Lawmakers hear H13 to require annual Medicaid rate-setting and a statewide HCBS rate study

A legislative committee held a hearing on H13, a bill that would require the Secretary of Human Services to determine payment rates for home- and community-based service providers and for designated and specialized service agencies and to adopt rules governing the rate methodology.

The bill would add a definition of “home and community based services” to Title 33 and direct the secretary to determine rates that are “reasonable and adequate to achieve the required outcomes,” adjust rates to reflect the reasonable cost of governmental mandates and an annual cost-adjustment factor for inflation and labor-market dynamics, and adopt rules with a predictable timeline for redetermining base rates. H13 also would direct the Department of Vermont Health Access (DVHA), in collaboration with other departments, to conduct a rate study and report its findings to the legislature.

Why it matters: Medicaid covers a large share of Vermonters’ long-term and specialty services, and committee members and administration witnesses said clearer, regularly updated methodologies would give the legislature and providers data-driven foundations for appropriation decisions and for identifying gaps in access and provider sustainability.

Legislative counsel Jennifer “Jen” Trefavy, Office of Legislative Counsel, opened the hearing by walking the committee through the bill’s text. “This is an act relating to Medicaid payment rates for home and community based service providers and designated specialized service agencies,” Trefavy said, summarizing the bill’s purpose and the statutory changes it would make to the chapter on rate setting.

Monica Ogilby, Executive Leadership Team member at the Agency of Human Services and the State Medicaid Director, said the administration shares the legislature’s concern for provider sustainability but urged a holistic approach. “We very much share the same mission to be supporting our Medicaid providers, especially those that are serving some of our specialty and most vulnerable populations in Vermont,” Ogilby said, and she described ongoing agency work on quality, compliance and federal reporting that officials will use alongside any rate work.

Alicia Cooper, Director of Managed Care Operations at the Department of Vermont Health Access, described DVHA’s internal teams that handle provider reimbursement and rate methodology: “Within the Department of Vermont Health Access, we have 3 teams that have focused on provider reimbursement,” Cooper said, noting a traditional reimbursement unit, a division of rate setting for nursing homes and PNMIs, and a payment reform team that explores alternatives to fee-for-service.

Committee members pressed administration witnesses on practical details. Questions and committee discussion covered: whether the new definition in section 1 was drawn from existing language or newly crafted; how the new section (section 2) interacts with existing law for designated and specialized service agencies (DAs and SSAs) and whether prior statutory language was actually implemented; whether a rate study should precede rulemaking or vice versa; what the study’s timeline and reporting deadline would be (a reporting date appeared in the draft but was not clear in the hearing transcript); and the level of federal risk or change coming through potential Medicaid reconciliation measures.

Witnesses and members recalled prior work and partial rate studies. Committee members noted that an earlier review found some residential care homes were reimbursed at roughly 79% of the cost to provide services; that review led to partial appropriations in a later budget, and officials said gaps remain. Administration officials said DVHA and other departments are already implementing federal HCBS assurance measures and working on quality and client-experience data that will inform future rate reviews.

Officials emphasized constraints and trade-offs. Ogilby and other AHS witnesses warned that while they support systematic rate reviews, appropriations remain the legislature’s tool and the state must balance funding priorities across Medicaid’s many programs. Ogilby also noted federal uncertainty: potential changes being discussed nationally include reductions in the federal matching rate (FMAP), caps on state spending, and other policy options that could affect Vermont’s Medicaid budget.

Next steps: Committee members were told the committee will take public testimony and that the committee expects to enter a markup process in weeks, at which point legislative counsel will prepare amendment language. AHS officials agreed to return with more written information on recent and ongoing rate reviews, and DVHA said it can provide a list of recent studies and the programs to which they applied.

No formal votes were taken during the hearing; the session was a bill walkthrough and question-and-answer session with administration witnesses and legislative counsel.

Ending: The committee will hear testimony from providers and other stakeholders before markup. AHS officials invited committee members to share suggested language before the committee’s markup stage so the agency can use those suggestions in the rulemaking and study work.