House Health Care reviews S36 language on Medicaid payment, public-inebriate beds as Howard Center describes program closures

House Health Care committee members heard a briefing on S36 and related provisions that would change Medicaid coverage rules for residential substance use disorder treatment and would repeal a statutory ban that has previously prevented holding people who are publicly intoxicated in correctional settings.

Katie McClanahan, Legislative Counsel, told the committee the bill before them was “the as passed Senate version,” and described three clusters of provisions: two sections that would require Medicaid coverage for medically necessary high- and low-intensity residential treatment when prescribed by a licensed health professional and provided by a Medicaid-participating residential program; a third section requiring AHS to review the Medicaid payment model for residential substance use disorder services and report recommendations to the House Committee on Human Services and the Senate Committee on Health and Welfare by December 1, 2025; and two sections that would repeal a statutory prohibition on holding people in correctional facilities when they are intoxicated, preserving the current practice if community alternatives do not exist.

The nut graf: The briefing focused on how state policy and Medicaid payment rules intersect with the availability of secure noncarceral alternatives for people who are intoxicated and on operational limits facing existing programs. Provisions in S36 would direct AHS to align Medicaid payments with clinical needs and require reports on capacity; at the same time the bill would keep the status quo on corrections holding authority unless community capacity is expanded.

Committee members asked whether the bill is trying to address an episodic-payment problem in Medicaid. McClanahan explained the Senate committee was considering concerns that the current episode-based reimbursement model uses a 14-day average to set per-episode payments and that model may not match the clinical lengths of stay prescribed by treating providers. “An episode is, while it might be less or more than 14 days, they use the average of 14 days to determine what the payment is per episode,” McClanahan said. She summarized the bill’s report requirement: the agency must consider the actual costs of providing residential treatment, transitions between levels of care and recommend legislation to align payment with clinical needs; the report is due 12/01/2025.

The committee also discussed sections of S36 that would affect “public inebriate” statutory language. McClanahan said there is a statutory prohibition set to take effect July 1, 2025, that would bar holding intoxicated people in correctional facilities, but the ban has repeatedly been delayed because community alternatives and sufficient beds have not been available. The bill’s repeal language would “maintain the status quo indefinitely,” McClanahan said, allowing the Department of Corrections to provide a secure setting when alternatives do not exist.

Beth Holden, chief client services officer at Howard Center, told the committee she came on short notice to describe why Howard Center closed its public-inebriate and PIP beds. “These programs were developed, like, 30 years ago … to decriminalize public intoxication,” Holden said. She listed three major reasons for closure: persistent financial shortfalls (Howard Center recorded an operating loss of $490,000 in 2023 and $401,000 in 2022), a COVID-era staffing crisis that reduced staffing by about 50 percent, and a change in the clinical profile of people presenting for these services.

Holden said the current drug supply has increased medical complexity: “Everything has fentanyl in it right now. People have complicated medical problems, not only wound care from xylazine use, but high blood pressure, diabetes.” She said modern presentations often require nursing and physician oversight that traditional social detox or public-inebriate programs were not designed to provide. Howard Center attempted to combine mental-health-crisis beds and public-inebriate beds but found mixing those populations triggered new problems: “mixing those 2 populations, turned out to not be successful because 1 population triggers the other population,” she said, noting trauma histories and differing clinical needs.

Committee members asked what options hospitals now have if a medically stable, intoxicated adult presents at an emergency department. Holden said there is often no alternative place to send such patients since Act 1 and PIP bed closures, and hospital practices vary; in some cases law enforcement or hospital security handle the situation if the person is not safe. McClanahan added that one provision in draft amendments would require reports from the Department of Mental Health and DOC about rollouts of more public-inebriate services, especially in Chittenden County, and that Human Services was expected to consider amendment language the following morning.

The meeting recorded discussion and testimony but no formal committee vote on S36. McClanahan said the bill had not yet left the Senate Human Services committee and that the Senate Health and Welfare direction at the time had been to keep the Senate language and add two new sections, which had not been voted on yet.

The discussion highlighted capacity and payment issues the Legislature will need to reconcile: whether Medicaid payment models should be adjusted to reflect clinical lengths of stay and resource needs for medically complex patients, and whether the state should invest in noncarceral secure alternatives so that a statutory prohibition on holding intoxicated people in correctional facilities can take effect.

Ending: Committee members thanked presenters and scheduled follow-up consideration through the Human Services committee process; no formal action was taken during this briefing.