Easy initial Unicam approval to advance bill proposing to boost Medicaid reimbursements

North Platte state Sen. Mike Jacobson's bill to extend Nebraska's quest for more federal Medicaid help beyond hospitals sailed Tuesday to first-round approval in the Legislature.

Lawmakers debated for about 15 minutes before voting 39-0 to advance Legislative Bill 527, which aims to boost Medicaid reimbursements for nonhospital health providers much as a Jacobson-sponsored 2024 law (LB 1087) intends for hospitals.

If it's passed and signed by Gov. Jim Pillen, LB 527 would collect an initial 6% "provider assessment" on non-Medicare insurance premiums written under a health maintenance organization "certificate of authority."

Those funds then would be continually recycled between those insurers and the state, serving as Nebraska's share of matching funds to unlock more federal money to repay physical health providers for serving Medicaid patients.

"This bill is incredibly important to the future of health care in our state, especially in rural areas and especially for pregnant women and Nebraska children," Jacobson told senators.

The mechanism could secure $239.2 million in additional federal Medicaid support for nonhospital health providers in 2026-27, the Legislative Fiscal Office said in its "fiscal note" on LB 527's potential impact.

LB 1087, signed by Pillen last April, collects a similar initial 6% tax on Nebraska hospitals' gross income. The state is awaiting final U.S. Center for Medicare and Medicaid Services approval to open its spigot to supply as much as $1 billion a year to help offset hospitals' Medicaid costs.

Worries that the Trump administration will instead gut Medicaid support through its aggressive cost-slashing campaign produced the lone moment of drama in Tuesday's LB 527 debate.

"Do you think this is one of the things the federal government will eventually not fund anymore?" asked Sen. Ben Hansen of Blair, who chaired the Health and Human Services Committee when LB 1087 passed before being elected Executive Board chairman this year.

"I would tell you that with 1087, there are so many states in the Union that are utilizing that today — and this is Medicaid dollars (for hospitals) — that I think it'd be tremendously difficult for the administration to cut out that funding," replied Jacobson, chairman of the Banking, Commerce and Insurance Committee.

Fewer states are leveraging federal help with their nonhospital Medicaid costs, he added, but some Southern states use provider assessments to have Washington cover the entirety of their states' Medicaid costs.

"So I think there would be a lot of outcry if DOGE or the president would move to repeal or get rid of that funding," Jacobson said, referring to the Elon Musk-led Department of Government Efficiency as well as President Donald Trump.

Senators asked a couple of other questions on bill details. They also voted 39-0 to adopt a Banking Committee amendment with minor changes suggested by the Nebraska Department of Insurance.

LB 527 will need to be approved two more times on the Unicameral floor before it can go to the governor.