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Bill would adjust Medicaid reimbursement formula for psychiatric residential treatment facilities
Summary
Testimony for Senate Bill 23-99 described changes to the Medicaid rate-setting categories and a legislative report; providers say the update would reflect modern administrative costs and support PRTF capacity statewide.
Senate Bill 23-99, proposing changes to Medicaid reimbursement for psychiatric residential treatment facilities (PRTFs) and a legislative management report on implementation, received supportive testimony from providers and questions from the Department of Health and Human Services.
Senator Judy Lee introduced the bill, saying it clarifies which costs are included in the PRTF reimbursement formula and directs a report to legislative management. Tim Ginger, senior director of residential partnerships for Dakota Boys and Girls Ranch, urged the committee to support the bill and explained that PRTFs are a medical level of care for children with significant psychiatric needs and trauma histories.
Ginger said the current rate-setting mechanism—developed roughly 30 years ago—has not kept pace with modern direct-care and administrative costs, citing examples such as electronic health records, cybersecurity, and increased licensing and accreditation requirements. He said Dakota Boys and Girls Ranch operates three PRTFs in the state and that private providers absorb large deficits to maintain services: “On a typical year, our breakeven budget is a 2 and a half million dollar loss,” Ginger said, adding that last year donors covered a larger shortfall.
Ginger described the bill as directing the Department of Health and Human Services to change administrative rules and provide a report to legislative management, and he characterized the measure as a step toward value-based purchasing and stabilizing provider payments.
Sarah Aker, executive director of the Division of Medical Services at the Department of Health and Human Services, testified for the department and described the data and fiscal approach the department used to prepare the bill’s fiscal note. Aker said the department reviewed historical use of “therapeutic leave days” and discussed limits that might be applied—such as monthly or per-youth caps—to estimate costs. She said the department is requesting funding to expand value-based purchasing programs and that it would work with providers to design VBP arrangements for PRTFs and related residential providers.
Committee members asked about the administrative cost cap (currently 15 percent) and how the bill’s changes would be implemented through administrative rules; witnesses confirmed rulemaking would be required to finalize details. The hearing closed after department comments and proponents’ testimony.
No formal vote occurred during the hearing; fiscal details and rule changes remain subject to subsequent administrative work and legislative action.
