Health Care

As it seeks steep budget increases, Vermont’s largest hospital network suggests it could roll them back this fall

John Brumsted
Dr. John Brumsted, the outgoing CEO of the UVM Health Network, on March 12, 2020. File photo by Mike Dougherty/VTDigger

Updated at 2:09 p.m.

Leaders of the University of Vermont Health Network, the state’s largest hospital operator, asked state regulators for steep budget increases Friday but promised to reduce their request by Nov. 15, if possible. 

The health network, which operates three hospitals in Vermont and three in upstate New York, is seeking double-digit increases to what it charges people with commercial insurance. If the state regulatory Green Mountain Care Board approves the request in full, those who carry private insurance could see their premiums increase significantly next year.

“Not one person on our team wanted to come here and get double-digit rate increases today,” network chief operating officer Al Gobeille told the board Friday. “This is not what we want. … We're here today because we have to seek the funding necessary to care for our communities, our friends, our neighbors, our family members.”

In July, the network asked regulators for a 19.9% increase in commercial insurance charges for University of Vermont Medical Center in Burlington, a 14.52% increase for Central Vermont Medical Center in Berlin and an 11.45% increase for Porter Hospital in Middlebury for the next fiscal year. Network leaders made their case to the Green Mountain Care Board for the first time in public at a hearing Friday.

But upcoming federal and state policy changes to Medicare and Medicaid reimbursements could yield more revenue than the network planned for in its proposed budget, Gobeille told the board Friday. If that’s the case, he said, the network would decrease commercial charges accordingly.

Even if the network decreases its charges in November, those with commercial insurance won’t see it reflected in their premiums because insurance rates get finalized at the beginning of September. 

The health network accounts for about two-thirds of hospital spending in Vermont, so even relatively small changes to charges can cause significant swings in next year’s insurance premiums. Most hospitals in Vermont are also seeking significant increases in charge at this year’s budget cycle and the cumulative effect could be quite costly for Vermonters with private insurance. 

In their opening remarks to members of the Green Mountain Care Board on Friday, University of Vermont Health Network’s leaders said its cash reserves had been significantly depleted in the current year. Without additional funds, the network now has enough money to operate its six hospitals for 127 days, they said, compared to the 175 days’ worth of reserves the network had the previous year.

The health network is “teetering on a financial precipice,” said Dr. John Brumsted, outgoing president and CEO of the UVM Health Network and its Burlington flagship hospital. He stressed to the four care board members that the network had already trimmed its budget significantly through financial improvement measures that produced some $50 million in cost cuts. 

Hospitals have long complained that public insurers such as Medicaid and Medicare aren't paying enough for patient care. To balance their budget, hospitals charge private insurers more for services. 

On Friday, network leaders essentially said permanent increases to Medicaid and Medicare reimbursements would prompt a decrease to commercial prices in November.

Significant increases to public insurance  reimbursements are likely next year. The recently passed  federal Inflation Reduction Act included higher Medicare reimbursement rates in certain areas. At the state level, higher Medicaid reimbursement rates are also in the works.  

Earlier this spring, the UVM Health Network sought from regulators a mid-year budget adjustment to address a $44 million budget deficit. Another hospital, Rutland Regional Medical Center, sought an increase to address a more than $7 million shortfall. Regulators granted the health network a $14 million increase, but denied Rutland’s request. Green Mountain Care Board members told officials from both hospitals that substantial hikes should be discussed during the annual budget cycle.

In its request last year, UVM Health Network cited increases associated with a greater reliance on costly temporary staff through the pandemic. Network leaders on Friday attributed the need to raise prices to high staffing costs.

Hospitals have long complained that public insurers such as Medicaid and Medicare aren't paying enough for patient care. To balance their budget, hospitals charge private insurers more for services. 

The care board is expected to vote on hospital budget proposals in September before the next fiscal year.  The fiscal year runs Oct. 1, 2022 to Sept. 30, 2023. 

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Liora Engel-Smith

About Liora

Liora Engel-Smith covers health care for VTDigger. She previously covered rural health at NC Health News in North Carolina and the Keene Sentinel in New Hampshire. She also had been at the Muscatine Journal in rural Iowa. Engel-Smith has master's degrees in public health from Drexel University and journalism from Temple University. Before moving to journalism, she was a scientist who briefly worked in the pharmaceutical industry.

Email: [email protected]

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