Green Mountain Care Board chair backs 135-day cash threshold, urges due process in H.482 emergency powers

Dylan Foster, chair of the Green Mountain Care Board, told the Vermont House Health & Welfare Committee on May 1 that hospitals across the state are under severe financial stress and recommended keeping a 135‑day cash‑on‑hand threshold in the emergency authority bill H.482 while adding safeguards for accuracy and due process.

“You can't look at any of these issues in isolation,” Foster said in testimony, arguing that insurer reserves, patient costs and hospital finances must be balanced when the committee considers emergency powers in the bill. He said the board had previously recommended 125 days but supported 135 days in the draft under review as a compromise that fits within credit‑rating agencies’ “adequate” category.

Foster told lawmakers the board also recommends a paired requirement of a positive operating margin in the prior year so that both liquidity and recent operating performance inform any emergency intervention. To reduce the risk that a hospital could artificially lower its days‑cash measure by prepaying expenses, Foster said the board would consider a six‑month rolling average of days cash on hand. “I think the 6 month rolling average takes perfect sense,” he said.

Foster also discussed procedural protections for hospitals if H.482 gives the state new emergency authorities. He said notice and an opportunity to be heard are appropriate even in an emergency, and urged the committee to include language that ensures hospitals can respond and provide documentation before extraordinary remedial steps are imposed.

On defining material noncompliance, Foster recommended linking the bill’s enforcement language to existing statutory procedures. He cited statutory language identified in testimony as “94 56 h 2 b,” saying that linking the emergency‑response definition to that statutory framework would clarify when the board may act for material misrepresentation or material violation of a budget the board has established.

The board chair also addressed several related concerns raised by the committee and commenters. Foster said the board does not parse individual hospital‑insurer contracts for reimbursement rates, noting confidentiality and trade‑secret claims by contracting parties: “We don't parse individual hospital and insurer contracts,” he said. Because of that confidentiality, he said contract details are not central to the board’s current emergency review but acknowledged the information could be valuable for policy discussions.

Committee members asked whether critical‑access hospitals should be exempted from the cash threshold. Foster warned that exemptions could be complicated when critical‑access hospitals are part of larger networks and that treating them differently could incentivize acquisitions or restructuring that shift cash among entities. He also cautioned that narrowly protecting one set of entities could shift costs or credit‑rating risk to others, including insurers.

Foster used the University of Vermont enforcement process as an example of the board’s typical timeline for a non‑emergency enforcement matter: a May 30 letter, a July 2 response, an August 28 hearing, a September 15 decision and an October 1 order effective date. He said that pace — several months of documentation and hearing time — would be too slow for a sudden emergency and that the bill should provide a streamlined notice and response process appropriate to emergency circumstances.

On insurer reserves, Foster acknowledged comments from Professor Nancy Kane proposing a withholding mechanism that would hold back a portion of premium payments (described in testimony as a 10% withhold) to be reconciled at year end. He said the board and the Department of Financial Regulation (DFR) could consider reserve adjustments in consultation with stakeholders, but that detailed design touches on tradeoffs across hospitals, insurers and consumers.

Foster cautioned that adding a specific statutory test about bond covenants or credit‑rating impacts could compel the board to evaluate many complex contractual arrangements, subsidiaries and lender terms. He recommended any broad financial review be applied consistently across institutions rather than singling out particular hospitals.

There were no formal votes during the hearing; the session was an informational briefing and question‑and‑answer period to gather input as the committee continues work on H.482.

What happened next: the committee closed the testimony and moved to other agenda items. The board and committee members agreed to follow up on suggested language for due process, the 6‑month rolling average, and statutory linkage for material noncompliance.