Committee reviews bill to cap hospital outpatient drug charges; hospitals warn of service cuts

Legislators reviewed proposed changes to H.266 on limiting hospital charges for outpatient prescription drugs during a committee meeting where legislative counsel and hospital representatives described how the bill would set percentage caps linked to CMS’s average sales price (ASP) and permit hospitals to seek relief from the Green Mountain Care Board if access or quality were harmed.

The proposed amendment would bar a hospital from submitting a claim to a health insurer for reimbursement of a prescription drug administered in an outpatient or office setting in an amount that exceeds 120% of the CMS-calculated ASP beginning Jan. 1, 2026, with a transitional higher limit of 130% for the period July 1–Dec. 31, 2025, and a requirement that hospitals update ASP benchmarks Jan. 1 and July 1. The draft text would exempt independent critical access hospitals that are not affiliated with another hospital or network.

The amendment also adds a process in which “if a hospital demonstrates to the board in its budget submissions under hospital budget review that the price cap … is having a negative impact on access to care, quality of care, or sustainability of rural health care services,” the hospital may propose increasing commercial reimbursement rates for preventive care or essential community services; the Green Mountain Care Board would consider the demonstrated impacts and any proposed increases.

Jen Carvey, legislative counsel with the Office of Legislative Counsel, walked members through the specific timing and drafting changes. Carvey said the bill’s benchmark language was adjusted to require hospitals to update the ASP “annually on January 1 and July 1 based on CMS’s ASP calculations for the most recent calendar quarter” so hospitals and payers would not need to check quarterly CMS updates.

Devin Green, representing the Vermont Association of Hospitals and Health Systems, warned the cap would affect all payers and described financial impacts hospital systems expect if a 120% cap is applied statewide. Green said the cap’s effect “goes to all payers” and noted earlier figures estimating a $46,000,000 effect to one major carrier were only part of a broader impact.

Hospital witnesses provided hospital-level estimates to illustrate potential effects. Green and other hospital speakers said the draft 120% cap could force closures of infusion centers and require hospitals to cut staff or program growth that had been recommended in prior transformation reports. Specific examples discussed by presenters included an estimated $2.5 million cut tied to one community hospital that could force closure of its infusion center, an $8.8 million impact cited for another hospital accompanied by a projected 12.5% reduction of workforce (125–150 full-time-equivalents), and a $16 million reduction cited for Rutland Regional Medical Center; presenters attributed those examples to their internal analyses and to consultants’ recommendations on hospital growth and service expansion.

Kelly Champney, vice president of revenue strategy and performance for UVM Health Network, and Wesley Bill, assistant vice president and chief pharmacy officer, described operational details hospitals say make a simple percentage cap problematic. Bill explained that hospital drug acquisition prices vary by hospital and program and noted that some hospitals cannot buy certain drugs at the federal 340B price, so the acquisition cost may exceed the ASP-based reimbursement. Bill described the charge description master and said for high-cost drugs “our markup is very small” and that some therapies (for example, cancer immunotherapies) can cost “10,000 plus for one dose.”

Champney outlined the network estimate that the proposed cap could reduce revenue by roughly $69 million for the health system she represents, with approximately $53 million tied to Blue Cross Blue Shield contracts and roughly $21 million of that $53 coming from out-of-state Blue Cross business; she characterized these numbers as estimates based on volume and asked the committee to treat them as a range.

Health Care Advocate Mike Fisher urged urgency on reining in high insurer rates and said lawmakers need “a shock to reduce the rate increases.” Fisher said he understood hospitals’ concerns but emphasized the downstream effects on households, small businesses and public employers if insurance premiums continue to rise.

Multiple legislators pressed witnesses about narrower approaches: limiting the cap to a single carrier (Blue Cross Blue Shield of Vermont) or to qualified health plans on the individual market as a pilot, and about the timetable for hospitals to petition the Green Mountain Care Board for budget relief. Witnesses and counsel said the Green Mountain Care Board could review requests for reimbursement adjustments during hospital budget review cycles but that hospitals would still need to negotiate with payers, and witnesses warned that the process might not be fast enough to prevent midyear cuts if the cap takes effect July 1.

Speakers also discussed interdependencies: the cap would interact with ongoing work on reference-based pricing, hospital global budgets, the Green Mountain Care Board’s authority, federal changes affecting Medicaid directed payments and the state’s all-payer model. Jen Carvey summarized the effective-date structure the committee had proposed: a transitional cap July 1–Dec. 31, 2025, a permanent cap effective Jan. 1, 2026, and twice-yearly ASP updates.

No formal motion or vote was recorded in the transcript. Committee members asked to receive more data (hospital-specific acquisition costs, payer-specific reimbursement rates and examples of the top drugs by spend) before further action. Witnesses said they would follow up with additional detail and links referenced in the meeting.

The meeting closed with scheduling notes for continued work on the bill; the committee plans to reconvene and the draft language will continue to be revised, including the carve-outs and the Green Mountain Care Board relief language.