By Melissa Davlin, Idaho Reports

The Idaho Department of Health and Welfare has notified Medicaid providers that the state will reduce reimbursement rates by 4%, effective Sept. 1. 

The reductions will affect all provider types and services, except for payments to Indian Health Services and other tribal clinics, said IDHW Director Juliet Charron in a Friday memo to providers. Affected services include both inpatient and outpatient care at hospitals, home and community-based services, nursing facilities, hospice, school-based services, ambulatory surgical centers, and intermediate care facilities, plus some pharmaceutical claims and dispensing fees. Read the full memo below.

The news comes a week after Gov. Brad Little directed most state agencies to reduce their general fund expenditures by 3%.

“We appreciate the early course correction from the Governor’s Office and the Division of Financial Management to allow for as minimal impact as possible to provider rates and covered services,” Charron wrote in the memo. “While we continue to monitor budget needs, it is clear that waiting until the legislative session to make changes could have yielded steeper rate changes and service reductions.”

That directive came as Medicaid costs continue to increase. During the 2025 legislative session, the Joint Finance-Appropriations Committee projected an 8% growth in the Medicaid budget for the upcoming fiscal year. That growth projection is now closer to 19%, Charron wrote. 

Trustee and benefit costs make up more than 96% of the Medicaid budget, Charron said in the memo, which means that internal savings, such as personnel costs, can’t stabilize the budget. 

Idaho Reports has reached out to IDHW for comment, and will update this story with more information.

---