Legislature Reconvenes

August 2020

From the Executive Director

Last week marked the beginning of the end of the 2020 legislative session. The Governor released what he’s calling a state fiscal year (SFY) 2021 budget “restatement.” The restatement is a revised proposal for a SFY2021 budget. The document highlights the changes between the original Administration budget proposal released in January and the new proposal that reflects the COVID-19 crisis. In the coming weeks, legislators will work towards the passage of a final budget so they can finally adjourn until 2021, now just around the corner. Since the start of the state fiscal year on July 1, Vermont has been operating on a short-term budget, buying time for state budget writers to make new revenue projections.

Vermont is grappling with a substantial revenue shortfall largely because the pandemic has reduced consumption and income taxes. The August revenue forecast projects $182.4 million less in available General Fund revenue for SFY 2021 than the January projection on which the original Administration budget proposal was built.

Despite the dismal revenue projections, the restatement does not call for cuts to Medicaid rates which is very good news for the provider community, including home health and hospice agencies. We are grateful to the Administration for its support and are hopeful the Legislature will agree with this approach.

The focus of our advocacy efforts over the coming weeks will be to ensure that low-income older and disabled Vermonters who would otherwise need nursing home care have the supports they need to remain at home. It’s hard to name an initiative that is more relevant to the state’s efforts to protect Vermonters from COVID-19 than home-based Choices for Care.

Vermont Update

Budget and Revenue Provisions Impacting Home Health and Hospice Agencies:

The budget does not include a Choices for Care rate increase.
The restatement projects a “caseload” and “cost per case” increase for home and community-based Choices for Care Services, neither of which is a rate increase. DAIL projects that more people will need home-based care (caseload) or those individuals on the program will need more hours of service (cost per case).
The budget restatement recommends that the Legislature authorize the Agency of Human Services to seek a one-year “no-change” extension to the Vermont’s federal Global Commitment, which governs state Medicaid programs including Choices for Care. The entire agreement was at the beginning of the renegotiation process when COVID-19 hit. Unfortunately, the long-overdue reconsideration of eligibility for the Moderate Needs program was slated for the renegotiation and could be delayed by this approach. The VNAs of Vermont will work with Agency officials to see if the eligibility criteria could be revised under the existing amendment process. With a substantial workforce crisis, it is critical to ensure the program is targeted at the people who need it the most.
Page 11 of the August 2020 Economic Review and Revenue Forecast Update projects a substantial increase in the “provider tax” paid by home health and hospice agencies. The amount of tax paid by home health and hospice agencies has increased by more than $1.1 million—or 23 percent—since SFY2018 (note, the SFY2017 tax was artificially high for reasons unrelated to the tax rate or formula). Because the tax is levied on nearly all patient revenue, including Medicare revenue, the cost of the tax is substantially offsetting Medicaid increases to home health and hospice agencies over the same period.
The budget postpones but doesn’t eliminate an Administration proposal to support home visiting services for maternal child health under the Medicaid program. Under the restatement, the program is postponed until the last quarter of SFY2021.

Federal Update

The 2021 Medicare payment rules for home health (still in draft form) and hospice (final) contain are disappointing in several respects, although not surprising Unfortunately, CMS failed to eliminate the substantial payment penalty home health agencies incur when they provide some visits through telehealth, even as they extended permission to provide remote care beyond the end of the current public health emergency. In addition, in accordance with the Bipartisan Budget Act of 2018, CMS has cut the home health rural add-on rate to 1 percent, down from 3 percent. Absent Congressional action, the rural add-on will be fully phased out

in 2022.