Senate Health and Welfare reviews committee bill to rework Vermont health payment and delivery system

The Senate Health and Welfare Committee convened Feb. 28 to review a draft committee bill that would restructure health care payment and delivery in Vermont, including a phased start for reference‑based pricing, timelines for global hospital budgets, creation of an integrated statewide health care delivery plan, new data‑integration work, and appropriations for staff and implementation.

The chair of the Senate Health and Welfare Committee opened the session by saying the committee has taken extensive testimony and developed a framework over the summer and fall, and that members would continue to refine the committee bill after town‑meeting break. The chair said, “we have been through an extenuating extensive process,” and asked committee members to listen to the bill language as presented.

The Office of Legislative Counsel’s Jen Kirby walked members through the draft. Kirby said the bill — titled for now “an act relating to health care payment and delivery system reform” — moves hospital budget and payment reform provisions to the front of the text and amends duties of the Green Mountain Care Board to align with the bill’s reforms. Kirby described a new subsection directing the board to establish reference‑based prices for payments to health care professionals and hospitals, noting the statute would set reference prices initially as a percentage of Medicare reimbursement for the same service but allow the board to later update prices using a separate growth benchmark.

Kirby said the bill directs the Green Mountain Care Board to begin implementing reference‑based pricing for commercial health insurers’ payments to Vermont hospitals in hospital fiscal year 2026 (the period beginning Oct. 2025). The bill also would allow the board, in consultation with the Blueprint for Health and other agencies, to extend reference‑based pricing to non‑hospital services and to adjust benchmarks to support primary care access and later align with the statewide health care delivery plan.

The draft would expand hospital budget review requirements. It adds new reporting items hospitals must file with the board — for example, counts of administrative staff versus staff who deliver direct patient care and reporting of base salaries and total compensation for executive and clinical leadership and for direct‑care employees — and requires hospitals to use a uniform system of accounts so the board can compare expenses across the system. The bill requires hospital budgets to be consistent with a new statewide health care delivery plan and reflect the board’s reference‑based prices and total cost‑of‑care targets.

On timing, the draft directs the board to establish global hospital budgets for not fewer than five non‑critical‑access Vermont hospitals starting in hospital fiscal year 2028 and for all Vermont hospitals by hospital fiscal year 2030. The bill would also require hospitals proposing to reduce or eliminate a service to provide at least 90 days’ notice to the board, the Agency of Human Services, the Office of the Health Care Advocate, and legislative representatives for the hospital service area; the board must evaluate proposed reductions for consistency with the statewide delivery plan and may modify a budget order or take other actions it deems appropriate to preserve access.

The draft creates a Healthcare Delivery Advisory Committee to help develop and monitor the statewide healthcare delivery plan and to advise the Green Mountain Care Board and Agency of Human Services. The bill directs the board and the agency, in collaboration with other regulators and stakeholders, to develop an integrated statewide health care delivery plan between 2025 and 2028 and present the plan to the Legislature by Jan. 15, 2029, with updates every three years thereafter. Kirby said the plan would set annual targets for total cost of care and for the share of spending aimed at primary care, mental health, and preventive services.

The bill also includes a new data‑integration section directing the Agency of Human Services to collaborate with payers, providers, and the Vermont Program for Quality and Health Care to create an integrated system of clinical and claims data, build on the unified health data space, and pursue interoperability and privacy standards. The draft instructs the agency to incorporate All‑Payer Claims Database (APCD) data and social drivers of health data where appropriate and to identify timelines and resources needed to enable clinical and research linkages.

Another session‑law provision would direct the Green Mountain Care Board and the Blueprint for Health to explore retaining accountable care organization (ACO) capabilities developed with public funds and report findings to the Health Reform Oversight Committee by Nov. 15 of the reporting year.

The draft would authorize staffing and appropriations to support implementation: five new permanent positions at the Green Mountain Care Board in fiscal year 2026 (to be filled by transfer of existing vacant executive‑branch positions), legislative intent to add five more positions in fiscal year 2027 and five in fiscal year 2028, and appropriation lines Kirby summarized as follows: $500,000 from the general fund to the Agency of Human Services in FY2026 (including $250,000 for hospital transformation grants and transition costs for reference‑based pricing, $50,000 for statewide plan development expenses, and $200,000 for consultant contracts and other implementation costs); $250,000 from the Health IT Fund in FY2026 for grants supporting data integration; and $1,300,000 from the general fund to the Green Mountain Care Board in FY2026 (including $750,000 for the five new positions and $100,000 for contracts and planning expenses).

Committee members did not take formal votes during the Feb. 28 session; the chair and Kirby said the committee will continue markup at a later time and solicit additional testimony after town‑meeting recess. Senator Cummings said she had not yet had a chance to read the draft.

Why it matters: The bill would shift how care is paid for and regulated in Vermont — tying insurer payments to reference benchmarks, phasing in global hospital budgets, setting statewide total cost‑of‑care targets, and investing in data and staffing to oversee the changes. Those changes affect hospitals, insurers, Medicaid, primary‑care and community providers, and patients across the state and set multi‑year timelines for implementation and legislative review.

What remains unresolved: The draft sets implementation timelines and financing in outline form but leaves multiple details for further committee work and negotiation — for example, the exact Medicare percentage used for initial reference prices, the specific uniform accounting system hospitals must use, details on implementation for psychiatric hospitals, and the criteria the board will use to approve or modify hospital budget orders. The committee said it will continue reviewing and refining the bill and will take additional testimony after the town‑meeting break.

Sources and attribution: committee chair (identified in transcript only by role) and Jen Kirby, Legislative Counsel, Office of Legislative Counsel; remarks and bill text excerpts presented to the Senate Health and Welfare Committee on Feb. 28, 2025.