Maryland Department of Health FY26 overview: budget dip, ‘End the Wait’ funding reduced and overdose/crisis programs examined

At a Health and Human Services (HHS) Subcommittee hearing, Department of Legislative Services analysts Naomi Camaro and Ann Braun presented the Maryland Department of Health's fiscal 2026 overview, reporting a roughly 1.3% decrease in the agency's total budget to approximately $21.5 billion and flagging major fiscal 2025 deficiencies and contingent reductions tied to the Budget Reconciliation and Financing Act (BRFAA).

The nut graf: DLS identified several high‑priority issues for the committee: large deficiencies in Medicaid and developmental disability services, persistent home‑and‑community‑based services (HCBS) registries and wait lists (the ‘‘End the Wait’’ efforts), the state’s overdose response funding and opioid settlement distributions, and a stressed cigarette restitution fund (CRF) with declining revenues and statutory restrictions on uses.

Major budget figures and DLS findings

- DLS reported proposed fiscal 2025 deficiencies that net to an increase of about $2.25 billion to the fiscal 25 appropriation for MDH, including roughly $740 million for Developmental Disabilities Administration (DDA) community services and about $650 million for shortfalls in Medicaid and behavioral health Medicaid services. - DLS noted cost containment actions (approved by the Board of Public Works in July 2024) including a $12 million reduction in core public health services funding for local health departments. - Contingent BRFAA reductions total about $240.6 million in general funds in the fiscal 26 allowance if BRFAA provisions take effect; examples include $92 million in contingent Medicaid savings tied to a hospital assessment change and other contingent reductions affecting DDA and community supports.

Home and community‑based services (HCBS) and ‘‘End the Wait’’

DLS emphasized persistent registries and wait lists for HCBS waivers. Ann Braun said the Community Options registry contains more than 20,000 individuals and that from fiscal 2023 to 2024 the registry decreased by about 13% (roughly 3,214 removals), while the autism waiver registry decreased about 15% (just over 1,000 removals). Braun said MDH now sends 700 Community Options applications per month—‘‘surpassing this requirement’’ established in 2022—but that less than one‑third of those applications are returned and about 84% remain pending at month‑end because of application‑processing backlogs tied to staffing shortages.

DLS and MDH described staffing constraints as a critical bottleneck: MDH reported a 37% vacancy rate for positions that handle Community Options application processing and eligibility determination in fiscal 2024. MDH told the committee it has partnered with the Hilltop Institute and the Vital Records office to remove deceased individuals from registries and is evaluating eligibility‑screening steps that could move the registry toward a wait list model. DLS noted $30 million originally dedicated to HCBS expansion (including autism waiver work) and reported $22.7 million of that amount had been spent or appropriated, leaving roughly $7.3 million in the dedicated purpose account; separate allocations totaling $16 million for ‘‘End the Wait’’ initiatives in fiscal 2024–25 were not spent, and cost containment actions reduced or reallocated much of that funding.

Overdose crisis and opioid settlement funds

DLS summarized overdose trends and funding. Between 2015 and 2024, more than 22,000 Marylanders died from overdose, and DLS showed racial, age and geographic disparities—Baltimore City accounted for approximately 44% of statewide overdose fatalities in the cited period. Federal grants (notably State Opioid Response grants via SAMHSA) remain a primary funding source; the state also receives opioid settlement revenue through the Opioid Restitution Fund (ORF). DLS reported the ORF received about $158.4 million during fiscal 2023 and 2024, and local jurisdictions had received $42.8 million directly from settlement awards. DLS asked MDH to report on delayed implementations that led to a proposed $30 million negative deficiency in behavioral health investments.

Cigarette Restitution Fund (CRF) and statutory constraints

DLS reported CRF revenues declined more than 8% across a three‑year span and that fiscal 2024 revenues were roughly $25 million below projections. Statutory restrictions require CRF budgets to dedicate certain percentages to specified programs; given contingent BRFAA reductions, DLS said CRF‑funded uses would fall below the statutory 50% requirement in fiscal 2026 and recommended a BRFAA (BRF) amendment to waive the percentage requirement for fiscal 2026 only. DLS also discussed pending litigation and arbitration related to Master Settlement Agreement adjustments and reported an arbitration award in Maryland’s favor covering certain sales years could result in approximately $25 million expected to be recovered, although MDH and the Attorney General’s Office said the final timing and amount remain uncertain.

Department response and committee exchange

Laura Herrera Scott, Secretary of the Maryland Department of Health, said the administration views the fiscal 2026 allowance as ‘‘substantial progress on critical health care services in light of tough fiscal constraints and federal uncertainty’’ and noted that Medicaid covers roughly 1.5 million Marylanders, including about 700,000 children. Scott and MDH staff confirmed MDH increased community option invitations from 300 to 700 per month and is working with Hilltop and Vital Records to reduce registries; the department said additional staffing resources would be needed to transition registries to a wait list model.

On contingency and CRF proposals, MDH said it concurs with DLS’s recommended BRFAA amendment to align CRF uses for fiscal 2026 but disagreed with expanding CRF allowable uses beyond the statutory framework; MDH asked caution because the timing and final amount of arbitration recoveries are uncertain.

Discussion vs. decision

- Discussion only: MDH staffing and vacancy trends, HCBS registry reduction strategies, opioid funding distributions and CRF revenue declines, and specific implementation delays accounting for a $30 million negative deficiency in behavioral health investments. - Direction/request: DLS requested MDH provide further detail on programs delayed, participation and claims for opioid‑related grants, and the status/timeline for registry reduction plans and for a potential technology waiver application to expand model waiver capacity. - Formal action: none recorded at the hearing.

Ending: The secretary said MDH will provide the committee with additional detail during subsequent, more focused budget hearings (behavioral health, Medicaid, public health and others).