By Guy Page

In a decision predicted by the University of Vermont Medical Center “to cut patient care and support services,” the Green Mountain Care Board ruled Oct. 10 that the state’s largest hospital is over-budget in patient revenue and therefore must take a ‘haircut’ in health insurance reimbursements.

“UVMMC’s FY23 operating results differed substantially from its budget. In this order, we correct UVMMC’s deviation from its budget by reducing its overall change in charge and commercial negotiated rate increase,” the GMCB Oct. 10 decision said. “Accordingly, we also deny UVMMC’s request for a retroactive adjustment to its FY23 budget.”

Per state law the GMCB regulates hospital budgets. Spend too much and the GMCB takes action – in this case, denying an increase in its reimbursement from patients’ health insurers. 

State law requires the GMCB to issue budget orders to “promote efficient and economic operation of the hospital.” A Board-established budget is not optional. Each hospital is required by law to “operate within the budget established for it by the Board, the GMCB order says. 

At issue is a GMCB red flag that the hospital exceeded its approved patient revenue by $80 million. The hospital concedes the revenue overrun but says it was necessary to provide patient care.

“This was a direct result of the hospital providing higher volumes of patient care that responded to community needs, as well as initiatives to reduce wait times and backlogs. All of the unbudgeted revenue was used to cover the additional expense of providing necessary care to those patients; none of it was retained by the hospital as a positive margin,” hospital spokesperson Annie Mackin said in a press statement released Tuesday, October 22. “In fact, the hospital lost $23 million providing the additional care, but continued its efforts to increase access to much needed health care as part of its nonprofit mission.”

Mackin’s quote was part of the statement’s vociferous public pushback.The lengthy press statement was headlined “UVM Medical Center Takes Legal Action in Effort to Prevent Additional Patient Care Cuts. Regulatory Action Penalized Hospital for Providing More Care to Patients Than Expected.” Mackin warned: 

“Unless the GMCB’s enforcement action is overturned, it will force UVM Medical Center, the academic medical center that anchors University of Vermont Health Network, to cut patient care and support services.

The ‘legal action’ referenced by Mackin is a motion filed by the hospital to the GMCB to delay the order. 

Mackin’s press statement described the impact of board’s reduction as the equivalent of closing UVMMC’s hospitals for 17 days. 

“The cumulative impact of the board’s reductions on UVM Health Network’s Vermont hospitals and enforcement action on UVM Medical Center has created the need to cut approximately $122 million of patient care revenue for the current fiscal year – the equivalent of closing the health system’s Vermont hospitals for 17 days.

“Additionally, the enforcement on UVM Medical Center reduces the FY25 commercial insurance rates it can charge by 1%, which essentially is a “give back” to insurance companies.  But that “give back” will result in no decrease to the rates that insurance companies charge their members this year.

“UVM Health Network recently paused construction on the planned Outpatient Surgery Center in South Burlington due to the impact of the regulator’s orders. The health system also shared with patients, as well as government and community stakeholders, that reductions to clinical services impacting patients and to the administrative departments that indirectly support care would be needed. The decision to pause the outpatient surgery center was a first step, with additional actions necessary if the enforcement order proceeds. The health system is approaching these decisions carefully with the goal of minimizing the impact on patients and employees to the extent possible.

Next Steps

“UVM Health Network will appeal both the FY23 enforcement action and its FY25 hospital budget. At the same time, leaders from across the health system are working to identify cuts to non-clinical expenses as a way to exhaust all options before making reductions to patient care,” the UVMMC statement continued. 

“Last year, in response to regulator budget orders, the health system reduced 130 open non-clinical positions and cut overall administrative costs by nearly $20 million.”