Vermont committee hears Green Mountain Care Board on reference-based pricing and unclear global budget plans

Representatives of the Green Mountain Care Board told the Vermont House Committee on Health Care on April 17 that the board supports moving to reference-based pricing for hospitals but urged changes in the bill’s wording, more flexibility on methodology and clearer funding and timeline provisions.

The board’s testimony matters because the bill would require the board to set ‘‘reference‑based prices’’ and to begin implementing those prices by a fixed date tied to hospital fiscal year 2027, while also directing the Agency of Human Services to implement reference‑based pricing for services delivered outside hospitals and to pursue hospital global budgets.

Michael Barber, general counsel for the Green Mountain Care Board, said at the hearing that the board “just at the outset supports moving to reference based pricing,” but he warned the bill’s current language frames reference‑based pricing as a requirement on what insurers must pay rather than a cap on what hospitals may charge. He said that distinction has legal and operational implications and recommended regulating the insurer’s allowed amount rather than the amount actually paid by an insurer because patients often bear much of the allowed amount through deductibles or cost sharing. Barber also said, “either way you frame this… it should withstand an ERISA preemption challenge,” but that statutes regulating providers tend to be less vulnerable to ERISA challenges than statutes that regulate payers.

Elena Bearby, director of health systems policy for the board, told the committee that the term “global budgets” is not well defined in the bill and that the board’s existing hospital budget process is already a form of global revenue cap. “When we talk about global budgets… it’s really about the revenue side of the equation,” Bearby said, adding that Maryland’s model adjusts prices in real time to meet a revenue cap while Vermont’s current approach adjusts retrospectively. She urged clarity in the bill on whether the legislature intends revenue caps, all‑payer global payments, or a different model, and recommended more detailed but targeted direction from the committee about policy goals rather than prescribing exact technical methods.

Board staff described practical steps the board would need to take to implement reference‑based pricing: hire staff, run procurements for contractor support, engage hospitals and payers, develop and model a methodology, draft and adopt rules (which the board estimated could take at least six months), and coordinate IT and billing changes for providers and payers. The board warned that tying some service prices to Medicare reimbursement could be inappropriate for services that Medicare does not cover and that the statutory list of factors the board “shall consider” when setting prices might be overly prescriptive and slow implementation.

The committee also pressed the board on scope: Green Mountain Care Board officials said state law already gives the board broad rate‑setting authority for health care professionals, but that authority has not previously been funded or used for non‑hospital providers. The bill’s current structure, which assigns non‑hospital services to the Agency of Human Services (AHS) while giving hospitals to the board, could create overlapping authority unless the language is clarified.

Diane Langford, representing board financial estimates, told the committee that the board’s cost estimate for implementing the proposal assumed AHEAD program funding for the global budgeting work; she cautioned that if AHEAD funds do not materialize, implementing the global budgeting components could require roughly an additional $2,000,000 on top of the board’s current estimate.

Board witnesses also questioned a statutory requirement that the board demonstrate that lower hospital prices “result in commensurate decreases in health insurance premiums.” Barber and Bearby said measuring what premiums would have been without the policy requires strong counterfactual assumptions; the board suggested instead publishing trend and impact analyses and being transparent about what can and cannot be concluded from post‑implementation data.

Committee members repeatedly asked whether the state should pilot the approach for a subset of payers or populations, and whether the committee should separate the reference‑based pricing work from broader moves toward global payments. Board witnesses generally recommended starting with a clear, testable methodology and building in stakeholder engagement and impact modeling before broad, expedited rollouts. Several members called for an ‘‘emergency’’ or accelerated planning process to assess immediate solvency risks and forestall potential hospital closures.

The hearing produced no formal votes. Committee members and board staff agreed to continue refining bill language, pursue drafting assistance with legislative counsel, and report back with more detailed implementation plans and cost estimates.