Subcommittee hears biennial Medicaid report, warns FMAP drop will shift tens of millions to state

The Montana Department of Public Health and Human Services (DPHHS) and the Legislative Fiscal Division (LFD) on Monday presented the biennial Medicaid in Montana report and new expenditure projections to the Section B Appropriations Subcommittee, laying out enrollment, spending and a projected decline in the federal medical assistance percentage that will raise state costs.

DPHHS Executive Director Rebecca DeCamara opened with the program’s data baseline. “My name is Rebecca DeCamara and I am the executive director for the Medicaid and Health Services Management practice,” she told the subcommittee, and she emphasized that much of the report’s data are drawn from state fiscal year 2023 claims because providers have up to 365 days to bill.

The report shows state fiscal year 2023 average monthly Medicaid enrollment at about 289,413 people — roughly 168,000 on traditional Medicaid and about 121,410 covered through expansion. Total FY2023 benefit expenditures exceeded $2.3 billion; DPHHS reported the state share was roughly $501 million (about 21 percent) with the federal share near $1.9 billion (about 79 percent). DeCamara and other presenters repeatedly cautioned that FY2023 figures are unusually high because the data window spans the COVID-era enrollment pause and later redetermination activity.

Why it matters: the federal matching rate that determines how much of those dollars come from Washington has been falling as Montana’s per‑capita income rises. LFD and DPHHS said a lower FMAP would reallocate tens of millions of dollars of Medicaid costs from federal to state funds in the coming biennium.

DPHHS staff reviewed program structure and services, including the state plan and use of federal waivers. DeCamara described Montana’s long use of waivers — including multiple 1915(c) home‑and‑community‑based waivers (Developmental Disabilities “0208”, Big Sky for elderly/physically disabled and the SDMI waiver for severe and disabling mental illness), 1115 demonstration waivers such as the HEART (Healing and Ending Addiction through Recovery and Treatment) waiver, and a 1915(b) care‑coordination waiver called Passport to Health.

Chapelle Smith, administrator for the Human and Community Services Division, summarized eligibility rules and the primary factors for Medicaid eligibility. “How eligibility for Medicaid is determined? It is determined using 4 primary factors,” she said, listing income (percent of FPL), resources, age and residency, and noting program-specific rules for pregnancy, children, elderly and people with disabilities. Smith also described coverage categories such as Healthy Montana Kids Plus, Medicaid expansion (0–138 percent FPL), and Montana Medicaid for Workers with Disabilities.

Gene Hermanson, who presented DPHHS payment methodologies, reviewed how provider reimbursements vary by provider type: resource‑based relative value scale and Medicare schedules for physician and professional services, cost‑based reimbursement and annual settlements for critical access hospitals, APR‑DRG methodology for inpatient prospective payment system hospitals, outpatient prospective payment for PPS hospitals, encounter rates for federally qualified health centers and rural clinics, and per‑diem plus quality adjustments for nursing homes. “Payments are based on a patient acuity, not based solely on their length of stay,” he said when describing APR‑DRG pricing.

LFD analyst Julia Hamilton demonstrated a rebuilt Medicaid expenditure model intended to give the legislature faster, more automated caseload and spending projections. “We completely rebuilt the Medicaid model,” she told committee members, and described automated pulls from the department’s data warehouse, a tightened “percent completion” factor to adjust for incomplete billing runs, and a battery of time‑series and machine‑learning methods used to select best‑fit forecasts for roughly 200 provider types.

LFD and DPHHS differed modestly on near‑term projections. LFD reported its traditional‑Medicaid projection is about $61.2 million (4.2 percent) lower than the department’s request for SFY 2026 and about $78.1 million (5.1 percent) lower for SFY 2027; for expansion the LFD projection was roughly $31.2 million (3.1 percent) lower in SFY 2026 and $45.1 million (4.3 percent) lower in SFY 2027. Both offices said timing of data pulls and model updates account for most of the variance.

FMAP and fiscal impact: multiple presenters explained that Montana’s federal matching percentage (the FMAP) has declined as state per‑capita income has risen. DPHHS told the subcommittee it budgeted SFY25 using an assumed FMAP of 64.12 percent but federal and LFD numbers show the actual federal share has fallen and is projected to fall further (LFD used approximately 61.7 percent for SFY26 and DPHHS assumes about 61.47 percent for SFY27). DPHHS said the FMAP difference would shift roughly $43 million of state funds into SFY26 Medicaid costs and about $45 million into SFY27 if projections hold.

Committee members asked for additional breakdowns and follow‑up: several legislators requested county and age‑band detail, a list of provider types with enhanced FMAPs (for example, certain Indian Health Service and Community First Choice payments), and the department’s underlying cost reports or audit procedures for provider submissions. DPHHS said it will provide more granular age cohorts and follow up on cost‑report processes; the Office of the Inspector General will present separately on recoveries and payment integrity.

Public comment included tribal leaders and health‑system representatives who emphasized the role of Medicaid expansion and Medicaid revenue in supporting tribal clinics, behavioral‑health access, and rural hospital services. Speakers from the Confederated Salish and Kootenai Tribes, Fort Belknap and Fort Peck described new clinical capacity funded by Medicaid revenue and urged continued coverage and stable funding.

Looking ahead: committee members set the agenda for continued hearings on Medicaid expansion policy, supplemental payments and Health Resources Division material in the next session of committee meetings. Both LFD and the department said they would provide updated caseload runs and FMAP guidance when federal calculations are finalized.

Sources: oral presentations and data tables provided in the DPHHS "Medicaid in Montana" report and LFD projection slides presented to the Section B Appropriations Subcommittee; committee transcript evidence is cited in provenance.