Legislative analysts flag lower Medicaid caseload, FMAP shifts in senior and long-term care budget

Legislative Fiscal Division analysts told the Montana Legislature’s Section B appropriations subcommittee on the senior and long-term care budget that the executive’s biennial request is smaller than the 2025 base because projected Medicaid caseload and federal match changes reduce benefit-and-claims spending.

Analyst Dr. Brian Pollet, presenting the LFD review, said the division’s request shows an overall reduction of about 5.8 percent from the base driven mainly by a 6.2 percent drop in benefits and claims; general fund demand rises because of a projected decline in the federal medical assistance percentage (FMAP). “This division is mostly traditional Medicaid, so when FMAP changes it affects this division in a very noticeable way,” Pollet said.

Why it matters: senior and long-term care is a large Medicaid budget slice in Montana; changes to FMAP, provider rates adopted last session and shifts in where care is delivered (nursing homes versus home- and community-based services) can move tens of millions of dollars in state general fund need.

Key numbers and drivers - Pollet reviewed actuals and appropriations: FY2024 actual expenditures were about $339 million; a modified FY24 budget of roughly $378 million; a FY25 base appropriation of roughly $419 million. The executive request is about $390 million in FY26 and $400 million in FY27, below the FY25 base but above FY24 actuals. - The LFD summary attributes recent budget growth to major provider-rate increases enacted last session and to expanded use of Community First Choice (CFC), which receives an enhanced federal match. - The request composition is roughly 30 percent general fund, 7.7 percent state special, remainder federal. The Tobacco Health and Medicaid Initiative Fund (a state special) is declining and is proposed to be reduced in several packages.

Program and trend context - Nursing home Medicaid days of care have trended down since before COVID, fell steeply during the pandemic, then resumed a slower decline. Nursing facility care remains the single largest Medicaid outlay in the division, but policymakers and LFD are watching whether rate increases will change supply and utilization patterns. - Community First Choice served about 3,600 people at the end of FY24 and received provider-rate increases last session; CFC receives a roughly 6 percentage point enhanced FMAP. - The Big Sky waiver is a home- and community-based waiver that is not an entitlement and therefore maintains a wait list; the fact sheet cited roughly 2,000 people served at any given time, capacity to serve up to 2,700 across a year, and a wait list of approximately 350–359 people (dates noted in the agency fact sheet). The FY26–27 request for Big Sky waiver services in the division was listed at about $137.5 million total funds.

Present-law and decision packages - The LFD and department materials break the budget into present-law adjustments (including FMAP shifts that typically increase state funds and lower federal funds) and targeted requests. One large present-law change reduces Medicaid core services spending relative to the FY25 base (LFD described a roughly $32.4 million reduction in FY26 and $30.4 million in FY27 versus the FY25 base, reflecting an expectation that FY25 base appropriations will exceed projected spending). - Decision packages include caseload and utilization adjustments (for example, increased CFC utilization of roughly $4.4 million in FY26 and $8.8 million in FY27), a request for three Adult Protective Services guardianship positions (~$500,000 general fund across the biennium), and an appropriation realignment that reduces reliance on the Tobacco Health and Medicaid Initiative Fund.

Fiscal trade-offs and questions - LFD staff and agency witnesses stressed uncertainty: a portion of the apparent drop from the FY25 base reflects a higher-than-anticipated FY25 appropriation (the base), not a prediction that spending will permanently retreat to FY24 levels. - Committee members asked how much of the change reflects enrollment forecasting error versus structural decline in institutional utilization; LFD said the department’s budget status reports and agency projections can be used to model alternative scenarios.

Ending The subcommittee’s hearing was informational: no formal vote on these packages occurred at this meeting. Legislators asked the department and LFD for follow-up material, including more detailed projections of nursing facility utilization, the department’s FY25 expenditure projections from their budget-status reports, and line-item details on vacancy savings and position requests.