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Draft bill would direct AHS to facilitate 2.5% hospital spending cut for FY26, require monthly updates and offer $2M transformation grants
Summary
The conference draft of H.126 directs AHS to facilitate hospital collaboration to reduce hospital spending for FY26 by not less than 2.5%, requires outcome-measure reporting tied to Act 167, and authorizes $2 million in grants to hospitals that engage in transformation efforts.
The conference draft of H.126 contains multiple provisions aimed at accelerating hospital transformation and tightening accountability under Act 167. Key provisions discussed in conference include a short-term target to reduce hospital spending, outcome-measure reporting tied to Act 167 goals, and a $2 million grant pool for hospitals that participate in transformation efforts.
Under section 11a as presented to the committee, the Agency of Human Services (AHS) would be directed to "facilitate collaboration and coordination among healthcare providers to... reduce hospital spending for hospital fiscal year 2026 by not less than 2.5%." The draft requires AHS to supervise participation as necessary to protect against antitrust concerns and to report proposed reductions, timing and accountability measures to the Health Reform Oversight Committee (HROC) and the Joint Fiscal Committee on or before July 1, 2025, with monthly updates beginning Oct. 1, 2025.
Committee members said this language grew out of a joint hearing with hospitals and the Green Mountain Care Board that highlighted urgency and the need for shared action. One committee participant summarized the intent: this provision would allow AHS, "because of AMFI Trust, and continuing the work on 167 that we've tasked them to do, this would allow them to supervise and facilitate and help the hospitals come together with their creative thinking around having some of their budgets."
Section 11b would require AHS to identify specific outcome measures for determining progress on the five transformation goals in Act 167 (reduce inefficiencies, lower costs, improve health outcomes, reduce health inequities, and increase access to essential services) and report to HROC and the Joint Fiscal Committee by July 1, 2025, on measures and timelines. Monthly updates on progress would begin Aug. 1, 2025, under the draft discussed. The section would also ask AHS to describe the state and federal funds spent or obligated on Act 167 transformation efforts to date.
Section 11c would direct AHS to award grants to hospitals in SFY 2026 that actively participate in transformation efforts to build partnerships, reduce costs for FY26 and expand access, including via telehealth. The draft expresses legislative intent that $2,000,000 in funds (identified in the bill's HIT plan section) be awarded on a first-come, first-served basis until expended, and requires AHS to report by Nov. 15, 2025 to HROC and the Joint Fiscal Committee on amounts obligated and disbursed.
Lawmakers acknowledged the reporting requirements are numerous and discussed whether aspects of Act 167 oversight could be folded into the broader strategic planning process to avoid duplicative reports. Committee members signaled they would continue to refine timelines and reporting formats during conference negotiations.
