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Hospitals and nursing homes oppose proposed cuts to statutory inflation index in FY2026 budget
Summary
Hospital and long‑term care leaders told the Senate Finance Committee that reducing the statutory inflation adjustment to 2.3% would underfund care, worsen workforce shortages and risk further facility closures; unions urged increases be targeted to frontline caregivers.
Leaders of Rhode Island hospitals and long‑term care providers urged the Senate Finance Committee on March 20 to restore a larger inflation‑based rate increase after the governor proposed lowering the statutory inflation index for nursing facilities and hospitals to 2.3% for FY2026.
John Gage, president and CEO of the Rhode Island Health Care Association, and Lisa Tomasso of the Hospital Association of Rhode Island testified that the proposed 2.3% increase falls short of the statutory 4.2% inflation index and will leave facilities further underfunded after prior years of cuts. "Rhode Island nursing facilities cannot absorb another cut, and we request that members of Senate Finance restore this cut and implement the full statutory increase of 4.2%," John Gage told the committee.
Why it matters: Providers said lower increases would reduce reimbursement available for direct care staff and operations at a time when facilities face higher costs for labor, energy, food and medical supplies. The administration said the 2.3% rate mirrors the state's projected revenue growth and is part of a broader approach that includes state‑directed hospital payments and other cost‑containment measures.
Provider testimony and union remarks centered on two funding issues. SEIU Local 1199 political director Alex Moore said the administration's definition of "direct care staff" in Article 8, section 4 should explicitly exclude administrators and supervisors, and he urged the committee to restore a 4.2% COLA for workers. "These workers, who were celebrated as health care heroes during the COVID pandemic, now struggle to make ends meet because of stagnant wages," Alex Moore said in testimony.
Hospital and association witnesses warned that changes to supplemental payment programs also carry fiscal consequences. The administration proposes eliminating inpatient and outpatient upper payment limit (UPL) supplemental payments for community hospitals (about $18,300,000) while increasing state‑directed payments, which the administration said will overall increase net aid to hospitals but also raise the hospital provider tax.
Committee members pressed the administration on whether a lower statutory index is sustainable given past underfunding and the sector's workforce challenges. Administration witnesses said they hope other budget investments — in primary care, pharmacy reforms and fraud recovery — together with the state‑directed payment structure will help bend the cost curve while avoiding benefit or eligibility reductions.
The hearing included multiple provider witnesses who asked the committee to preserve higher statutory increases and to consider additional funding to stabilize staffing and access to care. No vote on the statutory language took place at the hearing.
Provenance: Provider testimony and administration presentation in the March 20 hearing informed this account.
