Healthcare Policy Update

Joint Statement from North Country Hospital; Northwestern Medical Center; Rutland Regional Medical Center; and University of Vermont Health Network

Note for Patients:

The dialysis clinics in Newport, Rutland and St. Albans will remain open for patient care as UVM Health Network seeks to transition management and ownership of the sites.

As Vermont’s non-profit hospitals navigate the impact of future and ongoing decisions by state officials, we are working together to protect patient care in our communities. The recent announcement by University of Vermont Health Network to transition operation of dialysis clinics in Newport, Rutland and St. Albans to comply with legal orders from the Green Mountain Care Board (GMCB) has understandably created anxiety and stress for patients and their families who rely on this critical service. North Country Hospital, Northwestern Medical Center and Rutland Regional Medical Center have begun discussions with UVM Health Network in search of a way for dialysis care to be maintained in their respective service areas for the patients who desperately need it.

This process is still in its early stages and will ultimately require regulatory approval. Collectively, we are hopeful the GMCB will recognize this important need and support our hospitals in transitioning the care in a way that balances the needs of our organizations with the needs of our patients. We must be assured that we can reasonably fund and support under the limitations placed on us by the GMCB.

It is incredibly important for our patients, caregivers and communities to know that UVM Health Network will operate these clinics throughout this process to continue providing patient care. Patients do not need to take any action at this time. We will provide updates as soon as we are able.

Over the past several days I have received numerous questions that I feel are important to address and respond to in a timely manner. The questions have been spurred by our October Town Meetings and recent media reports relating to the Green Mountain Care Board (GMCB) and the Oliver Wyman Hospital Study. To respond to the questions, I have formatted today’s CEO Update as a list of frequently asked questions aimed at addressing some of the more prominent concerns and inquiries.

How does the GMCB oversee VT hospitals’ financial performance and what is the impact of the GMCB rulings?

Each year VT hospitals must present their budget to the GMCB for approval. The GMCB approves both the amount of revenue that a hospital can collect as well as the amount of the expenditures it can incur. Once approved, hospitals are obligated to comply with the budget. If a hospital’s annual financial performance does not align with its budget, it is subject to enforcement actions.

In 2023, the amount RRMC collected for caring for patients (referred to as “net revenue”) was greater than our expected budget by $11 million. Our net revenue exceeded budget because we increased care provided not only to patients in our local community, but also to patients residing in communities across Vermont and our neighboring states. This was the result of deliberate and intentional actions to improve access to care and reduce the amount of time that patients must wait for care.

Regardless of our work to improve access to care, the GMCB budget enforcement decision required that RRMC repay $5.5 million of the revenue overage. The way the repayment will occur is to reduce our 2025 rate increase request from 2.8% to 1.2%, effective October 1, 2024. A similar reduction will happen in 2026.

The GMCB’s decisions have impacted RRMC's finances, delaying critical projects and limiting patient service expansion plans related to the opening of the 5th OR room and forgoing the planned mobile MRI unit.

What impact do the recent GMCB rulings have on employee compensation and wages?

We are extremely disappointed in the decisions of the GMCB, the result of which means RRMC must step back from some of the patient access improvement plans that we intentionally set as part of our strategic plan. However, it is important to note that we are not planning to invoke organization-wide savings programs that will impact staff compensation and benefits. While RRMC was required to reduce our expenses by $3.5 million, we have worked diligently to find expense savings that were not related to employee compensation and benefit programs.

If RRMC’s net revenue was too high, why can’t we increase expenses to reduce the revenue?

It has been suggested that we should resolve our net revenue overage by increasing compensation and other expenses. Unfortunately, this is not an option. The net revenue budget reduction mandate is not impacted by expenses. The net revenue budget compliance simply takes into account the amount of money that we collect for the services that we provide to our patients. Increasing expenses to offset revenue is not an opportunity to lower our net revenue.

How are compensation and benefit offerings determined?

Our compensation and benefits are dependent upon the available funding that is included and approved in our budget each year. Compensation and benefit budgets are determined using currently available market data and include an across-the-board rate increase for all employees as well as market increases for positions that are deemed to vary from appropriate market comparisons. Market comparisons can differ but are largely based on comparative healthcare organizations of similar size, service offerings, and geographic region.

Our compensation and benefit philosophy is consistent across the entire organization. Our plans for 2025 include a 3% annual base rate increase (or a lump sum payment) for all RRMC employees and additional increases for positions that have a variance from market. We have also included raising our minimum wage to $16 per hour. Enhancements in our benefit plans include increased retirement plan funding as part of our 403(b) employer match program and keeping employees' share of healthcare premiums under 20% of total costs.

Act 167 – Hospital Transformation

Currently there is a lot of news about the Act 167 report provided by Oliver Wyman, the consulting firm that was commissioned by the Green Mountain Care Board (GMCB) and the Vermont Agency of Human Services (AHS). The report presented in September includes a slate of recommendations around the transformation of healthcare in Vermont. The recommendations include both state-wide and hospital-specific initiatives.

Examples of recommendations include building a regional EMS transport system, increased long-term care access, and improvements in housing. The report also includes a recommendation that four of Vermont’s critical access hospitals should consider closing and offer alternative services related to urgent care, mental health and long-term care. The link to the report is here Act 167 Recommendations. The RRMC recommendations begin on page 97.

The report has received a lot of media attention and continues to make headlines, including a movement spearheaded by the Vermont Association of Hospital and Health Systems Association (VAHHS) to dissolve the report due to confirmed errors and omissions of critical data. The report has been criticized for making recommendations that will create medical deserts, particularly in obstetric and emergent care.

However, for RRMC, the report’s recommendations are largely related to growth opportunities. Many of these opportunities have been identified in our Strategic Plan, while others represent newer innovative thinking. We will use the report as one of many inputs that will inform and guide our strategic planning efforts that aim to position RRMC as a strong healthcare service provider, for our Rutland community and beyond. Specific to the report, our goal is to better understand what recommendations make the most sense for Rutland, both from a care delivery perspective and a fiscally sustainable perspective.

What is RRMC doing to advocate for our community and how can I be informed and involved?

This is a critical time in Vermont healthcare. We will continue to work with our legislators and other government officials on behalf of RRMC providers and staff. After the November election, we will be inviting our legislators to attend an informational breakfast at RRMC in early December. We will continue to advocate for the needs of our community and will highlight areas of regulatory concern and offer our recommendations to address the concerns.

We are also working to write public comments on behalf of our hospital staff and will invite anyone interested in joining this effort to sign the respective letters. We will provide more information on how to engage in this support within the next few weeks.

I will keep you informed as this work progresses. Thank you for your continued support and for all that you do for our patients, one another, and our community.

Judi Fox
President & CEO, Rutland Regional Medical Center

Published in the Rutland Herald on October 22, 2024

It has become increasingly clear the Green Mountain Care Board has failed to fulfill its mission to drive system-wide improvements in access, affordability and quality of health care in Vermont. If we do not take swift and decisive action to dismantle the GMCB and establish a more effective alternative, we risk the financial collapse of health care in our state.

Created in 2011 under Act 48, GMCB was an ambitious effort to control rising health care costs in Vermont. With broad regulatory authority over hospital budgets and insurance rates, it was hoped the Board would help position Vermont to care for its aging population. The idea was bold, but the experiment has failed.

In July, I attended a Green Mountain Care Board meeting where a presentation by Oliver Wyman made the situation painfully clear: Vermont has become one of the most expensive states in the country for health care. Nine of the state’s 14 hospitals reported negative margins in 2023, and health insurance premiums have risen faster than in any other New England state. Vermont now has one of the highest insurance premiums in the nation.

Later in the year, the GMCB approved Blue Cross Blue Shield of Vermont’s request to raise premiums by 22.8% for small groups and 19.8% for individuals. This change was due to a report by BCBSVT, which indicated a $47 million decline in its reserve fund over the past two years and the risk of insolvency without drastic measures. In the 13 years since the creation of GMCB, Vermont has become the state with the highest insurance premiums in the country, with insurers hemorrhaging money with fear of insolvency and hospitals with negative margins facing bankruptcy.

This crisis reminds me of a lesson from a population health conference I attended years ago: When trying novel approaches, be bold and innovative — but if the strategy isn’t working, fail fast.

No one disputes the need for smart regulation to stabilize health care finances, but GMCB’s tools are too blunt, and its decisions have only driven up costs. Hospitals and insurers are struggling, and Vermonters are paying the price. The time has come to acknowledge the Green Mountain Care Board experiment has not worked, and to move toward a new solution — one that better balances cost control with the sustainability of our health care system.

It is time to fail fast and start fresh. Vermont must come together to implement meaningful, data-driven reforms before it’s too late.

Dr. Rick Hildebrant lives in Clarendon.

RRMC President and CEO Judi Fox was a guest on Catamount Community Connection, a public affairs Catamount Radio program hosted by Senator Brian Collamore.

Published in the Rutland Herald on September 25, 2024

I am writing to express my deep concern about the recent decisions made by the Green Mountain Care Board regarding hospital budgets.

Earlier this month, the GMCB mandated Rutland Regional Medical Center reduce its net revenue by $6.3 million beginning Oct. 1. The basis used by the GMCB to mandate the reduction is simply that RRMC provided too much care to patients, which is resulting in higher revenue and higher costs to insurance companies. While RRMC leadership and its board of directors understand the high costs of health care, and are committed to working in partnership with local agencies and state government leaders to address, we firmly believe simply reducing access to care is the wrong response.

Our budget as submitted to the GMCB reflected investments to increase critical services, specifically, diagnostic imaging, surgery, infusion therapies and specialty care. These investments were targeted to reduce testing delays and help patients gain faster diagnoses and treatment plans, all aimed to begin treatments earlier.

We know it can take too long to gain access to advanced imaging for MRI and CT services, to be scheduled for a necessary surgery or to have a colonoscopy performed. Our wait times in our clinics are also too long, which can prevent timely care. Our budget considered improvements in each of these services.

The GMCB decision to reduce access to care, without a doubt, undermines the ability of RRMC to meet the needs of the communities we serve. The reductions in our hospital’s budget, and the budgets of other Vermont hospitals, do not achieve the affordability goals we collectively share. Instead, they threaten access to care and place the health of Vermonters at significant risk. Unfortunately, the impact of the GMCB decision will force RRMC, along with most other Vermont hospitals, to reduce care.

As an example, budget restrictions of this magnitude would mean longer wait times for MRI scans, surgeries and visits within our medical specialty clinics. These are not just numbers; they are people, our community members, who will now face unnecessary delays in receiving the care they so desperately need.

It is also important to note, the demand for RRMC services continues to grow … not only from Rutland County but from communities across the state. Patients are traveling to RRMC to receive high-quality and timely care, which demonstrates the exceptional service and care we provide. Yet the GMCB is restricting our ability to serve these patients. Overall, the restrictions to provide care will force patients to seek care outside of Vermont. This will not result in savings to our commercial insurers or our patients.

More importantly, those who cannot afford to travel — the most vulnerable among us — will be most impacted. These individuals and families will be left without the care they need, without the timely MRI to detect life-threatening conditions, and without the surgery needed to return to their life and their work. This delayed care will result in our community members becoming sicker and health care costs more expensive when it is forced to be delivered in emergency care settings.

While focused on increasing access to care, Rutland Regional has also continually been committed to finding ways to reduce health care costs. During the past few years, RRMC has cut more than $10 million in operating costs, which has directly served to reduce the cost of care, despite rising inflation.

Rural hospitals like RRMC face significant challenges, including an aging population, increased mental health needs, addiction, housing shortages, recruitment challenges, limited access to child care, and of course, access to health care. RRMC is a safety net for our community. But that safety net comes at a great cost, and it requires thoughtful, diligent support.

To truly reduce costs and improve access, we need a comprehensive approach. We need more skilled nursing beds, a functional statewide ambulance system, solutions to homelessness, and transitional housing for those who are not sick enough to be in the hospital but have nowhere else to go. This is the challenging work of health care, and this burden cannot, and must not, fall on hospitals alone.

RRMC is committed to this work, and we are committed to our community. But the decisions made by the GMCB last week jeopardized RRMC’s ability, and the ability of other Vermont hospitals, to meet these critical commitments. We need collaborative partners who understand that cutting budgets does not cut the need for care.

RRMC is ready to work with the GMCB and partners across the state of Vermont to find solutions that ensure access to care for our patients. But the GMCB’s recent actions are not collaborative and do not feel like a partnership.

Regardless of the information we have presented, the impacts we have shared, the actions of the GMCB will have consequences, many of which cannot be easily reversed and will create challenges for the most vulnerable people in our communities.

As CEO, it is my responsibility to ensure RRMC provides consistent, timely, high-quality care for our patients … care they need and deserve. Rutland Regional will continue to advocate for preserving services vital to the health and well-being of our community.

Judi Fox is president and CEO of Rutland Regional Medical Center.

Published in the Rutland Herald on September 25, 2024

I wish to echo many of the same points raised by Drs. Boynton and Beckta in their recent letters to the Herald concerning the Green Mountain Care Board.

I feel as if I am watching an old movie yet again. From 1994 until 2016, I was the vice president/director of medical affairs at Rutland Regional Medical Center. All these years later, we are still using an ill-designed and ultimately futile system to try and limit health care expenditures by capping hospital budgets. As a result, hospitals are trapped between the pressures to provide high quality, easily accessible care, complex Byzantine payment systems, and overreaching state control.

The federal government is the largest health care payer across the country through the Medicare, Medicaid and TRICARE programs. However, they don’t pay rates that cover the actual cost of providing that care.

As a result, hospitals are forced to raise rates to commercial payers or risk going out of business. Everyone in Montpelier has known for years about the “cost shift.” Hospital costs are volume- and patient severity-related, but they cannot control the volume and severity of the citizens who show up needing inpatient and outpatient care.

Hospitals are at the end of a long and complex chain of causation driving that volume and that severity.

That chain includes, but is not limited to, Byzantine government payment rules, an aging population, income inequality, housing problems, education, substance abuse, mental health, elder/dementia care, violence, and tax structures.

To believe the state can control health care expenditures through the hospital budget system is simply impossible without degrading that very same health care system.

In some ways, Vermont is too small to be a well-functioning 21st-century state with its small, increasingly aging population, and small tax base. Years ago, we used to say, “The three biggest demands of the health care system were high quality, ease of access and low cost. Pick any two.”

I believe the GMCB members are mostly well-intentioned. However, GMCB cannot achieve its intended goal with the limited tools available to it and the larger forces beyond its control. When you find yourself at the bottom of a hole, quit digging.

Dr. Baxter Holland lives in Rutland Town.

Published in the Rutland Herald on September 21, 2024

Vermont’s health care system has stumbled into jeopardy, burdened by regulations crafted for a dream that never came true.

In 2011, the Legislature created the Green Mountain Care Board, an entity designed to manage a universal health care program for all Vermonters. This initiative was built with the idea of ushering in an affordable, high-quality era that would set national precedent. However, while the universal coverage plan was abandoned in 2014, the GMCB persisted, retaining sweeping regulatory authority over nearly every aspect of health and wellness, from setting insurance premiums and provider rates to controlling hospital budgets.

Thirteen years later, the GMCB has drifted far from the promises that fueled its creation. While defining “success” is subjective, one truth is clear: No other state has sought to replicate Vermont’s path. Instead of a model others strive to emulate, it has become a cautionary tale of an experiment gone wrong. Rather than creating a cohesive and efficient health care system, the GMCB’s extensive oversight has stifled competition, deterred investment, and left providers struggling to adapt to the changing needs of their communities.

The crisis of control

Since the idyllic plan of universal coverage was scrapped, Vermont’s health care landscape has become a restrictive, chimeric environment, disconnected from modern realities. Patients encounter limited choices and mounting barriers to care, while hospitals grapple with financial instability and inflexible regulations, unable to respond to shifting demographics.

To be clear, the current crisis is not due to malice or neglect on the part of actual board members, limited to the tools they are given. Rather, the proportion of residents aged 65 and older has nearly doubled, from 10.5% in 2010 to 19.5% in 2021, and continues to grow. Meanwhile, Medicare Advantage enrollment has surged by 400% since 2016, burdening patients with restrictive networks and frequent claim denials that make accessing care increasingly difficult.

Hospitals, already struggling with low reimbursements and escalating patient volume, are mandated to reduce reimbursements further, effectively penalized for the increased revenue generated by meeting the needs of a growing elderly population. At the same time, the GMCB has sanctioned double-digit premium hikes for insurance companies, adding to the financial strain on patients and the broader economy. The board’s approach mutates the fundamental concepts of “supply” and “demand,” creating a world where the books are impossible to balance.

Outdated policies, escalating problems

The restrictive nature of the GMCB’s authority stands in uniquely stark contrast to the regulation seen in the rest of the country. Facilities are burdened with Draconian revenue controls, which limit their ability to invest in crumbling infrastructure and underpaid workforce. This rigidity particularly impacts rural hospitals, which grapple with well-known challenges at baseline, further diminishing access to care.

Loosening these controls would allow Vermont’s hospitals to better compete for top-tier clinicians, retain existing staff, and invest in state-of-the-art equipment that improves patient care while reducing long-term costs. Making Vermont a more attractive destination for health care professionals and their families would have the downstream effect of supporting the broader economic vitality of the state.

A path forward

Every year, a tremendous amount of resources is dedicated at each of the state’s hospitals to prepare, present and respond to the various requirements of the GMCB. Deepening the challenge is the composition of the board, dominated by attorneys and academicians rather than individuals with direct experience in medicine. This lack of experiential insight influences decision-making in ways that cannot fully reflect the “boots-on-the-ground” reality of providers and patients.

A practical, immediate reform would be to reduce the GMCB’s control over hospital budgets, allowing institutions to independently manage finances without penalization. This is a small, first step that can provide fast relief while broader, more complex reforms are developed — such as those explored by the consultants the GMCB hired earlier this year.

Reforming aggressive regulation is not about eliminating the rule of law. Rather, it’s about recalibration, creating an adaptable system that genuinely serves the state’s communities. A balanced regulatory approach — one that maintains essential oversight but grants greater operational freedom — can unlock the full potential of the state.

The crossroads of opportunity

Vermont’s challenges are obvious; the solutions are not. What is certain, however, is that inaction is not an option. Reforming the GMCB (or dissolving it) may not be a guaranteed fix, but it represents a crucial step toward progress. Swift and decisive action from policymakers can initiate changes that, while modest, provide the necessary space for more comprehensive and lasting repairs.

We urgently need the flexibility to tackle today’s issues and the foresight to prepare for future demands. By drawing on the state’s legacy of innovation and progressive thinking, we can revive the dream of providing accessible, affordable, high-quality care, and build a healthier future for all of Vermont.

Jason Beckta, a board-certified radiation oncologist with a doctorate in radiobiology, is with the Foley Cancer Center of Rutland Regional Medical Center.

Published in the Rutland Herald September 17, 2024

Yesterday, the Green Mountain Care Board decided to punish the University of Vermont Medical Center and Rutland Regional Medical Center for having cared for more patients than budgeted in 2023.

That year, both medical centers saw patient volumes above what was expected by both medical centers and the GMCB. Remember, hospitals cannot turn away patients who seek care. Post pandemic, RRMC and UVMMC have worked diligently to decrease waiting lists for patients and improve access to care. It is important to note hospitals in Vermont generally do not see increased profit for seeing increased volume.

Hospitals receive payments for providing care based on government decisions for Medicare and Medicaid. In Vermont, payment changes from commercial insurers (BC/BS, MVP) are determined by the GMCB. In aggregate, these payments to hospitals and their clinicians, are often less than the hospital’s costs to provide the health care to Vermonters. RRMC and UVMMC count on other revenue such as the 340b program, grants, education funding and investments, to make up the difference.

When a hospital in Vermont has a good year, which is not very often lately, they may have a 3% margin or profit. This 3% profit is used for facility maintenance, new programs or technology.

The GMCB, as the regulator of the health system of Vermont, uses and has used for years what is called “net patient revenue” caps to try to control cost and create affordability for Vermonters. It is thought that, by not allowing Vermont hospitals to collect more than a certain amount of money, the cost of health care can be contained. Unfortunately, that is being proven wrong.

Two unfortunate outcomes are now occurring due to GMCB reliance on NPR caps. Both affordability and access are declining for you and your family. We have an access to care crisis in Vermont. As more and better methods of caring for patients develop and as our population ages, the necessity for health care rises.

This increased need for care is occurring at the same time Vermont hospitals are being squeezed financially by NPR caps used by the GMCB. This has been going on for years, often preventing hospitals to expand programs or renew facilities. Hospitals are now unable to expand access without more money. The NPR cap budgeting process has shrunken the resources of hospitals to a critical level. Also unfortunately, the NPR cap budgeting process by GMCP has not been effective in creating affordability for Vermonters.

Just look at your BC/BS bill for evidence of this. In fact, commercial insurance rates in Vermont are increasing faster than in many states.

Vermont once had a health care system that had reasonable access and lower costs than most states. Under GMCB regulation, by controlling the NPR increase, we are seeing our access to care decline and our insurance rates increase more rapidly than many other states.

Clawing back revenues for the care provided by our two largest hospitals is going to exacerbate the access crisis by making these centers not able to purchase technology, build more efficient and effective facilities, or hire the clinical staff you want caring for you and your family.

Clawing back revenues and continuing to restrict NPR has not and will not improve affordability for Vermonters. Those with resources will leave the state to receive care at hospitals the GMCB does not regulate (with the costs still being placed on Vermont insurers). Those that cannot leave the state will suffer an increased access to care crisis with waiting lists and beyond.

It is time GMCB became a regulator that facilitates reducing the cost to the hospitals of Vermont to provide care to you and your family.

There are many ways the GMCB could help. Perhaps they could encourage rapid access to specialty care; work to increase the quantity of skilled nursing facility beds; encourage the Legislature to give income tax breaks to RNs and other clinical staff; work with physicians to reduce waste and reduce the unit costs of procedures; develop a functional ambulance transportation system for the state; get insurers to create products that truly encourage a healthy lifestyle and beyond.

Using punitive measures against hospitals who have volumes above their budget is not one effective. It is time to recognize that restricting NPR growth is failing to improve affordability, access or quality.

It is also time to let your concerns about the access crisis be known to Green Mountain Care Board, Agency of Human Services and your legislators.

Melbourne Boynton is medical director of Vermont Orthopaedic Clinic and former chief medical director at Rutland Regional Medical Center.