Appropriations Committee hears DHHS budget; officials defend plan to move YRTC youth, propose Medicaid changes and prioritize rural health funds

The Nebraska Appropriations Committee heard multi‑hour testimony on the Department of Health and Human Services' budget, LB10‑71, as agency leaders described agency efficiencies, plans to reconfigure youth residential placements and preparations to deploy federal rural health transformation funds.

DHHS Chief Executive Steve Corsi asked the committee to advance the governor's budget package and said the department's proposals would reduce state general fund spending by more than $130 million across fiscal 2026–27 through a mix of program adjustments and operational savings. "The department worked with Governor Pillen and his team to propose budget adjustments that continue to serve Nebraskans while driving cost efficiencies," Corsi said in opening testimony.

Committee members pressed Corsi and DHHS leaders on several contentious operational changes. Senators asked for specifics on a plan to move male youth currently housed at the Youth Rehabilitation and Treatment Center (YRTC) in Kearney to the Nebraska Correctional Youth Facility (NCYF) in Omaha if a pending bill removing the Kearney male‑only restriction is enacted. Corsi replied the move would begin early July if the bill passes and said the Omaha site has 73 individual rooms with some capacity for double occupancy (up to 143 beds), while the newly built Kearney single‑story unit has 48 rooms.

The YRTC shift prompted questions about safety and an Inspector General memo flagging concerns about dormitory housing at Kearney, medication plans and double‑bunking risks. "If male youth or female youth for that matter in a different facility needed to be individually roomed, it would be much easier to do that at the Omaha facility," Corsi said, arguing NCYF's configuration allows more single rooms than Kearney's open barracks.

Medicaid director Drew Goncharowsky detailed how the department is responding to new federal rules in HR1 and the end of the COVID public health emergency. He described planning steps for implementing HR1 provisions, including verification of concurrent Medicaid enrollments and changes to retroactive eligibility and cost‑sharing. Goncharowsky said the department intends to pursue an 1115 waiver to eliminate some retroactive eligibility and that CMS has begun biweekly readiness reviews; he estimated roughly 12,000–18,000 expansion‑population enrollees might need to demonstrate compliance with upcoming work requirements depending on exemptions.

The hearing also included deep discussion of the Rural Health Transformation Program (RHTP), the federal HR1 fund that awarded Nebraska roughly $218.5 million for year one. Corsi and the CFO said the department planned to finalize a request for applications and begin issuing RFAs within days, but stressed the award is reimbursement‑based (no up‑front advances) and includes an October deadline for incurring eligible costs. "We have to make sure that we spend it well—or risk not receiving future discretionary funding," the CFO told the committee. Senators requested an executive summary on cash flows, prompt‑pay timelines and how grant recipients would be reimbursed.

Public testimony was lengthy: hospital systems warned that cutting retroactive Medicaid coverage for children and adults would raise uncompensated care, imperil safety‑net hospitals and transfer costs to private payers. Children's Nebraska and pediatric oncologists urged retention of pediatric cancer and biomedical research funding, saying state investments leverage federal grants. Providers and hospital representatives from across the state also urged restoration of a $3.8 million appropriation for Nebraska's Health Information Exchange (Sync Health), arguing the HIE reduces duplicate testing, supports public‑health reporting and unlocks federal match dollars.

DHHS said it will provide follow‑up materials requested by the committee, including caseload ratio summaries for child welfare, RHTP financial flow documentation, and details on how rural health awards will be administered. The committee did not take votes; senators said follow‑up sessions and written responses will be necessary before final budget votes.

What's next: DHHS will submit written answers and executive summaries requested by the committee; the RHTP RFAs were expected to post soon, and related budget bills including LB10‑71 will return to committee and the floor for further consideration.