VERMONT GLOBAL COMMITMENT TO HEALTH
Through an innovative agreement with the federal government, Vermont is beginning a five-year demonstration to test the impact of a federal funding cap on Medicaid spending coupled with state flexibility to manage Medicaid health services. Vermont believes that the experiment will result in greater controls on escalating Medicaid costs while allowing the state to provide wider access to health care to uninsured and underinsured Vermonters.
The program calls for the Vermont Agency of Human Services to contract with the Office of Vermont Health Access (OVHA), the state’s existing Medicaid demonstration project, to serve as a publicly sponsored managed care organization (MCO). OVHA will receive monthly capitation payments to cover the health needs of all Medicaid beneficiaries.
The Vermont initiative, the first of its kind in the nation, is being closely watched by other states also concerned about escalating Medicaid costs. (On October 19, the federal government approved a Florida Medicaid plan under which the state has flexibility to set a ceiling on spending for each Medicaid recipient based on a person’s medical condition and use of health care. The Florida plan also calls for a managed care structure, but with a private-sector approach compared to Vermont’s public MCO.)
The federal Centers on Medicare and Medicaid Services approved Vermont’s Global Commitment to Health program in late September, authorizing up to a maximum of $4.7 billion to the state for federal fiscal years 2006-2010. Vermont Governor Jim Douglas and the Legislature estimate spending will reach only $4.2 billion during that period, partly because the cap amount assumes a 9% administrative component, higher than normal state administrative costs of 3% to 5%. The state hopes to use these excess payments (as well as any portion of the premium amount not spent after paying for all covered services) to refinance state funding for uninsured and underinsured persons.
If costs exceed the $4.7 billion ceiling, however, the state will be forced to absorb all the additional expense with state funds. (Under Medicaid’s matching formula, Vermont receives 60 percent from the federal government.) Medicaid provides coverage for one out of every four Vermonters, and spending on the program is nearly $1 billion per year. The state’s analysts estimate that without program changes, Vermont’s Medicaid deficit for FY 2007 would reach about $60 million, while they calculate that the new program will result in from $135 million to $165 million in additional federal funds.
The current Vermont Medicaid demonstration program, called “Vermont Health Access Program (VHAP),” covers mandatory, optional, and expansion populations. 1 Under VHAP, Vermont covers children up to 300% of the federal poverty level (FPL), parents of those children up to 185% of FPL, and childless adults up to 150%. Although no changes in eligibility or benefits will be made for the mandatory Medicaid populations, the state will be able to change the benefit package (with legislative approval) for optional and expansion populations, so long as the total change in spending does not exceed 5%.
The Office of Vermont Health Access will enter into interagency agreements with the various state agencies (such as the Department of Disabilities, Aging, and Independent Living) that currently administer Medicaid programs being subsumed into the new demonstration program, includes the state‘s pharmacy program for low-income persons. Expenditures from these agencies will be reported in the aggregate under the demonstration.
Vermont also received federal approval in June 2005 for a long-term care plan, Choices for Care, that provides an entitlement to either nursing home care or home and community-based services (HCBS) for Medicaid-eligible persons, consistent with their needs and choices. This program will operate, in effect, through a “global” budget because Medicaid funds will not allocated in separate “silos” for nursing homes or HCBS but can be spent on whichever service is most appropriate for persons found to be eligible for long-term care.
The state’s budget bill (Act 71) enacted in June required legislative approval of the Global Commitment to Health demonstration before implementation. With the Legislature out of session, the Health Access Oversight Committee and Joint Fiscal Committee had authority to grant contingent approval of the program , which they did on September 30. For full approval on or before November 17, the Joint Fiscal Committee stipulated that the final premium amounts to be certified by an independent actuary must be determined sufficient to support the program.
Although the plan received federal approval for an October 1, 2005 implementation date, the actual start of the program may be delayed into 2006 because of details still to be worked out and the Legislature‘s intent to be kept informed of developments Several legislators who both voted for and against contingent approval said the waiver proposal left “many unanswered questions and unknown details.” They said they also wanted to know how the plan fit into health care reform, an issue which was addressed by the Legislature earlier in 1005 in H.524, “Universal Access to Health Care,” that the Governor vetoed in June.
1 Mandatory populations are groups that must be covered under federal law. A state can also choose to cover people who have higher incomes than the mandatory level (optional populations)., and can cover other groups, such as non-disabled, non-elderly adults without children under age 18 (expansion populations) if the federal government grants the state a waiver.
 1115 Waivers Page
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