Vermont law requires reference‑based hospital prices and broader transformation as board, AHS take lead

Jennifer Carvey of the Office of Legislative Council told the Senate Health & Welfare Committee that Act 68 — the state's recent health‑care payment and delivery reform law — requires the Green Mountain Care Board (GMCB) to establish reference‑based prices that represent the maximum amounts Vermont hospitals may accept as payment in full.

"A reference based price is a price, that is literally linked to a particular reference," Carvey said, explaining the reference is usually a Medicare rate or another benchmark and can be expressed as a percentage of Medicare (for example, 125% or 300% of the Medicare rate). The law directs GMCB to start work "as soon as practicable, but not later than hospital fiscal year 2027," she said.

Carvey said the purpose of reference‑based pricing is to increase transparency and create a consistent benchmark that GMCB can use when reviewing hospital budgets and insurer rates. Under the statute, balance billing would be prohibited where the reference price applies, meaning hospitals could not bill patients or insurers for amounts above that cap.

Act 68 also directs GMCB, in collaboration with AHS, to develop and, where resources permit, implement global hospital budgets. Carvey said the act contemplates rolling budgets in phases: for one or more non‑critical access hospitals starting hospital fiscal year 2027 and for all hospitals by hospital fiscal year 2030. Hospitals proposing to reduce or eliminate services must provide at least 45 days' notice to GMCB, AHS, the Office of the Health Care Advocate and legislators representing the affected service area; GMCB may modify a hospital's budget order to preserve access.

The law increases regulatory transparency in other ways: payers and providers must provide an unredacted copy of an executed or proposed health‑care contract on request to the Department of Financial Regulation (DFR) or GMCB, and GMCB may share subpoenaed materials with AHS or DFR as appropriate. Carvey also listed new reporting requirements: GMCB's annual report must include updates on reference‑based pricing and global budget work beginning with the 2027 report, and AHS must report on progress toward a statewide health‑care delivery strategic plan (first due Jan. 15, 2028) and produce monthly updates tied to hospital fiscal year 2026 activities.

Carvey detailed the act's funding and short‑term transformation supports: the legislature appropriated $5,000,000 for transformation planning overall (including consultant support), roughly $900,000 to AHS in FY2023 and a little over $4,000,000 to GMCB for its role. The act also included $2,000,000 in incentive grants to hospitals for short‑term transformational work and additional appropriations for staffing and contracts ($2,200,000 to AHS; $1,212,500 to GMCB).

Carvey cautioned GMCB will need staffing and resources and noted implementation will be phased: "they will review the reference‑based prices for each hospital annually as part of the budget review process" and make adjustments as appropriate. She said some elements (integration of clinical and claims data in a unified health data space) cannot proceed before the statute's timing conditions are met and require majority approval of the health information exchange steering committee.

The committee signaled a follow‑up expectation: staff and GMCB and AHS officials will return with progress updates and the technical workplans to translate these statutory obligations into implementable rules and operating practices.

This account is based on the committee discussion and Jennifer Carvey's presentation to the Senate Health & Welfare Committee.