The Department of Public Health and Human Services building in Helena.

The Department of Public Health and Human Services building in Helena

After hearing objections from hundreds of people on Medicaid, as well as the doctors and caseworkers who help them, a legislative committee Wednesday halted proposed cuts to Medicaid reimbursement rates.

Earlier this year, the Department of Public Health and Human Services, which sets Medicaid rates, proposed lowering how much providers are reimbursed — first by 3.47 percent and then, after public outcry, 2.99 percent.

Reductions to the department's budget were required as part of a law passed during the last Legislature that required cuts if revenues came in less than expected, which happened at the end of June.

Many health care providers who accept patients with Medicaid say that the rates at which they are reimbursed, typically lower than those paid by private insurance, were already insufficient before the proposed cuts. Any reduction would have either caused them to no longer accept Medicaid patients or reduce their services.

The Legislature has the ability to stop the department from enacting the rate reduction by making an objection, something that was first done informally in September and made formal Wednesday. The formal objection, which passed on a 7-1 vote by the interim Children, Families, Health and Human Services Committee, means the reductions can't take effect until January 2019.

The health department has said in the past that delaying the rate cut will only mean a deeper reduction down the road, as the department still has to spend less even if it has to continue reimbursing at the higher rate.

“We have major concerns about today’s vote," health department Director Sheila Hogan said Wednesday. "This puts us in a precarious situation of being forced to maintain current Medicaid provider rates with money that is no longer available due to legislatively mandated cuts."

Hogan also expressed concern about the fact that just seven members of an interim committee could derail a bill passed by the full Legislature that called for cuts. The bill called for Medicaid rate reimbursement reductions, but the interim committee has said the department is dropping rates too much and should find savings elsewhere.

The health department has 14 days to make a formal response to the objection.

In its objection, the committee said the department had not shown how it tried to reduce costs elsewhere before cutting rates. It also said the department did not explain how it arrived at the 3.47 percent, then the lower 2.99 percent, reduction, and that the cut would put vulnerable Montanans at risk.

Beth Brenneman with Disability Rights Montana told the committee Wednesday the cuts would have forced some providers to no longer see Medicaid patients, making parts of the state suffer.

“I doubt the department would be able to demonstrate to federal Medicaid that this is not going to eliminate services or vastly curtail services in many parts of the state,” she said.

Rep. Albert Olszewski, R-Kalispell, said the committee’s objection had merit because of public testimony it heard in opposition to the reduction, as well as a lack of information from the health department to support why the cuts to Medicaid rates needed to be 2.99 percent.

“Public testimony today only confirms our commitment and our suspicions of the fact the process has been deficient,” he said.

Rep. Kathy Kelker, a Democrat from Billings, was the lone vote against the objection. She said she worried the move would just create deeper cuts down the road.

"The concern should be for the increase in the debt that will occur to the state if we delay the cuts that have already been approved by the Legislature. There are concerns about the process and I think those can be dealt with in a different way. But the longer we delay, the greater the amount of money that will have to be made up in cuts and I don't think that's a wise fiduciary decision."

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State Bureau reporter for The Independent Record.

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