Idaho Medicaid budget grows as department seeks supplementals, MMIS and hospital assessment funding

The Joint Finance-Appropriations Committee on Feb. 26 reviewed a suite of supplemental and ongoing budget requests for Idaho’s Division of Medicaid that together would add hundreds of millions of dollars to the agency’s appropriations.

Alex Williamson, budget and policy analyst with Legislative Services, told the committee the division expended about $4.27 billion of the $4.56 billion appropriated in fiscal year 2024, and that more than 98% of expenditures are trustee and benefit payments for Medicaid plans. Williamson walked members through five requested supplementals for FY2025 and several ongoing enhancement requests for FY2026.

The requested supplementals include: a $1.35 million request to complete an external quality review required by the Centers for Medicare & Medicaid Services (CMS); a supplemental to cover system configuration related to the Idaho Behavioral Health Plan (IBHP) onboarding; a capitation rate increase request totaling about $108.8 million (split across the basic, coordinated, enhanced and expansion plans); and a $190 million request tied to hospital assessment funds — about $77 million of that from the dedicated hospital assessment fund and about $113 million from federal funds, Williamson said. She also identified a one-time federal forecast adjustment of about $113.8 million tied to hospital and developmental disabilities expenditures.

Williamson described a population forecast adjustment rolled into the 2026 enhancement package that would add roughly $367 million ongoing, and she said part of that total reflects a roughly $45 million shift from federal funds to the state general fund because of a change in Idaho’s Federal Medical Assistance Percentage (FMAP) calculation.

"The population forecast adjustments beginning in 2025…will show up in the enhancement bills," Williamson said during her presentation, and she pointed committee members to more detailed slides on SharePoint for line-by-line back-up.

Department of Health and Welfare Director Alex Adams said the department aimed to submit a maintenance-level budget and did not request benefit expansions or provider rate increases in its base request. "I submitted as close to a maintenance budget as I could submit," Adams said, adding that most of the requested items respond to federal requirements, legal settlements or implementation expenses.

Adams and Williamson told members that some requests reflect true-up of costs already incurred — the supplementals seek money for services already provided and payments already made — while enhancements anticipate future caseload, utilization, pricing and FMAP shifts.

Committee members asked for clarifications. Representative Furness asked whether the FMAP-related adjustments are ongoing; Williamson confirmed they are ongoing. Representative Tanner questioned whether the hospital assessment process functions as an effective offset rather than a de facto transfer to hospitals; Williamson said a portion of the assessment stays with the state and that policy changes would be required to redirect its use.

Why it matters: Medicaid is an entitlement program that defines who is eligible and what services must be paid. Even with a maintenance-level request, the program’s size and federal-state funding dynamics make the budget volatile. Williamson and Adams said forecasting is imprecise and that supplementals are a recurring feature of the Medicaid budget cycle.

What’s next: The department is publishing monthly Medicaid transparency reports and will continue to brief legislators; JFAC will consider the supplemental and enhancement requests as part of its budget deliberations this session.