Green Mountain Care Board outlines phased plan for reference‑based pricing as hospitals report strained finances

The Green Mountain Care Board on Jan. 8 told a legislative committee it will move to implement reference‑based pricing for hospital services in a phased way beginning in fiscal year 2027, even as many Vermont hospitals report tight cash reserves and negative operating margins.

"Our goals are to improve access, affordability and quality of health care," Emily Brown, executive director of the Green Mountain Care Board, said in opening remarks. Brown outlined the board's limited regulatory jurisdiction—hospital budgets, rate review for qualified health plans, certificate of need and ACO oversight—and described rule development and stakeholder engagement now under way to put reference‑based pricing into hospital budget guidance.

Owen Foster, chair of the board, said the board plans rulemaking this year and hopes to have guidance in place for FY27, with phased implementation to allow hospitals and insurers to adapt. Foster noted the board has used budget enforcement to reduce commercial prices in prior years, citing a roughly 8.9% reduction in one hospital system's commercial prices after enforcement.

Board leaders emphasized the financial pressures that motivate the change. Foster said Vermont spends more than half of its health dollars on hospitals and that service‑line reductions are rising; he cited about 195 hospital closures nationally since 2005 and said Vermont has seen service‑line contractions though not full closures. He also warned that federal subsidies that lowered premiums for many Vermonters have expired, increasing household sticker prices.

Foster and Brown provided specific measures to illustrate pressure on providers: days‑cash‑on‑hand thresholds that flag vulnerability (under 110 days is vulnerable; under 80 highly vulnerable); hospital examples included Brattleboro Memorial (72 days), Copley (65), and Springfield (33). Foster said Brattleboro is budgeting a roughly −12% operating margin that represents about $14 million and flagged that federally qualified health centers and mental‑health providers generally have much smaller reserves.

The board and committee reviewed recent state policy that affected the current picture. Brown cited Act 55 (the outpatient‑drug price cap), Act 68 (the reference‑based pricing framework and notice‑of‑service‑reduction requirement) and Act 15 (changes to CON thresholds). She said those actions, combined with board budget orders and enforcement, produced roughly $230 million in one‑time savings that helped reduce prior rate pressure but noted such one‑time savings are not repeatable.

Insurance rate review outcomes were presented as evidence of the board's leverage: Blue Cross Blue Shield requested a 23.5% increase on individual plans and was approved for 9.6%; MVP sought 6% and the board approved 1% on its request. Board members said insurer filings had already assumed some market exits after subsidies expired.

Several legislators pressed the board on how quickly reference‑based pricing can be applied without harming essential services. "Hospitals try to preserve their reserves and their margin, and they generally go low‑margin services first," Foster said, noting inpatient psychiatry and primary care are among services at risk. Mike Fisher, the state's health care advocate, urged a gradual, targeted approach—"feathering this in"—and suggested focusing next steps on particular service lines such as imaging or lab services to limit unintended consequences.

Brown described a five‑year data infrastructure project and an RFP to increase the board's capacity to monitor systemwide effects in closer to real time; she said the board is hiring staff and engaging stakeholders to track impacts as rules are phased in. Committee members also discussed site neutrality proposals and options to reduce prior‑authorization burdens while monitoring utilization shifts.

Committee members asked about troubled hospitals. Foster said Brattleboro and Springfield present the more acute near‑term concerns (Springfield was cited at about 33 days cash on hand) and described oversight tools including appointing outside observers or monitors and working with hospitals and the Agency of Human Services on transformation plans. He declined to predict imminent closures but said the system will need to look different in coming years absent major new funding.

The briefing closed with plans for the board to return with further details, and a prescription‑drug affordability report due to the committee on Jan. 15. The board emphasized that reference‑based pricing will be phased and monitored to try to balance affordability goals with provider solvency and access to services.

The Green Mountain Care Board presentation is scheduled to return to the committee for further briefings as rulemaking advances.