RI state agency asks for $218M Medicaid spending hike. Here's what it will fund.
The agency that oversees Rhode Island's public health insurance program is asking Gov. Dan McKee for more than $200 million in new annual spending to raise the rates Medicaid pays providers for mental health, child and elder care services.
The money requested by the state Executive Office of Health and Human Services would pay for rate increases recommended by Acting Health Insurance Commissioner Cory King last month in what was the first comprehensive review of rates across these services on record.
But the plan, which now goes to McKee, would phase in the rate hikes over two years starting next October instead of all at once.
Rate increases half the size the Health Insurance Commissioner recommended would happen in the partial first year and then full increases would happen in the second year. The rate hikes are estimated to cost $80.5 million from Oct. 1, 2024, through July 1, 2025, and then $218 million when fully implemented for the full 2025-2026 fiscal year starting July 1, 2026.
The federal government would pick up most of the tab, but state Medicaid spending would rise an estimated $32.7 million in the partial first year and $88.5 million in the full second year of the proposal.
Lawmakers approved $3.56 billion in June for medical assistance programs this year and the Health and Human Services budget request would push that up to $3.81 billion, including the proposed rate increases and other spending.
Money would be provided for early intervention services
If approved the budget would provide $1.9 million in early intervention services for children younger than 3 with developmental delays from Oct. 1, 2024, through June 30, 2025.
Staffing shortages at early intervention providers has caused a wait list for infants and toddlers seeking services in violation of federal requirement for states to make the services available within 45 days.
As of last month, the wait list for early intervention included 862 children, according to EOHHS figures, down from more than 1,200 children a year ago and no wait list in 2021.
Other funding increases
The request would also increase next year funding for psychotherapy by $8.6 million, $4.2 million for Mental Health Psychiatric Rehabilitative Residences, $29.6 million for elderly home care, $10.3 million for child therapeutic services, $1.5 million for adult day care, $3.8 million for the PACE alternative nursing home program, and $4.5 million for managed care administration. (All of those dollar amounts would more than double starting on July 1, 2025.)
Why the increase will be phased in
Why did Health and Human Services only propose half of the rate hikes recommended by the Office of the Health Insurance Commissioner study?
"To fund all the OHIC recommendations would cost $88 million in general [state] revenue," EOHHS spokeswoman Kerri White wrote in an email. "This would be exceedingly difficult to implement in the current fiscal environment. Understanding that reality, EOHHS chose to phase in the increase over a two-year period."
She noted that when fully phased in, the Health and Human Services Medicaid increases would be larger than what the Health Insurance Commissioner recommended, because they would extend to managed care.
"Rhode Island Medicaid services are primarily delivered through managed care and the rate recommendations cannot be meaningfully implemented in fee-for-service alone," White wrote.
The rate hikes do not include the rates paid for most general medical services. They also do not include the rates for developmental disability service providers – because they were recently increased – and do not include rates for child welfare services through the Department of Children Your and Families, which are the subject of an ongoing bidding process.
Senate Finance Committee Chairman Louis DiPalma, who has pushed for investments in mental health and children's services, said Rhode Islanders should not be surprised the first review of Medicaid rates for these services in the state's history produced recommendations for large increases.
DiPalma said the agency's decision to wait until the middle of 2025 to fully fund the rate increases because of the upfront cost is "not an appropriate response."
"Let's talk to the children who are not getting the services they need," DiPalma said. "When we invest in that we are saving money in the long term for having mitigated or ameliorated those conditions prior to the children needing special education services for years."
How likely is McKee to include the Medicaid spending in his next budget in January?
"The Governor and his team know how vital these services are for families across Rhode Island and we will be looking seriously at increasing resources for Early Intervention during this FY25 budget process," about the funding for children younger than 3.
Other items the Office of Health and Human Services is asking for in its request include:
Five new Medicaid "program integrity investigators"
Six new legal staff
Rental assistance for Medicaid recipients at risk of homelessness
This article originally appeared on The Providence Journal: RI Health and Human Services asks for Medicaid spending hike. Here's why
