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HCPF's Fiscal Year 2025-26 Budget
Budget Priorities
The Department of Health Care Policy & Financing (HCPF) invites you to keep up with the evolving discussions on HCPF’s overall fiscal year 2025-26 budget by listening to the Jan. 6 Joint Budget Committee budget hearing. Thank you in advance for your support of our $17.4 billion total funds and $5.4 billion General Fund request to cover eligible Coloradans under Health First Colorado (Colorado’s Medicaid program), Child Health Plan Plus (CHP+) and other safety net coverage programs. Our programs serve and cover about 1.3 million Coloradans today, including more than 40% of Colorado’s children and over 40% of births, as well as individuals with disabilities and older adults qualifying for long-term services and supports (LTSS).
With the end of federal stimulus funding, the state has returned to the more typical, tighter budgets of years gone by, further complicated by the difference between the lower inflationary factors used to calculate the TABOR limit compared to higher medical cost trends associated with Medicaid programs. Additionally, on average, members with higher medical needs have remained or returned to coverage through the PHE Unwind, while those disenrolling had lower medical needs. This is causing a significant increase in the average per member per month (per capita) cost of Medicaid membership. This increase is above expectations and reflects a net 1.16% over-expenditure against our FY 2023-24 services budget projection as well as higher costs in current and future fiscal years. Many states are facing similar increases in Medicaid spending despite lower enrollment post unwind (KFF Brief & News). This is concurrent with the increasing Medicaid trends and overexpenditures reflected in higher Medical Loss Ratios (MLRs) as reported by commercial carriers.
We are grateful for our allocation in the Governor’s budget, 96% of which goes to our providers to care for the one in four Coloradans we are honored to serve. Four percent of these funds are allocated to HCPF administration expenses, such as our contracted partners, with 0.5% covering HCPF staff. This 4% is about one-third of the typical commercial health plans’ administrative expenses.
The largest part of the HCPF budget request reflects the $1.4 billion in additional total funds necessary to cover our current programs while preserving member benefits and care access in a time of very limited spending growth. HCPF’s proposed discretionary fiscal year 2025-26 budget requests focus on increasing support for county administration to improve efficiencies and customer service in connecting Coloradans to our safety net programs; ensuring Colorado supports an equitable system resulting in high-quality, coordinated Medicaid services through the Accountable Care Collaborative Phase III; complying with federal requirements; and meeting federal requirements for modular health plan systems. Additional information is available on our website.
On the PHE Unwind, HCPF continues to collaborate with counties to reconnect individuals to Medicaid coverage where appropriate. With very limited exceptions, our county partners have eliminated the new application and renewal processing backlogs that accumulated during the PHE Unwind (May 2023 - April 2024) due to the unprecedented 1.8 million member renewal volume moving through the renewal process, in alignment with member renewal anniversaries. Further, case escalations are also way down (consistently less than 250/month). Case escalations are submitted by providers, advocates, members and others to HCPF to help navigate eligibility cases through renewal barriers in collaboration with counties. More than 90% of these case escalations result in coverage being retained or restored.
Given this progress, HCPF is working with counties to focus attention on eliminating any remaining “work task” backlogs; in processing those, members should be renewed back to their anniversary date if data was available but not applied during the initial renewal processing. Last, HCPF is also working with other state agencies and stakeholders to reconnect Coloradans back to Medicaid coverage where appropriate, while connecting Coloradans to other coverage like employer-sponsored, Medicare, or Connect for Health Colorado individual coverage to enable subsidies that make coverage more affordable. Open enrollment programs with coverage effective Jan. 1, 2025, provide an important opportunity to achieve this shared goal. Of course, all this is concurrent with continued work to improve system ex parte automation and HCPF’s “County Administration and Colorado Benefits Management System (CBMS) Enhancements,” which includes $38.2 million total funds and $4.1 million General Fund intended to address the issues identified through the SB 22-235 County Administration of Public and Medical Assistance Programs. (See my November message for more information).
Regarding the challenges with our Care and Case Management (CCM) system, HCPF is actively engaged with leaders of key vendor partners to address system defects and to drive improvements in service and support to members, case management agency (CMA) partners, providers and counties. Significant resources have been added to this mission-critical work to drive additional throughput of system fixes, with target stabilization in April. A dashboard is being built for a target January posting that provides optics into each major CCM system stabilization initiative, its target completion date, the responsible party, and its status against target.
Thank you for collaborating with the state through difficult state budget decisions, to get Coloradans reconnected to coverage post the PHE Unwind, and to thoughtfully respond to emerging changes in the national policy landscape in the months to come.
Best wishes for an enjoyable and healthy holiday season!
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