The Green Mountain Care Board amended hospital budgets Tuesday, ceding to the demands outlined in a scathing appeal letter from UVM Health Network CEO John Brumsted.
But it may not have been Brumsted that persuaded regulators. Instead, hospital officials raised concerns that the board’s original decision could put hospitals’ federal aid money at risk.
“We can’t really take any chances,” said chair Kevin Mullin in an interview.
Last week, the federal Health Resources & Services Administration issued guidance that suggested that hospitals’ aid money could be endangered if hospitals got other Covid funds.
That 2021 Covid rate could be construed as reason for the federal government to clawback funds, hospital officials argued in the special board meeting.
The uncertainty played to Brumsted’s favor. He requested that the board combine its budget decision from two separate rate increases — a general rate increase, and a temporary Covid rate increase — to a combined single rate increase.
He also asked for a higher increase for Porter Medical Center in Middlebury, saying that it was necessary to continue to run the associated nursing home, Helen Porter Rehabilitation and Nursing. After a showdown between the board and the state’s largest hospital, Brumsted mostly won out. Regulators offered a partial concession to Porter, increasing the cap on net patient revenue, but keeping the overall rate steady.
The board also ultimately decided to combine the two rates, not only for UVM Health Network, but for all hospitals that were granted a split rate. The change could solidify the Covid rate, leading to a higher baseline for next year. Ultimately, higher rates for hospitals will mean increased costs for Vermonters in the form of insurance rates. With the rate increases, hospitals will raise prices 5.6% on average.
“The bottom line for the consumer advocate, is that Vermonters can’t afford it,” said health care advocate Mike Fisher, as he argued against the change before the board. “The impact of big rate increases is more and more people are priced out of the ability to get the care they need.”
Brumsted set the stage for the hearing by excoriating regulators in his appeal letter, saying the board was “untethered from the equitable, legal, and financial principles that should guide it.” By cutting funds to the hospital, the board was “jeopardizing patient care,” he wrote last week.
At the hearing, board members defended their previous decision.
“There’s been a lot of press about what this board has done to the network hospitals, and that we didn’t use the process, and in fact we did use the process,” said board member Maureen Usifer, who added that Brumsted’s accusations weren’t fair. “We do our best as we’re going through this as well, and balancing, not just the hospital requests, but what it means for consumers who are using the services.”
Between 2015 and 2019, hospitals across Vermont had a combined $329 million in surpluses — patient care revenues minus expenses. UVM Medical Center’s operating margin was $295 million over that period, about 90% of the statewide total. Half of Vermont’s hospitals lost more money than they earned during that same five-year period. Operating margin is the revenue that comes from patient care after subtracting related expenses. It excludes free care, bad debt, and other income, such as from parking or food.
Usifer also pointed out that over those five years, UVM consistently exceeded its expenses and revenues over what was allowed by the board.
Brumsted said rising expenses were out of his control. Surpluses, or operating margin, is necessary to keep an academic medical center such as UVM Medical Center afloat, he said. He maintained that a temporary Covid rate increase wouldn’t allow him to plan for the future. Certainly, “nobody builds a house and puts the foundation on sand,” he said of the uncertainty.
Rutland Regional Medical Center CEO Claudio Fort, and Jeff Tieman, executive director of the Vermont Association of Hospitals and Health Services, chimed in in support of Brumsted’s request.
In the Care Board’s mid-September decision, regulators reduced the increases that hospitals would receive.
UVM Medical Center had originally asked for an 8% increase, but was granted a 6% increase in the board’s decision. The board approved a 4% increase for Porter, which had requested a 5.8% hike. Those rates go into effect on Oct. 1, the start of the fiscal year.
Wednesday’s decision prevented any chance ratepayers would pick up the tab for hospital expenses if the federal government clawed back its relief money, Mullin said in a subsequent interview. “I think it was the right thing to do,” he said. “Whether it was necessary or not, that’s a question for lawyers.”
They also voted to allow a higher surplus for Porter Medical Center, another of Brumsted’s requests.
Mullin acknowledged the need to clarify and standardize the budget process for next year, even as he critiqued Brumsted and UVM Health Network for their appeal.
Their sprawling critiques and narrow requests were “almost like a false narrative,” he said. “As much as they feel they didn’t get everything they wanted, there are probably more people in the state that believe we gave them too much.”
CORRECTION: The CEO of the Rutland Regional Medical Center was misidentified in the original version of this story.