House Human Services flags instability in long-term care spending, loss of residential beds and request for provider-stabilization clarity

Rep. Teresa Wood, chair of the House Human Services Committee, told appropriators that the committee had deep concerns about long-term care and Choices for Care spending in the Budget Adjustment Act, even though the committee made no specific changes in the BAA submission.

The nut graf: The committee said more than $50 million in the BAA is directed to nursing facilities and extraordinary financial relief for high-cost residential care while lower-cost residential care homes have closed in recent years. Committee members warned the state's focus on high-end institutional costs risks eroding home- and community-based capacity that keeps Vermonters out of nursing facilities.

Wood summarized multiple causes for the spending changes: caseload shifts, underbudgeted facility bed days, a post-budget collective-bargaining agreement for direct-care staff, and extraordinary financial relief already paid or in the pipeline. She said the committee was not recommending line-item changes in the BAA now but intends to revisit the issue in the FY26 process.

The committee cited a net loss of 23 residential care programs since 2020 and estimated that represented a net reduction of 321 beds. Wood said that underpayment through Medicaid rates contributed to that contraction and that the BAA appears to be addressing the highest-cost part of the system (nursing facilities) rather than the full continuum, which includes home- and community-based services, adult day services and residential care homes.

Wood relayed a department figure that only about 59% of authorized home- and community-based services were actually being delivered, a shortfall the committee linked to low Medicaid payment rates and workforce shortages. She also described a recent Vermont Supreme Court remand to the Human Services Board in a case that questioned whether a provider's good-faith inability to recruit employees justified non-delivery of authorized services; the Supreme Court directed the board to reexamine the matter and stated that failure to pay an appropriate wage alone is insufficient to excuse non-provision of services, according to Wood.

On wages, Wood said a signed agreement sets a baseline starting wage of $14.75 for direct-care positions under a recent contract; she said that wage will not be sufficient to recruit workers for many direct-care roles and suggested a $20-per-hour minimum would be more appropriate to maintain services. The committee also described an enhanced, out-of-state contract for a unit in Bennington that pays more than $300 per day for some specialized placements.

Members raised concerns about transparency and equity in provider-stabilization funding. The committee noted post-submission movement of an additional $6 million to Department of Vermont Health Access (DVHA), bringing a request discussed in testimony to $10 million for emergency provider stabilization. Wood said the transfer appeared intended to expand the universe of eligible providers but that precise eligibility and allocation criteria had not been clarified to the committee at the time of the hearing. She urged the Legislature to develop more transparent, consistent rules for when and how provider relief is granted.

Ending: The committee signaled it will press the issue in the FY26 budget and Medicaid rate-setting process, including formal rate reviews and legislation to address lower-paid home- and community-based services, to stabilize capacity across the long-term care continuum.