In a boon to South Dakota’s underpaid long-term care providers, the state’s new governor has proposed increases in Medicaid reimbursement and innovation grants in her $4.8 billion budget.

Gov. Kristi Noem (R), who addressed the Legislature on Wednesday, is proposing a 2.5% increase for nursing homes for April, May and June. After July 1, in the new fiscal year, there would be around a 5% increase, or $12 million going into the base formula calculation, said South Dakota Association of Healthcare Organizations President Tim Rave.

That’s great news for long-term care, which has seen a number of facilities close in the past year.

“It is a significant step to getting South Dakota in line with other surrounding states,” Rave, a former speaker of the South Dakota House of Representatives, said. “We’ve been a long ways behind our surrounding neighbor states and it’s starting to show.”

Additionally, Noem has proposed around $6 million one-time dollars for “innovative ways” to address nursing home challenges. She’s also proposed $490,000 for mental health initiatives and $4.6 million to address the state’s meth epidemic.

South Dakota ranks last in Medicaid funding per day, according to figures from the South Dakota Association of Healthcare Organizations. Medicaid funding pays for more than half of nursing home residents in the state, but pays $146.38 per day. Comparatively, neighboring North Dakota pays $270.71, while Minnesota pays $246.24.

Bringing the state more in line with others reflects progress, Rave said.

“It’s a lot of really positive things,” he said. “We are really thankful and excited they are addressing us.”