JFAC approves Medicaid supplementals, larger FY2026 Medicaid request including hospital assessment and MMIS funding

The Joint Finance-Appropriations Committee approved one-time FY2025 supplementals for the Department of Health and Welfare’s Division of Medicaid and forwarded a larger FY2026 maintenance package that increases funding for hospital assessments, Medicaid IT (MMIS), actuarial services and population forecast adjustments.

Alex Williamson, budget and policy analyst with legislative services, told the committee the FY2025 package included federal and state costs to meet federal requirements and unanticipated utilization, and described the FY2026 items as ongoing and programmatic needs.

Why it matters: the actions appropriate state and federal funds that support hospital payments, managed care oversight and a multi-year Medicaid IT replacement. Several items are tied to federal requirements or court orders, and one major change (the hospital assessment) affects how Idaho draws federal matching funds under upper-payment-limit calculations.

The FY2025 supplemental motion combined several items into a single, one-time package rather than considering each individually. The Division of Medicaid requested the funds to cover: a managed-care external quality review required by the Centers for Medicare & Medicaid Services (CMS); implementation costs and configuration fixes for the Idaho Behavioral Health Plan after its recent go-live; updated Medicaid forecasting for residual entitlement costs; a capitation-rate increase for the Idaho Behavioral Health Plan; and additional hospital assessment deposits to access federal matching funds.

Committee discussion focused on the nature of the federal requirements and forecasting uncertainty. Williamson said the managed care external quality review is a CMS federal requirement and that Idaho currently has four plans subject to that review. She described the updated forecast as a recalculation based on more months of actual spending and the capitation increase as driven by higher-than-expected utilization and acuity among enrollees.

Committee members also discussed the hospital assessment mechanism used to generate additional federal funds under a recalculated upper-payment-limit methodology. Williamson explained that hospitals transmit assessment funds into a dedicated account so the state can draw federal matching money and then remit funds back to hospitals; the appropriation backs the hospitals’ required assessment deposits.

Representative Furness and others questioned the role of actuaries and why the Medicaid division needs additional actuarial contract funding. Williamson said the division has no in-house actuaries and relies on contractors for capitation-rate work, forecasting, risk evaluation and other actuarial analysis required for managed-care and value-based products.

Votes at a glance

- FY2025 Medicaid supplementals (one-time): Approved. Motion moved by Senator Wintrow; seconded by Representative Handy. The committee recorded 13 ayes and 6 nays/absent combined across both chambers; clerks reported for the Senate 7 ayes, 3 nays; for the House 6 ayes, 3 nays, 1 absent/excused. Funding included $511,400 from the general fund, $77,243,700 from dedicated funds and $337,471,700 from federal funds (total $415,226,800) to cover the listed supplemental items.

- FY2026 JFAC program maintenance package (ongoing enhancements): Approved. Motion moved by Representative Furness; seconded by Senator Burkey. The committee recorded the same chamber-level outcome: Senate 7 ayes, 3 nays; House 6 ayes, 3 nays, 1 absent/excused; total tallies reported as 13 ayes and 6 nays/absent across both chambers. The motion forwards a request that adds $70,141,900 from the general fund, $88,963,700 from dedicated funds and $515,087,000 from federal funds for a total of $674,192,600 in FY2026 appropriations and ongoing authority, distributed across items described below.

- Language and reporting requirements tied to the FY2026 package: Adopted by unanimous consent. The committee approved trailer language requiring the Division of Medicaid to: explore value-based payment models for outpatient addiction treatment and report findings to JFAC by Jan. 15, 2026; transition contract periods to align with the state fiscal year and report progress by Jan. 15, 2026; and provide an annual emergency Medicaid report on clients served and total emergency Medicaid expenditures by Sept. 15 following each fiscal year. Standard federal funding restriction and conditions language were also included.

Key line-item and clarifying figures (as presented to the committee)

- Managed care external quality review (EQR): $1,350,000 one-time (FY2025) and $1,350,000 ongoing request for FY2026 to meet CMS requirement for external reviews of managed care organizations.

- Idaho Behavioral Health Plan system configuration and capitation changes: $695,500 one-time for system configuration costs and $108,821,400 (FY2025 capitation increase) tied to higher utilization/acuity; these were folded into the FY2025 package and an ongoing capitation funding posture was included in FY2026 items.

- Medicaid updated forecast (FY2025 residuals): $113,849,300 one-time to reflect actual expenditures recorded since the last forecast.

- Hospital assessment fund: $190,510,600 added in the FY2025 package (dedicated account) to allow hospitals to transmit required assessment funds so the state can draw federal matching dollars under the upper-payment-limit methodology; an ongoing appropriation for the hospital assessment was included in the FY2026 package ($190,510,600 referenced as ongoing in the maintenance list).

- MMIS (Medicaid Management Information System) procurement: $117,200,400 requested in FY2026 to free up state-share cash that had been set aside in the MMIS dedicated fund as the multi-year IT replacement reaches milestones; committee members described the appropriation as staged payment tied to deliverables.

- Population forecast adjustment (FY2026): $376,124,900 total (approximately $70,800,000 general fund and $305,200,000 federal funds) to reflect changes in caseload, utilization, pricing and the FMAP (federal medical assistance percentage) rate change.

- Actuary contract amendment: $1,100,000 (half general, half federal) to extend current actuarial services after the current contract exceeded its hours; the division relies on outside actuaries for capitation-rate certification and forecasting.

- Adult DD resource allocation model (related to a court settlement): $200,000 ongoing to support the assessment tool required by the KW lawsuit settlement and to pay court-ordered attorney fees.

Committee comments and context

Several legislators emphasized forecasting uncertainty. One member summarized forecasts as inherently imperfect, noting they can result in reversions if overestimated or supplemental requests if underestimated. Senator Cook and others described the MMIS funding approach as conservative: funds were placed in a dedicated account and will be released as project milestones are completed rather than paid as a lump sum.

Committee members noted that some changes in the FY2026 package are contingent on federal waivers and implementation details; Representative Furness flagged that savings tied to House Bill 345 rely on federal waivers and additional implementation work.

What the committee asked staff or the department to report

- A Jan. 15, 2026 report on outpatient addiction treatment value-based payment model exploration. - A Jan. 15, 2026 report on transitioning Medicaid contract periods to align with the fiscal year. - An annual emergency Medicaid report due to JFAC by Sept. 15 after each fiscal year showing clients served and total emergency Medicaid payments.

Ending note

With the votes recorded, committee leaders directed staff and interested members to work in smaller work groups on outstanding technical edits and implementation details; work groups were scheduled to continue the next morning. The bills will proceed with pass recommendations as recorded by the committee clerk.