KDHE lays out CHIP shortfall and IT, vital‑records and behavioral‑health requests

Kansas Department of Health and Environment officials briefed the Committee on Social Services Budget on the department’s FY2026–FY2027 budget request, emphasizing caseload-driven CHIP costs, required Medicaid IT upgrades and relocation expenses for vital records.

Lede: Amanda from Legislative Research summarized KDHE’s request, noting FY26 approved amounts include significant reappropriations and that KDHE’s FY27 enhancements include a $26 million ask to address CHIP caseload increases and CMS-related requirements for Medicaid systems.

Nut graf: KDHE officials and legislators focused on CHIP’s fiscal stress after unwinding and a CMS final rule that removed certain cost‑control levers. Deputy Medicaid Director Christine Osterlund said enrollment rose by roughly 10,000 children above estimates and that CHIP serves about 57,000 children in Kansas; the combination of higher enrollment and rule changes drove the agency’s larger request. Members noted the governor’s recommendation is $15 million and asked how that gap would affect coverage.

Key details and member concerns: Christine Osterlund told the committee that the state originally estimated fewer children after unwinding but now faces higher member months and utilization; she said the governor recommended funding for part of the request but insufficient funds would force the state to consider ending CHIP because it is an allotment rather than an entitlement. “If we run out of funding, the choice for the state would be to end the CHIP program,” the deputy secretary said. Members asked whether the $15 million would carry the program through the next fiscal year; KDHE responded it would buy several months but risk to the program would remain.

IT and programmatic requests: KDHE detailed multiple system and program needs tied to federal rules and operations: a half‑million SGF to cover OITS cloud storage charges, $3.4 million SGF for Gainwell system changes required by CMS interoperability and prior‑auth rules, and an anticipated $4,000,000 (all funds) for external quality review organization (EQRO) contract increases. KDHE also requested $810,817 to relocate the Office of Vital Statistics (about 80 FTEs expected to move) after the Kansas Highway Patrol moves into the agency's current space.

Behavioral health and rural health items: KDHE requested $5,000,000 to support hospitals that hold open inpatient behavioral‑health beds; the money is intended as one‑year funding and is tied to opening capacity until South Central Hospital comes online. KDHE also highlighted federal rural health transformation funding received earlier and noted ongoing implementation work.

What’s next: Members asked KDHE to detail alternate funds, reserves and fee fund balances that might be used if SGF is insufficient; the committee scheduled KDHE testimony to continue the next day. KDHE officials were asked to return with additional detail on reserves and timing for relocation costs and CHIP forecasts.