HF2782: HHS Budget

Appropriates $2.56 billion to fund various health, veterans, and human services (including Medicaid) for fiscal year 2027, which begins on July 1, 2026. This is a $3.1 million increase. Veterans: No change in funding for Veterans Home, Department of Veterans Affairs and Veteran Homeownership Program. Disability & Aging Services: Funding for the Statewide Independent Living Councils and Centers for Independent Living that had been funded in the Economic Development Budget are moved here ($171,351). Re-establishes and level funds ($949,282) the Comprehensive Family Support Program that was accidentally eliminated in 2024 (HF 2673), allowing the children at home program to continue (this change is effective back to July 1, 2025). No change in the Office of Long Term Care Ombudsman ($1,148,959).  Behavioral Health:  Eliminates funding for tobacco use and gambling prevention marketing materials ($580,200), Quitline ($500,000), and Iowa Students for Tobacco Education and Prevention (STEP) Summit ($120,000). Iowa HHS says Quitline will be paid for with federal funds. Eliminates funding for the Center for Excellence in Behavioral Health ($100,000). No change in funding for the children's behavioral health system ($300,000).  Transfers $5.6 million payment from the Behavioral Health Fund to Medicaid.  Requires HHS to provide the Legislature with a report on behavioral health expenditures to children and adults annually on December 15 (to include a summary of funding sources used). Public Health: Adds back line item for child vision screening ($191,000) and epilepsy education and support ($144,000), which were eliminated in 2023 (FY 2024). While the line items were eliminated, HHS continued to fund them. No change in funding for prescription drug donation program/SafeNetRX ($600,000), free clinics ($374,000), rural health clinics ($25,000), free radon test kits ($20,000), and state poison control center ($750,000). Eliminates funding for the volunteer specialty care provider network managed by Polk County Medical Society ($225,000), and the survey of Adverse Childhood Experiences/ACES ($40,000). Adds $1,171,999 to pay for the summer EBT program to help with childhood food insecurity. Adds new $1.5 million appropriation for medical residency grants outside of Johnson County (not to include family practice).  Medicaid: Level funds Medicaid, but includes transfers in funds that cover the expected $151.9 million shortfall.  Increases rates for elderly waiver ($3 million), ambulatory surgical centers ($1.2 million), and special population nursing facilities ($333,000). Continues HHS' recommended cost containment (savings noted): allowing dispensing of 90-day prescriptions ($150,000), shifting some behavioral services to Medicare ($308,000), cutting rates for telehealth-delivered services/site of service differential ($491,000), adjusting codes for venipuncture and therapy rehabilitation ($602,000), 30-day readmission for same diagnosis policy changes ($1.1 million), speech/language pathology service adjustments ($1.2 million), Medicaid paying lowest available price ($2.2 million), and facility and provider based billing adjustments ($5.4 million). Codifies current reimbursement structure for On With Life and ChildServe (special population nursing facilities), ending their need to go through an exception to policy. No change in funding for family planning program ($3,383,880). Increases funding for the children's health insurance program (Hawki) by $7.2 million, for total of $68,474,831 appropriation.  Shifts $6.5 million in costs to MCOs and reduces general fund spending because of influx of revenues from the temporary HMO tax ($132.9 million). Requires HHS to annually review all Medicaid provider reimbursement rates that are on a fee schedule and compare those rates to Medicare (for dental, rates are compared to neighboring state Medicaid rates), with a report due to the Legislature on January 15. Child Welfare: Increases child welfare provider rates ($1,590,842 for shelter, $3,245,594 for QRTP). Requires HHS to review child welfare provider (shelter care, QRTP) rates every two years, based on their cost reports, and report findings to Legislature by October 1.  Ends contracts for Treatment Outcome Package (TOP) protocols and instead use existing lower-cost tool ($1.4 million). Reduces state funding for childcare by $3 million ($32.7 million total appropriation) and federal block grant funding for childcare by $4.9 million ($42.3 million total appropriation). Increases funding for the More Options for Maternal Health (MOMS) Program by $1,493,299 and allows any remaining unspent funds at the end of the year to carry forward. Reduces funding for Eldora by $673,000. Eliminates "duplicative" funding for child abuse prevention administrator ($300,000). No change in funding for Early Childhood Iowa/ECI ($29,256,799) but eliminates funding for decategorization projects ($1.7 million). Reduces state funding by $1 million because of the "establishment of a central consulting model that is expected to decrease overtime hours for social workers." No change in funding for court-ordered juvenile services ($748,000) and child protection center grants ($1,658,000).  State Institutions: Reduces funding for MHIs by $1.75 million and Woodward by $1.9 million. Continues to fund the now-vacant Glenwood at $942,000 (a decrease of $648,000).  Directs HHS to apply for a waiver of Medicaid's "Institution for Mental Diseases" (IMD) exclusion, which would allow HHS to draw down federal matching funds to offset the costs of the state's two Mental Health Institutes (MHIs). This will increase Medicaid costs between $300,000-$350,000 but will reduce costs for MHIs (for an overall state budget savings). Other Appropriations: Allows automatic appropriation to continue for Child Abuse Prevention ($233,000), Center for Congenital & Inherited Disorders Registry ($224,000), and Behavioral Health Fund ($1 million). Appropriates $3 million in opioid settlement funds for the Renewal Falls Recovery Center in Cedar Falls. Transfers $9.9 million in funds left in funds eliminated last year in HF 972 (Health Care Workforce Shortage Interest Account, Medical Residency Training Account, Family Medicine Obstetrics Fellowship Program Fund, Rural Psychiatry Residency and Fellowships) to fund graduate medical education (GME) for residencies other than family medicine. Adds a new (additional) $1.5 million appropriation to support GME.  Other: Continues allocating 70% of community mental health block grant funds to designated community mental health centers (this formula was to expire September 30, 2026). Requires HHS to make staffing (FTE) information available on a public website. Gives HHS the ability to adopt emergency rules to implement federal changes (but must let Legislature know if those emergency rules increase costs to the state). Cuts 9.5 staff positions from the Bureau of Refugee Services due to reorganization. Increased expenses due to One Big Beautiful Bill Act (OBBA) and Senate File 2422 (Eligibility Verification/Public Assistance): Increases funding for the administration of the Supplemental Nutrition Assistance Program (SNAP) by $10,122,527 as required by OBBBA (there are two different line items in the budget for this - $8,738,907 and $1,383,620).  Adds $859,200 in funding to pay for the increased costs of public assistance eligibility determination as a result of OBBBA.  Adds a total of $123,444 to pay for the cost of determining Medicaid waiver neutrality per SF 2422 (there are two line items for this as well - $58,874 and $64,570). Adds $670,333 to Medicaid to pay for eligibility verification changes in SF 2422. You can read more details at: https://www.legis.iowa.gov/docs/publications/NOBA/1605124.pdf. Effective 7/1/2026. LINE ITEM VETO: The Governor vetoed the requirement that 70% of the mental health block grant continue to go to CMHCs and the $3 million opioid settlement earmark for Renewal Falls Recovery Center in Cedar Falls. You can read the Governor's veto message here.