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Conference committee debates global hospital budgets vs. reference-based pricing in S126
Summary
Members of the Senate-House conference committee on S126 debated whether Vermont should pursue global hospital budgets now or prioritize implementing reference-based pricing that would set hospital payment limits first, with differing House and Senate language on timing, scope and the Green Mountain Care Board’s duties.
Conference committee members on S126, legislation "relating to health care payment and delivery system reform," spent much of their session debating whether to proceed immediately with global hospital budgets or first implement reference-based pricing across payers.
Jen Darby, Office of Legislative Council, displayed a markup titled “passed by Senate showing markup from House” and summarized the key difference: the Senate language pushed toward establishing global hospital budgets while the House focused on implementing reference-based pricing first. Darby said, “The S126 is an act relating to health care payment and delivery system reform.”
A committee member voiced the core concern: “my, concern, my question is regarding, continuing, on to global hospital budgets,” noting uncertainty about feasibility if not all payers — including Medicare and self‑insured plans — participate. Members discussed that reference‑based pricing could reach more payers and therefore might better align incentives before a global budget approach is attempted.
Committee discussion covered technical distinctions in the House draft that would have the Green Mountain Care Board set reference‑based prices as the maximum amounts hospitals “shall accept as payment in full,” rather than directly regulating insurer payment rates. A committee member said the change means focusing on “what hospitals could accept.” Committee members also discussed allowing the board flexibility on site‑neutral pricing so rates could reflect different hospitals’ case mixes and regional circumstances.
Members noted the House had struck language requiring global budgets to begin by hospital fiscal year 2028 and to be in place for all hospitals by a later implementation date; the committee agreed to return to that provision in later meetings. Darby said the bill retains timing references to hospital fiscal year 2027 for some board reviews. The committee also discussed whether the board’s authority to set reference prices should exclude Medicare and Medicaid; the House draft explicitly said the board’s authority would not include Medicare or Medicaid.
Committee members acknowledged differing definitions of “global hospital budget” among witnesses and agencies. As Darby put it, “every single witness that we asked had a different definition of what they thought of as a global hospital budget.” The group agreed to continue debate on the scope and timing of any global budget requirement and on how reference‑based pricing might serve as a staging mechanism.
Less critical provisions discussed in this section included how often the board would review reference prices (the House language adds annual hospital‑level review as part of budget review) and whether balanced‑billing prohibitions and Medicare indexing language should be retained or revised. The committee paused this topic to address other sections of the bill and scheduled follow‑up meetings.
