Committee weighs site-neutral billing to equalize outpatient payments across settings

Supporters and regulators told a legislative panel on Thursday that ‘site‑neutral’ billing — charging the same reference‑based payment for certain outpatient services regardless of whether they are delivered in a hospital or in a community setting — could lower costs and shore up independent providers, while hospital representatives warned the change could imperil hospital finances.

The bill would direct the Green Mountain Care Board, working with the Department of Financial Regulation (DFR), to identify outpatient and ambulatory items and services that are safe and appropriate to deliver in lower‑cost, non‑hospital settings and to establish a single reference‑based price for each service. Jen Carvey, counsel to the committee, said the provision would apply only to selected outpatient services and would not authorize the board to set rates for Medicare or Medicaid enrollees.

Proponents said the change is intended to remove a perverse incentive that has developed as hospitals have acquired independent practices. Sharon Gutwin, a physical therapist and small‑business owner, told the committee that independent clinics deliver many outpatient therapies at far lower cost and that payment parity would allow them to remain viable. "Any service...that can be delivered with the same quality should be paid the same," Gutwin said, arguing that hospitals often bill several times what community providers receive for the same visit.

DFR and bill sponsors framed site‑neutral billing as a companion to last year’s reference‑based pricing work. DFR staff said the board would consult insurers, hospitals, the Office of the Healthcare Advocate and the Agency of Human Services when setting which services and benchmarks to use. They also pointed to statutory safeguards: the bill requires the board to identify factors that would justify terminating or modifying site‑neutral pricing — for example, measurable reductions in access or quality — and explicitly excludes authority over Medicare and Medicaid rates.

Hospital officials urged a cautious, data‑driven approach. Zevin Green of the Vermont Association of Hospitals and Health Systems said hospitals had been working to reduce costs and recommended more analysis before sweeping changes. Green presented an illustrative analysis that applied a 17% differential (derived from federal MedPAC work) and estimated roughly $205–206 million in reduced hospital revenue statewide under a full site‑neutral shift to the commercial market, producing a large negative operating margin in the scenario presented.

Committee members pressed DFR and the care board’s role in calibrating implementation. Some members asked whether the statutory language compels the board to set prices for every service it identifies; regulators said they expect to limit the initial list and proceed stepwise, with sensitivity to hospital solvency. Sponsors said the authority could be implemented narrowly at first and revised over time if unintended harms appear.

The hearing highlighted competing priorities: advocates focus on preserving independent outpatient capacity, reducing patient costs and curbing rapid hospital consolidation; hospital leaders highlight the fixed costs of being a 24/7 acute‑care provider and the risk that broad rate compression would reduce hospitals’ ability to deliver complex services. Regulators recommended additional modeling and a phased approach, citing the Green Mountain Care Board as the entity responsible for balancing affordability and solvency concerns.

Next steps: Committee members signaled interest in further technical briefings and more detailed financial analyses before advancing legislation. The bill, as drafted, would require the board and DFR to move from identification to establishing reference prices for each listed service; several members suggested amending the bill to clarify sequencing and safeguards before proceeding.