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Joint subcommittee approves DHHS budget closings, recommends Medicaid and provider changes
Summary
The Joint Subcommittee on Human Services approved closing recommendations for the Department of Health and Human Services that include prescription drug rebate adjustments, caseload revisions, targeted rate increases and program expansions; the committees approved the report by voice vote.
At a joint meeting of the Assembly Committee on Ways and Means and the Senate Committee on Finance, staff presented the Joint Subcommittee on Human Services' budget-closing report for the Department of Health and Human Services, the Director's Office and the Division of Healthcare Financing and Policy. The committees voted to approve the report by voice vote; Senator Dondero Lupo moved to approve the report and Assemblymember Backus seconded. The motion carried unanimously.
The subcommittee's recommendations would reduce general fund appropriations compared with the governor's recommended budget by $85.4 million in fiscal 2026 and $42.9 million in fiscal 2027, the report said. Key recommendations include recognizing additional prescription drug rebate revenue, vendor support for rebate data, a new epidemiologist position to support a single preferred drug list, revised Medicaid caseload projections and targeted provider rate increases and service expansions.
John Casera, Legislative Counsel Bureau fiscal staff, presented the report and described major items. The subcommittee recommended adding $55.2 million in prescription drug rebate revenues each year of the 2025–27 biennium to be transferred to Medicaid, and recommended $500,000 per year in drug rebate and federal funds for vendor support. The subcommittee also recommended creating one medical epidemiologist position in Medicaid administration, with staffing and operating costs noted in the report, and using a 27.5% state share of rebate revenues to generate additional general fund savings ($22.9 million annually), split between a Medicaid special reserve and returned general fund savings.
The report recommended revised March 2025 Medicaid caseload projections and associated adjustments to state and federal revenue estimates and waiver slot increases. To support mandatory rate increases, the subcommittee recommended approximately $153.9 million (including $41.9 million general fund) in fiscal 2026 and $275.4 million (including $74.1 million general fund) in fiscal 2027. The subcommittee recommended expansion funding for mobile crisis, assertive community treatment, first-episode psychosis services, adult dental and services for juvenile justice populations, and funding to support a specialty children's managed care plan in fiscal 2027 using federal funding and provider tax transfers.
Staff also presented a package of administrative and operational recommendations: continuing most positions recommended by the governor for federally mandated activities; approving additional positions converted from expiring federal grants and ARPA revenue; adding vendor and contractual fiscal support and a fiscal audit team; and supporting the transition of certain Medicaid eligibility functions to Nevada Health Link. The subcommittee recommended continued implementation of the public option with $2.4 million in direct general fund appropriations each year and added reporting language and limited operational funding for an unclassified agency manager position beginning Jan. 1, 2026.
Other recommendations included continuing private hospital provider tax transfers to fund nonfederal shares of expanded services and rate increases; continuing the upper payment limit (UPL) holding account for supplemental payments; transferring revenue from the University of Nevada, Reno School of Medicine for an academic partnership; and transferring funds from the indigent hospital account to support Medicaid nonfederal shares. The subcommittee authorized fiscal staff to make technical adjustments and recommended several letters of intent requiring follow-up reports.
Senator Dina Titus, a committee member, said she supported the budget and the creation of a Nevada Health Authority. "I think it's critical that we establish a Nevada Health Authority, and so I will be supporting this budget," Titus said. After brief discussion the committees approved the report by voice vote.
The committees concluded the item and moved to public comment.
