Health officials tell committee S.36 will prompt Medicaid rate review for residential SUD care and address public-inebriate transfers

State Medicaid and health officials told the House Health Care Committee that S.36 directs a review of how Vermont pays residential substance-use-disorder (SUD) providers and includes language tied to the public inebriate statute that would remove a DOC transfer option that is currently preserved in statute.

Monica Ogilby, state Medicaid director at the Agency of Human Services, told the committee the bill was rewritten after conversations with senators and committee staff to address perceived limits on residential treatment stays by focusing on payment methodology rather than setting clinical lengths of stay. "This bill was originally introduced and looked quite different," Ogilby said. "We landed on maybe what we need to do is reevaluate our methodology, how we pay providers, and how much we pay them."

The shift matters because payment rules affect provider finances and, according to agency officials, can unintentionally influence how long patients stay in residential programs, even though clinical teams make care decisions. Kelly Dougherty, deputy commissioner at the Department of Health, emphasized that "there is no Medicaid limit, and it is driven by clinical decision making," and she added there is no clear evidence that longer residential stays alone produce better outcomes.

Agency context and the proposed rate review Agency officials said the last statewide update to the residential treatment payment methodology occurred in 2019 and that the bill would authorize a fresh, transparent rate review to ensure payment levels reflect current costs and clinical realities. The state uses an episodic payment model for residential SUD care: per-diem payments cover the first three days, and an episodic rate applies thereafter. As Dougherty explained, "Once somebody is in for 3 days, the episodic rate kicks in." Agency staff flagged the episodic structure as a topic for review to determine whether it creates unintended incentives to shorten or lengthen stays.

Officials said the episodic model has already included substantial rate adjustments: Ogilby said recent changes baked significant increases into episodic payments, citing roughly a 38% increase that was incorporated in the payment model in the past year. Despite those increases, the state's average length of stay has remained near 14 days, which officials said likely contributed to a public misconception that 14 days is a hard limit.

How the system currently looks and capacity indicators The committee heard specifics about the state's mix of residential services. Kelly Dougherty described two high-intensity medical-monitoring programs (Valley Vista and Serenity House) that provide 24/7 nursing oversight and two clinically managed, lower-intensity residential sites (Grace House and McGee House) operated by Recovery House in Rutland County.

Agency-provided utilization figures shown to the committee indicated the two lower-intensity houses have a combined 28 beds: Grace House at about 67% utilization and McGee House at about 75% utilization (McGee House had opened roughly three months earlier and had staged a soft opening). For high-intensity residential programs, agency staff said utilization "hover[s] around 60 percent." The agency will provide the committee with a slide deck containing additional length-of-stay and utilization data that was previously used in testimony.

Clinical decision-making and the continuum of care Both Ogilby and Dougherty told the committee their goal is to strengthen the full continuum of SUD care so patients have access to the right level of care at the right time: residential programs for stabilization and lower-intensity settings and outpatient and hub-and-spoke services for longer-term recovery. Ogilby said the committee's charge should focus on payment and capacity rather than legislating clinical length of stay: "we don't usually legislate things like length of stay for clinical services," she said.

Public inebriate beds, the "sunrise" provision, and DOC use The bill's later section addresses a longstanding "sunrise" statutory provision tied to public inebriate program (PIP) disposition. Agency staff described the current arrangement: when a person taken to a PIP is unsafe or combative, law enforcement may place them in DOC custody until they are sober enough for release. The statute contains a provision scheduled to change on July 1, 2025, and the bill would repeal that particular provision. Agency staff said there is no secure alternative outside DOC currently available statewide.

"We had recommended that that sunrise be repealed because there is no alternative place to bring these folks," Kelly Dougherty said. Agency witnesses said alternatives such as using emergency departments are undesirable because emergency rooms are not secure holding facilities and would risk overburdening hospitals. They also noted that several local PIP programs (Howard Center and Lamoille County) had closed, reducing local alternatives.

Officials and committee members raised workforce and operational concerns. Department witnesses told the committee that staffing crisis- or PIP-style programs is difficult in a rural state; testimony cited staffing shortages and the complexity of the people presenting to those programs. The committee requested additional data, including the number of people routed from PIP to corrections, bed-day usage in corrections and PIP programs, and other disposition metrics; agency staff said they will supply available data and the slide deck referenced earlier.

Next steps and hearings Committee members said they will hear additional witnesses, including Recovery House representatives and Northeast Kingdom Human Services, and plan to invite the Department of Corrections to answer specific questions about bed days, transportation, and DOC protocols. Agency staff confirmed they will share the slide deck of utilization and length-of-stay data with committee members.

For now, no committee vote or formal action on S.36 was recorded at the hearing.

Ending: The committee scheduled S.36 for further testimony the following day, including Recovery House and Northeast Kingdom Human Services, and signaled it will request DOC participation to provide disposition and bed-day data.