Regulators leave hospital prices largely unchanged
MONTPELIER >> The Green Mountain Care Board will allow prices at hospitals to go up an average of 1.8 percent in the upcoming fiscal year.
The board, which regulates hospitals' budgets and insurance prices, finished approving the prices for Vermont's 14 hospitals Thursday. The board's accountants are still calculating how much revenue those new prices will take in.
The results leave $2.4 billion in hospital budgets largely unchanged. Even though numerous hospitals took in more money for care than they were supposed to in 2015 or are expected to do so in 2016, none will be forced to decrease how much they charge insurance companies starting Oct. 1.
For fiscal year 2017, the only hospital that will lower its prices is Rutland Regional Medical Center, which asked to drop its prices 5.1 percent. Copley Hospital in Morrisville will not see a price increase because it didn't request one, but it will be required to return to the board in December to discuss its budget.
The University of Vermont Medical Center in Burlington and Central Vermont Medical Center in Berlin, which are both part of the UVM Health Network, will raise prices. The two hospitals originally requested increases of 3 percent, but the board reduced those to 2.45 percent.
Southwestern Vermont Medical Center in Bennington, which originally requested a 3.9 percent price increase, will see a 3.36 percent bump. Northwestern Medical Center in St. Albans will be required to keep prices level after asking for a 2.9 percent price increase.
"There's some that were over that we did cut (their prices). There's some that were over that we didn't cut," said Al Gobeille, the chair of the Green Mountain Care Board. He said hospital budgets needed to be considered on a case-by-case basis.
"It'd be real easy if you just wanted to make a name for yourself for one year, cut rates, sound like a tough guy," Gobeille said. "It'd be really easy, but you'd do a lot of harm."
Gobeille earlier this month directed four hospitals — the UVM Medical Center, Central Vermont Medical Center, Northwestern Medical Center and Southwestern Vermont Medical Center — to work together to figure out how they could save money in light of their budget overages in 2015.
Gobeille said the process was necessary because taking in more patient care revenue than budgeted is different from taking in more profits. He said the hospitals needed to figure out how much of the excess revenue actually contributed to their profit margins.
Todd Keating, the chief financial officer of the UVM Health Network, led the process for the four hospitals. The hospitals came back and proposed price increases that were lower than their original requests by fractions of percentage points.
The UVM Medical Center and Central Vermont Medical Center proposed to lower their price increase from 3 percent to 2.63 percent. On Thursday, the board changed that number again to 2.45 percent.
Southwestern Vermont Medical Center proposed to lower its price increase from 3.9 percent to 3.36 percent. The board approved that number.
The biggest difference came at Northwestern Medical Center — which exceeded its budgeted patient care revenue three years in a row and had 375 days of cash on hand in fiscal year 2015. The hospital was forced to accept no price increase.
As a result of the case-by-case budget process, Gobeille said many hospitals will exceed the target rate for the growth in revenue from patient care for the coming fiscal year. That target — 3.4 percent — is the lowest the board has set since it started regulating hospitals in 2012.
He attributed the hospital system's inability to meet the 3.4 percent target to fee-for-service medicine — the financial system that pays hospitals for how many procedures they perform, not for keeping patients healthy.
"Regulating a fee-for-service hospital system is extremely challenging, and it is not a satisfying thing," Gobeille said. "It's very hard to regulate fee-for-service medicine. No one's ever done it successfully."
The board and the Shumlin administration have been working with hospitals to set up a new payment system that would use a regulated monopoly to pay doctors and hospitals based on the quality of the care they provide.
Gobeille said the board did a good job holding down the price increases this year. "These are extremely complicated institutions, and I think the board did well with a tough subject," he said.
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