Legislature limits how much hospitals can charge for outpatient drugs
By Guy Page
The Green Mountain Care Board (GMCB) June 19 denied health insurer BlueCross/ BlueShield’s request for a large group 17.3% rate increase and ordered adjustments projected to reduce the increase to 13.7%.
Vermont is in the midst of spiraling health care cost inflation, with serious consequences to insurers, ratepayers, and hospital sustainability. More than half of Vermont’s hospitals are in the red. One rural hospital announced last week it will close its birthing center (see below).
BCBSVT provides health insurance coverage to various groups, including large employer groups in Vermont. The largest provider of private health insurance in Vermont earlier this month issued a statement disputing media reports that it is ‘on the brink of bankruptcy.’
The decision by the GMCB, the state’s health care insurance regulator, specifically applies to BCBSVT’s large group (100 employees or more) products.
According to a Green Mountain Care Board statement, to achieve the reduction from the proposed 17.3% to about 13.7%, the GMCB ordered BCBSVT to implement three key rate adjustments:
Legislative Impact (H.266): BCBSVT must also reduce the rate 2.8% due to a bill reducing what hospitals can charge for outpatient drugs, including infusions for cancer. Nationally, these outpatient drug services have been signficant revenue centers for struggling hospitals.
Hospital Budget Guidance: BCBSVT must reduce the rate .2%.
Hospital Budget Enforcement: The insurer is required to reduce the rate .7% to reflect the impact of the Fiscal Year 2023 hospital budget enforcement decisions concerning the University of Vermont Medical Center and Rutland Regional Medical Center.
Insurer denies bankruptcy threat
Earlier this month, BlueCross/Blue Shield denied media reports that it was on ‘the brink of bankruptcy’ but did say its reserves are low and that recovery to financial health will take time. The statement reads.
“WCAX has reported twice in the past week that Blue Cross and Blue Shield of Vermont is “on the brink of bankruptcy.” This is untrue and a misrepresentation of Blue Cross VT’s financial condition.
“Health insurers are required to maintain an adequate level of capital reserves to ensure that we can pay member claims under any circumstances. At the end of 2024, Blue Cross VT’s reserve level was at approximately half of the level required by the Vermont Department of Financial Regulation. Our organization borrowed $30 million to increase our reserves in the short term and has implemented a financial recovery plan to further increase our capital levels over time. While we currently have lower than optimal levels of capital reserves, we are not nearing bankruptcy.
“It’s important to acknowledge that Blue Cross VT’s financial challenges developed over a prolonged period, fueled by high hospital prices, increased utilization, increased care intensity, and fully funded premiums that were insufficient to cover escalating claims. We’re confident in our disciplined financial management and actions to stabilize our organization, but recovery will take time.”
But just in case…..the Legislature this year passed, and the governor signed, Act 49 (H.482), “to reduce a domestic health insurer’s reimbursement rates to one or more Vermont hospitals if the insurer is facing an acute and immediate threat of insolvency. The GMCB may only reduce rates to a hospital that meets certain fiscal criteria and only to the extent necessary to address the threat to the insurer’s insolvency.”
Morrisville hospital to close birthing center, following national trend
Copley Hospital in Morrisville will close its birthing unit, today’s Journal-Opinion reports via a story in the News and Citizen. A news release from the hospital did not provide a date for the closure.
Reports emerged last year that the hospital was considering closing the birthing unit.
“Joe Woodin, Copley Hospital’s CEO, has repeatedly cited the expense of running the birthing center as the primary reason for considering its closure, claiming that it lost the hospital millions annually,” the Morrisville newspaper reported.
Last month, nurses at the hospital rallied in support of the birthing unit, according to the Hardwick Gazette.
The closure of birthing units is a widespread phenomenon in rural America.
More than 100 have closed since 2021, according to KFF Health News:
“Another financial challenge is that many births at rural hospitals are covered by Medicaid, the federal and state program serving people with low incomes or disabilities. The program typically pays about half of what private insurers do for childbirth services, according to a 2022 report by the U.S. Government Accountability Office.”