March 20, 2026

The President’s Message is published in the MHA Weekly News Report, a member-only publication of the Montana Hospital Association. To subscribe, click here.

Over the past two weeks, the Montana Department of Public Health and Human Services (DPHHS) has outlined significant policy and fiscal developments that will shape the Medicaid landscape in the months ahead.

DPHHS is moving forward with implementation of new community engagement (work) requirements beginning July 1, 2026. While the department has indicated it will not disenroll beneficiaries for the first three months, hospitals should anticipate meaningful coverage impacts beginning in October 2026 as eligibility enforcement takes effect. Based on prior analysis from the Montana Department of Labor and Industry, an estimated 4–6% of Medicaid beneficiaries are not working and do not have any health conditions or other factors that would qualify them for exemptions under the program—resulting in approx. 4,000 Montanans at risk of losing coverage.

Administrative burden will likely drive additional coverage losses, potentially even for those who qualify for the program. MHA staff continues to work closely with DPHHS to ensure the system is as automated and streamlined as possible—reducing administrative burden for both department staff and Medicaid beneficiaries and helping preserve coverage where eligibility exists.

At the same time, DPHHS is confronting a significant budget shortfall. The department is projecting a roughly $34 million gap this fiscal year, which the Gianforte Administration attributes to insufficient appropriations and budget reductions during the 2025 Legislative Session. The federal match rate for the traditional Medicaid program, also known as the FMAP, has declined from 65.5% in 2019 to 61.4% in 2026 and is expected to drop further—placing additional pressure on the state budget.

In response, DPHHS has indicated that “all options are on the table,” including service reductions and the potential halt of the 3% Medicaid provider rate increase scheduled to take effect July 1. These actions, combined with broader mitigation strategies outlined in the department’s supplemental budget request, reflect the scale of the challenge ahead.

For Montana’s hospitals, these dynamics create a dual pressure point. Coverage losses tied to community engagement requirements will increase uncompensated care, while uncertainty around provider rates and potential service cuts further strains already tight margins—particularly in rural and critical access settings.

MHA remains actively engaged with DPHHS and state policymakers to advocate for practical implementation, preservation of coverage where possible, and stability for providers. We encourage members to share real-time feedback on patient impacts and will continue to keep you informed as these developments evolve.