At a wide‑ranging oversight Senate Health, Hospitals and Human Services Committee hearing, the Virgin Islands Human Services Department detailed its agenda to modernize Medicaid, expand long‑term care, rebuild early childhood centers, and replace its aging headquarters.
Senators broadly welcomed the plans but repeatedly pressed on the same problems: unused federal Medicaid dollars, slow construction timelines, and chronic staffing shortages.
Commissioner Averil George framed the stakes in her closing remarks: “We are managing inherited structural challenges, yes, but we are not managing them passively … We are building systems that can withstand storms, literal and fiscal, and that can serve this territory, not just this year, but for decades to come.”
A major focus of the hearing was the Medicaid State Plan, the core document that defines who is covered, what services are included, and how providers are paid. Over decades, changes were layered onto the plan in both paper and electronic form, leaving what George described as a confusing patchwork.
“Over many years, amendments were developed in both paper based and online formats, resulting in a fragmented structure that makes it difficult to present a single, consolidated, authoritative version of the plan,” George told senators, explaining why the department launched a comprehensive clean‑up effort.
DHS has now indexed 147 historical amendments, identified 62 that need to be consolidated, and flagged 18 provisions as outdated, along with 11 sections that require complete rewrites to comply with federal rules. The goal is to have a consolidated plan ready by April, with a full gap analysis continuing through most of the year.
Even as that work continues, the department is already changing how some care is paid for. A recently approved state plan amendment for interventional cardiology allows Medicaid to pay a hospital‑employed cardiologist separately from the usual daily inpatient rate, a shift meant to encourage more cardiac specialists to practice in the territory and reduce the need for costly off‑island transfers.
Assistant Commissioner Taetia Phillips‑Dorsett stressed that the cardiology change is being treated as a cautious pilot, not a blank check. “If we open up the flood gates, then we will need additional dollars for the general fund portion of the claims match,” she said. “We know we are in a fiscal crunch … we don’t want to expand to cause that additional general fund burden that we know DHS cannot afford.”
Senators, however, kept returning to a larger question: why is the territory not using all the federal Medicaid money it already has? DHS testified that the Virgin Islands has about $142 million in annual federal Medicaid authority, but not enough local “match” funding to draw it down. Roughly $48 million went unspent in fiscal year 2025.
Lawmakers said the problem is compounded by lingering Medicaid liabilities. Many senators, including Sen. Novelle Francis, noted that carrying unpaid claims into new fiscal years strains the budget and limits the government’s ability to provide the required match. “This really throws the budget into a tailspin,” Francis said, arguing that until prior‑year Medicaid expenses are addressed, they will keep weighing down each new fiscal year.
When the discussion moved beyond Medicaid financing, lawmakers and Human Services officials focused on one of the territory’s most persistent structural problems: long‑term care capacity. George told senators that local hospitals are routinely caring for patients who no longer need acute treatment but cannot be discharged because there is nowhere else for them to go.
“On average, seven to ten medically stable individuals remain hospitalized at any given time because they cannot be safely discharged into our community,” George said. “These are patients who should be transitioning into long‑term care settings, but instead remain in acute care beds simply because the territory lacks adequate placement options.”
She described the situation as a “direct symptom” of limited long‑term care capacity, with hospitals effectively functioning as de facto nursing homes, bearing the full cost of food and daily services without CMS reimbursement.
The department’s own physical footprint is also in transition. George reminded senators that DHS still works out of the former Knud Hansen Memorial Hospital on St. Thomas, a structure built in the 1940s and opened in 1953. “It was never designed to house the administrative backbone of a 21st-century Department of Human Services,” she said, adding that “our employees have shown up to work every single day and delivered services from that facility” for decades despite outdated systems and failing infrastructure.
That building is now slated for demolition. In its place, the government plans a new four‑story complex that will house both DHS and the Department of Health, including a modern community health clinic and consolidated client‑service space. Demolition is expected around mid‑2026, with completion of the new complex projected near the end of the decade. Until then, DHS is relocating staff to temporary offices at Tutu Park Mall and Havensight and housing Queen Louise residents at Palms Court, leases that total about $2.1 million a year but are 95 percent funded by FEMA.
Staffing shortages were a recurring thread linking almost every topic. DHS reported roughly 200 vacancies across the department, many of them unfunded or requiring local match dollars. Those gaps limit how many long‑term care beds can be opened, how quickly Medicaid claims can be processed, and how many classrooms can operate in the Head Start program.
Head Start is federally funded for 794 children, but current enrollment is closer to 587 because six classrooms are closed for lack of qualified teachers and aides; on St. Thomas alone, about 110 children are on a waitlist for the coming school year, even as new centers are being rebuilt with federal disaster funds.
In her closing, George argued that these parallel efforts, rewriting the Medicaid State Plan, expanding long‑term care capacity, rebuilding facilities and trying to fill critical vacancies, are all part of the same project. “At the end of the day, the question is simple,” she told lawmakers. “Are we leaving a system stronger than we found it? That is the standard we are working toward.”
