Vermont Medicaid Overpaid Some Providers — and Wants the Money Back 

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• Jeb Wallace-Brodeur
• Katie Whitaker

A payment error by Vermont's Medicaid vendor has snowballed into a bureaucratic conflict that is putting the health care of some low-income patients in jeopardy.

Gainwell Technologies, which handles payments for most of Vermont's Medicaid claims, mistakenly overpaid about 180 nurse practitioners over the past several years a total that's in the hundreds of thousands of dollars. The state learned about the mistake this spring and says it needs the money back.

Providers have been told that their weekly Medicaid payments will be withheld until they work off their debts, which, in some cases, exceed $20,000. They work in various medical specialties, and include at least a dozen who work in psychiatry — a field without enough practitioners, meaning patients have trouble accessing care.

A number of the overpaid providers are employed at health care organizations that will cover the repayments. Others are in private practice and rely on Medicaid payments for the bulk of their income. They had no idea they were being overpaid and say they can't survive even a few weeks on shrunken incomes. The extra money they received — in some cases, years ago — has already been spent.

The Department of Vermont Health Access, which oversees Medicaid, began withholding the payments this month, but it has offered providers a chance to apply to have some of their debt forgiven. Those who do will continue receiving payments until the state reviews their application.

The department has not said how much it is willing to forgive, however, and providers fear that applying might prevent them from taking legal action. They argue that they should not have to pay back money they received through no fault of their own.

Several psychiatric nurse practitioners told Seven Days that they will no longer accept new Medicaid patients. At least three say they will be dropping Medicaid patients entirely.

That will hinder the state's ability to recoup the money, as well as make it even harder for this vulnerable population to find help. Medicaid is a state-run program that provides health insurance mainly to low-income people.

"I feel really bad for my patients," said Katie Whitaker, a psychiatric nurse practitioner who, starting in September, will no longer accept Medicaid from roughly 30 of her patients. "But if I go along with this, I'm going to go out of business."

Whitaker's decision devastated Jackie Scribner, a 59-year-old patient from Cabot who has been receiving ketamine treatments for severe depression over the past six months. "I don't think I would have survived without her," Scribner said.

Scribner, who cannot work because of a disability, said finding a mental health provider who accepts Medicaid and has availability can be exhausting. She was able to switch over to one of Whitaker's former interns, who is in the process of opening her own practice. But many of Whitaker's other patients are still looking.

"They're bummed and stressed out," Whitaker said.

Overpayments are a recurring problem in government programs such as unemployment and Social Security, in part because they rely so heavily on self-submitted information. Billions of dollars are mistakenly dished out each year.

Medicaid has safeguards intended to avoid such problems. Providers submit bills, or "claims," for services and are paid, or "reimbursed," each week based on a fee schedule. As long as they submit their paperwork correctly, they have no reason to worry about being overpaid — usually.

But a recent internal audit at Gainwell revealed a mistake on the back end of the process. When updating one of its payment systems several years ago, the Texas-based company somehow began reimbursing nurse practitioners at the same rate as doctors. Vermont's fee schedule, according to the state, says they should actually be paid 10 percent less.

For a nurse practitioner providing basic therapy services, the error represented about a $15 difference per appointment. It's a relatively small amount but, over the several years that the mistake went unnoticed, added up to substantial sums, especially for those who see a lot of Medicaid patients.

Whitaker is one such provider. She spent more than a decade at rural hospitals and health clinics and said she has always enjoyed working with people on Medicaid because they have diverse backgrounds and needs. "I just felt ethically, and politically, that if I'm going to do private practice, I need to be working with this population," she said.

She opened her practice in 2022 and spent the next two years seeing mostly Medicaid patients. In June, she received a notice from the state that she has to pay back about $11,000. The reimbursements would be withheld starting in July, the notice said.

She was dumbstruck and scared. "I don't have that much money in the bank," Whitaker said. While nearly half of her patients now have other forms of insurance, those payments are nowhere near enough to sustain her while she works off her Medicaid debt.

Whitaker and several other nurse practitioners met with the Department of Vermont Health Access repeatedly this summer to lobby for relief. They won some small victories — the state agreed to delay when it started withholding payments, for instance. But the providers were unable to gain much traction on forgiveness.

Gainwell's blunder has put the state in a tough position. The company is still working to confirm how much it overpaid, but the total is expected to be well over $500,000. While that represents a minuscule line item on Vermont's $2 billion annual Medicaid bill, the federal government picks up more than half the tab and prohibits forgiveness on overpayments. Running afoul of those rules can endanger future support, which is why state officials say they cannot forgive the entire amount.

Instead, officials are trying to determine how much they can legally forgive. From there, they will determine what the state can afford — and how to best spread out that relief to ensure the hardest-hit providers receive as much help as possible, said Alex McCracken, a spokesperson for the Department of Vermont Health Access.

"We are doing everything we can, within federal requirements, to support these providers," he said, "because we recognize the essential function that they serve in their communities."

McCracken would not say whether that will include holding Gainwell accountable for the mistake. The company has a four-year, $103 million contract with the state to handle its Medicaid payments. "The department is reviewing all contractual obligations," McCracken said.

In a statement, Gainwell apologized for the oversight and said it was "investing in technology to enhance accuracy and efficiency in our billing processes."

Providers received an email last week notifying them that they have until early September to apply for forgiveness. They were asked to submit a trove of financial information, which the state says will help determine who's most in need.

Providers remain skeptical. Several called the request for their finances "invasive" and said they are reluctant to share such information with the state when they haven't been told how much of their debt, if any, will be forgiven.

"It feels like a plea deal without a guarantee — and we didn't even commit the crime," Whittaker said.

At this point, she does not plan to apply. Even if Medicaid fully forgave her debt, she wouldn't be convinced to accept the insurance again.

The way the state has handled the situation has left her with a "profound loss of trust," she said, one that can't be remedied.

"If you stick with them, who knows what they're gonna come back for next," Whitaker said.