The Department of Health and Human Services (DHHS) presented a macro overview of its programs, budget and proposed efficiency priorities to the Task Force, emphasizing workforce performance, transparency and outcome-based contracting.

DHHS officials told the Task Force the department oversees major entitlement programs including Medicaid and economic assistance, licensing and public-health functions, behavioral health and services for older adults and people with disabilities. DHHS said its current budget totals about $5.8 billion and that the majority of that funding is paid to outside providers.

Pat Traynor, Commissioner of the Department of Health and Human Services, described the agency’s goals and approach: "We really have the opportunity in a small state under 800,000 or so of a population to look at state government from a macro perspective and say, how can we be the best in terms of efficiency and effectiveness?" Traynor asked the Task Force to consider both the delivery model and long-term prevention strategies that could bend the cost curve.

Deputy CFO Donna Ocland told members DHHS has a complex funding picture and that “we are the largest state budget. We have $5,800,000,000 in our budget,” and that about 82% of those dollars — roughly $4.7 billion — are paid out to providers and vendors rather than to department payroll. Ocland said DHHS recorded roughly 3,100 contracts across programs during the 2023–25 biennium, with about 1,200 amendments, and that the total contract value exceeded $1 billion. She said roughly 1,100 individual vendors provide services to the department.

Officials told the Task Force they are working to improve contract consistency, reporting and procurement turnaround time. "That contract value for those 3,100 contracts that we had was over a billion dollars," Ocland said, adding the department is standardizing contract language and moving toward an enterprise contract system to reduce duplicative requirements and clarify deliverables.

Behavioral Health director Pam Segnus presented a program example DHHS uses to measure outcomes: Free Through Recovery, a program launched during a prior justice-reinvestment effort to connect people leaving incarceration or on community supervision with peer supports, care coordination and recovery services. Segnus said the program is outcome-driven, not fee-for-service, and reimburses providers based on participant progress. "The program is funded based on outcomes," Segnus said. She reported that, from March 2018 through September 2024, 69% of participants met three of four outcome measures tracked for the program. Segnus said the program served an unduplicated total of 7,883 individuals since inception, currently serves a monthly census of roughly 1,500 participants, and the Legislature expanded the budget to target a monthly average of about 2,000 participants.

Sarah Acre, Executive Director of Medical Services, highlighted a DHHS pharmacy-management example she described as a long-run cost-control success: the department’s pharmacy program grew more slowly than the cost of pharmacy reimbursements would suggest and, in Acre’s words, "we are spending less today than we were in 2006" when rebates, supplemental rebate agreements and earlier management steps are included. Acre also noted Medicaid per-capita cost differences across eligibility groups and urged the Task Force to consider how state policy choices — reimbursement rates, service mix and access — drive per-capita spending.

DHHS staff told the Task Force they plan to make performance dashboards more user-friendly for legislators and the public, create clearer contract deliverables and reporting standards, and improve procurement and IT systems used to manage grants and payments. They asked the Task Force for guidance on which divisions or programs to review first and volunteered to bring specific follow-up datasets and proposed KPIs for the committee’s review.