Committee debates reference-based pricing, Green Mountain Care Board duties and AHS role in draft Vermont health bill

A legislative committee drafting a Vermont health care bill spent more than an hour debating whether the measure should explicitly direct "structural" or "systemic" change and how to phase in reference-based pricing for hospitals, the group said during a session on the bill's Sections 1–3 and related provisions.

The discussion centered on three points of consequence: whether the bill should claim it seeks structural transformation of Vermont's health care system; whether reference-based pricing should begin with a phased, hospital-first approach or be piloted at individual hospitals; and how the Green Mountain Care Board should coordinate with the Agency of Human Services (AHS), insurers, hospitals and the Office of the Health Care Advocate during implementation.

Committee members agreed the legislation should make clear the board will implement reference-based pricing by rule, and that rulemaking — not immediate statutory detail — will govern many operational choices. Several members said the board currently lacks staff and expertise to implement a comprehensive program immediately, so the draft tries to balance starting sooner with giving the board time to hire or contract for needed analysis. The bill text under review would add reference-based pricing to the board's existing duties for overseeing payment and delivery reforms and to the professional rate-setting provisions.

On scope and sequencing, most participants supported starting with hospitals and then extending reference-based pricing to other care settings later. The draft calls for the board to establish initial reference-based prices tied to a percentage of the Medicare reimbursement rate for the same or similar item or service, and to permit the board to update prices later using a separate growth measure (for example, the Medicare economic index) "to provide predictability and consistency for health care professionals and payers." The committee discussed adding wording to allow use of an "another benchmark as appropriate" when Medicare is not an appropriate comparator.

Members debated whether the law should describe the policy goal as moving toward "site-neutral" pricing; some questioned whether benchmarking to Medicare (which applies different methodologies for hospitals such as critical access hospitals) would truly be "site neutral." The committee discussed explicitly authorizing the board to differentiate prices across providers based on factors including hospital service-area demographics, payer mix, acuity, labor costs and social risk factors; some members suggested language that would require the board to revisit and update reference-based prices as circumstances change.

The draft sets milestone timing: committee discussion referenced a target that the board act "before 2027" as a drop-dead date for certain steps, language that hospital global budgets would begin for one or more non–critical-access Vermont hospitals by hospital fiscal year 2028 (the committee described that fiscal year as starting in October 2027) and that global budgets would extend to all Vermont hospitals by hospital fiscal year 2030. Committee members noted the draft's reliance on rulemaking means stakeholders will have additional input before any price changes take effect.

Committee members also raised process questions. Several urged stronger, earlier involvement by AHS because of the agency's Medicaid reference-based pricing experience; others warned that the committee can only direct the Green Mountain Care Board and cannot compel executive-branch cooperation. The Office of the Health Care Advocate, insurers and hospitals were listed in the draft as required consultative parties. One member requested reordering the consultation list to place AHS first to signal intent; the group ultimately left the order unchanged after a straw poll but asked staff to return with clarified language on consultation and cooperation.

Members discussed pilot options versus a phased rollout. Some said pilots at one or two hospitals could surface implementation problems before wider rollout; others argued pilots could delay system change. The group also noted prior legislative work (referred to in the session as "Act 51") that included a hospital pilot the members said had not been initiated, and used that example when weighing whether to require explicit pilots in the new bill.

On technical design, participants recommended that the board consider both price and methodology when referencing Medicare, and that it be allowed to group services or bundle payments where appropriate. Several members urged the statute to require the board to consider community composition and cost drivers when setting prices — for example, population health, demographics, payer mix, acuity, labor costs and social or structural drivers of health — and to incorporate equity and hospital-sustainability concerns into the board's decision framework.

Next steps from the meeting: committee staff and an identified member were asked to draft revised statutory language (including options for benchmarks, explicit direction on revisit/update cadence, and clearer consultation language) and return the language to the committee for further review.

Ending: The committee paused its review before finishing Section 3 and agreed to reconvene with draft text and suggested edits to the reference-based pricing sections and hospital-budget alignment.