population-forecast adjustments are estimates that will be reconciled in future fiscal actions: if the state overestimates, money reverts next year; if it underestimates, another supplemental would be needed.

Both motions were recorded as advancing to formal bill status with a new-pass recommendation. The committee recessed to allow work groups to meet before continuing budget work the following day.