House backs broad healthcare overhaul directing reference‑based pricing, hospital budget review and statewide plan

The Vermont House on May 20 approved Senate Bill 126, a comprehensive healthcare payment and delivery reform bill that directs the Green Mountain Care Board to implement reference‑based pricing, expands budget review of hospitals and hospital networks, and requires the Agency of Human Services (AHS) to lead a statewide health care delivery strategic plan due Jan. 15, 2027.

The legislation tasks the Green Mountain Care Board with setting reference‑based prices — maximum payments for services delivered in Vermont based on a percentage of Medicare or another benchmark — and authorizes the Department of Financial Regulation to monitor implementation to ensure lower hospital payments produce lower insurance premiums. The bill also directs the board to standardize hospital budget submissions, review network financial operations, and consider executive and clinical leadership compensation in budget reviews.

Why it matters: Sponsors said the bill seeks to curb rapidly rising premiums, shore up struggling hospitals and create a statewide framework for allocating health‑care resources. The measure creates new committees — including a 19‑member health care delivery advisory committee and a 16‑member comprehensive primary care steering committee — to guide strategy and monitoring.

Key provisions and timelines - Reference‑based pricing: The board must establish reference‑based prices "as soon as practicable, but not later than fiscal year 2027." The law as written excludes applying those prices to Medicare or Medicaid beneficiaries. - Statewide strategic plan: AHS, in collaboration with stakeholders, must deliver an integrated statewide health care delivery strategic plan by Jan. 15, 2027, with updates every two years (first update due Dec. 1, 2029). - Hospital notices and budget authority: Hospitals part of a network will face scrutiny of network financial operations and executive compensation; hospitals proposing to eliminate or reduce a service to meet a budget order must notify the Green Mountain Care Board, AHS, the Office of the Health Care Advocate and local legislators at least 45 days in advance. - Data and contracts: Contracting entities must provide unredacted copies of executed or proposed health care contracts to DFR and the Green Mountain Care Board on request. - Reporting and incentives: AHS must facilitate collaboration to identify at least a 2.5% reduction in hospital spending for hospital fiscal year 2026 and report proposed reductions to legislative oversight committees. The bill appropriates grants to incentivize hospitals that pursue transformation and authorizes AHS to award incentive grants funded from the health IT fund.

Appropriations and administrative support Committee and appropriations members explained the bill includes a $5.4 million appropriation to implement the law. The House appropriations presentation broke the total down as: $2.2 million in general funds to AHS for feasibility analysis, planning and staffing support; $2.0 million from the Health Information Technology (HIT) Fund for hospital incentive grants; and $1.2 million for the Green Mountain Care Board to hire staff and cover contracts for reference‑based pricing implementation.

Committee action and floor votes - The House Committee on Health Care approved a strike‑all amendment on a vote of 8‑3‑0 and reported the bill with amendment. - The House Committee on Appropriations recommended the healthcare committee report be amended to provide the $5.4 million appropriation; the appropriations committee reported a straw poll of 9‑1‑1 in favor. - On the floor, Representative Black (member from Essex), sponsor for the healthcare committee, framed the bill around rising premiums: “Is there anyone in this chamber that could possibly call that affordable?” - Representative Donahue (member from Northfield) offered amendments to add and better integrate language about reducing disparities and parity for mental‑health and substance‑use disorder services; some of that language was adopted earlier in committee and retained in the bill. A separate floor amendment from Representative Donahue requiring advance notice to AHS for certain non‑hospital health facility projects that do not require a certificate of need was defeated by division: 18 in favor, 115 opposed.

Supporters and opponents Supporters argued the bill establishes urgency, accountability and tools — including rate setting and a statewide plan — needed to stabilize hospitals and bring down premiums. Opponents warned of risks from price controls and the potential harms to small, struggling hospitals if reference‑based prices are not implemented with sensitivity to hospital‑by‑hospital circumstances.

Next steps and effective dates The House proposed the committee amendments to the Senate and ordered third reading; the bill will be transmitted to the Senate for concurrence on the House amendments. Several reporting and implementation deadlines are embedded in the bill, including the statewide plan due Jan. 15, 2027, and multiple interim reporting dates to legislative oversight bodies in 2025 and 2026.

Ending note: Legislators repeatedly described the bill as a difficult set of tradeoffs aimed at averting systemic collapse: if no action is taken, sponsors warned, Vermont risks further hospital closures and continued premium spikes.