Vermont Gov. Phil Scott has signed legislation that grants the Green Mountain Care Board new powers to manage the financial health of hospitals and insurers in the state.
The GMCB, an independent state agency in Vermont responsible for overseeing the state’s healthcare system, will be allowed to reduce health insurers’ reimbursement rates to hospitals if the insurer is facing an imminent risk of insolvency.
Under the legislation, rate reductions would continue until the insurer’s financial status improves and surpasses the regulatory threshold set by the state. The GMCB is also authorized to adjust the budget of hospitals that have exceeded their revenue targets in the previous year. If a hospital’s financial performance deviates significantly from its set budget, the GMCB can reduce its funding for the next fiscal year.
The new law also grants the GMCB the ability to appoint an independent observer to oversee the operations of a hospital that is found to be out of compliance with its budget. If the GMCB finds that a hospital has made misrepresentations or is significantly mismanaging its finances, the observer would have the authority to monitor the hospital’s operations and report directly to the state. This observer would have access to the hospital’s financial records and could recommend corrective actions.
The legislation is effective immediately. The law will remain in effect until at least 2030, when the provision allowing the GMCB to appoint independent observers is set to be repealed.
The legislation comes as the state’s largest insurer, Blue Cross Blue Shield of Vermont, has recently described itself as being in a “fragile financial state,” amid climbing healthcare costs. AMBest has rated the insurer’s financial strength as “marginal.” The company has lost nearly $152 million since 2021, including $62.1 million in 2024.
