Senate panel debates caps on hospital commercial rates, orders study of reference‑based pricing impacts

Senate Health & Welfare lawmakers on March 12 examined a major rewrite of S190 that would limit what hospitals can charge commercial insurers and create a study and implementation framework for reference‑based pricing.

The draft would require hospitals’ charges for qualified health benefit plans (QHPs) to be limited to 250% of a Medicare‑based benchmark and, if further reductions were needed to meet budget targets, to reduce commercial reimbursement rates that exceed 500% of a Medicare adjusted base rate or the hospital’s highest services relative to Medicare. Committee staff and the bill author said the approach is intended to channel savings to individuals and small groups enrolled in QHPs and to align with recently issued hospital budget guidance.

Supporters emphasized the potential to lower premiums for exchange plans. Opponents and hospital representatives urged caution, saying the statutory references to a “Medicare adjusted base rate” are unclear and that some hospital types—critical access and teaching hospitals, for example—require discrete adjustments. A hospital representative said the hospital sector can report “what we get paid,” but cannot uniformly convert those payments into the specific Medicare base‑rate percentage without rulemaking and technical guidance.

“The board should have rulemaking authority to make apples‑to‑apples adjustments for rurality, teaching status, acuity and other policy elements,” a hospital representative told the committee (testimony recorded in the hearing).

To address those concerns, the draft requires the Green Mountain Care Board to develop rules and a methodology for converting hospital payments into the benchmark used for limits and to accept hardship petitions when limitations demonstrably threaten access, quality or the sustainability of rural services. Committee members also directed the bill to require interim public reporting of hospital pricing in machine‑readable files, with hospitals reporting amounts received from Medicare until uniform methodology is established.

The bill creates a study committee and appropriates $200,000 to the treasurer’s office to contract consultants to analyze whether and how to extend reference‑based pricing to other cohorts, including state employees and teachers, and to model projected impacts on hospitals. Members said the study should include Green Mountain Care Board access to claims data from self‑insured plans and should model effects on rural hospitals, hospital service lines and premiums.

Committee members noted the 250% figure was modeled on other states’ approaches and discussed implementation timing, enforcement, and whether savings must be reflected in premiums or otherwise returned to Vermonters. The committee did not take a final vote and asked staff to produce a revised draft that clarifies Medicare benchmark definitions, rulemaking authority, reporting mechanics and data access ahead of further consideration.

The committee is scheduled to resume consideration the next day.