Federal deal preserves addiction treatment funding

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A new deal with the federal government means Vermont won't lose millions of dollars in funding for inpatient substance abuse treatment.

Officials on Thursday announced that the Centers for Medicare and Medicaid Services has decided to allow the state to continue receiving federal Medicaid money for addiction services at several residential treatment facilities.

The funding had been scheduled to "sunset" soon. And that would have cut off a critical source of financial support as Vermont struggles with widespread opioid addiction issues.

"This is a big advancement for the state," said Al Gobeille, secretary of Human Services.

At issue are federal regulations governing how Medicaid money is spent.

There are long-standing rules against sending federal Medicaid funding to large, stand-alone residential treatment facilities for mental health and substance abuse treatment. These are classified under federal law as "institutions for mental disease," and they must have more than 16 beds to fit into this category.

Vermont has been able to continue receiving Medicaid funding for such facilities through waiver agreements with the federal government.

But in 2016, federal officials decided those arrangements should end. The phase-out is scheduled to happen between 2021 and 2025.

Because of that policy shift, the state stands to lose tens of millions of dollars in federal Medicaid money for mental health treatment. Thursday's announcement doesn't change that.

But there is positive news on the addiction-treatment front: Federal officials have granted a waiver amendment allowing Vermont to continue receiving Medicaid funding for inpatient substance use disorder services.

In a letter to the state, a Centers for Medicare and Medicaid Services official wrote that granting Vermont an amended waiver "is expected to improve health outcomes for Medicaid beneficiaries by increasing access to high quality opioid use disorder/substance use disorder care."

In a statement issued with Thursday's waiver announcement, Gov. Phil Scott applauded "the hard work of our Agency of Human Services and our federal partners at CMS in providing this important approval to ensure all Vermonters have access to the care they need when they are seeking treatment for addiction."

Gobeille said the state worked on the waiver issue for about six months.

The stakes were high: Even though the federal funding for addiction treatment technically was scheduled to begin phasing out in 2021, Gobeille said the state was "under pressure to change" more quickly because federal officials were unhappy with the state's current mechanism for drawing down that funding.

"This was going to become a financial issue very quickly — this calendar year," Gobeille said. "So it's a very timely waiver."

Gobeille said there was currently about $4.5 million in federal funding at stake for facilities like the Brattleboro Retreat; Serenity House in Wallingford; and Valley Vista, which has locations in Bradford and Vergennes.

The new waiver agreement, which runs through 2021 with opportunities for renewal, also is good news for "anyone else who would want to open up a treatment facility," Gobeille said.

The "true impact" of having a reliable federal funding source is "being able to build an inpatient treatment system that's based on the needs of people, and not the way we pay," he added.

In a statement issued Thursday, Valley Vista Treatment Director Amanda Hudak said administrators were "very pleased" with the agreement between the state and CMS, especially given "the ongoing (opioid) epidemic plaguing our nation and, in particular, Vermont."

"Without Medicaid funding, treatment facilities like Valley Vista would be hamstrung in providing the treatment services so necessary for those seeking a life free from addiction - a life of enduring recovery," Hudak said. "With the amended waiver, and recognizing that 89 percent of people who need treatment do not receive it today, Valley Vista will be able to help and continue in its role, in collaboration with public and private sector agencies, in helping individuals, families and communities heal from the addiction epidemic."

At the Brattleboro Retreat, administrators said they are still assessing the effect of Thursday's waiver announcement due to the fact that the facility offers more than substance-abuse treatment.

"We're not sure if the Retreat will be impacted by this development, but we are encouraged that the administration is working to ensure ongoing access for individuals struggling with addictive disorders," said Peter Albert, senior vice president of government relations.

"We need to keep in mind that most of the people we treat suffer from both substance dependence and mental health issues that need to be addressed concurrently," Albert added. "This is one of the Retreat's areas of expertise, so we hope that any solution includes the ability to treat the whole person, which is not allowed under the current limits imposed by (federal) regulations."

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