House Human Services reviews H.13 draft to set schedule and methodology for Medicaid home- and community-based rates

The Vermont House Human Services Committee on Thursday examined a revised strike-all for H.13 that would require a formal schedule and methodology for reviewing Medicaid reimbursement rates paid to providers of home- and community-based services.

The committee asked the Agency of Human Services to report back with a proposed schedule and implementation plan — not a completed statewide rate study — by next January so members can see which provider types will be reviewed and when. The move reflects concerns that a five-year review cadence could leave some services unexamined for too long unless an earlier timeline or emergency mechanism is specified.

“For those of you who are new, what I typically do when I bring you a new version of a bill that we have marked up is that I incorporate all of the changes that we looked at last time that you liked,” said Jen Carvey of the Office of Legislative Council, introducing draft 2.1 of the bill and the committee’s recent edits. The draft adds a requirement that rate studies be scheduled at least once every five years and that rulemaking specify methodology, inflation adjustments and use of Vermont labor-market and cost-of-operation data.

Monica, Medicaid director, told the committee the department already plans to stagger studies and has limited capacity. “Realistically, we have capacity currently right now to do about 2 or 3 rate studies per year, depending on the breadth of the service and the number of providers,” she said, and suggested the department would prioritize services that have been neglected or are showing acute stress.

Committee members pressed for clarity about what the committee should expect by January. Members said they did not want the statute to require completing full rate studies by then; rather, they want either a progress report, a proposed schedule that sequences studies over the five-year cycle, or draft regulations/methodology that would govern the work. The chair asked staff to ensure Section 4 of the bill reflects that expectation.

Members and agency staff discussed several policy details the draft must resolve: whether methodology should be adopted by rule or placed in statute, how to treat facility-based rate systems (such as nursing homes and psychiatric residential facilities) that already have separate rate-setting processes, and a mechanism to accelerate review or provide short-term financial relief if a provider or sector enters a crisis.

The committee and agency agreed to exclude services already subject to their own facility-based rate-setting from the statute’s new schedule; the draft will be adjusted to cover short- and long-term services and supports provided in home or community settings “that do not have a separate rate-setting process,” committee members said. That wording aims to avoid unintentionally pulling in nursing homes and other institutional rate systems.

Providers raised concerns about unintended consequences for services that are updated more frequently than every five years. Joel Olsen, executive director of the DNA (home health and hospice trade association) of Vermont, asked the committee not to disrupt processes that are updated annually: “I just wouldn't want it to wait 5 years of your time because it's being updated annually right now,” he said, referring to ongoing work that compares state rates to Medicare for home health and hospice.

Members also discussed adult day services as an example where attendance-driven billing and expected client absences can leave providers with unstable revenue; committee members asked staff to review federal Centers for Medicare & Medicaid Services (CMS) constraints, which can limit state rate designs.

On process, the agency suggested removing aspirational “goals” language and instead directing the secretary to adopt a methodology for setting payments; agency staff pointed to precedent in recent nursing facility rate work. The draft already includes explicit requirements for an annual inflationary adjustment process, use of Vermont labor-market data and a public schedule for conducting rate studies.

The committee gave staff direction rather than taking a vote. Members asked Jen Carvey to circulate a revised draft to Chair Black and agreed to reconvene on the bill’s language; the committee is considering a possible vote to move the bill out of committee late Tuesday.

What happens next: the Office of Legislative Council will circulate the next draft to the chair and committee. The Agency of Human Services will return to the committee with a proposed schedule and implementation plan for the rate-study cadence and methodology by January, and the committee will review any proposed language changes about rulemaking versus statutory methodology and mechanisms for extraordinary financial relief.