Health & Welfare members debate reference-based pricing, state health plan to address hospital financial crisis

At a Health & Welfare meeting, committee participants reviewed recommendations from a Milbank Memorial Fund presentation and a Dartmouth researcher and debated how the state should respond to what they called a health care system crisis, focusing on hospital finances, insurer pricing policies and access to obstetric and emergency services.

The discussion opened with a reference to presentations the previous day by Chris Kohler of the Milbank Memorial Fund and Elliot Fisher of Dartmouth. Committee speakers reviewed a Milbank slide labeled “page 8,” which lays out several policy options including reference‑based pricing and price caps. Speaker 1, a committee member who led much of the discussion, said the testimony convinced members that “we're convinced about the crisis … our hospitals face,” and urged colleagues to consider short‑term stabilization alongside medium‑ and long‑term reforms.

Why it matters: committee members said high hospital prices and rising premiums are already straining patients, primary care providers and smaller hospitals and federally qualified health centers (FQHCs). Several speakers warned that well‑meaning payment reductions could unintentionally force facilities that are already operating in the red to cut services or close, worsening access—especially for obstetrics in rural areas.

Committee concerns and policy options

Members debated reference‑based pricing—setting payments as a percentage of Medicare—versus other approaches. Speaker 1 summarized the tension: reference‑based pricing could lower prices but “could be enough to put [some hospitals] under,” and the board must consider how to prevent essential services from being eliminated. The same speaker asked how the savings from price changes would be channeled to reduce patient premiums.

Several speakers recommended pairing short‑term measures with safeguards or sunsets so temporary fixes do not become permanent problems. One member suggested designing interim steps so they either fit into a longer‑term solution or automatically expire when a broader reform is implemented.

Access, obstetrics and regional services

Speakers raised examples of access erosion: one FQHC was described as facing bankruptcy, and multiple hospitals have cut services, including gynecology and chiropractic care at some facilities. Committee members discussed the idea of expanding birthing centers where appropriate but stressed the need for reliable 24/7 emergency transport when births or other complications occur. Speaker 1 noted the risk if a birthing center lacks a nearby hospital within “5 or 10 miles” and emphasized regional planning for transport and backup care.

Regulatory tools and data needs

Members discussed the role of the Green Mountain Care Board, certificate of need (CON) rules and a state health plan as instruments to align capacity with community needs. Speaker 1 said the state does not currently have a comprehensive statewide health plan and asked whether the Agency of Human Services (AHS) should play a role.

Several participants pressed for greater transparency and technical capacity, asking for more financial reporting from hospitals and outside help for facilities in distress. One member asked whether governance and management weaknesses—for example, hospital boards without financial expertise—contribute to some hospitals’ deficits.

Operational inefficiencies

Committee members also noted operational waste and technology gaps. A speaker described a routine clinic visit that required repeating the same intake questions three times and argued that better electronic medical record (EMR) connections could reduce duplicative work, save appointment time and lower costs.

Emergency designation and pace of change

Speakers considered whether to treat the situation as an emergency and borrow tools used during COVID‑19 to move faster. At the same time, the committee repeatedly cautioned against abrupt changes that could destabilize fragile providers. Speaker 1 used an analogy: the state cannot “strip down and rebuild” an existing system without risking critical losses, and urged balancing urgency with caution.

Next steps noted in the meeting

Committee staff were reported to be drafting language for the group to consider. Speaker 1 asked for reports on hospital budgeting, financial counseling or technical support available to struggling hospitals, and called for greater transparency about where hospital revenue flows. The committee expected testimony later in the session from the University of Vermont Health Network: the meeting log noted the network’s CEO and a senior vice president were scheduled to appear after a brief recess. No motions or votes on policy changes were recorded in the transcript segment.

Ending

The session closed this segment with members agreeing to gather more information, pursue draft language for potential policy responses, and hear testimony from the UVM Health Network later in the meeting. Committee speakers said they intend to pursue a mix of short‑term stabilization measures and longer‑term reforms while attempting to protect essential services and preserve hospitals’ financial viability.