Senate Health & Welfare reviews House amendment to H.266 that would cap hospital drug charges

The Vermont Senate Committee on Health & Welfare reviewed a House proposal of amendment to H.266 that would cap hospital charges for outpatient- or office-administered prescription drugs based on a percentage of the average sales price (ASP), including a temporary 30% cap for July–December 2025 and a 20% cap beginning Jan. 1, 2026, unless the Green Mountain Care Board establishes a different reference-based price.

Jan Carvey of the Office of Legislative Council summarized the amendment for the committee, saying the House version strikes out white-bagging provisions in H.266 and replaces the effective-date language with two sections that set caps on charges to health insurers. Carvey said the amendment would use an April 1, 2025 snapshot: for any drug for which a hospital charged a health insurer more than 20% of ASP on 04/01/2025, the charge would be capped at 20% ASP (moving to a permanent 20% cap after 2025), and for drugs where hospitals charged 20% ASP or less on that date, the hospitals would be capped at the percentage they were charging as of 04/01/2025. Average sales prices under the proposal would be updated twice annually; Carvey noted the Centers for Medicare & Medicaid Services updates ASP quarterly.

The amendment would bar balance billing and most cost-shifting, with a limited exception: a hospital could demonstrate that the cap was harming quality or rural health-care sustainability and seek higher commercial rates for other service lines; the Green Mountain Care Board would be required to consider such proposals. Carvey also said the section would not apply to an independent critical access hospital that is not affiliated with another hospital or hospital network.

Carvey explained the transition timeline: a 30% cap would apply for the second half of calendar year 2025 (effective July 1, 2025) to address contractual reimbursement rules that generally pay 90% of a hospital charge; the permanent 20% cap language would take effect Jan. 1, 2026, with other provisions effective on passage. "If they were charging 200% or 500% ASP, they would be charging a 20% starting in January with a 30[percent] piece in place for the rest of 2025," Carvey said.

Representatives of insurers and hospitals described practical complications. "Blue Cross and Blue Shield of Vermont with UVMHN has a fee schedule. So some of the drugs are discounted 10% off the off their ChargeMaster, but not all. We have different arrangements with every hospital in the system, so this is a little bit of a transition period," said Rachel, a representative for Blue Cross and Blue Shield of Vermont. Rachel said existing fee-schedule discounts and contractual terms mean insurers and hospitals would have to renegotiate payments for July 1 implementation.

Devin Green, identified in the transcript as a commenter, urged a different metric: "Our original request was make it a 20% of reimbursement as opposed to a 20% of the claim because there are discounts added, and that would make it lower than the 120%." Committee members asked clarifying questions about whether the caps referenced hospital charges to insurers or hospital purchase prices; Carvey clarified the cap applies to the amount the hospital bills the insurer, not the hospital's acquisition cost.

Several senators voiced concern about the timing and potential impact on hospitals, particularly smaller and rural providers. The committee chair said changing the amendment's effective date or otherwise altering the text at the end of the legislative session could endanger the bill's chance to reach the governor. The chair also noted the Green Mountain Care Board has authority to adjust reference-based pricing in a record-based process and said the committee will revisit the issue in January.

The chair asked for a straw poll on whether to concur with the House amendment as drafted. Committee members were asked to raise hands for concurrence; the transcript records hesitation and the chair described the result as "a struggle." The record does not reflect a formal roll-call vote or a final, binding committee action during the session on the amendment.

What happens next: the committee discussion left the proposal in an unsettled state. Committee members said the matter could return in the next session and that the Green Mountain Care Board could change reference pricing if it chooses; no formal amendment to the bill or final committee vote was recorded in the transcript.