Magellan of Idaho, the private contractor managing the state’s Medicaid mental health benefits, is cutting pay rates for doctors and health care providers by 4% to 15%, with most reductions taking effect in November. The cuts follow a broader series of budget reductions ordered by Gov. Brad Little across state government to address a projected shortfall in tax revenues.
The Cascade of Cuts
The Idaho Department of Health and Welfare announced 4% cuts to Medicaid provider pay rates in August, which then extended to payments made to managed care organizations like Magellan. According to a notice Magellan sent providers earlier this month, the company is implementing cuts of at least 4% but up to 15% for partial hospitalizations. The reductions are designed to help offset cuts the contractor faces from the state health department. Gov. Brad Little ordered 3% midyear budget cuts across state government—which his budget chief directed agencies to extend permanently—to avoid a projected $80 million budget shortfall required by the Idaho Constitution’s balanced budget mandate.
Specific Rate Reductions
Starting November 1, Magellan’s cuts will include 15% reductions to partial hospitalizations, 10% to intensive outpatient care, 5% to community-based ASAM programs, and 4% to all other services under the Idaho Behavioral Health Plan. A 4% cut to Diagnosis Related Group hospitals took effect September 1. Some providers and services will be excluded, including tribal providers, children’s residential services, institution for mental disease hospitals, and critical access hospitals.
Provider Concerns
Jason Coombs, founder of Brick House Recovery in Boise and Idaho Falls, warned that the short implementation timeline leaves providers little time to plan and risks the state losing treatment options, particularly in rural areas. “Idaho’s behavioral health system is built on the shoulders of dedicated providers who continue showing up for individuals and families in need,” Coombs said, adding that funding adjustments “must be implemented in ways that protect continuity of care and sustain the professionals who make that care possible.”
The duration of Magellan’s cuts remains unclear. The company stated it will coordinate with Health and Welfare to determine how long reductions will remain in place. State projections released earlier this month show Idaho is still projected to have a budget deficit of $56.6 million despite the cuts already implemented.
This article is an AI-assisted summary. All facts and figures are drawn from the original report: https://idahocapitalsun.com/2025/10/24/idaho-medicaid-mental-health-contractor-to-cut-doctor-pay-rates-by-4-15/