Next year, patient care at the University of Vermont Medical Center in Burlington and Central Vermont Medical Center in Berlin will be cheaper for commercial insurers. The hospitals submitted budgets to state regulators this week that would reduce commercial rates by 7.9% and 3.3% respectively.
The proposed reduction in commercial rates is a result of a number of legal requirements, including a new state law that will reduce drug prices at Vermont hospitals starting next year. It’s also because of penalties imposed by state regulators, the Green Mountain Care Board, after UVM Medical Center received more revenue from patient care than expected in 2023.
The hospital has gone over budget again this year, and is planning to reduce drug prices by nearly $20 million at the University of Vermont Medical Center and $6 million at Central Vermont Medical Center for the rest of the year, another factor that will bring down commercial rates.
“On multiple fronts right now, we’re trying hard to be compliant — to submit budgets that are compliant, to adjust them afterwards, and to do our part in trying to be as affordable as we possibly can,” said Dr. Stephen Leffler, the president of the University of Vermont Medical Center.
It’s the first time either hospital has submitted a proposed reduction in commercial insurance rates in years. Last fall, the Green Mountain Care Board ordered UVM Medical Center to reduce rates by 1%.
As of now, it appears UVM Medical Center’s budget submission complies with “what was mandated by GMCB and the legislature with regard to rate reductions,” board chair Owen Foster wrote by email. The board regulates hospital budgets and other aspects of the health care system in Vermont and will release hospital budget decisions in September.
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In the weeks following the budget order last year, the health network announced a range of cuts to patient services, including the closure of the in-patient psych unit at Central Vermont Medical Center earlier this year, and the closure of primary care clinics in Waitsfield. At the time, hospital leaders said those were decisions they were “forced to make” because of the budget orders.
This year, the hospital has not proposed any further cuts to patient services. To help reduce costs, executives at the hospital will not receive any bonuses. The hospital will also reduce how much it spends on buildings and equipment, consolidate real estate and cut down on temporary clinical staff, also called travelers.
“We’re not down quite to pre-pandemic, but we’re starting to get pretty close,” Leffler said.
In a press release, the hospital promised to share more details in the coming weeks on other ways they’re cutting expenses.
“We did a lot of work in this budget on administrative costs and expenses to preserve patient care service,” Leffler said.
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