For the 2024 supplemental operating budget, the Health Care Authority (HCA) has requested an increase to its 2023–25 general fund–state (GFS) appropriations of $222.6 million (3.0%). However, that includes several placeholders that will add significantly to the total.

Of the amount that is included in the request, $142.2 million is at the maintenance level (the cost of continuing current services, adjusted for enrollment and inflation) and $80.5 million is new policy. If the proposals are all enacted, the maintenance level changes would cost $196.6 million in 2025–27 and the policy level changes would cost $152.3 million in 2025–27.

The HCA administers Medicaid, so federal funds are a substantial part of its overall budget. In terms of all funds, HCA is requesting an increase of $561.4 million in 2023–25 and $3.058 billion in 2025–27.

These figures do not include the impact of the recent caseload forecast. Instead, the request includes placeholders for:

• Mandatory caseload adjustments for Medicaid, to be based on the November caseload forecast.
• Utilization changes for Medicaid, to be based on the November caseload forecast.
• Updated costs for the Certificated Public Expenditure program and federal disproportionate share hospital distributions, to be based on an October forecast of Medicaid expenditures. (It looks like a July estimate put the increase at $13.1 million GFS and $251.2 million from all funds for 2023–25.)
• Indian health improvement reinvestment account savings due to expectations of higher federal revenues.
• The hospital safety net assessment program. Changes were made to the program by the Legislature earlier this year, and the request notes, “current appropriations do not align with projected expenditures.” But the request doesn’t explain why the HCA cannot yet provide an estimate of the difference.

As I wrote yesterday, the November caseload forecast assumes that Medicaid caseloads will decrease over the next few years due to the unwinding of the federal pandemic-era continuous care provision. That said, caseloads will decrease more slowly than assumed in the February forecast (on which the current budget was based).

Note, too, that even though caseloads are decreasing due to the end of the federal policy, the costs to states are increasing because the enhanced federal Medicaid match is also winding down. (KFF estimates that nationwide Medicaid enrollment will decrease by 8.6% in FY 2024 while state spending on Medicaid will increase by 17.2%. Total spending on Medicaid is estimated to increase by 3.4%.)

Other notable GFS requests from the HCA include:

• $106.9 million in 2023–25 and $142.0 million in 2025–27 to restore Medicaid program integrity cost savings that are assumed in the current budget. According to the agency, “HCA is in compliance with or is in the process of becoming compliant with 2018 CMS program integrity recommendations and 2019 legislative budget proviso mandates.” Nonetheless, it estimates it will be able to achieve just 5–20% of the savings goal for FY 2024 and 20–40% of the goal for FY 2025.
• $28.4 million in 2023–25 and $56.8 million in 2025–27 to implement a tiered rate structure for behavioral health personal care services for adult family home (AFH) providers. The 2023–25 biennial budget required the HCA to negotiate a tiered rate structure with these providers and then submit an application to the federal government for a 1915(i) state plan home and community-based services benefit. According to the request, “HCA has reached a tentative agreement with the AFHs related to supportive supervision rates. However, current funding levels are not sufficient to implement the tentative agreement or the 1915(i) waiver.”
• $16.0 million in 2023–25 and $32.0 million in 2025–27 to increase rates for 90- and 180-day involuntary civil commitment bed providers.
• $15.7 million in 2023–25 and $18.2 million in 2025–27 in additional funding for the Program of Assertive Community Treatment (PACT), which “supports teams of multidisciplinary health care professionals to assist individuals in the community as they recover from severe behavioral health disorders.”
• $3.9 million in 2023–25 and $20.0 million in 2025–27 for start-up support for new intensive behavioral health treatment facilities.
• $1.2 million in 2023–25 and $16.5 million in 2025–27 to provide a vision hardware benefit for adult Medicaid clients.
• $3.2 million in 2023–25 and $12.7 million in 2025–27 to increase Medicaid rates for durable medical equipment.
• $128,000 in 2023–25 and $10.3 million in 2025–27 for pre-release and reentry services and the reentry capacity building program.
• $686,000 in 2023–25 and $1.1 million in 2025–27 “to help HCA ingest, analyze, and contextualize data to allow agency leaders and state policymakers to make informed decisions about new and innovative policies to control costs” (in the context of the Health Care Cost Transparency Board).

(Previous posts on agency 2024 supplemental budget requests are here.)