Rutland Hospital CEO wants to lower its rates starting May 1

Courtesy of RRMC

Tom Huebner

By Erin Mansfield, VTDigger.org

The chief executive officer of Rutland Regional Medical Center told regulators he will start charging insurers lower rates unless regulators tell him not to.

Tom Huebner told the Green Mountain Care Board on Thursday that his staff is planning to cut how much it charges insurance companies by about 3.7 percent starting May 1. More cuts might come in October.

“What we would like to do, and we would like to do it on May 1, and frankly we’re probably going to do it on May 1 unless you tell us we can’t, is reduce our charges,” Huebner said.

“We’re spreading it out over different services in the hospital, not evenly,” he said. “We’ve chosen areas where prices are more important to people than others. … We’re starting the work today as if you’re going to say yes.”

The annual savings works out to about $5.4 million among all commercial health insurers that pay the hospital for services. About $3.6 million of that annual savings would be passed on to Blue Cross Blue Shield of Vermont.

Rutland Regional was among nine hospitals in Vermont that took in more money from patient care than they were supposed to during the fiscal year that ended Sept. 30. The total net excess revenue was $49.2 million. It’s not profit, but it’s “real money” that the hospitals collected from ratepayers in fiscal 2015, according to Al Gobeille, the chair of the Green Mountain Care Board.

A financial analysis from the board says the hospitals took in excess revenue because they planned to be able to write off $145.3 million in bad debt and free health care. The actual amount hospitals could write off in those categories was $98.8 million—a difference of $46.5 million.

The board, which regulates hospital budgets and commercial insurance rates, is now trying to determine the process it will use to require hospitals to essentially give the excess money back to the public. The board decided Thursday to open public comment on Rutland’s proposal and reopen the public comment period for a proposal from the University of Vermont Health Network.

Last week the UVM Medical Center in Burlington and Central Vermont Medical Center—which collectively account for $35.4 million of the excess revenue—said they planned to give $15 million to public health initiatives and to use up to $14.1 million to lower rates in several months.

Gobeille also has directed his staff to work with hospitals and Vermont’s health insurers to see how much of the hospital system’s excess revenue can be used to reduce health insurance premiums Jan. 1. The premiums may not go down, he said, but they could grow at a slower rate than ever before.

“I’ve worked for four and a half years to understand hospital budgets… to work to try to make this more affordable for people,” Gobeille said in an interview this week. “This is a great chance to do that. Let’s not blow it.”

“We are the only state in the country that has one public board that has the ability to do this,” he said. “The Legislature should be really proud of it. We literally have the ability to reconcile this.”

Jessica Holmes, an economist who sits on the board, expressed resistance to the UVM proposal Thursday. She said regulators, who already get monthly reports on hospital budgets, should be more aggressive with hospitals.

“One thought is, could we do something more throughout the year so that this is not a year-end adjustment process,” Holmes said. She said the board should have a transparent process for returning excess revenue from patient care, and it “should not be in the business” of allocating hospital money to community organizations.