Vermont patients would be shielded from hospital charges above set rates

Vermont lawmakers are considering a plan that would put firm limits on what hospitals can be paid for many services. The proposal directs the state’s Green Mountain Care Board to set "reference-based prices" that hospitals must accept as full payment for care delivered in Vermont.

The idea is to move away from prices negotiated privately between hospitals and insurers. Instead, the board would establish maximum payment levels based on national data. Hospitals would not be allowed to charge insurers more than the reference price, and patients could not be billed beyond the usual cost sharing required by their health plan.

State regulators would gradually adjust those limits over time. The goal is to bring hospital prices in Vermont down to the national median for similar hospitals by 2030.

Medicare as a pricing benchmark

The system would rely heavily on Medicare, the federal health insurance program for older adults, as a reference point. Medicare uses standardized formulas to determine what it pays for hospital and medical services, which makes it a common yardstick when policymakers compare health care prices.

Under the proposal, the Green Mountain Care Board would use high quality national data showing hospital prices as a percentage of Medicare payments to track progress toward the national median target. In some cases, payment limits for certain health plans could be expressed as a percentage of a Medicare adjusted base rate.

Hospitals would also be required to display pricing information in multiple ways when publishing their charges, including as a percentage of Medicare rates and as dollar amounts. The goal is to make comparisons easier for regulators, insurers, and the public.

Limits for some health plans

For a specific hospital fiscal year, the board could require hospitals to lower the commercial reimbursement rates they receive from certain types of coverage, including qualified health benefit plans and health plans offered to school employees. Those payments could be capped at a percentage of the Medicare adjusted base rate set by the board.

Insurers and health benefit associations would not be allowed to reimburse hospitals above that percentage. Hospitals paid under these limits could not bill patients for extra amounts beyond the cost sharing already required by their insurance coverage.

State regulators would also review insurance premiums to ensure that reductions in hospital payments are reflected in what consumers pay for coverage.

Oversight, data, and transparency