State auditors and public-sector benefits groups press reference-based pricing as way to rein in rising hospital costs

Wednesday, Feb. 5 — State auditors, union benefit administrators and school plan trustees told a legislative committee that reference-based pricing (RBP) could cut what Vermont public plans pay hospitals and help stabilize sharply rising health-care costs for state employees and teachers.

The deputy state auditor summarized an office analysis showing large price variation among Vermont hospitals, a multi‑year swing in the state employee health fund from a surplus to an approximately $39.9 million deficit, and a requested February budget adjustment of about $18.5 million in general fund to partly cover the shortfall. He said the office’s limited modeling of 39 procedures suggested RBP could generate millions in savings and recommended the state employee plan as a possible pilot.

The auditor’s office presentation placed the issue in context: hospital prices paid by commercial plans vary dramatically for the same procedure, and that unexplained variation is the target of RBP. “The key opportunity, if there’s an opportunity in reference-based pricing, I believe, is the unexplained portion,” the deputy state auditor said, describing the office’s role as informational rather than advocacy.

Why it matters: Representatives of the two largest public-sector pools in Vermont told the committee the immediate fiscal pressure is real. Adam Norton of the Vermont State Employees Association said the state employee plan — which…