Department of Mental Health presents BAA adjustments; PNMI rate setting and utilization drive higher costs

Shannon Thompson, finance director for the Vermont Department of Mental Health, and Emily Hawes, commissioner, briefed committee members on a series of budget adjustment (BAA) items that include Agency of Digital Services service agreements, transfers of programs back to the Department for Children and Families (DCF), additional federal spending authority, and increased costs for private nonmedical institutions (PNMIs) that provide youth residential care.

Thompson described several line items in the BAA packet: an initial redistribution of Agency of Digital Services funding and two service agreement adjustments ($62,202 and $129,772 respectively), a $739,000 transfer of parent‑child center funding back to DCF, and a request to add roughly $1,100,000 of federal spending authority so the agency can record and spend multiple federal grants without repeated excess‑receipts requests. “So we need federal authority in order to, just to spend that money,” Thompson told the committee, explaining the statewide accounting constraints that require appropriation authority before grant expenses can be recorded.

The largest identified pressure came from PNMI services. DMH staff said recent changes in the PNMI rate‑setting process now include an inflationary adjustment that can raise annual rates; combined with an increase in acuity and length of stay for some youth — including more out‑of‑state placements — that has raised costs. Staff said the BAA shows a net increase request related to PNMI utilization and the rate changes of about $2,000,000, and later clarified that approximately $1,900,000 of the request is attributable to PNMI adjustments. Committee members asked for additional data, including counts and the split between in‑state and out‑of‑state placements; DMH committed to providing a report that breaks placements out by county.

DMH defined a PNMI as a residential youth program that delivers wraparound services and treatment at a lower level of care than a psychiatric residential treatment facility (PRTF). Officials said adolescents are the largest PNMI user group and that Vermont operates a handful of in‑state facilities (examples cited included an in‑state girls’ facility in Bennington and two NFI youth residentials in Chittenden County). A committee member noted the BAA documentation references four in‑state group homes totaling 13 beds; staff said they would provide up‑to‑date utilization counts.

Staff and committee members also discussed administrative transfers of programs. DMH said certain Integrating Family Services (IFS) waiver dollars and related supports (provided through programs such as NCSS) are being administratively transferred back to DCF because DCF is the lead operator for those services. DMH emphasized the transfers are administrative and that the federal funding remains available to support the programs.

Why it matters: PNMI spending affects both the department’s budget and the state’s ability to provide appropriate placements for youth. The new rate‑setting approach and rising acuity have produced recurring upward pressure on costs; committee members requested more granular placement and utilization data to understand drivers and potential policy responses.

DMH staff said they will return with additional material, including a county‑level breakdown of in‑state and out‑of‑state PNMI placements and more precise utilization and cost figures.