State health budget hearing highlights Medicaid funding, long HCBS registries and opioid-settlement grant planning

Department of Health (MDH) leaders and Department of Legislative Services analysts briefed the subcommittee Jan. 29 on the fiscal 2026 overview, covering Medicaid spending, home- and community-based services (HCBS) registries, opioid-settlement spending and the cigarette restitution fund.

DLS analyst Naomi Kimura said the department’s total fiscal 2026 budget is approximately $21.5 billion, a slight decline from fiscal 2025 driven by projected Medicaid enrollment and utilization decreases. DLS flagged proposed fiscal 2025 deficiencies that add roughly $2.25 billion to the enacted fiscal 2025 budget, largely to cover unanticipated Medicaid and DDA (Developmental Disabilities Administration) spending. The fiscal 2026 allowance includes 7,391 regular positions and 349 contractual FTEs; DLS told the committee MDH had a 15% vacancy rate as of Dec. 31, 2024.

On long-term services and supports, Anne Braun of DLS highlighted HCBS waiver registries. MDH’s community options registry exceeded 20,000 individuals at the end of fiscal 2024 while DDA waivers’ combined waiting lists were under 4,000. Braun said registry reductions are influenced by outreach, low return rates of mailed applications and staffing shortages handling eligibility processing. MDH said it increased monthly invitations to apply from 300 to 700 and is working with Vital Records and the Hilltop Institute to remove deceased or relocated individuals from the registry—work MDH expects to complete by March 31, 2025. MDH noted it has not applied for an additional model waiver because the fiscal 2026 allowance does not include technology-waiver funding.

Kimura and Anne Braun also reviewed behavioral health funding and implementation changes. The fiscal 2025 legislative appropriation included roughly $90 million in discretionary behavioral-health investments; DLS reported a $30 million fiscal 2025 deficiency tied to delayed implementation of several initiatives. MDH told the committee it shifted some investment planning to maximize Medicaid federal match—for example, by prioritizing programming and contracts (including a major IT/managed-care transition contract) that can be Medicaid-billable.

On overdoses and opioid settlement funds, DLS highlighted more than 22,400 overdose deaths in Maryland from 2015–2024; nearly 90% involved opioids. The opioid restitution fund has received roughly $158.4 million for fiscal 2022–24 and local jurisdictions received about $42.8 million directly under settlement terms. MDH said settlement money is administered via grants and competitive programs, with an opioid restitution advisory council guiding distribution. MDH also described federal State Opioid Response and substance-abuse block grants as major federal funding streams supporting prevention, treatment and recovery.

DLS reported a revenue decline in the cigarette restitution fund (CRF) and noted statutory restrictions that require at least 50% of budgeted CRF spending for specified public-health and Medicaid uses; because of contingent reductions in FY26 the allowance would fund those required uses at about 43%. DLS recommended a one-year BRFAA waiver to align statutory CRF allocation requirements with the FY26 budget; MDH concurred and DBM agreed to propose amended BRFAA language. DLS also noted an arbitration award potentially returning roughly $25 million in MSA-related funds to the CRF; DLS recommended the department consider that recovery when finalizing Medicaid funding plans.

Committee members asked about operational items: recruitment for state psychiatric and DDA roles, the status of a paused behavioral-health value-based purchasing pilot, and the operational transition from Optum to Carillon for managed behavioral-health claims. MDH said 116 of the 700 newly authorized merit positions are filled, 391 are created but not yet filled and 193 are in process of creation. The department confirmed the behavioral-health value-based purchasing pilot will not be launched now because of fiscal constraints. MDH said the January transition to Carillon produced some provider payment delays and call-center backlog but that claims are being paid and Carillon is addressing configuration and provider enrollment issues; MDH staff said payments improved in the second weekly run after go-live and they are meeting daily with the vendor to troubleshoot.

MDH also described a new Center for Firearm Prevention and Intervention moved into the Office of the Secretary with a $1,000,000 allocation to fund an executive director, a data analyst and programmatic grants for community violence intervention, safe-storage education, and youth violence programming. The department said a public dashboard for firearm incidents and an RFP cycle for settlement and opioid-related grants will come in 2025.

MDH agreed to provide additional follow-up on vacancy filling timelines, waiver-registry reduction projections developed with Hilltop, and the behavioral-health program timing cited in the fiscal 2025 deficiency.