Health care regulator should stay the course

This week's writers are former Gov. Jim Douglas and Lisa Ventriss, president emerita of the Vermont Business Roundtable. They are co-chairs of the VT Healthcare 911 Leadership Council.

Vermont's healthcare system is undergoing a seismic transition, engineered by legislators and regulators. The objectives are to significantly lower costs, preserve our rural hospitals and improve the quality of care.

To give reform efforts the best chance of succeeding, it will be important for the incoming Green Mountain Care Board (GMCB) chair to keep that body moving in the direction the outgoing chair, Owen Foster, championed.

GMCB was established in 2011 to regulate hospitals and health insurers. For the first decade, many wondered if the Board was having a real impact. In that same period, Vermont went from middle-of-the-pack health insurance costs to the most expensive health insurance premiums in the country.

Appointed chair of the Care Board in 2022, Foster led the effort to fundamentally change the regulatory landscape. He and the Board questioned more rigorously the traditional assumptions behind hospital budgets and rising insurance costs. They also dug into data forensically and pressed hospital leaders on declining quality, long wait times, and the crisis in primary care.

Cutting excessive costs at hospitals through regulation may feel to some like a blunt instrument, but it is foundational to curbing runaway medical inflation. In the last few years, GMCB has taken $200 million out of proposed hospital spending and pushed hospital leaders and Blue Cross Blue Shield of Vermont for even more savings.

Early signs are that this positive trend is continuing as the 2027 hospital budget process gets underway.

Complementing the Care Board's work are other promising initiatives that, if executed well, will stop price-gouging, lower insurance premiums and transform care delivery.

In 2025, for example, Act 68 authorized GMCB to implement a methodology to reimburse hospitals based on a percentage of what Medicare pays. This is called "referenced-based pricing" (RBP).

It had been implemented for the public sector in other states and saved a lot of money. Under Chair Foster's leadership, GMCB commissioned an RBP analysis of the claims of Vermont state and school employees and their dependents. The 2024 report showed that if the State's medical fund and the risk pool covering school employees had reimbursed hospitals at 200% of what Medicare had paid from 2018 through 2023, it would have saved an estimated $400 million.

With Act 68, though, Vermont will be the first state to operationalize RBP for the entire commercial insurance market, effective FY28. It is a straightforward way to take the savings the Care Board has demanded from hospitals and put them back into the pockets of employers, employees and taxpayers who pay for commercial insurance.

After RBP is in place, the objective is then to move Vermont hospitals by 2030 to "global budgets." This funding mechanism has been used with Maryland hospitals for over a decade. It sets a total amount of revenue annually that a hospital may receive. Combined with rational price setting like RBP, global budgets can incentivize hospitals to reduce unnecessary utilization and operate more efficiently.

In 2025, the legislature and Gov. Scott also established a regionalization planning effort to help hospitals better coordinate and improve services and reduce expenses. Vermont received $195 million in federal funds to drive this process. It is facilitated by the Agency of Human Services and aligns with the expectations and practices of accountability the Care Board has instituted. It's our best shot at helping smaller hospitals stay open, innovate and function sustainably.

The reforms and strategies in play now, unthinkable five years ago, demonstrate that bold change is possible when state regulators and lawmakers put patients, price setting and affordability first.

What comes next will not be easy. But if the legacy of GMCB during Owen Foster's tenure is embraced and extended by the new chair, in tandem with fellow regulators whose service has also been exemplary, we could achieve something remarkable.

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The goal of VT Healthcare 911 Leadership Council (VHC911) is to build a broad and diverse coalition of support for affordable, accessible, and high-quality healthcare.