Agency of Human Services seeks $83.5M gross Medicaid increase, $15M in provider relief requests expected

At a Jan. 21 Senate Appropriations Committee session, Agency of Human Services officials outlined the agency’s budget picture and requested several budget adjustments to cover higher Medicaid utilization, ongoing provider instability and one‑time stabilization needs. "The agency of human services budget, as appropriated, is $5,400,000,000 across all funds. That is $1,300,000,000 in general funds," Secretary Jenny Samuelson told the committee.

Key points

- Requested Medicaid adjustment: Agency fiscal staff described a consensus projection that requires an $83,500,000 gross increase for Medicaid in the current fiscal year; staff said that increase would require about $35,500,000 in state general fund to match the federal share. Officials said part of the gross increase is offset by about $15,000,000 gross in pharmacy rebate timing.

- ACO settlement and payment model changes: Officials said an annual ACO (accountable care organization) settlement and a re‑attribution of enrollees (with more adults than expected) added to spending pressure; staff described a $5,200,000 gross settlement adjustment tied to those eligibility and attribution changes. Committee members were told the ACO is winding down during calendar 2025 but that the state will continue prospective per‑member payments while it transitions administrative responsibility for those payments.

- Provider stability and extraordinary financial relief (EFR): Agency witnesses said requests for extraordinary financial relief and other stabilization support continue to arrive. Officials said about $15,000,000 in EFRs had been paid or requested to date and that additional onetime provider stabilization funding is being requested for organizations such as residential substance‑use treatment programs, federally qualified health centers, mental‑health providers and others outside skilled nursing facilities and PNMIs.

- Nursing homes and skilled nursing: The agency described ongoing strain in nursing homes and private nonmedical institutions (PNMIs) following the pandemic, including workforce and temporary reliance on travel nurses. Staff said the adjustments and earlier rate changes are intended to reduce future EFR requests over time but noted continued pressure in the sector.

- Global budgets and hospital transformation: Officials said Vermont has moved toward prospective monthly payments to hospitals and is working to expand global budget arrangements. The agency said five hospitals currently operate under near‑global budgets and the requested funding would support expanding that model to six additional hospitals.

Why it matters: Medicaid and human‑services spending make up a large share of the state budget; requests for additional general‑fund match dollars matter for the overall state fiscal picture and for decisions about provider supports.

Follow‑up and next steps

Agency staff said departments that operate Medicaid‑funded programs (including the Department for Vermont Health Access and the Department for Children and Families) will present more granular detail in subsequent committee appearances. Committee members asked for lists of pending EFR requests and more detail on how much of the Medicaid increase reflects higher utilization versus changes in service mix; staff agreed to provide additional breakdowns.

Comments and figures quoted at the meeting were supplied by Agency of Human Services presenters and joint fiscal staff.