Vermont Green Mountain Care Board gains authority to adjust hospital reimbursement rates

The Senate Health and Welfare Committee convened on March 27, 2025, to discuss proposed legislation concerning the Green Mountain Care Board's authority to adjust hospital reimbursement rates. The meeting focused on the implications of this authority in relation to the financial stability of domestic health insurers in Vermont.

The primary agenda item was the introduction of a new section to Title 18 of the Vermont statutes, which would allow the Green Mountain Care Board to reduce or reallocate reimbursement rates for hospitals under specific conditions. This authority is time-limited and contingent upon certain financial triggers related to health insurers' solvency.

Key definitions were outlined, including the term "hospital," which encompasses all Vermont hospitals, and "hospital network," defined as a system of two or more affiliated hospitals that derive a significant portion of their revenue from Vermont hospitals. The committee emphasized that the proposed changes aim to address acute threats to the solvency of health insurers, particularly when their risk-based capital levels fall below regulatory thresholds.

The legislation stipulates that if the Green Mountain Care Board, after consulting with the commissioner of financial regulation, determines that a health insurer faces an immediate risk of insolvency, it may order a reduction in reimbursement rates to one or more Vermont hospitals. However, this reduction can only be applied to hospitals that meet specific financial criteria, such as maintaining a minimum number of cash days on hand or having a positive operating margin in the previous fiscal year.

The committee highlighted that any rate reductions would be carefully calibrated to avoid jeopardizing the financial health of the hospitals involved. Specifically, the board cannot reduce reimbursement rates to a level that would decrease a hospital's cash on hand to below 125 days, ensuring that hospitals retain sufficient financial stability.

Discussion among committee members included the potential for alternative solutions to address insurer solvency without resorting to rate reductions. However, the focus remained on the necessity of the proposed measures to safeguard the operations of domestic health insurers while considering the financial realities faced by Vermont hospitals.

The meeting concluded with a recognition of the delicate balance between maintaining insurer solvency and ensuring the financial health of hospitals, setting the stage for further discussions on the implications of the proposed legislation.