This story, by Report for America corps member Carly Berlin, was produced through a partnership between VTDigger and Vermont Public.

The federal government has given Vermont the green light to use funds from the low-income health care program Medicaid to pay for housing programs for people experiencing homelessness who have high medical needs. 

The federal signoff could give the state new access to federal funds that officials hope will help stabilize people trying to manage severe medical vulnerabilities while unhoused.

But that approval doesn’t necessarily guarantee that the money will start flowing soon. Both state and federal officials would need to approve funding for the new initiatives. 

“Our goal is to make sure that people are getting care in the right place, at the right time, at the right level,” said Monica Ogelby, Vermont’s Medicaid director. “You might not need to go to the emergency department on a cold night if you have a place to live.”

The approval, from the federal Centers for Medicare & Medicaid Services, allows Vermont’s Agency of Human Services to use Medicaid funds to cover six months of rent for certain Vermonters experiencing homelessness, as well as for medical respite services, which can provide housing-insecure people a place to recover from an illness or injury.

The rental assistance would be part of a small “permanent supportive housing” program pilot currently under development by the agency, which is aimed at helping people who have “lifelong, chronic disabilities or illnesses” that make it difficult to maintain housing, Ogelby said. That pilot program, which will be run by the Groundworks Collaborative in Brattleboro, will use already-approved Medicaid dollars to cover services. Now the agency will be able to use Medicaid funds to go toward rent, too, if funding is approved. 

Vermont already has two pilot medical respite programs underway, Ogelby said, run by the Northwestern Medical Center in St. Albans and Lamoille Community House. Another such program in Burlington was quietly shut down in July of 2023. Both of the current programs are funded by time-limited grants. The newly-approved Medicaid authority could allow the state to eventually sustain those pilots or fund “different, new opportunities,” Ogelby said. 

The federal government also gave Vermont permission to use up to $10.9 million to help build these programs, including hiring staff.

These services would not simply be available to any Vermonter on Medicaid, Ogelby said. They would be aimed at people with significant mental health disorders, or who have a chronic, lifelong condition like an intellectual or developmental disability. “We’re talking about people that might need help with, you know, eating, bathing, dressing themselves,” she said.

Medicaid funding uses a federal/state match system, meaning that every dollar the state spends on housing or shelter programs could leverage more federal funds, Ogelby said.

“If we’re putting in several million dollars into housing right now, imagine if we were using that for something that we had Medicaid authority to do,” Ogelby said. “We could actually make that money go a lot further.” 

The state would not be able to use this funding source to pay for existing programs, such as the motel voucher program, Ogelby noted.

Before Vermont can use the new Medicaid funding mechanism, the state would need to allocate its share of funds, which Ogelby does not expect to happen until one year from now.

“It won’t be addressed in the governor’s budget address in the next few weeks,” Ogelby said. While the Legislature could choose to act this year, she added, given the recent timing of the funding notice, “this would be something that wouldn’t even be able to be contemplated until next legislative session at the earliest.”

On the federal side, Ogelby is concerned that recent transitions of power in Washington, D.C. could imperil Medicaid funding. 

“We just don’t know what’s going to gain momentum and traction, and so we’re watching and waiting,” she said.