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Consultant Manatt tells JBC Medicaid growth unsustainable; offers targeted actions including behavioral‑health, LTSS and pharmacy reforms
Summary
Manatt Health presented a data‑driven review showing Medicaid and CHIP spending up roughly 60% since 2018, identified LTSS, behavioral health, pharmacy and PBT as cost drivers, and recommended eight targeted policy actions for stakeholder testing.
A contracted team from Manatt Health briefed the Joint Budget Committee on a rapid, data‑driven effort to identify Colorado Medicaid cost drivers and potential policy actions.
Kevin McAfee of Manatt summarized a landscape assessment that found Colorado's aggregate Medicaid and CHIP spending has increased nearly 60% since state fiscal year 2018. He identified four broad levers states use to manage Medicaid costs—eligibility, covered services, payment rates, and maximizing value—and said Manatt focused on options that were actionable and consistent with Colorado's guiding goals.
Manatt's analysis flagged long‑term services and supports (LTSS) as Colorado's largest cost center—accounting for more than 35% of total Medicaid benefit spending in SFY2025 and roughly 42% of growth since 2019—and noted behavioral health capitation and pediatric behavioral therapy (PBT/ABA) spending also outpaced other categories. Manatt highlighted that a small share of members generates a large share of costs and that high per‑member per‑month increases and growth in provider networks both contributed to rising expenditure.
The consultants proposed a set of targeted policy options for stakeholder testing, among them: updating withdrawal‑management clinical policies and utilization controls for substance use disorder services; acuity‑ or tier‑based pricing for select behavioral services; expansion of mobile health services and community paramedicine; program integrity steps and advertising restrictions for HCBS; standardized assessments for PBT to align intensity with clinical need; and revisiting utilization management for two protected drug classes. Manatt emphasized stakeholder engagement and phased implementation rather than a single, blunt policy change.
Committee members raised concerns about stakeholder engagement timing, the treatment of providers’ operational input, and how policy changes might affect access; Manatt and the department said they would continue robust stakeholder testing before agency action.
