Montana panel reviews BISFIG budget projections and informal fiscal notes for behavioral health proposals

Madison — The House Bill 872 commission’s BISFIG subcommittee reviewed informal fiscal notes and spreadsheets for 10 long-term behavioral health recommendations included in the governor’s budget, with department staff outlining cost assumptions, implementation timelines and funding risks.

The department’s Medicaid finance manager, Jean Hermanson, told the subcommittee “you’ll see the $300,000,000 that the legislature set aside,” and walked members through a color-coded spreadsheet that projects state special revenue (BISFIG) balances, estimated state share spending by fiscal year, and the projected mix of state special revenue and federal Medicaid match through state fiscal year 2031.

Why it matters: committee members pressed staff for clarity on which costs are one-time versus ongoing and how proposals would enter the state’s base budget. Members said they need clearer baselines and timelines to decide whether to fund start-up costs, ongoing program expenses, or to delay implementation pending further analysis.

Major fiscal highlights and assumptions

- Overall BISFIG account: Department materials start from a $300 million legislative set‑aside and show projected spending for the 10 governor-recommended items that would reduce BISFIG balances over time; staff reported updated projections that reduced the biennial 2026–27 request from roughly $99 million to about $85.6 million after timing adjustments.

- Near-term vs. out-year mix: Department staff said IT and vendor costs are heavier in the 2026–27 biennium (for example, roughly $4.0 million/year for IT in 2026–27 and $3.0 million vendor support in those years), while benefit and service expenditures dominate later years; by 2028 the department expects the majority of spending on the package to be direct benefits to clients.

Selected recommendation summaries and dollar figures from the informal notes

- DD waiver: acuity-based rates and assessments — The department assumes contracting for a rate methodology vendor ($500,000) and a project-management vendor ($325,000), purchase of an acuity assessment tool, and an initial Medicaid benefit increase of about $3.5 million in FY2027 (partial year) and about $7.15 million in FY2028 (full year). Annual assessment costs were estimated at $500 each (about $300,000 annually).

- START model and specialized residential habilitation (complex DD cases) — The department plans to pilot the START model (national certification) and a small resource center. Staff estimated START operating costs (including a START center and clinical team) of about $1.35 million per year beginning in FY2028, a $1.0 million one-time capital cost for a four‑bed resource center in 2027, and a new residential habilitation service projected to increase direct benefits by about $5.5 million per year (assumptions included 3–4‑bed homes at an illustrative per‑person figure cited by staff).

- Evaluation and diagnostic (E&D) clinics (children) — The department proposed stakeholder work ($50,000 FY2026) and reestablishing multidisciplinary evaluation clinics with a recurring state share estimate of roughly $1.0 million once 50/50 Medicaid administrative match is applied.

- Targeted case management (TCM) redesign — Staff proposed contracting for evaluation and pilot design (~$500,000 over FY2026–27), provider incentive payments ($1.5 million in FY2027 and FY2028), and start‑up grants to support about 20 new TCM teams ($460,000 total); the department projected a 25% increase in utilization in later years and planned value‑based pilot incentives tied to defined performance metrics.

- Care transition program (discharge supports, e.g., critical time intervention) — Start‑up costs estimated at about $247,000 (ramp up) and operating costs for an initial set of teams (three teams estimated to serve roughly 120 clients a year) of about $991,000; the department forecast seeking CMS approval to draw Medicaid match for ongoing services.

- Electronic bed registry and 988 enhancements — Department materials proposed purchasing tablets and connectivity (3,540 tablets at $200 each, $708,000 one‑time), ongoing software and data licensing (department estimate cited about $2.1 million/year), 988 text/chat enhancements ($700,000/year), marketing of 988 ($500,000/year for FY2026–27), building an electronic bed registry (development/maintenance ~$500,000/year; eligible for higher federal match in some components), provider participation incentives ($1.0 million in FY2027–28) and vendor operations/training (~$642,000/year starting FY2027).

- Youth residential rates (tiered, acuity‑based) — The department estimated a vendor contract (~$150,000) and an annual increase in Medicaid benefits of roughly $6.5 million beginning in FY2028, assuming a tiered payment model would apply to a subset (illustratively ~25%) of youth in residential settings.

- School‑based behavioral health and free‑care rule evaluation — The package included expanded PAX Good Behavior Game and other prevention programs (department estimate: $3.8 million in FY2026–27 and about $1.8 million ongoing), Project ECHO training ($250,000/year), continuation of universal screening ($875,000/year), technical assistance for reversing the historic “free care” restrictions ($200,000 over FY2026–27), and a modeled implementation cost of roughly $4.3 million/year if the department and CMS implement expanded Medicaid billing for school‑based services.

- Workforce development: tuition reimbursement and dual enrollment — The informal notes included a tuition reimbursement pool ($7.0 million, supporting up to ~270 workers) and a dual‑enrollment pathway administered with the Office of Public Instruction and the Montana University System (start‑up and ongoing admin costs with an ongoing nominal cost estimate of $250,000/year to support roughly 250 students annually).

- Certified Community Behavioral Health Clinics (CCBHCs) demonstration — The department plans to apply for the SAMHSA/CMS demonstration and to enroll an initial set of four providers already engaged in planning. Cost assumptions included administrative staffing, grant/writing and evaluation support, data/technology upgrades, and a PPS‑style encounter rate (department illustrative average $279 per encounter). Using department estimates of expected visit volume (roughly 238,000 visits annually across an estimated 7,155 unique individuals), staff calculated multi‑year totals and noted substantial federal match during the demonstration period; the department also offset portions of fee‑for‑service claims that would be bundled into the PPS estimate. Staff cited an illustrative state share of roughly $10.7 million in FY2028 (with larger federal dollars estimated in that year) and a projected increase in state obligation as enhanced federal match ends in later years (staff noted a projected state obligation rising to roughly $14.0 million in FY2031 if federal demonstration match phases out).

Uncertainty, timing and policy questions

Committee members repeatedly pressed staff on implementation sequencing, what will go into the base for future biennia, the length of vendor contracts versus potential transition to state employees, and how much of the projected costs are one‑time versus ongoing obligations that require legislative base funding.

Director Hamilton and other staff told the committee the department had “paused” implementation and adjusted timelines to allow meaningful legislative discussion; staff said moving some decision packages later pushed down 2026–27 costs by roughly $13.5 million compared with earlier estimates.

The department also warned that federal match rates and Medicaid policy changes are inherently uncertain and could change projections; several legislators asked staff to return baseline data (for example, emergency‑department and inpatient use for particular populations) so the legislature can judge program performance after implementation.

What’s next

Staff said they will present the informal fiscal notes in more detail for each recommendation, provide baseline measurements where possible, and supply procurement and vendor‑scope details for major contracts on request. Committee members asked for a concise fact sheet showing where recommendations overlap (for example, TCM services that could be provided through CCBHCs) and what double‑counting or offsets the department expects.

The subcommittee did not take votes at the meeting and did not adopt formal fiscal notes. Staff said the department will refine estimates and provide additional detail in advance of executive action.