EOHHS briefing flags audit adjustments, Medicaid program changes and new program-integrity proposals

The Executive Office of Health and Human Services (EOHHS) briefed the House Finance subcommittee on the governor's FY2026 proposals and on recent audit findings on March 4 and again during the April 1 subcommittee hearing. The presentation covered Medicaid program changes, an array of time-limited federal grant projects, and proposals for new data and technology investments.

Why it matters: EOHHS administers Medicaid and coordinates health-system programs across state agencies. Audit adjustments and decisions about provider rates, pharmacy policy and the Medicaid eligibility IT platform carry major fiscal and operational implications for the state's health spending.

Audit findings and fiscal adjustments EOHHS staff reviewed the auditor general's FY2024 financial audit, which identified a number of material journal-entry corrections and cited weaknesses in financial oversight. The presentation noted that errors identified during the audit were corrected; EOHHS and committee members discussed steps to strengthen internal controls, including adding standard operating procedures and layered reviews for manual accruals and journal entries.

Medicaid program highlights - Caseload forecasting: The governor's recommendation incorporates the November caseload estimate, with FY2026 changes dominated by Medicaid program adjustments. For FY2026 the recommendation is higher than enacted, largely driven by Medicaid caseload and rate adjustments. - Hospital and nursing facility rates: The governor proposed caps on some provider rate increases, including a 2.3% cap for hospitals and nursing facilities; the recommendation seeks related savings in 2026. EOHHS staff described a separate multi-step redesign for nursing facility payments shifting to a patient-driven payment model (PDPM) effective Oct. 1 (a contractor-supported redesign and stakeholder engagement process was funded in the budget). - Pharmacy policy: EOHHS has proposed a multi-year approach to reduce pharmacy spending, with a future implementation of a single preferred drug list (PDL) and other tools; the governor did not assume FY2026 savings from the pharmacy work but funded analytic and planning resources and proposed that savings begin in subsequent years. - Program integrity: Article 3 includes a proposal to add positions aimed at detecting improper payments; EOHHS and DOA estimated recurring savings in the medical assistance program from enhanced audit and recovery activity (the budget included funding for new FTEs and contractor analytic support and assumed partial-year savings in FY2026).

Technology and long-term projects EOHHS outlined major IT projects and their federal match assumptions. The Medicaid enterprise system replacement (a modern Medicaid claims and eligibility back office) was summarized with an overall long-term request; the governor's FY2026 plan contains initial funding and a state match component under the existing federal 90/10 rate. EOHHS noted federal uncertainty: the possibility that Medicaid match rates for certain technology projects could change would raise the state share substantially.

Federal grants and time-limited funds EOHHS updated the subcommittee on opioid settlement accounts and federal ARPA/HSTP funds targeted to workforce and system transformation. The presentation listed spending plans for opioid abatement and health-system transformation funds and noted that some ARPA and HSTP programs are time-limited and will require decisions about sustainment if federal or one-time funding ends.

Questions and next steps Committee members pressed officials about internal accounting controls that led to audit adjustments and asked how EOHHS will ensure accuracy in future closings. Members requested follow-up documentation about the program-integrity savings plan, nursing-facility payment redesign timelines and any legislative changes that would be needed to implement proposed pharmacy or licensing-fee changes. EOHHS said it would provide requested follow-up materials and that certain proposals will be addressed during subsequent article hearings.

Sources: presentation to committee by EOHHS fiscal staff (Linda and colleagues), Secretary Richard Charest, Medicaid Director Kristen Souza and related budget documents.