Draft H.13 would require AHS to set and report Medicaid rates for home and community‑based services

Jen Carby, legislative counsel in the Office of Legislative Council, told legislators the Human Services Committee is circulating draft 3.1 of H.13, “an act relating to Medicaid payment rates for home and community‑based service providers and designated and specialized service agencies.”

Carby said the bill would require the Secretary of Human Services to determine payment rates for home and community‑based services (HCBS) that are “reasonable and adequate to achieve the required outcomes for the populations they serve,” and to report those rates and the amounts necessary to fund them to the Legislature annually as part of the agency budget presentation.

The bill expands the statutory definition of HCBS to include long‑term services and supports provided in home or community settings — rather than in nursing homes or other institutional settings — and lists services such as enhanced residential care, home health and hospice, adult day rehabilitation, assistive community care services, and services for people with mental health conditions, substance use disorders, developmental or intellectual disabilities, and brain injury. Carby said the draft incorporates those services into the state’s existing rate‑setting chapter, currently cited in statute as 33 V.S.A. §900.

Under the draft, the Secretary must establish a methodology for determining payment rates and the methodology must, among other things: provide a schedule of ongoing rate studies (including studying each type of service at least once every five years); set a predictable timeline for redetermination of base rates; include a process for annual inflationary adjustments; permit, to the extent CMS allows, consideration of provider enrollment patterns and client absences; and provide an extraordinary‑financial‑relief process for providers at imminent risk of closure similar to the process that exists for nursing homes.

Carby said the draft also directs the Secretary to consider in rate calculations the reasonable cost of any governmental mandate enacted by state or federal law and to take into account Vermont labor market rates and Vermont costs of operation. The Secretary may consider geographic differences in wages, benefits, housing and real‑estate costs among regions of the state.

The draft folds the existing statutory provision that addresses payment to designated and specialized service agencies (DAs and SSAs) into the broader HCBS rate‑setting framework rather than repeating the same language in two places. Carby said that under prior practice some parts of state government viewed the agency’s “sole responsibility” language as discretionary; the amendment would make the Secretary’s duty to determine rates an active requirement and then provide that the Legislature, through appropriations, decides whether to fund the amounts the Secretary reports.

Section 4 of the draft would require the Agency of Human Services to report to the House Human Services Committee, the Senate Health and Welfare Committee and the Appropriations Committee on the agency’s implementation plan for the methodology and a proposed schedule for rate studies, with a reporting milestone discussed in the draft for on or before Jan. 15, 2026.

Committee members asked several clarification questions. One member asked whether the phrase “required outcomes” is defined; Carby replied that some contractual requirements dictate outcomes and that the agency might be better situated to explain specifics. Another member asked where the statutory definition of “home and community‑based services” can be found; Carby said the committee had wrestled with that definition while drafting the bill and that hospital settings are treated as facilities or institutions rather than community settings.

A committee member observed that the bill as drafted creates a methodology and reporting requirement but does not itself appropriate money, noting, “this bill has…report facts, and it’s everything about creating a methodology that doesn’t require actual rate increases.” Carby and others confirmed the draft is intended to produce information for the Legislature to use in the appropriation process, not to automatically increase provider payments.

On process, the group discussed rulemaking language. Earlier versions had required rulemaking to set methodology; the current draft directs the Secretary to establish a methodology rather than adopt rules, reflecting agency testimony that rate methodologies are typically developed without formal rulemaking because rulemaking is a longer process.

At the end of the discussion members signaled no major objections to forwarding questions to the Human Services Committee and did not take a trial vote. One member summarized the procedural outcome as sending the bill forward with questions and no immediate action on funding.

What’s next: The Human Services Committee’s draft 3.1 text is available on the Human Services Committee website; the Agency of Human Services would report on methodology and schedule, and the Legislature would receive the agency’s rate determinations and funding estimates in the agency’s annual budget presentations.