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2% automatic Medicaid rate increase stalls amid federal‑limit and cost concerns
Summary
House Bill 750, which would require a minimum 2% annual Medicaid provider rate increase, drew widespread support from providers but opposition from DPHHS over federal upper payment limits and potential multi‑year costs; the committee ultimately tabled the bill after a failed roll call.
Representative Mary Cafaro introduced House Bill 750 proposing a 2% annual automatic increase to Medicaid provider rates to prevent reimbursements from falling further behind a 2022 benchmark study. "House bill 7 50 keeps providers from falling further behind, helps keep the doors open, and most important, provides the necessary care to continue," Cafaro said in opening remarks.
Provider groups and community organizations — from dentists and behavioral health providers to long‑term care and tribal representatives — urged the committee to adopt a predictable adjuster to stabilize workforce and access. Pat Noonan of the Behavioral Health Alliance of Montana asked the legislature to avoid repeated ad‑hoc increases and embrace a modest recurring increase. Several speakers emphasized that a stable, matched increase could be partly offset by federal Medicaid matching funds.
Gene Hermanson, Medicaid chief financial manager at DPHHS, testified in opposition, warning that a mandatory 2% floor applied indiscriminately could have unintended consequences. Hermanson said many rates are already adjusted through Medicare fee schedules or other statutory mechanisms and that a blanket 2% could push some reimbursements above federal upper payment limits. He provided a compounded projection, saying that if the 2% minimum applied through FY29 the state cost could reach about $163 million annually by that year. Hermanson pointed the committee instead to HB419, a data‑driven alternative the department supports.
Committee members questioned how the mandate would interact with existing statutory rate adjustments (physicians were specifically excluded from HB750), whether duplication would occur, and how the department would manage potential upper payment‑limit exposure. Sponsor Cafaro argued many provider types do not have automatic annual adjusters and said legislated predictability is warranted.
On executive action the committee held a roll call vote; the motion to report HB750 do‑pass failed (9 yes, 12 no). The vice chair then moved to table HB750 and that motion carried. Supporters said the bill would have provided routine stability for underpaid providers; opponents and DPHHS said the measure risked federal noncompliance and large fiscal exposure.
The bill was tabled at committee for the record.
