With Vermont’s long-term care capacity shrinking, state leaders have increasingly relied on a decades-old payment program described as an emergency backstop for nursing homes—funds that lawmakers say deserve more scrutiny. The Associated Press, reporting on state records obtained by VTDigger, said Vermont has distributed around $38 million in state and federal Medicaid dollars for what it calls “extraordinary financial relief” over the past five years to help nursing homes stay open.
The program has attracted attention in recent legislative sessions, when lawmakers asked for comprehensive reports and payment records from state leaders about how the bailout mechanism is working. Health officials defended the practice as necessary to protect bed capacity for elderly Vermonters, while critics and advocates pointed to the staffing costs that appear to drive the need for repeated emergency requests.
Vermont’s Department of Disabilities, Aging and Independent Living oversees the flow of extraordinary financial relief, which routes through multiple departments nested within the Agency of Human Services. The state’s Department of Vermont Health Access rate-setting division reviews requests submitted by facilities, while the extraordinary financial relief funds come from Medicaid dollars allocated through the Department of Disabilities, Aging and Independent Living, according to department officials. Helen Labun, executive director of the Vermont Health Care Association, said the state does not want extraordinary financial relief to become a routine option, calling it “meant to be an extraordinary measure.”
Officials said the arrangement has existed for more than 20 years but took on a recurring role only in the wake of the COVID-19 pandemic. The AP report said nursing homes that receive the extraordinary financial relief provide the highest intensity of care, serving people who would not have their needs met in assisted living or residential care homes, and facilities must serve Medicaid patients to qualify. Jill Bowen, the department commissioner, said the state would lose critical bedspace without extraordinary financial relief.
The report said Vermont has 33 nursing homes with about 2,847 beds as of July, a decline of nearly 900 beds over the last two decades. Bowen described the shrinking bed count as worrying given Vermont’s aging demographics, although she said the decline may partially reflect people seeking at-home care instead. Angela Smith-Dieng, director of the Adult Services Division, said extraordinary financial relief is “incredibly important as a tool to prevent nursing home closures.”
State officials attributed at least part of the funding pressure to changes in how Medicaid reimbursement rates are “rebased” to reflect prior years’ cost data, which can lag behind emerging expenses. The report said Vermont rebased reimbursement rates in 2025 and 2023, and in 2023 the state used cost data from 2020 that did not reflect the new pressures brought on by the pandemic. In July, Vermont again balanced reimbursement rates, this time using 2023 costs, and Bowen said she hopes the move will limit the need for extraordinary financial relief.
As part of extraordinary financial relief reviews, the AP report said the rate-setting division examines a company’s finances and whether facilities comply with state and federal requirements. Jaime Mooney, director of the rate setting division, said the division consults on possible care-related issues and makes a recommendation to the Department of Disabilities, Aging and Independent Living after reviewing financial information such as past-due invoices and cash on hand. Mooney said she could not recall the state denying a request because of the quality of care, and she said granted funds carry restrictions, including limits on how facilities can use them and prohibitions on paying penalties or exorbitant owner-administrator fees with the financial relief money.
Officials also said the state restricts extraordinary financial relief to address concerns about companies shifting resources across locations, according to Labun. She said nursing home owners need to demonstrate they do not have money from other sources. During the COVID-19 pandemic, she said, nursing homes’ savings ran dry and extraordinary financial relief was retrofitted to respond to the emergency.
The AP report said Vermont nursing homes use staffing arrangements that make costs harder to absorb, with contract staff and traveling nurses standing out. Labun said “Vermont’s an outlier state in terms of our use of travelers as part of a normal part of the workforce,” and she said while contract staffing rates have generally returned to pre-pandemic norms nationally, Vermont has not seen the same pattern. The report cited federal Centers for Medicare and Medicaid Services data indicating Vermont nursing homes depend on traveling staff more than any other state, and it said analysis by the Long Term Care Community Coalition found Vermont nursing homes had the highest contract staff employment rate among states in 2024, peaking at 31% in the first quarter compared with a national average of 8%.
Kaili Kuiper, Vermont Legal Aid’s long-term care ombudsman, said the staffing model creates a difficult cycle because temporary staffing agencies often require higher rates than permanent staffing. She said attrition among permanent staff—driven by factors such as workplace hazards or low pay—can lead facilities to increase contract staff use, and she said her office has seen issues tied to insufficient staffing, including response-time and hygiene problems. Kuiper also said contract staffing is an important short-term tool but called for a “stronger movement away from temporary staff” so that staffing strategies do not become the status quo.
Lawmakers and advocates pointed to workforce-building efforts that are smaller than the emergency funding. Sen. Richard Westman, R-Lamoille, said in a May interview that Vermont has allocated some funds to rebuild the nursing workforce, including $500,000 toward attracting and keeping licensed nursing assistants in the current fiscal year budget. Labun said the state also planned to draw down federal workforce development funds from the Civil Monetary Penalty Reinvestment Program, which had been held up between the administrations of President Joe Biden and President Donald Trump and during the federal shutdown. Westman said emergency support remains crucial for facilities that risk going out of business, arguing that staffing investments and reimbursement-rate changes could reduce the need for bailout money.
The report also said that in the last two years, about two-thirds of nursing homes requested extraordinary financial relief, according to Westman. Kuiper said she wants the state to prioritize strategies that curb contract staffing while still using temporary emergency staffing to avoid understaffing, but she argued that longer-term changes are necessary for the nursing care system to stabilize.
Under the program’s design, state officials said, extraordinary financial relief is meant as a limited intervention—one that can prevent closures while Vermont weighs how to strengthen staffing and reimbursement rules so emergency funding is not required as a recurring solution. The AP story said former VTDigger reporter Peter D’Auria contributed reporting, and it added that the story was originally published by VTDigger and distributed through a partnership with The Associated Press.