Medicaid spending set to ‘significantly increase’ in response to COVID-19

Wisconsin’s Medicaid spending is set to “significantly increase” over the biennium as the state fights the spread of COVID-19, Department of Health Services Secretary-designee Andrea Palm told lawmakers Tuesday.

“We are in an extraordinary moment in the history of Wisconsin and the nation, as we wage an all-out battle against the COVID-19 pandemic,” Palm wrote members of the Legislature’s Joint Finance Committee. “Medicaid members will require more healthcare services, and the pandemic’s effect on the nation’s economy will likely drive up Medicaid enrollment.”

The state agency is working with the Legislature to make temporary program changes to qualify for enhanced federal funding under a federal law enacted last month. The 6.2 percent increase could save $150 million in state spending per quarter, per the Legislative Fiscal Bureau.

DHS reports quarterly on the overall condition of the Medicaid benefits budget. In its December update, projected costs were expected to exceed the budget by $39.8 million in general purpose revenue.

But Palm said that the current environment has rendered that projection “obsolete.”

She wrote that hospitals, nursing homes and other healthcare and long-term care providers “will be stretched to the limit” as they care for patients with COVID-19.

DHS has issued Medicaid policy updates and is working with the Legislature on a temporary Medicaid waiver allowing for more flexible requirements in responding to COVID-19. The temporary waiver

requires legislative approval under a law approved after Gov. Tony Evers was elected, but before he took office. Lawmakers said Monday they’ll act on it.

The department is also working with lawmakers on temporary changes to Medicaid to qualify for the enhanced federal money, Palm wrote.

“If the department is able to make the required temporary program changes, this additional federal funding would help offset increases in service utilization and enrollment,” she wrote.

In a separate report, Palm wrote that neither the Centers for Medicare and Medicaid Services nor DHS were able to make progress on plans to roll out Medicaid work requirements due to the public health emergency.

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