On September 26, 2024
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GMCB announces FY25 hospital budget decisions and enforcement of FY2023 budgets, includes RRMC

The Green Mountain Care Board (GMCB) has concluded its annual review of hospital budget submissions for fiscal year 2025. This year’s decisions reflect a careful balance between ensuring access to high-quality, affordable healthcare for Vermonters, maintaining financial sustainability of hospitals, and responding to the evolving healthcare landscape. The GMCB also took corrective action against The University of Vermont Medical Center and the Rutland Regional Medical Center for exceeding their budgets in FY2023.

The GMCB reviewed budget proposals from all 14 regulated hospitals across the state, taking into consideration each institution’s financial health, projected revenue needs, cost containment efforts, and patient care priorities. As part of this process, the Board engaged in a series of public hearings, incorporating feedback from stakeholders, hospital administrators, healthcare providers, the Vermont Health Care Advocate, and community members.

“Vermonters are facing some of the highest healthcare costs in the country and deserve an affordable healthcare system. Not only are Vermont insurance premiums rising faster than in nearly any other state, but healthcare costs are straining school budgets and contributing to rising property taxes,” said Owen Foster, chair of the Green Mountain Care Board. “These budget decisions require Vermont hospitals to focus on population health—to keep patients healthier and out of hospitals—and to constrain costs at a time when many hospitals face significant financial challenges. This will not be easy, particularly given our underlying demographics and housing shortages that must be urgently addressed. Our healthcare costs and these decisions highlight the need and opportunity for systemic change that will provide Vermonters with an affordable and sustainable hospital and health system.”

The Green Mountain Care Board’s decisions were consistent with FY25 guidance, which set hospital revenue targets and price increases at levels reflecting wage growth and inflation. FY25 guidance established that operational efficiency and provider productivity would be a key focus and important factors in considering whether a hospital’s budget could exceed guidance. Review of FY25 budgets revealed opportunity for Vermont hospitals to increase efficiency and provider productivity—which would lower healthcare costs for Vermonters and improve access. 

The hospital system transformation and sustainability recommendations arising out of Act 167 (2022) will be presented to the Board on Wednesday, Sept. 18. Dr. Hamory and his team from Oliver Wyman will discuss in detail the changes they recommend to ensure the long-term affordability and sustainability of Vermont’s healthcare system.

Budget enforcement

Vermont’s hospital budget review statute provides that “Each hospital shall operate within the budget established” by the Board. 18 V.S.A. § 9456(d)(1). If a hospital believes that it cannot comply with the budget as established by the Board, the statute provides a process by which a hospital can take proactive steps to apply for adjustment of its budget, showing need based on an exceptional or unforeseen circumstance,18 V.S.A. § 9456(f). In prior years, some hospitals have sought mid-year rate adjustments as part of a process by which the GMCB reviews the situation and determines whether adjustment to the established budget is appropriate.

In 2024 several Vermont hospitals reported results over their FY23 established budgets. Four hospitals, having not applied for budget adjustments, received letters from the GMCB explaining that the Board identified these deviations and intended to review the underlying factors in considering potential enforcement. 

The University of Vermont Medical Center (UVMMC) exceeded its FY23 budget by $80,290,156. Porter Medical Center exceed its FY23 budget by $11,000,307. Rutland Regional Medical Center exceeded its FY23 budget by $11,064,861. Northeastern Vermont Regional Hospital (NVRH) exceeded its budget by $2,105,926.

After reviewing evidence, conducting hearings, taking extensive public comment, and deliberating on these FY23 overages, the GMCB determined that corrective measures to remediate the deviations for UVMMC and RRMC were appropriate to protect Vermont rate payers. 

The GMCB voted to fully enforce UVMMC’s overage by reducing future commercial rates over two years. GMCB elected to enforce 50% of RRMC’s overage by reducing future commercial rates over two years. GMCB elected to not take action to enforce NVRH or Porter Hospital’s FY23 budget overages.

UVMMC had requested a 6.8% budget increase for FY25, GMCB approved a 3.4% increase but with the enforcement action, the net change is a decrease of -1.0%. For RRMC, they requested a 2.8% increase, which was approved, but with the enforcement, received a net 1.2% increase.

“Vermont statute requires hospitals to comply with budget orders, which are a critical tool to protect Vermonters from runaway healthcare costs and hold hospitals accountable for expense growth,” said Owen Foster, Chair of the Green Mountain Care Board.  “In FY23 UVMMC was approved for a 14.77% commercial effective rate, and RRMC a 17.40% change in charge. Today’s budget enforcement decisions remediate Vermonters’ paying hospital commercial rate increases that FY23 performance demonstrate were unnecessary and that patients did not need to bear considering significant unbudgeted government payments and patient volumes. These decisions will lower hospital prices which will allow for increased patient access without imposing undue financial burden on Vermonters.”

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