HELENA — During the Montana Legislature’s 2025 session, the main budget bill – passed by lawmakers from both parties – included a provision to increase Medicaid payments to health care providers around the state. Now, though, Gov. Greg Gianforte’s administration says they’re trying to account for millions of dollars in budget shortfalls, and as part of that plan, they aren’t implementing that increase.
The proposed 3% increase in Medicaid reimbursement rates was set to take effect on July 1, at the start of the new state fiscal year. For people on Medicaid, the reimbursement rate determines how much the state will pay providers for giving them health services.
(Watch the video for more on the reaction to this decision.)
In March, leaders with the Montana Department of Public Health and Human Services told lawmakers they were facing a shortfall of almost $200 million in the Medicaid budget. They announced a plan to redirect some funds and seek supplemental appropriations, but also to withhold the increased reimbursement rates. Holding off on the increase would save about $10 million.
The Gianforte administration says these steps are the best way to protect services and keep the budget issue from growing. However, some lawmakers aren’t satisfied with that answer.
“Governor Gianforte would have you believe that he has no choice, and that's wrong,” said Rep. Paul Tuss, D-Havre. “There are always choices.”
Tuss was one of a group of Democratic lawmakers who spoke at a news conference at the State Capitol Tuesday, urging the administration to look for other sources of funding to allow the rate increase to move forward.
“When you look to cut the budget because there's a budget shortfall, the last place you should look is a place that invests in health care – in the health and well-being of people, and the health and well-being of the private sector in every corner of the state and all parts in between, and that's Medicaid,” said Rep. Mary Caferro, D-Helena.
The lawmakers argued that providers are relying on this increase and that withholding it could force some to close their doors.
Also speaking at the news conference was Dr. Heather Zaluski, a child psychiatrist in Helena. She said she’s the only one in the area still providing these services for patients on Medicaid – and she said the low reimbursement rate plays a part in that, because providers will receive more for giving the same services to someone on another form of insurance.
“In order to pay our staff, pay our rent, we have to be able to balance our budget,” said Zaluski. “So if Medicaid pays $100 and Blue Cross will pay $200 – just as a business person, we also have to wear that hat, and we have to make practical decisions.”
Zaluski said the proposed rate increase would not fully close the gap between Medicaid reimbursement and private insurance, though it would bring it closer.
“Children are currently waiting a year and a half to two years to have a needed evaluation,” she said. “Without a rate increase, that wait will get longer and the number of providers that accept Medicaid will go down.”
Medicaid provider rates have been a topic of debate in the Legislature for years, and lawmakers approved some major increases during the 2023 session.
In explaining the budget shortfall, DPHHS argued the Medicaid budget legislators approved in 2025 was already inadequate – especially after a Senate amendment that removed some funding for contract nurses at the Montana State Hospital. Since then, department leaders said there has been higher use of Medicaid than expected, in areas like hospital services and nursing homes. Federal changes from the “One Big Bill” have also reduced some of the federal funding the state is receiving.
MTN reached out to Gianforte’s office for a response.
“This administration will not apologize for making hard choices to keep Medicaid stable when legislators on both sides of the aisle have acknowledged the budget they passed put DPHHS in a difficult fiscal situation,” a spokesperson said in a statement. “Despite the Legislature's failure to properly fund the department, the state has implemented a solution that avoids cuts to optional services for vulnerable Montanans and cuts to provider rates.”
During Tuesday’s news conference, Caferro said she agreed the Legislature had approved less for the Medicaid budget than was appropriate. She also put some of the blame on the ongoing loss of federal funding to the Montana State Hospital.
Democratic lawmakers said they hoped to see the Gianforte administration tap another state account to cover the $10 million for the rate increase, like an account created several years ago to pay off Montana’s debt – but they said the executive had been unwilling to do so.
“I stand here in deep frustration that we, as a Legislature, in a bipartisan way, have made an agreement and pushed forward these provider rates, and now we are being told that it's not possible when every single person up here knows that it is,” said Sen. Laura Smith, D-Helena.
