HSD to seek $79.8M more for Medicaid

Much of increase would cover higher hospital, provider rates

SANTA FE — New Mexico’s Medicaid enrollment has leveled off since 2017 after years of rapid growth, but the state agency that runs the joint federal-state health care program is asking lawmakers for a 7% budget increase — or $79.8million in additional state money — for the coming year.

The additional funding would be used mostly to cover higher hospital rates, Medicaid provider rate increases and a looming reduction in federal matching funds for states that, like New Mexico, participated in Medicaid expansion.

“I know that sounds like a ton of money,” Human Services Secretary David Scrase told members of a key legislative committee Wednesday. He said the

budget request is part of a broader plan to improve access to health care services in a state with one of the nation’s highest Medicaid enrollment rates.

He also said former Gov. Susana Martinez’s decision in 2013 to accept federal funding to expand the state’s Medicaid rolls to additional low-income residents has generated roughly $6 billion in additional state revenue in each of the past five years.

“It is a huge stimulus to our economy,” Scrase said.

For the current budget year, New Mexico state Medicaid spending is pegged at more than $1.1 billion — or about 16% of total state spending. The state also gets billions of dollars in federal funds annually.

For next year, more than 78% of the overall budget increase requested by the Human Services Department would go toward Medicaid spending, according to the agency. The rest of the money would be spent on child support collection efforts, behavioral health services and more.

If approved, the Human Services Department’s total budget starting in July 2020 would rise to roughly $7.8 billion, including state and federal dollars.

“It’s bigger than our state budget,” said Sen. Steven Neville, R-Aztec, who called spending levels on health care costs “mind-boggling.”

Overall, more than 825,000 New Mexicans — or about 40% of the state’s population — were enrolled in Medicaid as of August, according to the Human Services Department.

Of that amount, 469,356 were adults and roughly 355,989 were children.

Enrollment is expected to gradually increase to nearly 850,000 New Mexicans by the end of the 2021 budget year, according to the Human Services Department.

However, after years of skyrocketing enrollment growth, the state’s Medicaid caseload has decreased over the past two years, likely due in part to an improving state economy.

Meanwhile, the Human Services Department is one of many state government agencies seeking additional funding for the coming budget year, as New Mexico lawmakers will have an estimated $907 million in “new” money available to spend during a 30-day legislative session that starts in January.

The windfall is due primarily to unprecedented oil production levels and related economic growth in the state’s southeastern corner, and Sen. John Arthur Smith, D-Deming, said Wednesday that he’s not overly concerned about the agency’s request for additional Medicaid funding.

“The way things are going, it seems pretty typical,” said Smith, chairman of the Legislative Finance Committee.

During his remarks before the committee, Scrase also said the Human Services Department is doing further study of a proposal to expand health care coverage by allowing almost anyone to buy into Medicaid after a bill seeking to do that failed to win approval during this year’s 60-day session.

Part of that effort will include gathering data on uninsured New Mexicans by region, an HSD staffer said Wednesday.

However, Scrase said it’s unlikely that a revised Medicaid buy-in bill will be ready in time for the coming 30-day session.

He also told legislators that the Human Services Department has reached a basic agreement with the five remaining behavioral health nonprofits that still have active claims against the state over a 2013 Medicaid funding freeze prompted by allegations of fraud and overbilling.

The agency has signed settlement agreements with five other providers, and Scrase said he expects the next round of settlements to be completed in the coming months.

The legislative session begins Jan. 21.