Committee hears Appropriations amendment to S.190 that shifts hospital pricing authority to regulator and authorizes 1332 waiver

The Ways & Means Committee on the afternoon of May 20 reviewed S.190 and the Appropriations Committee's amendment, which removes legislatively prescribed hospital reimbursement targets and authorizes the Department of Vermont Health Access to seek a section 1332 waiver under the Affordable Care Act to pursue a state reinsurance program.

Ben Carvey, of the Office of Legislative Council, told the committee the amendment incorporates changes from the House Health Care committee and replaces specific percentage targets for hospital reimbursements with a standalone session-law provision for hospital fiscal year 2027. "The board may do reference based pricing, order hospitals to reduce their commercial reimbursement rates for qualified health benefit plans and the Beehive plans based on a percentage of the Medicare adjusted base rate determined by the board," Carvey said, summarizing the standalone provision.

Carvey also said the amendment removes a planned change to the outpatient prescription drug cap (the proposal to move it from 120% to 130%) and moves budget-language authorization into the bill to allow the state to seek federal pass-through for premium tax credit savings as part of a reinsurance strategy.

A staff speaker explained the practical purpose of a 1332 waiver. "A 1332 waiver is under the Affordable Care Act; it's like an innovation waiver," the staff member said. The speaker added that states that pursue reinsurance typically must show the federal government how any savings would be reinvested and that the administration expects to analyze the state's potential "skin in the game" and the fiscal exposure before moving forward.

Committee members pressed on consequences and origins. One member asked, "So they would be able to make even more cuts than the 1%?" and staff replied that the amendment removes a legislative percentage and leaves budget orders to the Green Mountain Care Board's statutory criteria and discretion. When asked who requested the added reinsurance language, staff said it came through the House Appropriations Committee and that the governor's office originally requested similar language in budget materials.

Members debated the policy trade-offs. Supporters said the change preserves the regulator's ability to tailor hospital budget orders to each institution after a lengthy review process; critics framed it as a philosophical question about removing a directly elected body's role in setting targets. Carvey reminded members that the Appropriations Committee had voted the amendment out 11-0 and that a related House Health Care straw poll on an earlier amendment had been 7-4.

Carvey warned that changes could put downward pressure on the state's education fund and property taxes depending on budget outcomes. Because scheduling impeded an in-committee straw poll, the committee agreed to huddle on the House floor the following day to take a floor straw poll on the measure.

The committee did not take a final recorded vote on S.190 during the session; the Appropriations Committee amendment has already been reported with an 11-0 vote to date. The committee scheduled follow-up on the House floor and said members would receive an email with details.