Appropriations subcommittee reviews BHDD addendum, highlights BISFIG funding requests

Legislative Fiscal Division analyst Miss Hamilton told the House Appropriations subcommittee that an addendum to the Behavioral Health and Developmental Disabilities (BHDD) division replaces the earlier budget analysis and should be used in deliberations.

The addendum shows an overall biennial increase of about $92,100,000 from the base, Hamilton said, including a roughly 12.9% general fund increase tied largely to lower federal match (FMAP) and a 51.5% rise in state special revenue driven mainly by BISFIG proposals. "We're going to be going over that addendum rather than the original BA," Hamilton said.

Why it matters: the BHDD division is one of DPHHS’s three Medicaid divisions and carries most of the department’s benefit-and-claims spending. Lawmakers told staff to prioritize concise, data-focused questions to allow time for public testimony.

Details: Hamilton said operating expenses at the account level show a 352.7% percentage increase from a small base, and benefits-and-claims rise about $53,000,000 (4.9%) because Medicaid is a core part of the division. The addendum incorporates 10 recommendations from the Behavioral Health Systems for Future Generations commission (BISFIG) that the governor included in the executive request; those recommendations amount to roughly $99,000,000 over the biennium in combined funding, Hamilton said, including about $63,000,000 in Medicaid-specific funds and about $53,500,000 in state special‑revenue obligations to be drawn from the BISFIG state special revenue account created by House Bill 872.

Hamilton flagged FMAP changes as another major driver: she told the committee the federal medical assistance percentage assumed for fiscal 2025 (about 64.12%) falls to approximately 61.61% in fiscal 2026 and 61.47% in fiscal 2027, producing multi‑million‑dollar increases in the state share of Medicaid in each year.

DPHHS officials confirmed other budget details. "The total fund request as well as the increase in operational budget are driven by our 10 BISFIG recommendations," Jeanne Hermanson, Medicaid chief financial manager for DPHHS, told the committee. Hermanson walked members through present‑law caseload and FMAP change packages, and new proposals the department has submitted for inclusion in HB2, including existing federal grants the agency recommends bringing into HB2 rather than treating as budget amendments.

Medicaid and waivers: speakers noted BHDD manages multiple Medicaid waivers, including the 208 developmental‑disabilities waiver (about 2,500 Montanans served), the severe and disabling mental illness waiver, the HEART waiver for addiction and reentry services, and the WASP waiver for certain state‑funded mental‑health recipients. Hamilton said the HEART waiver and other waivers have CMS approval and that the HEART fund (a state special revenue created in 2021 funded by a recreational marijuana tax) supports substance‑use and recovery services.

Legislative options and risks: Hamilton reminded the subcommittee that BISFIG decision packages are optional and can be approved, modified, or rejected. She also noted the BISFIG state special revenue account currently lacks a statutory revenue source that would cover interest retention; the obligation is being brought into HB2 for committee consideration in this biennium. Committee members asked staff and department officials for more data on caseload modeling, vacancy and personal‑services assumptions, and the fiscal impact if Medicaid expansion changes.

What’s next: DPHHS and LFD presenters told the panel they will present the BISFIG recommendations and associated change packages in more detail at tomorrow’s hearing. The department also agreed to provide additional breakout data (for example, caseload math and fund crosswalks) the committee requested so members can review the assumptions behind the addendum.