UVM Health Network requests double-digit rate increase, citing inflation and pandemic pressures

Published: 7/1/2022 5:24:44 PM
Modified: 7/1/2022 5:22:11 PM

Citing more than $110 million in inflation-related costs, the state’s largest health network is asking Vermont regulators for double-digit increases to private insurance service charges in the next fiscal year.

If regulators at the Green Mountain Care Board approve the University of Vermont Health Network’s budget request in full, consumers with private insurance could see drastic increases in their premiums next year.

“There is no question this is the most challenged financial position we have experienced in my 20 years in health care,” Rick Vincent, the health network’s chief financial officer, said in a written statement Friday.

The network is asking regulators for a 19.9% increase in commercial insurance charges for University of Vermont Medical Center, a 14.52% increase for Central Vermont Medical Center and an 11.45% increase for Porter Hospital, according to a news release issued Friday.

Network officials also said its three Vermont hospitals have undergone a series of “financial improvement measures” that produced some $50 million in cost cuts.

Some of those measures include making better use of surgical and patient bed capacity, investing in nurse retention initiatives and expanding the network’s pharmacy services, according to the network’s release.

Despite these efforts, officials said in the news release, “there will still be gaps.” The increase in commercial rates should generate a “modest” margin for the network, which, according to the announcement, is important for the network’s long-term sustainability.

If the Green Mountain Care Board approves these requests in full, University of Vermont Medical Center’s projected margin would be $39 million or 2% of the total budget in the next fiscal year.

In addition to its three Vermont hospitals, the network operates three hospitals in New York state — Champlain Valley Physicians Hospital in Plattsburgh, Elizabethtown Community Hospital in Elizabethtown and Alice Hyde Medical Center in Malone.

In a news briefing Friday, Vincent stressed that the health network already spent down some of its reserves and would find it “difficult to absorb any losses” in the coming year. He suggested it may have to cut services to handle deficits.

The Green Mountain Care Board regulates hospitals by setting the rate of hospital growth each year. That rate relates to the commercial charges that hospitals stipulate in their proposals. Regulators set hospital growth against a benchmark, normally 3.5%, but this year, they set the ceiling at a total of 8.6% for the next two years.

The commercial rate increases the health network requested in its most recent proposal correspond to 10% growth for University of Vermont Medical Center, 7.3% for Central Vermont Medical Center and 10.6% for Porter Hospital in fiscal year 2023.

The Vermont Association of Hospitals and Health Systems said the state health care system is “stressed” and in need of “stabilization budgets.”

The care board should “support commercial rate increases that reflect the significant and growing pressures our hospitals face,” interim president and CEO Mike Del Trecco said in a news release Friday.

But commercial payers — privately insured Vermonters — will bear the brunt of these increases in next year’s premiums. That could further strain families already grappling with higher costs for everything from gasoline to food.

“Vermonters can’t afford it,” said Mike Fisher, chief health care advocate at Vermont Legal Aid. “It’s not a comment on whether hospitals need it or not, but the increases in commercial rates translate directly to increases in the cost to Vermonters.”

The Green Mountain Care Board will be tasked with trying to balance these competing needs during its deliberations this summer.

Earlier this spring, the UVM Health Network sought from regulators a midyear budget adjustment to address a $44 million budget deficit. Another hospital, Rutland Regional, sought an increase to address a more than $7 million shortfall. Regulators granted the health network a $14 million increase, but denied Rutland’s request. Green Mountain Care Board members told officials from both hospitals that substantial hikes should be discussed during the annual budget cycle, slated to begin this summer.

In its request last year, UVM Health Network cited increases associated with a greater reliance on costly temporary staff through the pandemic.

Hospitals are required to submit their full applications for fiscal year 2023 to the care board by the end of the day Friday, but the applications likely won’t become public until next week. The fiscal year runs Oct. 1, 2022 to Sept. 30, 2023.

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