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Hospitals, Medical Society Urge Caution on Certificates of Need, Reimbursement as Birth Centers Are Considered
Summary
Hospital groups and the Vermont Medical Society supported patient choice for freestanding birth centers but warned of financial strain on rural obstetrics units and urged higher Medicaid reimbursement and careful review of certificate-of-need exemptions.
Hospital representatives and the Vermont Medical Society told a legislative committee considering S.18 that freestanding birth centers should be an option for pregnant people, but they asked lawmakers to address financial risks to hospital labor-and-delivery units and the state’s reimbursement structure.
"We support accredited birth centers as safe places to birth and support patient choice," Jessa Barnard, executive director of the Vermont Medical Society, told the committee. At the same time she said hospital labor-and-delivery services “need to be sustainable so that when there is a higher risk delivery, there are safe places for all patients to give birth.”
Hospital witnesses described narrow financial margins for obstetric services. Barnard cited a hospital executive’s public comment that the hospital was losing $3 million to $5 million a year on obstetrics and noted prior closures of rural units. Devon Green of the Vermont Association of Hospitals and Health Systems told the committee that some small hospitals perform about one birth per day and that a loss of “two births a month” could make a rural unit unsustainable; she urged lawmakers to consider raising Medicaid reimbursement rates for comprehensive prenatal, delivery and postpartum care.
Several witnesses pressed the committee to revisit the bill’s language on certificates of need (CON). The draft of S.18 would exempt freestanding birth centers from CON review. Supporters argued that CON requirements are a high barrier for small, often nonprofit birth centers and that exemptions have become common nationally; opponents said CON or another statewide review could help the state plan locations to avoid weakening hospital services in areas that already struggle to sustain obstetrics.
"We do think it's worth the committee spending more time, discussing whether removing birth centers from CON review is appropriate," Barnard said, noting the value of a statewide planning approach to preserve higher-risk capacity. Proponents, including midwifery coalition witnesses, countered that CON processes impose up-front legal and administrative costs that can prevent community birth centers from opening or from being sold to a new operator if an owner leaves.
Policy fixes discussed: hospital and medical-society witnesses proposed (1) increasing Medicaid reimbursement for comprehensive prenatal-to-postpartum care (suggesting an enhanced primary care rate under Medicaid fee schedules), (2) requiring more detailed written transfer agreements or clearer rule guidance so transfers go to facilities with comprehensive obstetric services rather than generic emergency departments, and (3) asking the committee to consider other statewide resource-planning mechanisms (such as a health resource allocation plan) if CON is not applied.
Committee members asked agencies for data to quantify how many births might move to birth centers, where out-of-state births currently go, and whether the presence of a birth center has historically led to closures of hospital birthing units; witnesses and staff said the committee lacked definitive Vermont-specific data. Several members asked hospital and agency witnesses to submit detailed financial and utilization modeling to inform the committee’s work.
No formal action was recorded in the transcript; the discussion closed with requests for more data and for the agencies and stakeholders to continue work on reimbursement, CON thresholds and transfer language.
