Montana Budget and Policy Center: Increase funding to improve health outcomes

Jan 30, 2023

This legislative session, Montana has an opportunity to significantly strengthen our healthcare delivery system, particularly for people most in need of healthcare. Last session, the Montana Legislature commissioned a “provider rate study” to study the rates at which Medicaid providers are reimbursed. The study focused on services primarily used by people on Medicaid, including addictive and mental disorders, developmental services, children’s mental health, and senior and long-term care.

The study, conducted by an outside consulting firm, recommended that the state invest $27.7 million more into its Medicaid program. Because Medicaid is funded with both state and federal funds, increasing provider rates would bring in roughly $54 million in federal funds. During a time when our health care system has been stretched to its limit, bringing funding up to adequate levels is key to making sure everyone has the care they need.

After investing years, listening to stakeholders' input, and spending $2.7 million on the study, Gov. Gianforte’s office has proposed to fund only a fraction of what the study recommended. The governor’s budget proposes funding 10 percent of the recommended increase in 2024. In 2025, the governor’s budget calls for funding 36 percent of the recommendations in the study.

While the budget also contains a $25 million unrestricted pool of money, purportedly to be used for a temporary boost in provider rate increases, these funds are for one year only. In 2025, providers will receive less in reimbursements than they had the year before and left facing the same crisis they are now.

Provider rates are not simply in-the-weeds Medicaid policy. When reimbursement rates for Medicaid are too low, it limits access to health care and risks poor health for tens of thousands of Montanans. Children in need of residential psychiatric treatment, for example, are routinely sent out of state due to low provider reimbursement rates in Montana. Closing the gap between Medicaid reimbursements and private pay insurance would also reduce disparities in access among adults and eliminate access disparities for children. Provider rates are a racial justice issue, as well. Fundamentally, adequate provider rates determine Montanans’ access to health care.

Sufficient provider rates are also an investment in the Medicaid system, by allowing for community-based care rather than high-cost hospitalizations down the road. Appropriate reimbursement rates will also help stabilize Montana’s healthcare workforce at a time where there is a shortage of healthcare workers across the state.

Montana is sitting on a $1.9 billion surplus. The state can and should invest in the health of Montanans as well as our healthcare workforce. Instead, the Governor’s budget is calling for large tax cuts for the wealthy. After spending two years studying the pay Medicaid providers receive, the Legislature and the governor fully understand the gaps in our healthcare system. Medicaid provider rates influence access to healthcare, our economy, and how we prioritize spending in our state budget. We ask the Legislature to fully fund the provider rate study.

Signed by members of the Montana Budget and Policy Center.

Montana Budget & Policy Center

Shaping policy for a stronger Montana.

MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.