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Lawmakers weigh S.190 reference‑based pricing plan as officials warn of hospital revenue shock
Summary
A hearing on S.190 examined a plan to use reference‑based pricing to cap prices in the individual (QHP) and small‑group markets; proponents say it can reduce premiums, while regulators and the commissioner warned a too‑fast rollout could threaten hospital finances and must be phased in.
A proposed change in S.190 to impose reference‑based pricing on the individual qualified health plan market and extend it to small employers drew sustained debate at a state committee hearing.
Emily, the presenter, told lawmakers the individual market has seen "a significant decrease in enrollment" and that insurers submitted premium increases to compensate. She said federal changes to silver‑loading and new fraud‑prevention rules are adding administrative burdens that may further depress enrollment and raise costs. "So really, believe that that market is in crisis right now," she said, urging immediate relief targeted at people and small employers remaining in the market.
The proposal would give the Green Mountain Care Board tools to approve premium rates and implement reference‑based pricing for qualified health plans (QHPs) and, eventually, the small‑group market. Emily said the effort will be phased in and modeled so hospitals have time to adapt — a multiyear approach she described as essential to avoid destabilizing the provider system.
Commissioner Kai Samson (Department of Financial Regulation) told the committee he supports reference‑based pricing as a metric to identify high‑cost items, but warned that imposing broad caps too quickly could outpace hospitals' ability to adjust. He cited a UVM liaison report indicating the state's largest hospital may need on the order of $300,000,000 of cost reductions over three years to be "right sized," and said some proposed caps could cause 39–40 million dollars in revenue reductions in an earlier board guidance scenario.
Committee members asked whether Medicaid or Medicare benchmarks could be used in place of commercial pricing; Emily said Medicaid has its own pricing structure and that offering Medicaid as a QHP would likely require a federal waiver and further analysis. Several members asked whether the board could pilot reference‑based pricing first on discrete services such as radiology or laboratory work; proponents described those targeted pilots as a lower‑risk first step.
The hearing included repeated questions about sequencing: whether savings limited to the QHP market in 2027 would meaningfully reach nonprofits, employers and self‑insured plans in 2028. Samson cautioned that if hospitals cannot absorb large revenue reductions quickly, anticipated savings may not materialize for the broader market in the near term.
The committee paused for a break after extended questioning; no formal votes were recorded during the session.
The next procedural step was not specified during the hearing; witnesses said the board's contractor would complete financial‑impact modeling to guide the timeline and magnitude of any caps.
