SB3324 appropriates $1.7 million in state general funds for fiscal year 2026-2027 to increase Medicaid home- and community-based service funding, specifically for residential services in community care foster family homes and expanded adult residential care homes. The bill is aimed at moving reimbursement levels from the “low” to the “medium” scenario identified in a 2022 Milliman rate study, which the legislature cites as necessary to better align provider payments with current labor and operating costs.
The measure also requires the Department of Human Services to secure the maximum available federal matching funds before any money may be spent, and to pursue other identified funding sources, including private grants. The appropriation is conditioned on those funding efforts, and the act takes effect on July 1, 2026.
Impact
The bill amends state spending policy for Medicaid-related home- and community-based services by directing new funds to DHS for residential care settings serving kupuna. It does not create a new program, but it increases reimbursement support for community care foster family homes and expanded adult residential care homes, with the practical effect of raising provider payment levels and potentially improving provider sustainability, staffing, and service availability. It also ties expenditure of the appropriation to federal Medicaid matching and other funding efforts, which could increase the total resources available for these services.
Sentiment
The bill appears to have broad support and little visible opposition. It passed the Senate Health and Human Services Committee unanimously, then advanced through Senate Ways and Means and the conference process with unanimous or near-unanimous votes. The legislative findings and the bill’s purpose statement frame the measure as a response to unmet need, provider financial strain, and the importance of allowing kupuna to receive care closer to home.
Contention
The main policy issue is not whether to support community-based long-term care, but whether the funding increase is sufficient and how it should be financed. The bill itself acknowledges that a prior 2024 appropriation was inadequate, and it directs DHS to exhaust all available funding sources and maximize federal matching funds before spending state dollars. That condition suggests concern about leveraging outside funds and limiting state exposure, while the underlying tension is between provider cost pressures and the state’s ability to sustain higher reimbursement rates.