As the 101st South Dakota Legislative Session begins, the SDAHO advocacy team enters the session well-prepared after months of planning and monitoring priorities. Nearly 70 bills have already been filed, with many more expected in the weeks ahead.
Ahead of Governor Larry Rhoden’s State of the State Address on Tuesday, January 13, lawmakers are relying heavily on guidance from the December budget address. Key highlights include:
Budget & Funding Overview
- Medicaid Providers: 0% inflationary increase
- $14.1 million for required Medicaid cost increases (prescription drug inflation and Medicare crossover payments)
- $11.8 million to support the FMAP increase from 48.47% to 49.33%
- Department of Human Services: Restores $16.4 million in ongoing funding following last year’s reductions
- Medicaid Expansion Work Requirements (one-time): $450K in general funds and $4M in federal authority
- Opioid Settlement Funds: $9 million for prevention, treatment, and recovery initiatives
- Broadband Expansion: $87 million in federal funding to support rural access and telemedicine
- Rural Health Transformation Initiative: $500 million in federal funding authority over five years
What this Means for Providers
- No Medicaid rate increase means continued financial pressure, particularly for rural and safety-net providers.
- FMAP and required cost increases help offset rising prescription drug and crossover costs, but may not fully close budget gaps.
- Restored DHS funding reflects increased utilization and may stabilize services impacted by last year’s reductions.
- Rural Health Transformation funding presents a significant opportunity to strengthen workforce pipelines, modernize technology, expand telehealth, and improve long-term financial sustainability—especially for rural hospitals and clinics. South Dakota was awarded $189 million for the initial year of the 5 year grant.
- Broadband investments support expanded access to telemedicine and specialty care in rural communities.
- Opioid settlement funding strengthens statewide prevention, treatment, and recovery efforts.
Rural Health Transformation Fund
Discussion around the Rural Health Transformation Fund continues to be a major focus. Current takeaways include:
- Minimum $500 million over five years
- State application request of $200 million annually
- CMS awarded South Dakota $189 million for the first award year
- Focus areas include technology modernization, telehealth expansion, workforce recruitment and retention, and financial stability for rural hospitals and clinics
- Applications anticipated in early 2026, with the state aiming to deploy funds quickly once approved
- The Joint Committee on Appropriations will receive an overview from the Governor’s Office, DOH, and DSS at 2PM on January 15th
Stay Informed
SDAHO continuously updates its Advocacy webpage and Bill Tracker, providing real-time bill status and SDAHO’s position as directed by the Council on Public Policy.
Visit: sdaho.org/advocacy
Important Dates
- January 12, 2026 | 12pm CT / 11am MT
South Dakota Legislative Update Webinar – SDAHO Advocacy Team - January 13, 2026 | 1pm CT / 12pm MT
State of the State Address – Live on SDPB (sd.net) - January 15, 2026 | 2pm CT / 1pm MT Rural Health Transformation Fund JCA presentation – Live on SDPB (sd.net)
Live Committee Audio
- House Committee on Appropriations – Mon. Tus., Wed. Thurs. & Fri. 8am CT/ 7am MT. Room 362 LIVE AUDIO FEED
- Joint Committee on Appropriations – Mon. Tue. Wed. Thur. Fri. 8am CT / 7am MT, Room 362 LIVE AUDIO FEED
- Senate Committee on Appropriations – Mon. Tue. Wed. Thur. Frid. 8am. CT/ 7am MT, room 362 LIVE AUDIO FEED
- House Health and Human Services – Tue. Thur. 7:45am / 6:45am MT room 412 LIVE AUDIO FEED
- Senate Health and Human Services – Mon. Wed. Fri. 7:45am / 6:45am, room 412 LIVE AUDIO FEED
- House State Affairs – Mon. Wed. Fri. 7:45am / 6:45am room 414 LIVE AUDIO FEED
- Senate State Affairs – Mon. Wed. Fri. 10am CT / 9am MT room 414, LIVE AUDIO FEED
For the full list of Audio visit www.sd.net.
For additional legislative information, visit the South Dakota Legislative Research Council at sdlegislature.gov.
