Legislative budget panel approves Medicaid supplementals, advances FY2026 funding and HB345 reporting language

At a legislative budget committee meeting, the panel approved one-time supplementals to the Division of Medicaid and advanced a broader FY2026 Medicaid funding package that includes ongoing hospital assessment funding, increased actuarial and IT project appropriations, and reporting requirements tied to House Bill 345.

Alex Williamson, budget and policy analyst with Legislative Services, described the FY2025 supplementals as a single collective motion and listed the major items rolled into it, including a managed-care external quality review contract, implementation costs for the Idaho Behavioral Health Plan, updated Medicaid forecast costs, a capitation rate increase for the behavioral health plan, and an additional hospital assessment deposit to enable the state to draw federal matching funds. "This is a federal requirement," Williamson said of the managed care external quality review, and she described the hospital assessment appropriation as the mechanism that lets hospitals transmit assessment funds so the state can draw federal dollars under the upper payment limit methodology.

The committee approved the FY2025 supplemental motion and later approved the FY2026 program maintenance package. The FY2025 supplemental was described on the record as covering (among other items) a $1,350,000 request for the managed care external quality review; $695,500 for Idaho Behavioral Health Plan system configuration changes; $113,849,300 for an updated Medicaid forecast; $108,821,400 for a capitation rate increase in the Idaho Behavioral Health Plan; and roughly $190,510,600 for additional hospital assessment funds. The motion sponsor presented combined totals of general, dedicated and federal fund splits for the package. The committee recorded the motion as passing and forwarding the proposal as a bill with a new-pass recommendation.

Representative Furness moved the FY2026 budget package, which the committee described as including an ongoing portion of the hospital assessment fund, additional CAHPS survey contract funding to meet federal requirements, $200,000 ongoing for the adult developmental disabilities (DD) resource allocation model tied to the KW lawsuit settlement, an actuary contract amendment, and continued appropriations from the MMIS (Medicaid Management Information System) replacement fund. Williamson said the actuary contract amendment would add approximately $1,100,000 (split half federal, half general) to allow the department to continue procuring actuarial services used for capitation-rate calculations, forecasting and managed-care analytics.

On the population-forecast and FMAP adjustments, Williamson told the committee the request accounts for updated caseload and utilization expectations and the federal match rate change; she identified a population-forecast adjustment of $376,124,900 as part of the FY2026 package. Committee members discussed the uncertainty inherent in forecasts: "A forecast is guaranteed just like economists. It will be wrong — it will be too low or too high," one member said. Senator Cook emphasized the practical role of actuaries in those forecasts: "The actuary — we can't live without them; we'll be running totally blind without them," he said.

The package also includes administrative and statutory trailer language associated with House Bill 345. Williamson summarized the language on the screen: a directive to explore value‑based payment models for outpatient addiction treatment and report to JFAC by Jan. 15, 2026; a requirement to transition Medicaid contract periods to align with the state fiscal year and report on progress by Jan. 15, 2026; an annual emergency‑Medicaid report on clients served and expenditures due to JFAC after each fiscal year (no later than Sept. 15); a standard federal‑funding restriction clause; and standard conditions, limitations and restrictions language for the appropriation.

Committee discussion noted that some FY2026 items are contingent on federal or court processes: the KW settlement items respond to court‑ordered requirements, and some savings tied to House Bill 345 will be contingent on obtaining federal waivers. Members also pointed to the hospital assessment mechanism as a way to access additional federal dollars under a revised upper payment limit methodology; as Williamson explained, hospitals transmit assessment funds to a dedicated account so the state can draw federal matching funds that are then returned to hospitals.

Both motions passed on roll call. For both the FY2025 supplemental and the FY2026 package the committee recorded the same committee-level result: in the Senate delegation, 7 ayes and 3 nays; in the House delegation, 6 ayes, 3 nays and 1 absent/excused, for a combined majority vote that sent the measures forward with a new-pass recommendation.

The committee adopted the proposed trailer language on unanimous consent and directed the departmental reporting described in the language. Committee leadership also scheduled work groups and adjourned to allow subcommittee work.