Vermont federally qualified health centers warn of fiscal squeeze, seek state help for rates and residency funding

Leaders of three Vermont federally qualified health centers told a legislative committee this morning that mounting losses, shrinking cash reserves and federal funding uncertainty threaten primary care access in rural and urban communities across the state.

The chiefs of Community Health Centers of Burlington, Northern Counties Healthcare and Gifford Healthcare described a funding model they say no longer covers the full cost of FQHC care — including outreach, behavioral health, dental services and interpretation — and asked the state to adjust Medicaid reimbursement and provide one‑time workforce funding to start a residency program.

The centers said they serve large shares of Medicaid and uninsured patients and provide services other providers do not. "FQHCs do not turn away people because they can't pay," said Jeff McKee, CEO of Community Health Centers at Burlington, describing the centers as "the last mile of health care." McKee told the committee his organization had about 54 days of cash on hand and is "losing 2 and a half days a month," a pace he said would force closures or service reductions without new funding. He added that "a day for us is about $120,000," which the panel discussed as roughly consistent with a monthly shortfall of $250,000–$300,000.

Chris Bowden, CEO of Northern Counties Healthcare, said his rural system — which covers roughly 2,000 square miles in the Northeast Kingdom and is the sole dental and primary care provider in parts of Essex County — projected "nearly a $1,000,000 loss for our next fiscal year." Bowden said rising labor costs, including a roughly 25% increase in nurse wages since the pandemic and a 22% rise in health care expenses this year, are major drivers of the gap.

Gifford Healthcare's chief described a mixed organization that operates an FQHC, a critical access hospital and senior‑care services. He said his organization has trimmed management roles and cut other costs but still posted a large operating loss last month. "We need to look in the mirror," he said, adding Gifford is pursuing a teaching health center residency through a Maple Mountain Consortium of FQHCs and seeking state support to fund that workforce effort.

The speakers described federal and programmatic pressures that have reduced key revenue streams for FQHCs: a decade of flat federal grant funding, pressure on 340B revenues, and uncertainty about HRSA grant conditions. McKee said the federal grant that supports homeless health outreach has not kept pace with inflation and that many outreach activities are not billable to Medicaid or Medicare.

The panel discussed technical fixes and policy options. Committee members and presenters described an already‑underway change‑in‑scope process with the state Medicaid agency intended to reexamine FQHC rates; presenters said that negotiation has stretched more than two years with limited movement. One presenter said the FQHCs were seeking a one‑time workforce investment to stand up a residency program, estimating roughly $4,000,000 over four years (about $1,000,000 a year) to get the program to self‑sufficiency. In the hearing a committee member referenced a $5,000,000 figure discussed elsewhere for related seats; presenters acknowledged both numbers in the discussion and characterized the exact ask as subject to legislative consideration and clarification.

Speakers and committee members emphasized the broader system cost implications of losing FQHC capacity. "Those 14 patients would have gone to the emergency room," Bowden said of early demand at an express care site; he and others argued that investing in primary care reduces higher‑cost downstream spending. Committee members asked whether consolidated clinics, improved transportation or other system redesigns could preserve access if some sites closed; presenters warned consolidation alone would leave underserved residents without convenient care and produce greater long‑term costs.

Presenters raised several potential revenue strategies already in use or under consideration, including greater collaboration with community behavioral health (CCBHC) models, leasing staff to draw higher federal match rates and pursuing additional billing codes where allowed, but said these steps were not sufficient to close the funding gap. They urged the state to set durable rules to keep FQHC rates updated with cost changes and to consider targeted, short‑term investments to stabilize centers while longer‑term payment reform proceeds.

The committee did not take formal votes during the discussion. Presenters said they would provide a more detailed written proposal for the residency workforce request and continue negotiating rate adjustments with the state Medicaid agency.

For now, the centers said, continued operations depend on a mix of one‑time state help, federal grant stability, and a Medicaid rate‑setting process that keeps pace with documented cost increases.