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Human Services panel urges restoring residential care rates after Medicaid study cut reimbursements
Summary
House Human Services Chair Teresa Wood told Appropriations the committee recommends restoring tier-1 enhanced residential care rates to the FY25 level ($72.37/day) after an administrative implementation of the Medicaid rate study rolled up lower-level cuts that would have driven payments as low as roughly $47/day.
Teresa Wood, chair of the House Human Services Committee, told the House Appropriations Committee on Jan. 15 that the committee recommends restoring tier-1 enhanced residential care Medicaid rates to the FY25 level of $72.37 per day.
Wood said the administration's implementation of a recent Medicaid rate study "rolled up things" in a way that masked decreases at lower levels of the rate structure. She said the result would have been a dramatic reduction in payments for residential care providers: "to reduce it down to $47 a day is preposterous." The committee concluded that steep cuts were not legislative intent and recommended returning the rate to FY25 levels.
Why it matters: Wood said sharp reductions in residential rates risk further closures or reductions in available residential-care capacity, citing an ongoing workforce shortage and more than 250 current vacancies in the field. She argued that the committee and the Joint Fiscal Office (JFO) had not asked sufficiently deep questions when reviewing the rate study report and urged more transparency from the Department of Disabilities, Aging, and Independent Living (DAIL).
What the committee recommended: The Human Services committee proposed (a) restoring the tier-1 enhanced residential care rate to $72.37 per day, (b) making any necessary April 1 rate adjustments rather than abrupt retroactive reductions, and (c) requesting a department report to explain how rates were calculated and to clarify where savings or increases in one line were offset by cuts elsewhere.
Evidence and next steps: Wood said the JFO produced a Medicaid closeout report that breaks down expenditures and that the committee has asked DAIL for a report on how emergency financial relief (EFR) payments have been used, including whether recipients were for-profit or nonprofit providers. Committee members requested follow-up testimony from AHS/DAIL to explain the rate study implementation and to provide JFO data. The committee voted on the memo components as they went through the items, with majority support on each component and unanimity on some results.
The committee scheduled further review of the rate study implementation during the FY27 budget process and asked for additional transparency and documentation from the administration.
