Committee reviews bill to change Medicaid payment model for residential substance use disorder treatment

Senators and witnesses spent the committee session reviewing S.36, an act to align Vermont's Medicaid payment model with clinical needs for residential substance use disorder treatment and to remove confusing, delayed statute language on public inebriates.

Katie, legislative counsel with the Office of Legislative Council, told the committee the bill responds to recurring questions about the adequacy of current payments and who should authorize extended residential stays. "Episodic payments are for about 14 days," Katie said, and the bill is intended to address whether that episodic period matches clinical need.

The bill would require the Agency of Human Services (AHS) to provide coverage for "medically necessary" high-intensity, medically monitored and low-intensity, clinically managed residential treatment episodes for Medicaid beneficiaries with substance use disorder and co-occurring mental health conditions when prescribed by a health care professional employed by a participating residential treatment program. Under the draft language, coverage would extend for the "entire length of stay prescribed by the health care professional," who must take into account current best practices across the substance-use continuum of care.

S.36 also directs AHS to submit a review of the Medicaid payment model for residential substance use disorder treatment services to the policy committees "on or before December 1." The review must consider the actual cost of providing residential care, length of stay, co-occurring physical and mental health needs, and post-residential service needs and include proposed legislation to better align payment with clinical need and transitions between levels of care.

Senator Larry Hart, who reported the bill, described changes requested in committee: removing a rigid 14-day default and allowing treatment to last "up to whatever is necessary," including programs that provide far longer courses of care. "It's up to whatever is necessary. So it's up to 180 plus if necessary," Hart said, recounting examples of programs with extended residential programs.

Witnesses and committee members discussed possible effects on capacity and prior authorization. Katie said some providers reported more than three-quarters of their patients are Medicaid beneficiaries; the draft language would make decisions about continuing care more clearly driven by the residential program's prescribing clinician, potentially sidestepping internal prior authorization steps currently used by the agency.

Committee members noted the bill also includes unrelated cleanup language in sections 4 and 5: repeal of earlier statutory language (never implemented) that would bar incarcerating public inebriates in Department of Corrections facilities and a corresponding change that would have authorized the language to take effect on July 1, 2025. Committee members said they would need separate background and likely coordination with judiciary committee staff on the public-inebriate provisions.

Advocates and program representatives who testified in favor of S.36, according to witnesses cited by the bill reporter, included officials and providers from multiple recovery organizations and state agencies, among them the Department of Health and representatives from designated agencies and recovery homes. Those witnesses urged longer treatment periods and continuity across levels of care.

The committee did not take final action on S.36 during the session. Members signaled they will invite additional witnesses and expect further discussion of the report language, reimbursement review and the public-inebriate statutory cleanup in coordination with other committees.

Ending: The committee will continue to solicit input from AHS, clinical providers and judiciary staff before deciding next steps on S.36 and the related statutory repeal language.