Experts tell Vermont lawmakers hospital prices and weak primary care are driving a health-cost crisis; options include reference pricing, price caps, global Bud

Dr. Elliot Fisher, a presenter, told a Vermont legislative committee that the state faces "a crisis of affordability and access in Vermont," driven primarily by hospital inefficiency and weaknesses in primary care.

Fisher said data show "at least a hundred and $50,000,000 on the table that could be saved within a year" and that longer-term savings could be substantially larger if utilization and prices are improved. A Millbank Memorial Fund presenter who followed Fisher summarized a recurring finding from multi-state work: "The problem is commercial. And when you look at commercial, the problem is prices. It's not utilization."

The presentations, delivered to lawmakers and staff, reviewed national case studies and state policy tools and urged three concurrent approaches: (1) strengthen primary care and quality-improvement capacity, (2) give state agencies clearer, auditable financial oversight to solve market failures, and (3) pursue payment-policy levers that realign prices and incentives.

Why this matters

Committee members were shown multiple data points the presenters said are relevant to Vermont policymakers: commercially insured patients can trigger prices multiple times higher than Medicare for the same services; benchmarking suggests some Vermont hospitals charge about 3.17 times Medicare rates for comparable care; and analyses cited to the committee estimate hundreds of millions of dollars in potential annual savings if hospital cost-efficiency matched peer institutions. Presenters warned those price gaps threaten hospital financial stability, endanger access in rural areas and shift costs onto employers and workers.

What the presenters recommended and the evidence cited

- Primary care and quality improvement. Fisher emphasized that improved access to primary care and practice-level improvement cycles can reduce unnecessary emergency visits and inpatient utilization. He cited national examples (Intermountain Healthcare, SelectHealth) in which system-level improvement and aligned incentives reduced discretionary utilization without worsening outcomes.

- Audited, comparable hospital financial data. Both presenters urged a consistent, auditable accounting standard across hospitals so policymakers and regulators can compare costs and identify administrative savings. Fisher said this would create "a level playing field" for evaluating efficiency.

- Reference-based pricing. The Millbank presenter described reference-based approaches that tie payment to a percentage of Medicare (examples cited: Montana and Oregon public-employee plans, which used roughly 200'225% of Medicare as a benchmark for some services). He described this as a relatively quick, administrable step that can align public purchasers with Medicare prices but cautioned it can create a "balloon effect" (costs shifting to other services or payers) if performed in isolation.

- Hospital price-growth caps. The Millbank presenter described Rhode Island'style limits that constrained hospital commercial price growth (Rhode Island applied limits similar to CPI plus 1 as a growth constraint for insurers negotiating rates), noting Rhode Island experienced slower commercial premium growth after the policy was introduced. He framed this as a lighter-touch intervention than a full budget reform and noted it can be implemented through insurance regulation where statutory authority exists.

- Prospective global budgets. Both presenters discussed global or per-capita hospital budgets (Maryland was offered as a mature example). Under a global budget hospitals receive a set revenue target for a population and can still bill claims, with reconciliation at year end; presenters said global budgets can make deliberate rebalancing from inpatient-centered care toward community and preventive services financially feasible. The Millbank presenter said Maryland'style budgets enabled hospitals to redirect effort to community prevention once revenue was predictable.

Case studies and technical examples cited

- Intermountain Healthcare: presenters cited Intermountain's published work (Brent James and colleagues) that tied full-capitation authority to major cost reductions and clinical process improvements (examples included hip-replacement pathways and reductions in inappropriate cardiac catheterization after implementing checklists and prior-authorization workflows).

- Peter Pronovost: committee members were told Peter Pronovost has been invited to speak to the board; one presentation slide said Pronovost's team reduced administrative costs by about $250 million in a single-year effort at the cited institution (presenter attributed this figure to public reports about that system's reorganization).

- Reference-pricing examples: Montana (state employee plan) and Oregon (statute applying a percentage of Medicare for in-network payment for public purchasers) were offered as models that produced measurable savings for the covered populations.

Concerns raised by legislators and staff

Committee members repeatedly pressed presenters on access risks and the limits of state authority. Questions and concerns included: - Whether constraining hospital revenue would cause hospitals to close clinics or cut community services (several legislators described instances where hospitals reduced outpatient clinics or dialysis capacity after budget decisions). - How to align Medicare, Medicaid and commercial purchasers so cost reductions do not simply shift costs among payers (the presenters recommended seeking federal alignment where possible and designing state-level reconciliation to reduce cost shifting). - Who would hold providers accountable and how the state would monitor access and quality while limiting price growth (Maryland and Rhode Island were recommended as places to study oversight structures and monitoring arrangements).

Committee directions and follow-up items reported in the hearing

- An invitation to Peter Pronovost was confirmed for March 5; committee staff were asked to circulate links and the Milbank working paper to members. - Presenters encouraged the committee to consider strengthening the Green Mountain Care Board's capacity for audited financial oversight, clarifying the board's role in strategic planning, and pairing price controls with investments in primary care so reductions in hospital revenue are not translated into reduced access.

What was not decided

No formal votes or statutory changes were taken during the session. Presenters and lawmakers framed the meeting as an exploratory policy discussion and asked staff and the Green Mountain Care Board to follow up; the committee planned a break and scheduled a roundtable with Green Mountain Care Board representatives and other officials to continue questioning.

Ending

Presenters told the committee they can provide detailed analyses and follow-up briefings and said Milbank would make the cited working paper available to members. Committee members signaled interest in pursuing technical exchanges with Maryland and Rhode Island officials and in receiving audited hospital financial accounting that would support more definitive policy work in the coming weeks.