Senate Health & Welfare unveils framework for statewide health‑care delivery plan, payment reforms to curb rising hospital costs

Montpelier — The Senate Health & Welfare Committee on Feb. 11 discussed a committee bill outline aimed at reworking Vermont’s health system to address rising hospital costs and shrinking commercial insurance capacity, emphasizing a statewide health‑care delivery plan, data integration and payment reform.

The draft, presented by Jennifer Carvey of the Office of Legislative Council, would direct the Green Mountain Care Board and the Agency of Human Services to develop an integrated statewide health‑care delivery plan that builds on the Health Resource Allocation Plan (HRAP), Act 167 transformation work and other data sources. The proposal also contains provisions on clinical and claims data integration, reference‑based pricing for commercial payers, global hospital budgets, a statewide audit of hospital finances, and new staff and contract resources for the Care Board.

Why it matters: Committee leaders said Vermont faces rapidly rising hospital and insurance costs that threaten access and affordability; the draft is meant to create both near‑term regulatory authorities the Green Mountain Care Board could use and a longer‑term blueprint to align hospitals, payers and state agencies. Members emphasized tradeoffs, noting some measures could strain hospitals that are already financially vulnerable.

The bill outline describes five parts: a statewide health‑care delivery plan; a health system evaluation and advisory committee; technical development and sharing of clinical and claims data; hospital budgets and payment reform (including reference‑based pricing and total cost‑of‑care targets); and resources (staffing and contracts for the Green Mountain Care Board).

Jennifer Carvey, Office of Legislative Council, said the document is an outline, “not drafted as legislative language,” and summarized the major parts: the statewide plan; data aggregation; hospital budgets and payment reform; and resources to staff implementation. She said the plan would require hospitals to submit strategic plans aligned with the statewide delivery plan and would direct the Green Mountain Care Board to review hospital strategic plans for alignment.

Committee discussion focused heavily on payment reform. The draft would direct the Green Mountain Care Board to implement reference‑based pricing for hospital prices in the commercial market “at a percentage of Medicare prices to be determined by the Green Mountain Care Board,” and to establish total cost‑of‑care spending targets intended to bring Vermont’s growth in hospital and total health spending in line with national GDP growth. The outline calls for global hospital budgets beginning with the five largest Vermont hospitals in 2027 and for all Vermont hospitals to have global budgets by 2029.

Debra Green, Vermont Association of Hospital and Health Systems, asked for clarification about whether “nonhospital services” referenced in the draft meant outpatient services affiliated with hospitals or all nonhospital services; the bill text would need specificity when drafted, Carvey said. Sarah Teachout of Blue Cross noted reference‑based pricing is typically applied on the commercial side because Medicaid and Medicare set their own rates.

Committee members repeatedly cautioned about unintended consequences. One senator raised that reference‑based pricing could push some hospitals “under” if they are already losing money; committee members discussed using targeted supports or “carrots” for hospitals that need help adjusting. The draft proposes an independent, statewide audit of hospitals — a single contract paid for by hospitals, rebid every three years — and a uniform system of accounts to make interhospital comparisons possible.

The draft also directs Vermont information‑technology leader VITL (Vermont Information Technology Leaders) to lead the technical work for clinical and claims data linkage, follow the health information exchange steering committee plan where practicable, and plan interoperability steps that would include emergency medical services and a linkage between the Department of Health and the WIC (Women, Infants, and Children) program.

On resources, the outline would add 15 positions to the Green Mountain Care Board over three fiscal years (five positions each year in FY2026–FY2028) and appropriate an unspecified amount for positions, contracts and other needs in FY2026. Several committee members said the board may need contracted support initially while it builds capacity.

No formal votes or motions were recorded during the session; the committee scheduled further testimony from national experts and officials from other states, and signaled an intent to prioritize detailed work on payment reform while also developing the longer‑term statewide plan.

“There's a lot here,” a committee member said during the session, adding the committee must balance what can be done quickly with what requires longer‑term planning. The committee plans to invite witnesses from states such as Maryland, Maine and Montana and national groups (Milbank, academic and policy experts) to inform design choices.

The outline and follow‑up hearings will inform the committee’s drafting of legislative language. Committee leaders said they will seek data on how steps such as reference‑based pricing and global budgets affected hospitals and premiums in other states before finalizing statutory language.

The committee recessed to hear testimony from nurse practitioners and 2‑1‑1 staff later in the meeting and scheduled additional sessions to collect stakeholder input and expert analysis.