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Committee backs bill to raise conversion factor for therapists amid DPHHS opposition
Summary
House Bill 585 would increase the Medicaid conversion factor used to set payments for physical therapists, speech‑language pathologists and occupational therapists (proposed conversion factor $39.56). Providers testified they are losing money on Medicaid patients; DPHHS opposed the bill over statutory rate‑setting language and potential unintended rate increases.
Representative Ed Buttrie opened on House Bill 585, saying the bill updates the conversion factor used to calculate Medicaid payments for physical therapists, speech‑language pathologists (SLPs) and occupational therapists (OTs). He said the change is intended to keep small provider practices open and maintain access to care in rural communities.
The fiscal note presented by the sponsor shows DPHHS general fund costs of $2,970,000 in FY 2026 and $3,230,000 in FY 2027, with those state dollars matched by federal funds depending on beneficiary category. The bill includes an option authorizing the department to increase rates by referencing the consumer price index; sponsors described that clause as a mechanism to reduce repeated legislative rate fights.
Proponents included professional associations and practicing clinicians who said many clinics are losing money on Medicaid patients and are reducing the number of Medicaid slots or closing locations. Emily Herndon, Montana chapter president of the American Physical Therapy Association, said many small PT practices cannot cover overhead and cited industry conversion targets as the basis for the requested $39.56 conversion factor. Jennifer Henseley and Michael Cruse described similar business‑viability pressures for SLPs and OTs.
The Department of Public Health and Human Services, through Jean Hermanson (Medicaid chief financial manager), opposed HB 585. The department said statutory language could inadvertently allow rates to rise faster than the CPI because RVU (relative value unit) changes set by CMS interact with the conversion factor; the department also raised concerns that the bill would prevent downward adjustment of conversion factors if CPI declines and could reduce future legislative control over provider rates.
Committee members explored technical details about RVUs, conversion factor mechanics, and whether prior RVU changes had historically exceeded CPI; provider witnesses said they had not observed large RVU‑driven jumps and urged passage to stabilize provider participation in Medicaid. After extensive questions and testimony, the committee moved HB 585 to executive action and recorded concurrence by roll call, 12 yes, 10 no.
