DSS projects $74.6M Medicaid shortfall; Community First Choice enrollment strains budget

Commissioner Andrea Barton Reeves told the Appropriations Committee the Department of Social Services projects a $74.6 million net deficiency in the Medicaid account for FY2026. Reeves attributed the shortfall primarily to higher per‑member utilization, growth in the Husky C eligibility group (seniors and people with disabilities), rising pharmacy costs and expanded use of home‑and‑community‑based services, including rapid enrollment in the Community First Choice (CFC) program.

Why it matters: Medicaid is an entitlement program; the department said it needs additional appropriations to meet statutory obligations and continue essential health services. Rapid growth in higher‑cost eligibility groups and new home‑based services can substantially raise program spending in a short period.

Reeves said DSS has taken cost‑containment steps, including tightening over‑the‑counter coverage, updating the preferred drug list and establishing clinical criteria for high‑cost therapeutic classes, and reported that some OTC spending fell by roughly half after changes. But she warned that per‑member, per‑month costs across Husky populations are higher than budgeted and that CFC enrollment is outpacing available budgeted resources; she described CFC growth as “exponential” and said the program’s sustainability is a primary concern.

Committee members asked for more detail on waiver wait lists, per‑member cost comparisons between institutional care and home‑based services, and documentation of care‑coordination and continuum‑of‑care measures that could reduce higher‑cost utilizations such as emergency‑room visits. Reeves said DSS will provide specific waiver enrollment and wait‑list data and cited an internal chart showing enrollment trends and PMPMP increases.

The committee also discussed whether some Medicaid pressures could be addressed through FAC transfers and other administrative actions before the Joint Fiscal deadline. No formal vote was taken on the deficiency request at this hearing.