Regulators cut requested increase of UVM Medical Center charges to a fraction of the hospital’s ask



Published: 09-17-2023 12:16 AM

Vermont’s hospital regulators spoke with one voice Wednesday morning when all four voting members of the Green Mountain Care Board rejected a second double-digit cost increase for the University of Vermont Medical Center.

In the unanimous decision, the board decided to allow Vermont’s largest hospital and only academic medical center to grow its revenue by almost 24% compared to 2022 but set the maximum amount it could raise rates for commercial insurers in 2024 at 3.1% over the current year.

Board members said that, based on board staff analysis, they saw several pathways for the hospital to make up for at least some of that revenue through increasing administrative and clinical efficiency, as well as planned improvements to billing practices that would more accurately reflect the severity or complexity of a patient’s illness.

The board also added conditions requiring that UVM Medical Center submit a plan for reducing costs and controlling expense growth in several administrative areas, including information technology, and to meet monthly with the board for ongoing monitoring of those efforts.

Hospital administrators told the care board in initial budget filings in June that UVM Medical Center needed to raise overall prices for commercial insurers by 13.5% in 2024, after receiving approval for an increase of 14.8% in 2023.

Care board chair Owen Foster noted that UVM Health Network administrators had told Vermonters they could achieve increased efficiency upon fully consolidating UVM Medical Center, two other Vermont hospitals and their satellite clinics under one network.

“We’d hope to see those efficiencies by now and that they’d show up in cost containment and containment of expense growth and more efficient and increased productivity, shorter wait times and lower administrative costs,” Foster said. “But the record before us does not show that.”

Foster said in Wednesday’s hearing that he was optimistic those efficiencies remained available.

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Hospital leaders, however, said they saw it differently.

“We have presented what we believe is needed to deliver the care our patients expect from us, to recruit and retain our vital staff during a national workforce shortage and make investments that keep us on the cutting edge of medicine,” UVM Medical Center spokesperson Annie Mackin said in a written statement in response to the vote.

Mackin went on to say that the hospital would not know what the full repercussions of the board’s decision would be until administrators reviewed more detailed written orders due by Oct. 1. “We are committed to remaining transparent about the impact of these orders as we better understand their consequences,” Mackin said.

All four board members who voted said they did not believe that a second double-digit increase in commercial charges was warranted but agreed with a 3.1% hike to account for rising operational costs

The board’s fifth member, David Murman, a part-time emergency physician at Central Vermont Medical Center in Berlin, abstained from participating in the discussion or the vote after the UVM Health Network, which also operates CVMC, requested his recusal, arguing that he had a conflict of interest.

“I viewed last year’s budget as a recovery budget,” said longtime board member Jessica Holmes. “It was designed to be a one-time bump to shore up the academic medical center’s finances” following disruptions caused by the COVID-19 pandemic, “and it was a really tough rate to approve last year,” she said.

The state’s two primary commercial insurers, BlueCross BlueShield of Vermont and MVP Health Care, told regulators during their own hearings that their close-to-record premium rate increases for consumers and employers were directly tied to growing hospital charges.

As premium costs have increased over the past decade, more Vermonters and small businesses have responded by purchasing lower-cost insurance plans with higher copayments and annual deductible amounts, results from a statewide Vermont Department of Health survey suggest. Public advocates say that many Vermonters now decide to forgo or put off care because they cannot afford to pay that level of cost-sharing, and public comments have echoed those concerns.

“What do you do if your out-of-pocket exposure is a high percentage of your income? How do you behave?” asked Mike Fisher, head of the Office of the Health Care Advocate, run by Vermont Legal Aid, during Wednesday’s hearing. “The way we experience people responding to that pressure is that they wait. They hope it gets better.”

The board members asked the hospital to look for other places for savings and additional earnings.

“I think there are opportunities for revenue to be generated from sources other than the commercial rate. I think there’s potential for administrative savings,” Holmes added. “And so I don’t think that the medical center has met its burden to justify this year’s commercial rate ask.”

The smaller commercial charge increase brings UVM Medical Center — which earns roughly half of all public and private hospital payments made on behalf of Vermonters in the state and more than half of all of what commercial insurers pay — on par with the increases the care board has so far allowed for other Vermont hospitals in previous weeks.

With the 3.1% hike, the maximum increase in charges to commercial insurers approved for this year and 2024 combined now total just under 18% for UVM Medical Center, with the majority of that (14.8%) approved in 2023 and already in effect.

The same combined maximum commercial charge increase is 23% for Rutland Regional Medical Center (with 17.4% approved in 2023); around 16% for Springfield Hospital (10% in 2023); Brattleboro Memorial Hospital (14.6% in 2023), North Country Hospital in Newport (12.2%) and Southwestern Medical Center in Bennington (9.5%) and 15% for Northwestern Medical Center in St. Albans (9%).

The other three hospitals with 2024 budgets already approved — Gifford Medical Center in Randolph, Grace Cottage Hospital in Townsend and Mount Ascutney Hospital in Windsor — asked for and received commercial rate increases that total less than 10% for both years combined.

The care board plans to consider and vote on the four remaining budgets — UVM Health Network’s Central Vermont Medical Center and Porter Hospital, Copley Hospital in Morrisville and Northeastern Regional Hospital in St. Johnsbury — during a public hearing on Friday.

Legislative letter related to process concerns, not outcome, trustee says

Wednesday’s vote comes just days after lawmakers received a letter from chairs of the governing boards of the UVM Health Network and its three Vermont member hospitals, all nonprofit organizations.

That letter was not intended to influence the outcome of the Green Mountain Care Board budget vote but rather to share concerns trustees developed after observing the process this year, health network board chair Allie Stickney said in a written statement to VTDigger on Wednesday.

“We are a group of volunteer community members whose role it is to hold the UVM Health Network’s leadership accountable for its operations and ensure they are upholding the organization’s nonprofit mission on behalf of patients, employees and the wider community,” she wrote.

The organizations’ trustees take seriously their responsibility for ensuring the sustainability of health care in their communities, which includes both access and affordability, Stickney wrote. That relies on a regulatory process that is based on accurate data and that “sees health care in a larger context,” she said.

“Our recent communication to the Legislature was in direct response to our concern for the integrity of the regulatory process, given its impact on our patients and our communities, rather than any particular outcome,” she said.

In response to a question about the letter’s criticism of his three appointees to the board at his weekly press conference, Gov. Phil Scott said he had “confidence in their ability to work their way through this process.”

Scott described the care board’s oversight role of hospital budgets as “critical.”

“Their budgets will have an impact on Vermonters every day, every-day Vermonters,” he said.