Report: Montana Medicaid holds down costs, helps build out behavioral health statewide

While costs for healthcare have continued to rise, the relative amount Montana spends on Medicaid has remained astonishingly stable — about 13% of its budget — for years, according to a new annual report that has tracked the program in the state since its expansion nearly a decade ago.

“Medicaid in Montana: How Medicaid Impacts Montana’s State Budget, Economy and Health,” was released Monday and it shows that part of the reason for Montana’s stable costs has been the shift from high-cost healthcare visits, for example, to the emergency department during crisis, to routine and preventative care, and lesser expensive services like primary physicians.

Montana Healthcare Foundation, which commissioned the report, noted an uptick in preventative care services and screenings for diseases like diabetes and cancer.

“This report shows for the third consecutive year that access to these services is contributing to better health outcomes for Montanans, accompanied by decreased emergency and hospital costs,” said Montana Healthcare Foundation chief executive Dr. Aaron Wernham. “That, to me, is proof of concept. It shows that Medicaid enrollees are accessing care earlier and avoiding more serious outcomes.”

For those enrolled in Medicaid for at least three years, the study, conducted by Manatt Health, saw a shift in services from the emergency department to more routine care.

“The composition of health care costs for members also shifted over time, with costs becoming more concentrated in outpatient, pharmacy and dental services, rather than emergency and inpatient services,” the report said.

Wernham said that doesn’t just represent a cost savings, but better health outcomes: Often patients focus on preventative care and managing other health conditions. By the third year of enrollment, the study said on average emergency department and inpatient costs dropped by nearly 20%.

Uncompensated medical expenses, or charity care, for hospitals and health centers has also seen a general decrease since the state expanded Medicaid in 2015. That year, the Montana Hospital Association said that uncompensated care ran Montana hospitals $390 million. Today, that number is $236 million, slightly higher than 2021 which saw a $208 million deficit.

Meanwhile, the percentage of state funding to expand the program has remained relatively flat, meaning Montana has been able to hold costs — a function Wernham attributes to better, less expensive health outcomes.

Approximately $900 million is brought into the state healthcare system yearly by the federal Medicaid expansion. Since 2015, Montana has spent nearly the percentage of the state budget, ranging from $270 million to $310 million annually, a number that hasn’t moved much since 2020.

Two-thirds of Montana’s adult Medicaid enrollees report working a full-time job, while 11% report going to school full time. Nineteen percent report a disability or having to work full time to care for a family members. That means just 3% of the Medicaid enrollees reported having no impediment and not working.

Building access

For several years, residents with mental health or substance-use disorders have been utilizing more behavioral services in the state.

Montana typically ranks among the top states for suicide, and has struggled to find enough providers throughout an expansive, largely rural state. However, Wernham said the study’s 2024 findings suggest that with the emphasis on mental health, as well as the state encouraging more community-based services, the mental health network has begun to branch out and increase capacity.

The report said that 6,100 people got treatment for substance-use disorders and 35,000 people accessed mental health services using Medicaid.

“This is the engine to build out the system we need,” Wernham said.

Previously, mental health care wasn’t just in high demand, but residents had limited government options. Montana only used two block grants to help fund its mental health services, meaning it was limited.

“Once the money ran out, the money ran out,” said Zoe Barnard, Senior Advisor for Manatt Health Strategies, recounting that sometimes mental health services would stop because grant funding ran out. The Medicaid program has helped stabilize treatment.

As many as 23% of Medicaid patients had accessed mental health or substance abuse programs, which Wernham explained has put pressure to build out a behavioral health network in Montana, which had been stunted.

“That’s a quick and important expansion of services that has been there before,” Wernham said.

Barnard said the expansion of Medicaid has helped to build access for all Montanans. For example, when a new healthcare provider opens, it opens more capacity not only for Medicaid enrollees, but also anyone in the area.

“Services couldn’t be provided or expanded because there weren’t enough payers,” she said. “But now that’s changing.”

Uncertain future

While the report covered a variety of areas from preventative health to the percentage of Native Americans utilizing the program, there are two questions that loom large over the program. First, is what the “redetermination” process will mean for the Medicaid program.

Like other states, Montana saw its number of Medicaid patients expand during the COVID-19 public health emergency, when states paused their “redetermination” process. That process, which can vary by state, determines whether those who are enrolled in Medicaid are eligible to continue on it. The public health emergency meant that the ranks of Montana Medicaid would mostly grow because citizens couldn’t lose coverage during the pandemic. However, since the COVID-19 public health emergency ended, states have re-started the “redetermination process.” The federal government estimates more than 130,000 Montanans have lost Medicaid coverage.

Even though the redetermination process began in 2023, data won’t be available until next year that will show how the redetermination process is affecting such aspects such as reimbursement rates for hospitals and healthcare systems, and if the redetermination process is causing worse health outcomes for those who may have chronic healthcare problems to manage.

“Anecdotally, it’s hitting places hard. We’ve heard of at least one round of lay-offs at a community health center,” Wernham said. “We don’t know how it will play out regarding coverage, and we don’t know how it will affect the healthcare system yet.”

He said that if patients are losing mental health care or substance abuse care in the middle of treatment, there can be “high, high relapse.” But the problems don’t stop at behavioral health.

“When people lose coverage and they have chronic diseases, like diabetes, they are much more likely to end up in the hospital,” Wernham said. “And when that happens, there are complications.”

Also, the 2025 Legislature will have to decide if Montana wants to continue to participate in the Medicaid expansion — continuing its 10-year history in the Treasure State. While some lawmakers have pointed to its success and the federal reimbursement rates that are favorable to Montana — the federal government foots nearly 80% — others worry that without an ironclad guarantee by the federal government, the state could be left for a growing share of healthcare costs.