Update for Families & Stakeholders: Advocacy Needed for Disability Services
As we enter a Minnesota legislative session in which disability services will be a key concern, your advocacy and engagement are essential to ensuring that these services remain viable, effective, and accessible in our state for years to come.
The Minnesota legislative session is still in its early stages. This year is a short session, so things are moving quickly at the Capitol. This year is also a non‑budget year for the state. Minnesota’s system is built around a biennial budget with annual adjustments, and state law requires the governor to propose budget updates even when it isn’t a full budget cycle. These supplemental budgets allow the state to respond to new economic conditions, revise spending, and introduce policy priorities without waiting two full years.
Yesterday, Governor Walz released his Supplemental Budget proposal. This Supplemental Budget proposal reflects more than $400 million in reductions to waiver disability services following more than $1 billion in cuts enacted during the 2025 legislative session.
Now is a critical time for families, providers, and advocates to reach out to legislators to share your perspective and the impact these cuts would have on your life and our community.
The current landscape
Federal Funding Pressure on Minnesota
Minnesota is under significant financial strain as the federal government withholds hundreds of millions of dollars in Medicaid funding, creating uncertainty for the state’s health care system and those who rely on it. The Centers for Medicare & Medicaid Services (CMS) has challenged how Minnesota structured certain payments to providers, prompting a freeze on reimbursements that the state argues is both unprecedented and destabilizing. As the dispute continues, Minnesota faces growing pressure to either fill the funding gap with state dollars or brace for cuts that could affect essential services, leaving policymakers and health systems navigating a period of fiscal and operational uncertainty.
Home and community-based services (HCBS) are provided through the Medicaid program. These critical services enable people with intellectual and developmental disabilities to live full and independent lives in their communities, providing a wide array of supports, from assistance with activities of daily living to community integration and employment.
We continue to monitor any impact on funding for services.
Disability Waiver Rates (DWRS)
In every corner of Minnesota, access to waiver-funded disability services helps people with disabilities to live full and community-integrated lives. To ensure access, the state must continue to address the rate reimbursement system (DWRS), which is foundational to service access. Our trade association, MOHR, partnered with other groups on legislation that proposes to change the current law, every-other-year economic adjustments to reimbursement rates, to instead take place annually (Senate File 4260/House File 3374).
It was disheartening to see that the Governor’s Supplemental Budget instead proposes to move our state backward in access to disability services, by proposing arbitrary caps on the economic adjustments made to the DWRS system. At this time of significant workforce shortages, wait lists for services, and repercussions from last session’s nearly $1 billion in reductions to DWRS, this proposal further exacerbates the very real gap between reimbursement rates and the cost of providing services.
The Absence and Utilization Factor in the Disability Waiver Rate System helps offset fixed program costs when people have absences. Reducing this factor for Day Support Services would significantly jeopardize access to these services, especially for programs like MSS, which support people with the most complex health and disability needs. Their complex needs often come with more frequent absences. It was extremely concerning to see this proposed reduction to this factor in the Governor’s Supplemental Budget again this year.
Disability services have been underfunded for years and cannot sustain additional cuts. Further reductions, provider moratoriums, or restrictions on expanding services would destabilize the disability support system and limit choices for people and families.
Accountability Matters—Without Harm
We support rooting out fraud and misuse of taxpayer dollars. Solutions to address fraud must be carefully designed so they do not reduce access to services for people who rely on Medicaid and disability supports. Fraud should be targeted without harming Minnesotans with legitimate needs.
Concerns About System Reform Readiness
Waiver Reimagine Phase II is currently scheduled to go into effect on January 1, 2027. Based on participation in the Waiver Reimagine Task Force, there is significant concern that the state is not yet ready to implement this reform without risking the loss of critical services and supports for many people who rely on waiver funding. The Task Force has requested a delay in implementation of up to 36 months. Please urge your legislators to delay the implementation until at least 2029 to ensure people will continue to have access to the services and supports they rely on. If this is implemented next year without further analysis, adjustments, and stakeholder input, many people will lose access to some of the services they are currently receiving. There was a bill introduced in the Senate yesterday, SF 4512, that proposes a one-year delay for Waiver Reimagine. This is not enough time to ensure we can mitigate unintended harm from this large system change. You can find more information on Waiver Reimagine here.
Implementation of changes enacted last session
The Long-Term Services and Supports Advisory Council (LTSS) is working to reduce cost growth and improve efficiency, with recommendations due to the legislature in late 2026. Providers have long advocated for improved streamlining and coordination across state agencies, and meaningful opportunities exist to improve outcomes without cutting essential services. If the Advisory Council fails to identify cost savings of $177,542,000 in savings for the 2028-2029 biennium, rates for services and supports that MSS offers will be adjusted downward by reducing the Competitive Workforce Factor and requiring counties to pay a portion of the cost for residential disability waiver services
Disability waiver providers are already facing ongoing workforce shortages and rising operating costs. We understand the real financial pressures that exist in our state. The reality is that the state cannot continue to reduce rates for these critical disability services without further destabilization and causing a breakdown of the service structure.