Idaho will cut Medicaid reimbursement rates by 4% for all provider types and services except Indian Health Services and tribal clinics, effective Sept. 1, 2025, the Idaho Department of Health and Welfare told providers in a memo reported by Idaho Reports on Aug. 22, 2025.
Why Idaho cut rates
The memo, MA25-17 from department Director Juliet Charron, came a week after Gov. Brad Little directed most state agencies to cut general fund spending by 3%. Charron wrote that legislative budget writers had projected 8% growth in the Medicaid budget for the fiscal year, but that growth was now closer to 19%, according to Idaho Reports.
Idaho Reports said affected services included home and community-based services, intermediate care facilities, nursing facilities, hospitals and school-based services.
Why this mattered for providers and DSPs
An across-the-board rate cut lands hardest on services where labor is most of the cost. For I/DD provider agencies, a 4% cut can mean choosing between wages, staffing levels and hours of service, with little room to absorb the loss. For DSPs, it raised the risk of frozen pay or reduced hours. Idaho made further cuts to I/DD services in 2026, including a $21.8 million reduction to residential habilitation.