Senate committee hears divided testimony on H.482 to let Green Mountain Care Board adjust hospital rates to shore up Blue Cross Vermont

Senate Health and Welfare Committee members heard hours of testimony April 10 on House Bill H.482, which would permit the Green Mountain Care Board, in consultation with the Department of Financial Regulation (DFR), to adjust hospital reimbursement rates for a domestic health insurer facing an acute solvency threat.

DFR Deputy Commissioner of Insurance Emily Brown told the committee “DFR is the primary and sole financial regulator of insurance companies who are domesticated in Vermont.” She said the bill’s trigger is a risk-based capital (RBC) ratio at or below 150 percent and that the change would target hospitals that have “more than 135 days cash on hand and meet other financial metrics.” The intent, she said, is to preserve continuity of coverage if Blue Cross Blue Shield of Vermont (BCBSVT) faces an immediate solvency risk.

The proposal drew a direct appeal from Don George, president and CEO of Blue Cross Blue Shield of Vermont. George described a multi-year surge in claim costs that left BCBSVT with a year-end RBC of about 214 percent for 2024 and a reported operating loss he said was about $65,000,000 last year. He urged the committee to adopt the bill as an emergency tool, saying, “This is a Vermont solution,” and arguing it could prevent far costlier outcomes for members and providers.

Hospital trade groups and individual hospital leaders opposed or warned against the bill’s current language. Mike DelTreco, president and CEO of the Vermont Association of Hospitals and Health Systems, said the measure could destabilize hospital finances by permitting rate reductions for hospitals that have relied on days-of-cash covenants with lenders. Rutland Regional Medical Center President and CEO Judy Fox told the committee that her hospital once negotiated a covenant that required maintaining 150 days of cash on hand and said the bill’s 135-day threshold could put some hospitals below lender covenants; she added that Rutland lost 18 days of cash on hand in a matter of days recently.

Hospital witnesses also criticized a provision that would allow appointment of an “independent observer” to review hospital data. They said lenders already have mechanisms — including the ability to appoint a financial facilitator under bond covenants — and that adding a separate observer could be costly, duplicative and adversarial.

Supporters and regulators stressed narrow triggers and limited scope. Brown and George emphasized that the authority would be invoked only in an acute solvency emergency for a domestic health insurer and would target financially healthy hospitals (as defined by the bill’s metrics) to shift reimbursement temporarily and specifically to the insurer at risk. George described recent liquidity steps taken by BCBSVT, including a surplus note and cost-savings measures, and said the bill would be a last-resort tool to preserve weekly claim payments and continuity of care.

Committee members acknowledged the competing risks and asked regulators and stakeholders to craft guardrails to reduce unintended impacts on hospitals. Senator Ginny Lyons, chair of the committee, urged further language work to prevent adversarial processes and to preserve hospital stability while protecting insured Vermonters.

The committee did not take a final vote on H.482. Lawmakers said they will continue to work with DFR, the Green Mountain Care Board, Blue Cross Blue Shield of Vermont and hospital leaders to refine the bill’s thresholds, independent-observer language and other guardrails before further action.