House Healthcare committee advances Appropriations amendment to S.190 preserving drug-pricing cap and authorizing pursuit of 1332 reinsurance waiver

The House Healthcare Committee on Friday, May 22 approved the House Appropriations Committee’s amendment to S.190, which strikes the bill’s prior prescription of specific hospital commercial‑rate percentages, preserves a 120% cap on hospital outpatient drug payments and authorizes the Department of Vermont Health Access, in consultation with the Department of Financial Regulation, to apply for a Section 1332 state innovation waiver to create a reinsurance program.

A legislative counsel told the committee the amendment removes section 2 of the bill — the provision that would have set short‑term percentage targets for hospital commercial reimbursements — and instead authorizes the Green Mountain Care Board to order reductions in commercial reimbursement based on a Medicare‑based benchmark for hospital fiscal year 2027. "The Green Mountain Care Board may order hospitals to reduce their commercial reimbursement rates for the QHPs and the Beehive plans," the counsel said, and the amendment also directs payers not to reimburse above the board’s ordered rates and includes no balance‑billing for affected enrollees.

The amendment also strikes an earlier proposal that would have raised the statutory cap on hospital outpatient drug payments from 120% to 130% of average sales price; the counsel said the amendment keeps the 120% cap established by last year’s Act 55. Committee members sought and received confirmation that deleting the bill’s section means the statute reverts to its current text rather than adopting the 130% change.

Members debated the added authority to pursue a Section 1332 waiver, which would allow the state to design a reinsurance program and, if the waiver is approved, seek federal pass‑through of advanced premium tax credits. Committee members and counsel said federal guidance typically requires legislative authorization for waivers that could obligate state dollars. "Federal law and guidance require state legislative authorization for both the waiver and the insurance program," a legislative counsel said; members were told that if the state applies and the waiver is approved, some state‑dollar commitment is likely and the size of that commitment depends on program design.

Representative Lynn Dickinson (Appropriations) argued the amendment appropriately leaves rate‑setting and hospital‑level adjustments to the Green Mountain Care Board rather than prescribing a one‑size‑fits‑all legislative formula. Dickinson recommended treating the change as a one‑year pilot to let the board implement changes for hospital fiscal year 2027 and then evaluate results. She also suggested duplicating the reinsurance authorization in the larger budget bill so the option would not be lost if S.190 fails on the floor.

Supporters said the amendment focuses on markets where the Green Mountain Care Board has rate‑setting authority (Qualified Health Plans and the so‑called Beehive plans) and that targeting those markets is more likely to affect subsidized enrollees than trying to reach self‑insured employer markets the state cannot regulate. Critics cautioned that projected savings are uncertain and that hospitals have warned of fiscal strain if reductions are set too aggressively.

The committee proceeded to a vote to report the Appropriations amendment to S.190. The chair called for those in favor to raise their hands and reported seven in favor and four opposed; the amendment was reported out of the committee for floor consideration.

Next steps: the amendment will be reported to the House floor for consideration. If the legislature later directs pursuit of a Section 1332 waiver and the state applies, the waiver application would specify program design, state funding commitments and which products the reinsurance would cover; federal approval would also be required before the program could take effect.