Senate bill S.126 would expand Green Mountain Care Board powers, require reference-based pricing and set timetable for global hospital budgets

The Vermont Senate committee heard a section-by-section read of S.126 on July 13 that would direct major changes to how hospitals and insurers are paid and how the state plans health care services.

Jen Carvey, Legislative Counsel in the Office of Legislative Council, told the committee the bill’s stated purpose is “to promote the transformation of Vermont’s health care system,” and that the legislation would pursue four goals: improve health outcomes and access, invest in primary and long-term care, stabilize providers and reduce premiums by managing total cost of care, and increase insurance coverage.

The bill would expand the duties of the Green Mountain Care Board (GMCB). New language added to the board’s duties would expressly authorize reference‑based pricing, global payments and global hospital budgets and require the board to develop methodologies for payment reform. Carvey told the committee the bill directs the board to begin implementing reference‑based pricing for hospitals “as soon as practicable, but not later than hospital fiscal year 2027.”

Nut graf: S.126 sets a timetable and new reporting requirements that, if enacted, would shift the state toward an all‑payer approach that starts with reference‑based pricing tied to Medicare rates, then moves to hospital global budgets and a statewide health care delivery plan. The bill also increases data reporting and oversight demands on hospitals and insurers and creates a new advisory committee and deadlines for agency reports.

Key provisions

Reference‑based pricing: The bill requires the GMCB to establish reference‑based prices for hospital items and services based on a percentage of the Medicare reimbursement rate for the same or similar service, with an option later to update prices according to another growth metric. Under the bill the board must implement hospital reference‑based pricing by hospital fiscal year 2027 and “shall implement reference based pricing in a manner that does not allow hospitals to charge or collect from patients any amount in excess of the reference‑based amount,” a provision Carvey summarized as protecting patients from balance billing.

Global hospital budgets: The bill directs the GMCB to establish global hospital budgets beginning with one or more non‑critical‑access hospitals by hospital fiscal year 2028 and for all Vermont hospitals by hospital fiscal year 2030. The bill says global budgets “shall include Medicare to the extent permitted under federal law, but shall not include Medicaid.”

Hospital budget review and reporting requirements: Hospitals would need to submit standardized budget data and new detail to the board, including counts of employees with primarily administrative duties versus those delivering direct patient care, and base salary and total compensation for executive and clinical leaders and for direct‑care staff. The board would compare hospitals’ executive pay to median regional salaries and to its own lowest‑paid patient‑facing employees. The bill directs the GMCB to exclude revenue from primary care, mental health and substance use disorder treatment services when calculating net patient revenue and any total cost of care targets, a change intended to incentivize spending in those areas.

Statewide health care delivery plan and timelines: The Agency of Human Services (AHS), in collaboration with the GMCB, Department of Financial Regulation (DFR), the Office of the Health Care Advocate and others, would lead development of an integrated statewide health care delivery plan. AHS is directed to engage stakeholders and gather data from 2025–2027, prepare the plan in 2028 and present it to the legislature by Jan. 15, 2029; the bill also requires updated plans every three years thereafter.

Oversight, network review and contract disclosure: The bill authorizes the GMCB to review hospital network financial operations as they relate to an individual hospital’s budget and to investigate network compensation and governance where needed. It would also require contracting entities (private payers) and providers to provide an unredacted copy of executed or proposed health care contracts to the GMCB and DFR (not for public disclosure), to give regulators visibility into payer‑provider terms.

Data integration and reporting: The bill directs AHS to lead creation of an integrated system that links clinical and claims data and social drivers of health to support the statewide plan. Health insurers would be required to provide clinical and claims data to AHS “as directed by the agency,” to the extent permitted by federal law and existing data‑use agreements. The bill establishes multiple first reports: AHS to provide an implementation update by Nov. 15 (year specified in the bill), and the GMCB to report by Feb. 15, 2026, on steps toward reference‑based pricing and global budgets.

Board composition and limits: Committee members asked about the GMCB’s current independence and removal rules. Carvey noted the governor appoints the board members from candidates provided by a nominating committee, terms are six years, and members may be removed only for cause (the board is to adopt rules defining that process). Several committee members raised concerns about the scope of the board’s authority and the statutory language that requires the board to carry out duties “consistent with the principles” in the GMCB chapter, which include preserving patient choice and recognizing the primacy of the patient‑clinician relationship.

Funding and staffing: Committee testimony accompanying the bill indicated the agencies told the legislature they would need additional staff and contracts to carry out the work: the draft fiscal analysis tied to an earlier version of the bill estimated several permanent and limited‑service positions and contract funds for the GMCB and AHS, plus grants for data work. Those appropriations were removed before the bill’s passage in committee and remain subject to the budget process, the committee was told.

What the bill does not do (or leaves to later): The text ties several actions to the statewide health care delivery plan “once established,” meaning some provisions are contingent on the plan’s content. The bill also permits, rather than requires, certain GMCB evaluations (several places use “may” rather than “shall”), and it exempts service changes that are part of earlier Act 167 transformation work from the 90‑day notice requirement for proposed service reductions.

Closing: Committee members signaled interest in hearing from the GMCB and AHS about operational details — how reference‑based prices will be set, how the board will standardize hospital budget submissions and what resources hospitals and regulators need to comply. Jen Carvey concluded the session by listing report deadlines and noting the bill aims to provide both a framework and a timetable for shifting Vermont’s payment system over the coming years.