State health agency outlines $7.4 million shortfall, staffing reassignments and program changes tied to HR1

The Department of Remote Health Access said it is managing about a $7,400,000 shortfall and proposed a mix of staffing reassignments, contract changes and targeted program adjustments to close the gap.

The presenter said the agency balances a dual identity as Medicaid managed care and Medicaid program administrator and described three outward priorities — member-centered service, a high-quality provider network and population‑health improvements — alongside systems modernization and workforce development. "We have not proposed new initiatives," the presenter said, noting the budget was shaped to address the shortfall.

Officials described several staffing and contract actions. HR1 implementation was cited as a major driver: the agency estimates 12 eligibility positions will be needed for increased redeterminations and new requirements. The budget request included about $510,000 in general fund support for those positions and an additional estimated $290,000 for increased notice and mail costs (of which roughly $72,000 is the state's share), officials said. Deputy Commissioner Adi Stromlo said a proposal to leverage community organizations as certified "assisters" is under review and could augment in‑person application support.

The presenter also discussed contract consolidations and cancellations. The Medicaid Data Warehouse and Analytics Solution (MDWAS) recently gained analytic capabilities that the department said make a separate HEDIS contract duplicative; the department recommended discontinuing the HEDIS contract and relying on MDWAS for quality measurement. Officials said a Vermont Legal Aid Medicare assistance contract has produced mixed returns on investment in recent years (reported ROIs cited by staff were ~60% in 2024, ~15% in 2025 and roughly 47% so far in 2026), and that some recovery work is also performed by an internal coordination unit.

On the IT and facilities side, the department noted MMIS (core claims processing) updates and ongoing Oracle and other licensing costs. Staff described MDWAS as a recently launched analytics platform used for federal reporting and internal dashboards. The agency plans to move into a new Pilgrim Park office in Waterbury; the lease is budgeted at $159,000 general fund with additional federal and other funding matches reflected elsewhere in the book.

Policy changes proposed to reduce baseline spending included discontinuing a temporary emergency-department per‑diem for extended mental‑health stays and eliminating modest dental incentive payments that officials said had not measurably increased access. The administration also proposed increases to prescription co‑pays (from $1/$3 to $4/$8 for preferred/non‑preferred drugs) and a reduction to a $4.75 per‑member‑per‑month base funding line that had previously been routed through an ACO; committee members pressed officials for detail on which providers and programs would feel the cuts.

Finally, the agency requested one‑time implementation funding tied to HR1 systems work (estimates were presented in the range of $5 million, with some offset expected from federal HR1 grants) and a $2 million provider stabilization fund to help providers through the policy and payment changes. The presenter said many estimates are preliminary and that staff will provide more detailed cost breakdowns and contract histories on follow up. The hearing moved on to a Green Mountain Care Board presentation about prescription drug pricing.

The committee paused the discussion to receive additional materials and asked the agency to return with more detailed data, implementation language proposals where necessary, and the costs and timelines for IT and contract transitions.