House orders third reading of bill to study Medicaid rates for home- and community-based providers

Montpelier — The Vermont House of Representatives on Feb. 18 advanced H.13, an act directing the Agency of Human Services to determine “reasonable and adequate” Medicaid reimbursement rates for home- and community-based service providers, designated agencies, and specialized service agencies, and ordered the bill for third reading after adopting committee-recommended amendments.

The bill directs the secretary of human services to develop a rate-setting methodology that accounts for state and federal mandates, cost of goods and services, inflation, labor-market pressures and geographic differences. It also requires a schedule for reviewing rates at least every five years, a process for annual inflationary adjustments, and a mechanism for emergency financial relief for providers at imminent risk of closure.

Why it matters: Supporters said the study is intended to give state budget writers and policymakers data needed to address underfunding that contributors say has caused provider closures, workforce shortages and service gaps for older Vermonters and people with disabilities.

Representative Noyes, speaking for the House Human Services Committee, told members the bill requires the secretary to “determine reasonable and adequate rates” and outlined the types of providers covered, including home health agencies, residential care, enhanced residential care and adult day providers. The committee cited prior rate studies indicating large funding shortfalls for some services and numerous facility closures since 2020.

Representative Iacovone, speaking for the House Appropriations Committee, said Appropriations supports the bill because it will supply the “critical information needed to move forward” and highlighted language in the calendar directing the agency to report costs for reasonable and adequate rates. The Appropriations Committee reported a committee vote of 10-0-1 in favor.

The bill’s floor explanation cited recent trends: a 2023 rate study that found assistive community care services underfunded by 79 percent, a net loss of 321 residential care beds since 2020, and several adult day providers and facilities that closed because reimbursement rates were unsustainable. Sponsors brought forward an appropriation history noting $24,500,000 was appropriated to skilled nursing to cover increased utilization and an additional $21 million for emergency financial relief in the budget adjustment.

The House adopted the human services committee amendment by voice vote, then ordered third reading by voice vote. Committee testimony listed dozens of stakeholders who provided input to the committee, including provider associations, designated and specialized agencies, the Department of Disabilities, Aging and Independent Living, Medicaid and Agency of Human Services staff, Vermont Legal Aid, Cathedral Square, and the Joint Fiscal Office.

The bill requires the agency’s report back to the legislature on Jan. 15 on rates and the agency’s progress establishing a schedule for rate reviews. H.13 states it takes effect on passage.

Clarifying details recorded in the chamber included the following: the bill does not itself increase provider rates; it mandates a study and methods for setting rates and a process for emergency financial relief for providers “in imminent risk of closure.” The Appropriations Committee noted language of particular interest is on page 89, section 2, letter E of the calendar (as cited during floor remarks).