Department of Vermont Health Access presents steady administration budget, flags Medicaid cost pressures and requests follow-up analysis

The Department of Vermont Health Access (DVHA) told the House Appropriations Committee on Feb. 12 that its FY2026 administrative budget is largely steady while program lines show growing cost pressure driven by higher cost per Medicaid enrollee and new one-time and annual items.

“Over the past year, we've made very good progress. We've completed the post pandemic Medicaid renewal … with the 75% retention rate,” said Deshaun Gross, commissioner of the Department of Vermont Health Access. Agency officials gave the committee a line-by-line review of administrative and programmatic ups and downs and identified several items they want the committee to note for the coming fiscal year.

The central office (admin) budget covers DVHA’s 372 employees, overhead and many IT and contract costs; staff told the committee the admin total proposed mirrors the current enacted level (roughly $182.3 million) and that most changes are technical. Stephanie Barrett, DVHA chief financial officer, said the admin budget includes a $2.1 million Pay Act-related personnel increase across funding sources (about $871,000 in general fund) and associated fringe costs, and a set of federal funding maximizations moved between budget lines. Barrett also reported an $8 million correction removing over‑appropriated federal spending authority from the operating budget.

Agency staff described several program changes and cost drivers. DVHA presented a $46.1 million net increase in the Global Commitment line driven not by caseload growth but by higher cost per case following the Medicaid unwinding; the agency contrasted that figure to last year’s mid‑year budget adjustment, which reflected a $78 million change. Officials said overall caseload is declining toward pre‑pandemic levels, but per‑member costs rose enough to require the incremental funding in the FY26 proposal. Barrett described the $46.1 million as “an incremental change to the baseline” and noted it represents roughly 5% of the $900 million baseline for that line.

The agency also described specific program items: eight new case management positions tied to a Justice Reentry Initiative waiver (staff to begin early in FY26; program start targeted for January 2026), a new call center contract (same vendor, slightly higher cost beginning July 2025), an amendment to the Medicaid Management Information System (MMIS) with fiscal-agent costs, and an annualization of funds for a previously funded psychiatric residential treatment facility (PRTF) that will be fully reflected in FY26. The Justice Reentry Initiative waiver permits coverage beginning up to 90 days prior to release from corrections, agency staff said.

DVHA highlighted a set‑aside for emerging high‑cost drugs (an estimated $4.5 million), and separately estimated that recent Medicare coverage changes for some GLP‑1 drugs used in certain cardiac indications could carry about a $2 million annualized cost to Medicaid (the agency said GLP‑1 use for weight loss is not covered under Medicaid). Commissioner Gross and staff warned gene therapies are difficult to predict: a single eligible person could drive multi‑million‑dollar costs in a year.

Agency staff also described a one‑time general fund bridge of $10.8 million in Global Commitment to continue certain Medicare flows (to SASH and Blueprint entities) through 2026; Barrett said the general‑fund portion of that bridge is about $4.4 million and the mechanics of payout must still be worked out.

Committee members pressed agency staff for additional analyses. Several members asked DVHA to estimate the fiscal and operational impacts of expanding the Qualified Medicare Beneficiary (QMB) income limit from 145% to 150% of the federal poverty level to better align with Low Income Subsidy (LIS) lists from Social Security; DVHA said a prior estimate put first‑year general fund cost near $400,000 but agreed to update that analysis and return with details on affected population, system timing, and spending authority implications. Members also asked DVHA to reprice emergency medical services (EMS) reimbursements to model the impact of increasing certain ambulance treatment/no‑transport codes from a Basic Life Support (BLS) rate to an Advanced Life Support (ALS) rate; DVHA said it would return with numbers re‑priced to Medicare percentages and utilization data.

Other program notes included a full annualization of Medicare Savings Program expansions that take effect Jan. 2026 (changes to QMB and related buy‑in populations), indexing updates for FQHCs and hospice, and continued baseline funding for non‑emergency medical transportation (NEMT) pending an RFP next summer. DVHA said the transportation contract remains level funded for FY26 and any methodology changes (for example, per‑ride vs. per‑member‑per‑week) would be considered in the upcoming RFP process.

Committee members asked for additional benchmarking and line‑item detail on the drivers behind the higher cost per case (pharmacy, inpatient, outpatient, or intensity of services). DVHA said staff are tracking monthly claims and will continue to analyze cross‑payer changes and coding/intensity shifts as data mature.

On required reports, DVHA noted it has completed the doula coverage reimbursement methodology called for in Act 97 (reporting begins on page 54 of the agency book) and a required EMS reimbursement analysis from Act 157 (page 56). Committee members asked for the supporting spreadsheets and repricing work so they can consider budget language if they choose to act.

Follow‑up steps recorded in the hearing included committee requests that DVHA provide: (1) an updated fiscal estimate and affected‑person count for expanding QMB to 150% of FPL (including system timing and spending authority impacts); and (2) repriced EMS reimbursement scenarios (treatment/no‑transfer code repriced at ALS rates versus current BLS benchmarks), with supporting utilization data and projected budget impacts. DVHA agreed to supply both items for committee review.

The session closed with committee members asking DVHA to return with the requested numbers and additional reconciliation back to prior budget‑adjustment figures; no formal votes were taken during the department budget review.

The committee’s requests for updated estimates and the agency’s continuing monthly tracking of claims set a clear timetable for additional briefings before the next round of budget action.