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HSB 777

A bill for an act relating to and making appropriations to the department of veterans affairs and the department of health and human services, including aging and disability services, behavioral health, public health, and community access and eligibility; the medical assistance program, state supplementary assistance, Hawki, and other health-related programs; family well-being and protection; state-operated specialty care; administration and compliance; transfers, cash flow, and nonreversions; report on nonreversion of moneys; more options for maternal support program; reimbursement rates review; mental diseases exclusion waiver; community health centers reimbursement; full-time equivalent dashboard; comprehensive family support program; federal community mental health services block grant; child welfare and juvenile justice decategorization; commitment or hospitalization of certain persons with substance abuse disorders or mental illness; behavioral health expenditure report; and opioid settlement fund; and including effective date and retroactive applicability provisions.

2025-2026 Regular Session

HSB 777 substantially increases funding and broad program expansions across health, behavioral health, aging, child welfare, and maternal supports for FY 2026-2027, with new compre

Committee report approving bill, renumbered as HF 2782.
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Bill Summary · HSB 777

Summary of Bill HSB 777 (Session 2025-2026, Iowa)

This document provides a comprehensive overview of HSB 777, a appropriations and policy bill introducing FY 2026-2027 funding for the Iowa Departments of Veterans Affairs and Health and Human Services (HHS). It covers aging and disability services, behavioral health, public health, child welfare, family supports, and related administration, with numerous specific program appropriations, policy changes, and reporting requirements. The bill also includes several divisions that address reimbursement, decategorization, maternal supports, and other health-related programs.

Note: The bill text is extensive. The summary below highlights the major purposes, key provisions, and potential impacts based on the Division structure and section-by-section content.

1) Overall purpose and intent

  • Provide targeted appropriations to the Department of Veterans Affairs and the Department of Health and Human Services (HHS) for FY 2026-2027 to fund operations, services, and compliance across a wide range of health, behavioral health, aging, child welfare, and family support programs.
  • Establish and/or expand programs (e.g., comprehensive family support, maternal support options, decategorization for child welfare/juvenile justice funding) and improve transparency (e.g., FTE dashboard, reporting on nonreversion of funds).
  • Adjust, review, or establish reimbursement rates and cost-reporting frameworks to align Iowa’s provider payments with state and federal benchmarks.
  • Retroactive applicability provisions and immediate-effect trusts for urgent program needs.

2) Key provisions and changes

A. Department of Veterans Affairs (Division I)

  • FY 2026-2027 general fund appropriations:
    • VA administration: $1,369,205 (FTE 15.00)
    • Iowa Veterans Home: $8,145,736
    • Home Ownership Assistance Program: $2,200,000 (transfer to Iowa Finance Authority)
  • Monthly reporting on Iowa Veterans Home expenditures/billings to enhance oversight.

B. Aging and Disability Services (Division II)

  • Comprehensive set of aging-related program funding, including:
    • Case management, aging/disability resource centers, prevention of elder abuse, dependent adult abuse services, centers for independent living, information/assistance, and related salaries/maintenance (FTE 88.00; $19,379,531)
    • Specific allocations for the Comprehensive Family Support Program (see Division XVII) and Conner v. Branstad training/community capacity

C. Behavioral Health (Division III)

  • Core behavioral health funding for prevention, education, early intervention, treatment, recovery, crisis services, helpline, and youth prevention (FTE 71.00; $23,127,121)
  • Specific allocations:
    • $300,000 for children’s behavioral health system
    • $950,000 for an integrated SUD managed care system, with waivers to maintain services
  • Statewide emphasis on aligning with CDC/SAMHSA best practices

D. Public Health (Division IV)

  • Public health funding to support health promotion, disease surveillance, donor registry (142C.18), and workforce capacity (FTE 348.60; $22,024,369)
  • Subprogram-specific items include:
    • $95,000 for child vision screening program (U of IA collaboration)
    • $96,000 for grant to a nationally affiliated volunteer eye organization
    • Several targeted grants (drugs donation repository; free clinics infrastructure; rural health clinics; radon test kits; rural psychiatric residencies; etc.)
    • $2.3 million for medical residency program grants (non-U of IA/HSC and not family medicine)
    • No indirect costs charged to UI Hospitals and Clinics for these appropriations
    • CPI-based cap adjustments for some contracts

E. Community Access and Eligibility (Divisions V & VII)

  • TANF-related funding and administration:
    • Community access/eligibility: $12,566,312
    • Pregnancy prevention grants: $1,913,203 (prioritize programs with outcomes; emphasis on abstinence; focus on areas with high unplanned pregnancy rates)
    • Modernization of TANF to promote economic mobility and reduce benefit cliffs: $25,000,000
    • FaDSS and related administration: $3,013,980
    • Child care assistance: $42,281,826
    • Child protective services, including a $1,658,000 allocation for Child Protection Centers (equated base, rural satellite focus)
    • Hotline funding for Iowa Food Bank Association (SNAP hotline): $127,500
  • Child support services: $15,644,114 (FTE 464.00), with flexible cash-flow management and federal grant participation considerations

F. TANF and Related Programs (Division VIII-X)

  • TANF-related transfers, nonreversions, and carryover provisions
  • Nonreversion language for multiple trust funds to maximize ongoing use for medical and child-related programs
  • Comprehensive welfare information system (VISION) partnership

G. Medical Assistance and Health Program Operations (Divisions VI, IX-XVI)

  • Medical assistance program and Hawki with federal/state match considerations
  • Reimbursement policies preserved as of June 30, 2026, with several specific rate adjustments:
    • Nursing facility rates, MCO rate adjustments, and retroactive rate changes
    • Ambulatory surgical centers, rehabilitation, speech therapy, air medical services, adult day services, and home and community-based waiver services
    • Substantial new investments in rate enhancements totaling many millions
  • Federal and state fund sources including Quality Assurance Trust Fund and Hospital Health Care Access Trust Fund
  • Behavioral Health Fund contributions to support medical assistance, along with a separate infusion from the Behavioral Health Fund

H. State-Operated Specialty Care (Division VIII)

  • State-operated facilities: $100,225,768 (FTE 756.00)
  • Specific allocations for Cherokee and Independence mental health institutes, Woodward Resource Center, Eldora Training School, and related obligations

I. Comprehensive Family Support Program (Division XVII)

  • New 231.80 provision creating a Comprehensive Family Support Program
    • Purpose: statewide services to support families caring for individuals with disabilities
    • Eligibility: Iowa residents, intend the individual to remain home, income under $60,000 (tax year)
    • Structure: Family support centers, vouchers, direct payments, and coordination with existing disability services
    • Emphasis on timely access, eligibility determination alignment, and non-supplanting of other services
    • Funding to be appropriated separately; funds not reverting at year-end
  • Code designation: Subchapter VIII of Chapter 231

J. Federal Community Mental Health Services Block Grant (Division XVIII)

  • Revisions to distribution of federal block grant funds to community mental health centers via a behavioral health ACO or the department’s system
  • Quarterly distribution; performance-measured reporting to SSa/CSAT

K. Child Welfare and Juvenile Justice Decategorization (Division XIX)

  • Reorganization and repeal of certain decategorization sections, with carryover funding provisions
  • Establishes new decategorization carryover funding rules and reallocation mechanics across agencies

L. Commitment/Hospitalization (Division XX)

  • Amendments to procedures for immediate custody and hospitalization of individuals with substance use disorders or mental illness
  • Clarifications on detention periods, hearings, attorney appointment, and child protection court alternatives

M. Reimbursement Rates — Reviews and New Sections (Divisions XIII, XIV, XV, XVI)

  • Biennial or annual reviews of certain provider rates (shelter care, residential treatment, waiver services)
  • New cost-based reimbursement framework for home and community-based waivers
  • Requirement to submit rate-models and fiscal impact analyses to the General Assembly

3) Who is affected

  • State agencies: Department of Veterans Affairs; Department of Health and Human Services (various divisions: Aging and Disability Services, Behavioral Health, Public Health, Community Access and Eligibility, Child Protective Services, etc.)
  • Health care providers: Hospitals, nursing facilities, ambulatory surgical centers, home health agencies, rehabilitation and therapy providers, adult day service providers, prosthetics suppliers, shelter care and residential treatment facilities, and community health centers
  • Families and individuals: Persons with disabilities and their families; recipients of Hawki and state supplementary assistance; TANF participants; recipients of state child care assistance; adoptees and post-adoption services
  • Local entities: Area agencies on aging; county-based systems (decategorization carryovers); local child protective services and court entities; family support centers
  • Veterans and veterans’ families: Iowa Veterans Home residents and related programs

4) Procedural and timeline aspects

  • Effective date: Several divisions take effect upon enactment; retroactive applicability provisions apply to multiple divisions (notably Division XII and XXIV with retroactive dates to July 1, 2025 or similar)
  • Fiscal year focus: All appropriations cover FY 2026-2027 (July 1, 2026 – June 30, 2027)
  • Reporting requirements:
    • Monthly reports on Iowa Veterans Home expenditures
    • Quarterly report on nonreversion of funds (Division XI)
    • Quarterly reporting by community mental health center recipients of federal funds (Division XVIII)
    • Full-Time Equivalent (FTE) dashboard to be posted online (Division XVI)
  • Nonreversion and carryover:
    • Several sections authorize nonreversion of funds at year-end to support ongoing priorities (e.g., medical assistance, adoption reinvestment, decategorization carryover)
    • Special provisions for TANF carryover and 232.188 decategorization funding carryovers (Division XIX, Division XII)
  • Reimbursement methods:
    • Maintains rates from 6/30/2026 baseline; specifies adjustments and retroactive application where rates are recalibrated (Division VI)
    • Cost-based reimbursement development for home and community-based waivers (Division XIII)
  • Maternal support options:
    • Expanded or clarified “More Options for Maternal Support Program” with retroactive applicability (Division XII)
  • State and federal funding interplay:
    • Numerous lines reference federal matching, Title XIX/XXI, TANF, and Trust Fund allocations (Quality Assurance Trust Fund; Hospital Health Care Access Trust Fund; Behavioral Health Fund)

If you would like, I can condense this into a succinct one-page briefing or provide a section-by-section table of key allocations and policy changes.

Compiled from official sources — confirm details with the bill’s official record.

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