As the Green Mountain Care Board prepares to vote on the proposed 2024 budgets of three UVM Health Network hospitals this week, the state regulator is facing unusually aggressive pressure to step back its attempt to cut health care costs.
Chairs of the boards of the health network and its three Vermont hospitals — Central Vermont Medical Center in Berlin, Porter Medical Center in Middlebury and the University of Vermont Medical Center in Burlington — penned a joint letter to legislative leaders on Friday saying they anticipate the care board’s “budget actions may overreach its authority” and that they have “grave concerns with the current regulatory system governing health care in our state.”
The two-page letter notes that “writing a letter like this with such strong language to our State’s legislative leadership is an irregular action,” but adds, “we cannot sit by and watch what is unfolding without lending our voice to the discourse.”
Sent in the midst of the care board’s hospital budget deliberations, the letter questions the experience of the board’s three newest members — chair Owen Foster and members Thom Walsh and David Murman, all appointed within the last two years by Gov. Phil Scott.
All three new members have shown a willingness to pursue more aggressive regulatory action, including caps on executive salaries at OneCare, an affordable care organization that is part of the UVM Health Network. (OneCare is appealing the order that included those caps.)
In their letter, the trustees accuse the three members of having “a fundamental misunderstanding of the health care needs of Vermonters” and of “employing tactics and rhetoric intended to demean our leaders, our boards and our employees.”
The letter, addressed to House Speaker Jill Krowinski, D-Burlington, and Senate President Pro Tempore Phil Baruth, D/P-Chittenden Central, and the chairs of the two chambers’ health committees, goes on to encourage lawmakers to work with the trustees to “make changes“ to “improve regulatory oversight” and asks them to “hold the GMCB accountable” for both its process and “the impact its decisions will have on the most vulnerable citizens of our state.”
Hospital budget decisions are due this Friday, following more than a month of hearings and public discussion.
Over the past week, the care board has already voted to approve the budgets of nine of the state’s 14 hospitals, with only the three health network hospitals, along with Copley Hospital in Morristown and Northeastern Vermont Regional Hospital in St. Johnsbury, remaining. The revenue requests thus far have all been approved as submitted, except for small reductions for Springfield Hospital and North Country Hospital in Newport.
The remaining hospitals, though, are expected to have the greatest impact on commercial insurance rates, which have already been approved to increase significantly in 2024. Those rates were lowered by regulators based on the assumption that the board would cut hospitals’ proposed increases in costs to insurers by 50%.
Four of the five hospitals still waiting for board votes, all except Porter, have proposed budgets that would require that costs for commercial insurers increase by 11% to 13.5%, with UVM Medical Center asking for the largest increase.
Without the commercial rate increase requested, health network hospitals will be forced to cut services, “especially those that lose the most money” which “also tend to be the most essential,” the trustees’ letter said.
Rep. Lori Houghton, D-Essex Junction, chair of the House Health Care Committee, said she became concerned after reading the letter and is now making her way through the 12 hours of UVM Health Network hearings recorded on Aug. 23.
“I’m concerned that they obviously felt the need to send this letter at this time,” Houghton said.
“The Legislature is not part of the hospital budget process,” she added. “We can’t interfere. We shouldn’t interfere. But we are watching it.”
For the health network, a four-member board
The trustee letter is not the only action that representatives of the health network have pursued behind the scenes of the hospital budget votes.
The health network’s legal counsel also pushed for the recusal of the board’s only practicing health care professional, David Murman, from deliberations on its budgets. On Monday, Murman announced that, due to tight timing, he would be abstaining from participation.
“Asking my fellow board members to dedicate the time to discuss and deliberate on that (recusal) request detracts from the limited time that the board has left on our schedule to make decisions on the remaining hospitals,” Murman said, explaining his decision.
As a result, only four board members will be voting on budgets that represent more than three-quarters of the overall revenue increases that hospitals are requesting this year.
In total, all 14 hospitals as a group anticipate bringing in $576 million more in revenue in fiscal year 2024 —- which runs from Oct. 1, 2023, to Sept. 30, 2024 — than they did in 2022, which is the last full fiscal year available for comparison.
UVM Medical Center revenue projections alone make up almost 62% of that amount. Central Vermont Medical Center’s and Porter’s increases as a percentage of the total requested are the next largest, at just under 9% and just under 5%, respectively.
Health network administrators estimate in their submission to the board for UVM Medical Center that cost increases will make up around two-thirds of the new revenue for that hospital, with the largest portion of that coming from commercial insurance payments.
In fiscal year 2022, UVM Medical Center alone commanded more than half of all commercial payments to Vermont hospitals, according to reports to the care board.
Murman, an emergency room doctor at Central Vermont Medical Center and one of the board’s three new members criticized by the trustees, had intended only to recuse himself from his hospital’s vote. After consulting the Vermont State Ethics Commission and receiving an advisory opinion, he was planning to participate in the votes related to UVMMC and Porter.
He explained his decision in a disclosure statement stating that he believed that any conflict that might exist was very small, particularly since he only worked one-third time, and was outweighed by the benefit of his participation.
“I cannot legally or practically delegate the hospital budget decisions and, as a result, recusing myself would raise the possibility of inaction on the part of GMCB,” Murman said in the statement.
However, the health network’s general counsel, Eric Miller, submitted a formal request to the board for Murman’s recusal from budget votes involving all network hospitals. To satisfy that request would have required a formal hearing and written decision, according to board rules.
By choosing to abstain, Murman allowed the budget decisions to move forward without resolving the issue, which is likely to come up again. That result may impact the type of budget adjustments the board can make for the UVM Health Network hospitals this year.
Action by the board can only be taken by a majority of board members, care board executive director Susan Barrett said in a written response to questions.
Now, in all three cases, UVM Health Network hospital budgets must receive the approval of three of the four participating board members. Getting to an agreement may end up requiring the remaining board members who are perhaps more inclined to draw a harder line to compromise on their desired cuts.
Vermont law outlines qualifications for care board members, which include “knowledge of or expertise in health care policy, health care delivery or health care financing, and openness to alternative approaches to health care” as well as “impartiality and the ability to remain free from undue influence by a personal, business or professional relationship.”
With more than 1,400 physicians on its payroll, and even more nurses and physician assistants, UVMHN employs many of the people in Vermont with that kind of expertise.
