FQHCs ask Vermont for $5 million to raise Medicaid visit rates

Mary Kate Mollman, director of Vermont Public Policy at Bi-State Primary Care Association, told the House Human Services Committee that the association is requesting a $5,000,000 state appropriation to bring Federally Qualified Health Center (FQHC) Medicaid rates closer to the cost of providing care to Medicaid enrollees.

Mollman said FQHCs provide care to about one in three Vermonters and to roughly 36 percent of the state’s Medicaid enrollees. The state’s 11 health centers have sites in every county and often are the sole primary-care provider in their communities, she said. They provide comprehensive services including primary and preventive care, mental-health and substance-use treatment, oral and vision care, reproductive health services, transportation, translation and other enabling services.

Mollman told the committee that FQHCs are paid under a federally established bundled Medicaid rate that is intended to reflect an organization’s average cost per visit. She said the bundled rate does not vary by complexity of visit — a brief wellness visit and a medically complex visit receive the same payment — and that current rates “fall well below the cost of an average visit, as much as $60 to $80 per visit” in some cases. That shortfall, compounded across the roughly 54,000 Medicaid visits FQHCs serve annually, has contributed to what she described as the sector’s financial fragility.

“We are asking for an appropriation of 5,000,000 in state funding to bring FQHC Medicaid rates, more in line with the cost of providing care to Medicaid enrollees,” Mollman said.

She told lawmakers that all Vermont FQHCs are struggling financially. Some centers have fewer than 20 days of cash on hand, others are drawing down reserves, and two clinic sites have closed this year, she said. Mollman identified the closures as the Bellows Falls site operated by Northstar Health in southern Vermont and a Stowe clinic previously run by Memorial Health Partners that was consolidated into Morrisville.

Mollman also said multiple funding pressures are at play: federal grant funding for FQHCs has been essentially flat-funded for about a decade; savings from the federal 340B program have been eroded; and Vermont has not always implemented the federal rate methodology in a way that reflects centers’ costs. She said current leadership at the Department of Vermont Health Access (DVHA) has been “helpful and supportive” in efforts to align rates with federal law, but that the association is seeking legislative appropriation to raise rates to nearer cost.

Committee members asked whether the $5 million request was an attempt to “rescue a federal program.” Mollman responded that the request is to ensure Medicaid rates paid by the state cover the cost of care for Vermont Medicaid enrollees, not to substitute for federal obligations.

The committee did not take a vote on the request during the testimony. Mollman concluded by offering to take follow-up questions and to provide additional financial detail to staff and members.