Senate Health & Welfare leans toward time-limited repeal of white-bagging ban, seeks impact report

MONTPELIER — The Vermont Senate Committee on Health & Welfare on May 6 signaled it will include a time-limited repeal of a 2022 prohibition on insurer-directed “white bagging” in draft S.266 and asked the Green Mountain Care Board to report on the repeal’s effect on hospital budgets and health insurance rates.

The committee’s discussion focused on who would capture roughly $40,000,000 in savings that witnesses said could shift under the bill: insurers and pharmacy benefit managers (PBMs) argue savings would lower prices, while hospitals and patient advocates warned of safety and reimbursement problems. The committee indicated agreement to repeal the ban with a sunset and to ask the Green Mountain Care Board to report back on the financial effects before the repeal becomes permanent.

The draft under consideration, described in the meeting as draft 1.2 of S.266, would remove statutory language that barred a health insurer or PBM from requiring that a designated pharmacy deliver a medication directly to a health-care setting for a clinician to administer. Jan Carter, legislative counsel, presented draft 1.2 for committee review.

The committee heard testimony from multiple parties. A representative of the Vermont Association of Hospitals and Health Systems, identified in the transcript as Denning Green, warned of patient-safety incidents that motivated the original 2022 restriction: “There was one story in particular where the provider was looking for the medication and it was in a bag on that provider's desk, and they were unable to find it,” Green said, arguing that delivery and chain-of-custody issues have led to canceled appointments and dosing errors.

The state's health care advocate (name not specified in the transcript) emphasized insurer solvency concerns and said they are inclined to support the repeal to stabilize the insurance market: “This is competition between our two major parties in our health care system over revenue,” the advocate said, adding that the current risk to the state’s largest health insurer influenced their position.

Sarah Teachout of Blue Cross Blue Shield of Vermont told the committee the insurer’s use of white bagging stems from higher hospital prices for specialty drugs. “If the hospital would lower the prices to something reasonable . . . there’s no need to do the white bagging,” Teachout said, and added that eliminating the ban could reduce prices rather than trigger wide-scale white-bagging. She also said insurers report specialty drug trend data in rate filings and that the trend figure used in filings was about 18 percent at the time of the hearing.

Hospital representatives and others asked the committee to build safeguards into any repeal. Witnesses suggested the legislature require reporting or other oversight to show whether cost shifts actually reduce premiums or patients’ out-of-pocket costs. The Vermont Association witness noted a peer-reviewed study cited to the committee (a JAMA article) that found insurer savings did not necessarily translate into lower out-of-pocket costs for patients.

Committee members discussed timing and administrative concerns. Several members said repeatedly changing the rule every two years is disruptive. The committee took a straw poll and indicated support for inserting a sunset on the repeal; after discussing calendar and plan-year timing with insurers and the Green Mountain Care Board, members settled on a January 1, 2030, effective date for the repeal’s sunset so the change would be time-limited and could be revisited.

The committee also asked that the Green Mountain Care Board provide a report on the repeal’s impact — specifically on hospital budgets and health-insurance rates — to help the legislature evaluate whether savings are reflected in premiums or hospital finances. Committee members discussed whether the Department of Financial Regulation (DFR) could or should provide the analysis but directed the request to the Green Mountain Care Board, which receives rate filings and trend data.

No formal roll-call vote on final legislation was recorded in the transcript; the decision described in the meeting was a committee straw poll and direction to staff to draft repeal language with a sunset and a reporting requirement.

What’s next: staff will draft language to add a sunset dated Jan. 1, 2030, and a reporting requirement for the Green Mountain Care Board to assess effects on hospital budgets and insurance rate trends. The bill will continue through the legislative process and return to the House and subsequent committees for additional consideration.