Expert warns reference-based pricing could entrench fee-for-service; urges total-cost-of-care and global budgets

Jessica Michella, senior vice president of high value care for the University of Vermont Health Network, told the Health & Welfare Committee on March 12 that Vermont should avoid treating reference‑based pricing as a final solution and should instead accelerate the shift to total‑cost‑of‑care contracts and hospital global budgets.

Michella said reference‑based pricing “is fee for service. It’s not value based care,” and that while it “caps prices and brings the prices down immediately,” it also keeps the system anchored to per‑service billing and the incentives that have driven fragmentation and high cost. She called for an “immediate transition to total cost of care contracts, with a transition to global budgets,” and said those models better align payer and provider incentives around quality and coordinated care.

Why it matters: Committee members are drafting a bill that contemplates reference‑based pricing pilots alongside broader delivery‑system reforms. Michella and others told the committee that short‑term price…