Gianforte signs state budget, boosting Medicaid reimbursements by hundreds of millions

Gov. Greg Gianforte on Wednesday announced signing the state’s roughly $14.3 billion primary budget bill, creating a roadmap for funding state government for the next two years and substantially increasing reimbursement rates for health care providers who care for Medicaid patients.

In a press release Wednesday afternoon, the governor’s office touted many aspects included in House Bill 2, including income and property tax cuts, investments in state infrastructure, boosts to affordable childcare and housing programs, and a “historic” increase to Medicaid provider rates.

“​​Any one of these accomplishments would be historic on its own. Taken together, we’ve passed one of the most transformational budgets in state history,” Gianforte said.

The governor’s deputy communications director, Brooke Stroyke, later confirmed that Gianforte approved the Medicaid rate increases as passed by the Legislature, despite a suggestion in May from House Majority Leader Steve Fitzpatrick, R-Great Falls, to cut $15 million from the overall rate increases. The most recently available analysis of the final rates from the Legislative Fiscal Division calculated an increase of $339.4 million in combined state and federal funds over fiscal years 2024 and 2025.

Advocates for behavioral health providers and other impacted services heralded the governor’s announcement.

“Montana’s mental health system and our citizens who rely on it desperately needed better reimbursements,” said Matt Kuntz, director of NAMI Montana, a mental health advocacy group, in a Wednesday text message. “It’s wonderful to have them pass.”

The fight over how much to increase Medicaid reimbursements for certain types of providers dominated much of the 2023 Legislature. Republicans and Democrats, responding to a recently commissioned study that found the state underpays behavioral health, developmental disabilities and senior and long-term care providers, pushed to close that gap beyond what Gianforte’s budget originally proposed, though to different degrees.

While Democrats and providers sought to raise rates to meet the benchmarks identified in the 2022 study, some Republicans were wary of releasing a sudden flood of funding into that sector of the health care industry. Other members of the party, including the health budget subcommittee chair, Rep. Bob Keenan, R-Bigfork, supported record increases to rates but raised concerns that the surge in funds suggested by Democrats and service providers would put rates on the chopping block during future budget shortfalls.

Health care providers, many of whom testified to lawmakers that Medicaid patients make up the majority of their caseloads, insisted that fully funding the rates identified in the study was the only way to prevent further closures of health care providers. At least 11 nursing homes shuttered around the state in 2021 and 2022, a trend also seen at local group homes and behavioral health services. In addition to inflation and a pervasive strain on direct-service providers during the pandemic, providers often pointed to inadequate Medicaid reimbursement rates as a leading cause of the closures.

Throughout the course of the session, bipartisan support for funding for rate increases eventually brought levels up to those in the contracted study. Providers slated to receive the largest rate increases said Wednesday that the governor’s approval signaled less financial strain in the years ahead.

“The provider rate increase combined with our temporary county tax levy that we are receiving will allow us some more time to continue caring for our own community members that built and maintained our towns and that they will not have to relocate due to a closure,” said Wes Thompson, administrator at Valley View Home, a nursing home in Glasgow. “Stabilization in long-term care is not met with this rate increase but it’s a starting point that is so desperately needed due to Montana’s growing elderly population.”

The roughly month-long delay between the session’s conclusion and the governor’s approval of the budget created anxiety among many in the health care fields. In recent weeks, Democrats accused Gianforte’s office of holding provider rates and other high-profile bills hostage while legislators debated whether to override his vetoes of bipartisan reforms to the state psychiatric hospital in Warm Springs and the child welfare system. Two out of three of those override efforts were successful — lawmakers fell seven votes short of turning the child welfare reform into law.

Members of both parties endorsed the final rates approved by Gianforte.

“Good to see that’s checked off the list,” Keenan said in a Wednesday statement.

Democrats celebrated the news as well while taking credit for their role in the result.

“This session, Montana Democrats finally convinced Republicans to invest in our community health care providers, and Montana’s seniors and working families will at last have a better shot at getting the care they need close to home,” said Rep. Mary Caferro, D-Helena in an emailed Democratic press release.

The fiscal year begins July 1.