The budget includes funding for Disproportionate Share Hospital (DSH) payments equal to the maximum amount established by federal law. Disproportionate Share Hospital payments to state mental hospitals are budgeted in each year of the biennium. This budget includes funds transferred from the university teaching hospitals to be used as state matching funds for the portion of DSH funds received by those facilities.
The budget request assumes that Medicaid services are provided statewide by five (5) contracted Managed Care Organizations (MCOs). Recipients in long term care facilities and waiver programs are excluded from managed care enrollment.
The budget request assumes a federal medical assistance percentage (FMAP) of 71.55 percent for state fiscal year 2027 and 71.60 percent for fiscal year 2028 for eligibility groups other than the ACA Medicaid expansion group. The FMAP for the Medicaid expansion eligibility group authorized by the Affordable Care Act (ACA) is 90 percent for the biennium. The federal Medicaid match rate for KCHIP is estimated at 80.90 percent for fiscal year 2027 and 80.12 percent for fiscal year 2028.
The Kentucky Children's Health Insurance program was initiated under Title XXI of the Social Security Act and currently serves eligible children up to 213 percent of the federal poverty level.
The Office of State Budget Director and the Department for Medicaid Services work together to arrive at a consensus forecast of the amount needed to maintain the Medicaid Benefits budget. These forecasts examine past trends in categorical spending to generate projections for future cash expenditures, adjusting for policy changes. Using member eligibility information, historical monthly cash fee-for-service data was classified as either fee-for-service or managed care. Managed care costs were calculated based on the monthly member forecast and the negotiated rates with the contracted managed care organizations.
An additional $442,498,700 General Fund was added in fiscal year 2028 to support Medicaid Benefits. This will cover estimated program needs and forecasted eligibles in the Medicaid Benefits Program determined through a consensus forecasting process.
The budget accommodates the following estimated average monthly enrollment for fiscal year 2027 and fiscal year 2028.
Medicaid Enrollment
Projections FY 2026 - FY 2028
| MCO (Traditional Medicaid) | MCO (Medicaid Expansion) | MCO (KCHIP) | Fee For Service (FFS) | Grand Total |
| FY 2026 | 716,419 | 459,675 | 137,590 | 151,846 | 1,465,530 |
| FY 2027 | 709,928 | 452,126 | 145,432 | 152,384 | 1,459,870 |
| FY 2028 | 700,085 | 423,400 | 153,282 | 152,426 | 1,429,193 |
The budget includes a state fiscal year 2027 federal share or FMAP of 71.55 percent for Medicaid eligibility groups, 80.90 percent for the Kentucky Children's Health Insurance Program eligibility group, and 90 percent for the Medicaid expansion eligibility group. The budget includes a state fiscal year 2028 federal share or FMAP of 71.60 percent for Medicaid eligibility groups, 80.12 percent for the Kentucky Children's Health Insurance Program eligibility group, and 90 percent for the Medicaid expansion eligibility group.
The budget includes an additional 500 slots for the Michelle P. Waiver program. The total additional funding for Michelle P slots is $27,300,000 each year, with $7,766,200 from the General Fund and $19,533,800 from federal funds. This increase will bring the total number of funded slots to 11,850.
The budget includes an additional 250 slots for the Supports for Community Living program. The total additional funding for Supports for Community Living slots is $28,625,000 each year, with $8,143,100 from the General Fund and $20,481,900 from federal funds. This will bring the total number of funded slots to 5,666.
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