Lawmakers Press HCPCS on Medicaid Cuts as Committee Weighs Major Provider and Eligibility Changes

Representative Susan Sirota, chairing the Smart Act session, opened the hearing by describing the governor’s budget priorities and telling members the substance of the debate: the Department of Health Care Policy and Financing (HCPCS) is the chief driver of general‑fund growth and therefore the principal target for savings. “This is the governor’s budget,” Representative Sirota said, noting that HCPCS accounts for nearly one‑third of general‑fund spending and that any durable solution requires ongoing, not one‑time, reductions.

HCPCS Executive Director Kim Bimstepher told the committee Medicaid general‑fund costs have averaged roughly 19% growth in recent years and that continued trends at that pace would require roughly $1 billion more in general fund next year. Bimstepher and Director Rachel Ryder described a multi‑pronged approach: trimming provider‑rate increases, tightening eligibility or benefits in some areas, and seeking additional federal draw‑downs through mechanisms such as state‑directed payments and a new rural hospital transformation grant. “If we don’t follow disciplined approaches to get these trends back to normative ranges, we’ll have to cut benefits, provider rates and potentially access,” the HCPCS presentation warned.

Members focused their questions on the distributional effects of proposed cuts. Representative Leader and others asked why a program that receives federal matching funds should be reduced before programs funded only with state dollars; HCPCS and Representative Sirota answered that Medicaid’s rapid growth and the structure of federal rules leave few alternatives that close the budget gap at scale. Committee members also pressed HCPCS on audit findings and fraud‑related exposures, notably large outlier trends in pediatric behavioral therapies (PBT/ABA) and non‑emergency medical transportation (NEMT) that HCPCS officials said are the subject of federal audits and investigative work.

HCPCS listed its major proposals in four buckets: (1) medical forecast/fixed entitlements; (2) eligibility and benefit changes (where many reductions would require new legislation); (3) provider‑rate changes, including reclaiming a 1.6% planned increase and moving certain reimbursements down to 85% of Medicare; and (4) administrative changes. The department estimated provider‑rate related savings in the hundreds of millions of dollars if approved. HCPCS also outlined operational steps—shared services for county administration, a centralized call center, and targeted fraud‑investigation units—intended to reduce administrative costs and PER (payment error rate) exposure under new federal rules.

Committee members repeatedly raised the practical risks of rate reductions: providers told the committee they feared losing staff and access in rural areas, while representatives from provider and patient groups warned that cutting rates and benefits could accelerate provider exits and squeeze already fragile networks. HCPCS said it is balancing targeted reductions against the need to preserve a functioning provider network, and pointed to the rural hospital transformation grants (federal) as one means to protect critical access hospitals.

The session ended with members asking HCPCS to refine models showing projected access impacts and with an invitation for further technical briefings. The committee voted to continue oversight work during supplemental and figure‑setting stages; HCPCS and the JBC will return to the committee with more detailed fiscal and access models during February figure setting.