Appropriations committee hears Medicaid utilization, provider and waiver concerns in Human Services budget briefing

State health officials presented detailed Medicaid utilization and budget projections to the Appropriations - Human Resources Division committee during a morning session, focusing on developmental disabilities, long-term care and Medicaid expansion.

The presentation emphasized that timing of claims payments — not necessarily the date services were delivered — drives much of the month-to-month volatility in budget data, and that program growth in home- and community-based services (including a state 1915(i) benefit) poses the most significant cost risk going forward.

The committee heard that spikes and dips in the department’s charts largely reflect when providers submitted and received payment for claims, not steady increases in demand. Sarah Aker, executive director of the Division of Medical Services, told the committee that “providers on average bill us approximately around 45 days after the date of service,” and that providers have “up to 6 months, a hundred and 80 days to bill Medicaid for timely filing.” She also said the division’s “average time frame for payment of all claims is 7 days.”

Aker and staff attributed several pronounced swings in the medical-services graphs to a national billing outage at Change Healthcare, which temporarily prevented many providers from submitting electronic claims. Aker said, “Change Healthcare had a, data breach ... that really impacted a lot of providers [and] their ability to submit claims,” producing large dips followed by catch-up spikes when claims were finally processed. Presenters stressed that the department pulls data by paid date because that corresponds to “what actually goes out the door” and to appropriation needs, but cautioned that paid-date charts can differ from date-of-service trends.

Committee members asked for clarification about how the department counts a “unit” of service. Staff said the unit definition varies across programs — from a single day of service to 15-minute increments or an hour, depending on the benefit — and that units therefore cannot be converted directly into a one-for-one count of people served.

Representative Murphy warned the committee about the fiscal risk in one program area: “If we’re going to run over on any of the services we offer, this is the one to run over on,” referencing the state’s 1915(i) service expansion (a Medicaid state-plan home- and community-based option). Aker said enrollment in the 1915(i)-like program had risen sharply — from about 200 individuals earlier in the year to more than 800 by December — and that the division has budgeted about $7 million for the program next biennium (a decrease from the current biennium budget, the division said). Staff said the program’s growth has been slower than originally expected because of provider capacity, eligibility and operational hurdles, and that the division recently removed a service-authorization requirement to speed access.

Committee members also discussed provider enrollment and administrative barriers for nontraditional providers (for example, community groups or churches) that the division hopes will expand capacity for new services. Aker said the division has added provider-facing resources — more guidance on the Medicaid website, webinars, open office hours and a live provider-enrollment phone line — and that the department added contractual performance expectations (with penalties) for its enrollment contractor to improve responsiveness.

On broader enrollment and utilization figures, staff told the committee that the department covered roughly 130,000 people in the prior biennium and is now running about 107,000 eligible individuals (including Medicaid expansion). Medicaid expansion enrollment was described as relatively stable; staff said the expansion population has averaged about 23,500 people. For some budget lines, presenters noted that the governor’s $68,000,000 decision package for home- and community-based services was not included in the charts shown to the committee.

Long-term care and developmental-disability services drew frequent attention from members. Staff said a “massive portion” of Medicaid spending is concentrated in long-term care and developmental-disability programs, and explained that many home- and community-based services are billed in small units (for example, 15-minute personal-care units) that together create large aggregate expenditures. On nursing homes, presenters said some spikes reflect value-based purchasing payments timed to specific months.

Program-specific notes included: PACE (Program of All-Inclusive Care for the Elderly) operates in multiple cities (staff listed Bismarck, Minot, Dickinson and Fargo) and had enrollment of 190 individuals as of Dec. 31; the children’s hospice waiver currently had no enrollees; and dental services showed uneven utilization partially tied to the same billing outage and to ongoing provider billing patterns. The division also said the charts excluded some decision-package funds that had not been incorporated into the visual pull.

Committee members asked staff to return with additional comparisons and detail, including a similar utilization-format report specifically for the Medicaid expansion population and updated run-rate data through January and February so members could judge the direction of recent trends. Staff agreed to provide updated charts and to review projections that were last refreshed in June 2024.

The committee paused the briefing to reconvene later in full committee; members scheduled the next full committee session for 10:00 and expected to meet again the following morning at 8:30.

Ending details: the committee’s briefing made clear that claim timing and provider-billing patterns account for much of the short-term volatility in Medicaid budget lines, while enrollment and service-capacity developments — particularly in home- and community-based and developmental-disability services — create the largest medium-term fiscal uncertainty for the Human Services budget.