Health Care

Regulators to decide on $2.4 billion in proposed hospital revenue

Green Mountain Care Board

The Green Mountain Care Board listen to the UVM Health Network’s budget presentation in August. From left, Dr. Allan Ramsay, retired human services administrator Con Hogan, chair Al Gobeille, nurse practitioner Betty Rambur and economist Jessica Holmes. Photo by Erin Mansfield/VTDigger

Vermont’s health care regulators will decide in the next several weeks whether to lower the prices that hospitals charge for services starting Oct. 1.

The hospital system as a whole, which includes 14 hospitals of various sizes and management structures, has proposed to take in $2.4 billion from patients in the upcoming fiscal year, a 5 percent increase over what was budgeted for in the current fiscal year.

The proposed increase in revenue from patient care is higher than the 3.4 percent target the Green Mountain Care Board requested from hospitals going into the hospital budget process, and may be the result of more people needing health care services.

The same 14 hospitals have proposed to raise their prices only by a weighted average of 2.2 percent, according to the Green Mountain Care Board. The figure represents an all-time low, according to board chair Al Gobeille, but the regulatory process may push that price increase even lower.

Gobeille said patient care revenue to hospitals is going up for two main reasons — the price of each individual service and the amount of services people use. He said regulators only have control over how much the hospitals charge, not whether or not Vermonters need to use the hospitals.

“If we were to cut [the University of Vermont Medical Center’s] rates tomorrow, their prices tomorrow, or next Thursday, it would take that 2.2 [percent] down a lot,” Gobeille said. “I think the conversation needs to be had, meaning if volume is going up, there has to be some type of adjustment for the variable cost.”

hospital

Central Vermont Medical Center in Berlin is part of the UVM network. Photo by Erin Mansfield/VTDigger

The high requests for patient care revenue in 2017 are in addition to results from fiscal year 2015, when nine hospitals went over their requested budgets, and final numbers analyzed by the board show that eight hospitals went far enough over their budgets that they may have to have their prices cut.

Additionally, data that the board collected from the hospitals in July projects that eight hospitals may go over their budgets in fiscal year 2016. The system as a whole is projected to go over by 1.4 percent in 2016, while Central Vermont Medical Center and Rutland Regional Medical Center could go over by 8.2 percent and 4.7 percent, respectively.

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Jeffrey Tieman, the president and CEO of the Vermont Association of Hospitals and Health Systems, said the proposed hospital budgets show that hospitals are “working to reduce health insurance premium inflation, and are making meaningful investments in their communities.”

“It is important to remember that [revenue from patient care] does not cover operating cost, and look at the entire budget picture,” Tieman said. “The [patient care] revenue target set by the board is one component of the budget, and does not represent the complete financial picture of a hospital.”

Julia Shaw, who works for Vermont Legal Aid’s Office of the Health Care Advocate, said the board should determine what has been causing hospitals to take in excess revenue, and then develop a process for how to address each hospital’s overage.

Shaw said the board should not allow hospitals to “bake in” their revenue overages into their baseline budgets each year. “We hope that the board doesn’t undercut its process by allowing huge revenue increases without determining what’s driving them,” she said.

Shaw said this is the first year since the Green Mountain Care Board started regulating hospital budgets that the Office of the Health Care Advocate has participated in the process. She said there have been “bumps in the road” that she hopes get smoothed out over time.

Gobeille said of the process: “We’re the only state doing this. Maryland does it, does it in a different way, but 48 other states don’t even do this. So I mean, Vermonters are like, ‘Oh you didn’t do this giant thing.’ Well, 48 other states aren’t even having hearings. There’s no transparency.”

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Erin Mansfield

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