The proposed bill, Substitute Senate Bill No. 1358, aims to establish annual inflationary increases for rates paid to nonprofit human services providers that contract with the state. It defines a "nonprofit human services provider" as organizations that offer services for individuals with physical, intellectual, or developmental disabilities, including autism spectrum disorder, as well as behavioral health services. The bill mandates that state agencies increase rates for recurring contracts by the percentage increase in the consumer price index (CPI) for urban consumers in the northeast region from the previous calendar year, effective July 1 each year. Importantly, if the CPI decreases, state agencies are prohibited from reducing the rates.

Additionally, the bill requires the Commissioner of Social Services to adjust Medicaid rates for these nonprofit providers in alignment with the CPI increases, unless restricted by federal law. The Office of Policy and Management is tasked with filing a report every three years, starting January 1, 2026, detailing the appropriations needed to ensure future contract rates reflect CPI increases. The bill is expected to incur significant costs to the state, estimated at least $72 million in FY 26 and FY 27, with a corresponding federal revenue gain of approximately $20 million. The effective date of the bill is upon passage.