Primary care groups ask Legislature to fill $5.5M ACO funding gap for FY2026

Jessa Barnard, executive director of the Vermont Medical Society, told the House Committee on Health Care on Feb. 19 that primary care practices statewide face a one‑year funding cliff because OneCare Vermont’s all‑payer programs end in calendar 2025 and the state’s new AHEAD payment model will not begin until 2027.

"Primary care, I you all know, you've heard, has had challenges for years being sufficiently funded in terms of base funding and workforce initiative funding," Barnard said, adding that the timing gap will remove an estimated $15,000,000 in support for primary care in calendar-year 2026 unless the Legislature acts.

Barnard urged lawmakers to include a one‑time backfill for the second half of fiscal year 2026 — roughly $5.5 million — to hold harmless two OneCare programs that currently distribute dollars to primary care practices: the population‑health model that provides base and quality‑based payments and a comprehensive payment reform (prospective payment) program that distributes monthly payments to participating independent practices.

Nut graf: The requested $5.5 million is intended to replace the Medicare and hospital/dues components that currently flow through OneCare for the January–June 2026 portion of state fiscal year 2026. Barnard said the governor’s recommended budget already includes $10.8 million to preserve Medicare blueprint and SASH payments; the medical groups said that item fills only part of the total gap.

Barnard described how the OneCare arrangement pooled Medicare, Medicaid and other payer contributions to support both direct payments to practices and shared community teams. She told the committee that continuing the population‑health program would require about $4.6 million and that the remainder of the $5.5 million ask would sustain the prospective (monthly) payments for 19 participating practices.

She said Medicaid has not removed its contribution from agency budget requests for FY2026, so the state backfill would focus on replacing Medicare and “dues” components that had been passing through OneCare. "There will be a loss of about, dollars 15,000,000 for primary care in state fiscal year 2026," Barnard said.

Committee members asked for detail on how payments would be distributed in the interim year if OneCare stops and the AHEAD model is not yet operating. Barnard said conversations were ongoing between OneCare and a payer‑administrator called DIVA to identify a distribution mechanism for continued payments, but she did not present a finalized transfer plan.

Barnard also warned that the end of OneCare would re‑expose many practices to Medicare’s MIPS quality reporting program. She said OneCare functioned as an advanced alternative payment model that exempted participating practices from direct MIPS reporting; without OneCare, practices will need reporting support to avoid MIPS penalties, which Barnard said can reach reductions in Medicare payments (the committee discussed a 9% penalty level in current MIPS rules).

Other budget and workforce items raised by Barnard and allied organizations included:

- A proposal to bridge startup funding for a new family medicine residency program (a partnership of FQHCs and hospitals) with one‑time support over up to three years until federal residency dollars arrive; physician leaders for that residency were present in the room and will testify to the committee in more detail.

- A request to make permanent and fund the Medical Student Incentive Scholarship (a program that provides tuition support to third‑ and fourth‑year UVM medical students who commit to practicing primary care outside Chittenden County). Barnard said 22 scholarships have been awarded to date but the statutory program currently carries a sunset scheduled for 2027; the group asked for base funding and removal of the sunset.

- Concern that the Blueprint expansion pilot (focused on social determinants, mental health and substance‑use screening and community health teams) is not funded in the governor’s FY2026 recommendation. Barnard said the pilot previously received about $4.6 million in state funds per year, with $635,000 allocated to the Dulce program; the governor’s proposal contains language allowing continuation without additional funding but no explicit dollars.

Barnard asked the committee to treat the $5.5 million request as a one‑time fix tied to calendar‑year timing and the pending AHEAD start. "Ideally we hope AHEAD comes in 2027 to support primary care. These are 1‑time funding asks," she said, while acknowledging the state may face related requests for the rest of the calendar year if AHEAD’s timeline changes.

Ending: Barnard and allied groups asked the committee to preserve the governor’s $10.8 million blueprint/SASH item and add the separate $5.5 million backfill. She offered to provide detailed financial worksheets to committee staff and to meet individually with members to walk through the granular numbers if lawmakers desired more specificity.