Appropriations hears DEVA budget-adjustment request driven by Medicaid caseload, system changes

Montpelier — The Vermont House Appropriations Committee on Jan. 16 heard testimony from Department of Vermont Health Access (DEVA) Commissioner Deshawn Rose and DEVA financial director Stephanie Barrett on a budget adjustment that would address caseload and utilization pressures, administrative catch-ups, contract and information‑system modifications, and an expansion of a hospital global-payment pilot.

DEVA officials told the committee the department’s total budget is about $1.25 billion, with an administrative budget just under $180 million and a program budget of roughly $1.07 billion that largely pays providers. "Our administrative budget was very tight, a little bit underwater closing last year," Commissioner Deshawn Rose said, summarizing why DEVA seeks several midyear adjustments.

Why it matters: The request is driven primarily by higher-than-expected Medicaid claims and the lingering effects of the national public-health emergency redetermination unwind. DEVA reported a caseload and utilization package totaling $83,470,000, of which $35,470,000 is general fund. Much of the program spending flows through the state’s Global Commitment to Health waiver and federal match rules.

Key items presented

- Caseload and utilization: DEVA said unexpected increases in per‑member, per‑month costs after the end of pandemic-era continuous coverage were the largest single driver. Officials described differences in utilization between members who remained on Medicaid and those who were removed during the redetermination process.

- Net request totals: DEVA identified $83,470,000 in program pressures (including the $35,470,000 general‑fund portion). A one-time rebate timing offset tied to a health‑care cybersecurity incident reduced part of the shortfall.

- ACO reconciliation: DEVA reported a calendar‑year 2023 reconciliation liability of about $5,100,000 attributable largely to misalignment of member attribution by age categories during the redetermination unwind. Officials said the magnitude is considerably smaller than last year’s reconciliation and should normalize in future reconciliations.

- Administrative changes and contracts: DEVA described a set of admin-line adjustments. The department seeks temporary staffing to clear a backlog of manual redeterminations for aged/blind/disabled Medicaid populations and asked to move a $547,000 contract payment to Vermont Legal Aid from the program budget into the administrative line (a gross neutral technical reclassification). DEVA also listed roughly $884,000 in DEVA‑held contract adjustments (about $524,000 GF) and MMIS (Medicaid Management Information System) modifications including a Justice‑reentry MMIS change on a 50/50 match.

- Federal fund authority correction: DEVA said it is reducing an over‑appropriated federal fund line by about $8,000,000 to align spending authority with likely drawable federal dollars.

- Pharmacy and PBM work: The department requested funding for technical assistance to begin a pharmacy benefit manager (PBM) reprocurement. DEVA described ongoing monitoring of pharmacy claims and rebates and said the work will likely carry into the next fiscal year.

- Provider payments and program moves: DEVA will implement a 3.5% increase to federally qualified health center (FQHC) encounter payments beginning in January and noted a modest annual hospice floor increase. Two programs (the Blueprint spokes program and the Pregnancy Intention Initiative) were moved from the program budget into the Global Commitment investment bucket to align waiver accounting; DEVA said this is an accounting change, not a net dollar change.

- Vermont cost‑sharing reduction program: DEVA identified a state general‑fund reduction tied to changes in how silver plans are priced in the individual market; the change produces a half‑year fiscal effect because plan years are calendar years.

- Global payment pilot for hospitals: DEVA described a pilot that allows hospitals to opt into a global prospective payment for previously unattributed lives. Five hospitals (UVM Health Network members including Central Vermont and Rutland, plus Porter and regional participants) joined the pilot; DEVA requested an additional $4,000,000 to cover the "tail" of claims that arrive after the start of prospective payments and to allow additional hospitals to opt in. Commissioner Rose described the tail payment as a one‑time fiscal gap tied to a payment model switch.

Questions and follow-up

Committee members asked about DEVA’s forecasting process and monthly dashboards (formerly the "52 points" report, now a monthly program dashboard), dental preventive‑care patterns, and whether lawmakers could use a Budget Adjustment Act (BAA) vehicle for emergency provider relief. Commissioner Rose said DEVA currently "doesn't have funding right now within our budget" for ad hoc provider relief but indicated the BAA could be the right legislative path if members identify a systematic issue requiring midyear funding. DEVA committed to providing the monthly spending dashboard to members.

No formal votes were taken at the session; committee chairs and vice chairs were asked to return comments on budget adjustments within a week as the committee prepares its BAA recommendations.