The Vermont Statutes Online

Title 18 : Health

Chapter 221 : Health Care Administration

Subchapter 007 : HOSPITAL BUDGET REVIEW

• § 9456. Budget review

  (a) The Board shall conduct reviews of each hospital’s proposed budget based on the information provided pursuant to this subchapter and in accordance with a schedule established by the Board. Notwithstanding any provision of 3 V.S.A. chapter 25 to the contrary, the Board’s review, establishment, and enforcement of hospital budgets under this section shall not be construed to be a contested case. Any person aggrieved by a final Board action, order, or determination under this section may appeal as set forth in section 9381 of this title.

  (b) In conjunction with budget reviews, the Board shall:

  (1) review utilization information;

  (2) consider the Statewide Health Care Delivery Strategic Plan developed pursuant to section 9403 of this title, once established, including the total cost of care targets, and consult with the Agency of Human Services to ensure compliance with federal requirements regarding Medicare and Medicaid;

  (3) consider the Health Resource Allocation Plan identifying Vermont’s critical health needs, goods, services, and resources developed pursuant to section 9405 of this title;

  (4) consider the expenditure analysis for the previous year and the proposed expenditure analysis for the year under review;

  (5) consider any reports from professional review organizations;

  (6) for a hospital that operates within a hospital network, review the hospital network’s financial operations as they relate to the budget of the individual hospital;

  (7) solicit public comment on all aspects of hospital costs and use and on the budgets proposed by individual hospitals;

  (8) meet with hospitals to review and discuss hospital budgets for the forthcoming fiscal year;

  (9) give public notice of the meetings with hospitals and invite the public to attend and to comment on the proposed budgets;

  (10) consider the extent to which costs incurred by the hospital in connection with services provided to Medicaid beneficiaries are being charged to non-Medicaid health benefit plans and other non-Medicaid payers;

  (11) require each hospital to file an analysis that reflects a reduction in net revenue needs from non-Medicaid payers equal to any anticipated increase in Medicaid, Medicare, or another public health care program reimbursements, and to any reduction in bad debt or charity care due to an increase in the number of insured individuals;

  (12) require each hospital to provide information on administrative costs, as defined by the Board, including specific information on the amounts spent on marketing and advertising costs;

  (13) require each hospital to create or maintain connectivity to the State’s Health Information Exchange Network in accordance with the criteria established by the Vermont Information Technology Leaders, Inc., pursuant to subsection 9352(i) of this title, provided that the Board shall not require a hospital to create a level of connectivity that the State’s Exchange is unable to support;

  (14) review the hospital’s investments in workforce development initiatives, including nursing workforce pipeline collaborations with nursing schools and compensation and other support for nurse preceptors;

  (15) consider the salaries for the hospital’s executive and clinical leadership, including variable payments and incentive plans, and the hospital’s salary spread, including a comparison of median salaries to the medians of northern New England states and a comparison of the base salaries and total compensation for the hospital’s executive and clinical leadership with those of the hospital’s lowest-paid employees who deliver health care services directly to hospital patients; and

  (16) consider the number of employees of the hospital whose duties are primarily administrative in nature, as defined by the Board, compared with the number of employees whose duties primarily involve delivering health care services directly to hospital patients.

  (c) Individual hospital budgets established under this section shall:

  (1) be consistent, to the extent practicable, with the Statewide Health Care Delivery Strategic Plan, once established, including the total cost of care targets, and with the Health Resource Allocation Plan;

  (2) reflect the reference-based prices established by the Board pursuant to section 9376 of this title;

  (3) take into consideration national, regional, or in-state peer group norms, according to indicators, ratios, and statistics established by the Board;

  (4) promote efficient and economic operation of the hospital and, if a hospital is affiliated with a hospital network, ensure that hospital spending on the hospital network’s operations is consistent with the principles for health care reform expressed in section 9371 of this title and with the Statewide Health Care Delivery Strategic Plan, once established;

  (5) reflect budget performances for prior years and, if not already addressed pursuant to subsection (h) of this section, account for any significant deviation in revenue during the most recently completed fiscal year in excess of the budget established for the hospital pursuant to this section;

  (6) include a finding that the analysis provided in subdivision (b)(11) of this section is a reasonable methodology for reflecting a reduction in net revenues for non-Medicaid payers;

  (7) demonstrate that they support equal access to appropriate mental health care that meets standards of quality, access, and affordability equivalent to other components of health care as part of an integrated, holistic system of care;

  (8) include meaningful variable payments and incentive plans for hospitals that are consistent with this section and with the principles for health care reform expressed in section 9371 of this title; and

  (9) take into consideration the costs associated with implementing a security plan pursuant to section 1911b of this title.

  (d)(1)(A) Annually, the Board shall establish a budget for each general hospital, as defined in section 1902 of this title, on or before September 15, followed by a written decision on or before October 1.

  (B) Annually, the Board shall establish a budget for each psychiatric hospital, as defined in section 1902 of this title but excluding those conducted, maintained, or operated by the State of Vermont, on or before December 15, followed by a written decision on or before December 31.

  (C) Each hospital shall operate within the budget established under this section.

  (D)(i) Beginning not later than hospital fiscal year 2028, to the extent that resources are available, the Board shall establish global hospital budgets for one or more Vermont hospitals that are not critical access hospitals. Not later than hospital fiscal year 2030, to the extent that resources are available, the Board shall establish global hospital budgets for all Vermont hospitals.

  (ii) Global hospital budgets established pursuant to this section shall include Medicare to the extent permitted under federal law but shall not include Medicaid.

  (2)(A) It is the General Assembly’s intent that hospital cost containment conduct is afforded state action immunity under applicable federal and State antitrust laws, if:

  (i) the Board requires or authorizes the conduct in any hospital budget established by the Board under this section;

  (ii) the conduct is in accordance with standards and procedures prescribed by the Board; and

  (iii) the conduct is actively supervised by the Board.

  (B) A hospital’s violation of the Board’s standards and procedures shall be subject to enforcement pursuant to subsection (h) of this section.

  (3)(A) The Office of the Health Care Advocate shall have the right to receive copies of all materials related to the hospital budget review and may:

  (i) ask questions of employees of the Green Mountain Care Board related to the Board’s hospital budget review;

  (ii) submit written questions to the Board that the Board will ask of hospitals in advance of any hearing held in conjunction with the Board’s hospital review:

  (iii) submit written comments for the Board’s consideration; and

  (iv) ask questions and provide testimony in any hearing held in conjunction with the Board’s hospital budget review.

  (B) The Office of the Health Care Advocate shall not further disclose any confidential or proprietary information provided to the Office pursuant to this subdivision (3).

  (e)(1) The Board, in consultation with the Vermont Program for Quality in Health Care, shall utilize mechanisms to measure hospital costs, quality, and access and alignment with the Statewide Health Care Delivery Strategic Plan, once established.

  (2)(A) Except as provided in subdivision (D) of this subdivision (e)(2), a hospital that proposes to reduce or eliminate any service in order to comply with a budget established under this section shall provide a notice of intent to the Board, the Agency of Human Services, the Office of the Health Care Advocate, and the members of the General Assembly who represent the hospital service area not less than 45 days prior to the proposed reduction or elimination.

  (B) The notice shall explain the rationale for the proposed reduction or elimination and describe how it is consistent with the Statewide Health Care Delivery Strategic Plan, once established, and the hospital’s most recent community health needs assessment conducted pursuant to section 9405a of this title and 26 U.S.C. § 501(r)(3).

  (C) The Board may evaluate the proposed reduction or elimination for consistency with the Statewide Health Care Delivery Strategic Plan, once established and the community health needs assessment, and may modify the hospital’s budget or take such additional actions as the Board deems appropriate to preserve access to necessary services.

  (D) A service that has been identified for reduction or elimination in connection with the transformation efforts undertaken by the Board and the Agency of Human Services pursuant to 2022 Acts and Resolves No. 167 does not need to comply with subdivisions (A)–(C) of this subdivision (e)(2).

  (3) The Board, in collaboration with the Department of Financial Regulation, shall monitor the implementation of any authorized decrease in hospital services to determine its benefits to Vermonters or to Vermont’s health care system, or both.

  (4) The Board may establish a process to define, on an annual basis, criteria for hospitals to meet, such as utilization and inflation benchmarks.

  (5) The Board may waive one or more of the review processes listed in subsection (b) of this section.

  (f)(1) The Board may, upon application, adjust a budget established under this section upon a showing of need based upon exceptional or unforeseen circumstances in accordance with the criteria and processes established under section 9405 of this title.

  (2) The Board may, on its own initiative, adjust the commercial health insurance reimbursement rates payable to a hospital at any time during the hospital’s fiscal year in order to ensure that the hospital operates within the budget established under this section.

  (g)(1) The Board may request, and a hospital shall provide, information determined by the Board to be necessary to determine whether the hospital is operating within a budget established under this section. For purposes of this subsection, subsection (h) of this section, and subdivision 9454(a)(8) of this title, the Board’s authority shall extend to an affiliated corporation or other person in the control of or controlled by the hospital to the extent that such authority is necessary to carry out the purposes of this subsection, subsection (h) of this section, or subdivision 9454(a)(8) of this title. As used in this subsection, a rebuttable presumption of “control” is created if the entity, hospital, or other person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing 20 percent or more of the voting securities or membership interest or other governing interest of the hospital or other controlled entity.

  [Subdivision (g)(2) is repealed effective January 1, 2030.]

  (2)(A) The Board may, upon finding that a hospital has made a material misrepresentation in information or documents provided to the Board or that a hospital is materially noncompliant with the budget established by the Board pursuant to this section, appoint an independent observer with respect to any matter related to the Board’s review or enforcement under this section if the Board believes that doing so is in the public interest. The independent observer shall be a person with experience and expertise relevant to the specific circumstances. At the direction of the Board, the independent observer may monitor the hospital’s operations, obtain information from the hospital, and report findings and recommendations to the Board.

  (B) An independent observer appointed pursuant to this subdivision (2) shall have the right to receive copies of all materials related to the Board’s review under this section and the hospital shall provide any information requested by the independent observer, including any information regarding the hospital’s participation in a hospital network. The independent observer shall share information provided by the hospital with the Board and with the Office of the Health Care Advocate in accordance with subdivision (d)(3) of this section but shall not otherwise disclose any confidential or proprietary information that the independent observer obtained from the hospital.

  (C) The Board may order a hospital to pay for all or a portion of the costs of an independent observer appointed for the hospital pursuant to this subdivision (2).

  (h)(1) If a hospital violates a provision of this section, the Board may maintain an action in the Superior Court of the county in which the hospital is located to enjoin, restrain, or prevent such violation.

  (2)(A) After notice and an opportunity for hearing, the Board may impose on a person who knowingly violates a provision of this subchapter, or a rule adopted pursuant to this subchapter, a civil administrative penalty of not more than $40,000.00, or in the case of a continuing violation, a civil administrative penalty of not more than $100,000.00 or one-tenth of one percent of the gross annual revenues of the hospital, whichever is greater. This subdivision shall not apply to violations of subsection (d) of this section caused by exceptional or unforeseen circumstances.

  (B)(i) The Board may order a hospital to:

  (I)(aa) cease material violations of this subchapter or of a regulation or order issued pursuant to this subchapter; or

  (bb) cease operating contrary to the budget established for the hospital under this section, provided such a deviation from the budget is material; and

  (II) take such corrective measures as are necessary to remediate the violation or deviation and to carry out the purposes of this subchapter.

  (ii) Orders issued under this subdivision (2)(B) shall be issued after notice and an opportunity to be heard, except where the Board finds that a hospital’s financial or other emergency circumstances pose an immediate threat of harm to the public or to the financial condition of the hospital. Where there is an immediate threat, the Board may issue orders under this subdivision (2)(B) without written or oral notice to the hospital. Where an order is issued without notice, the hospital shall be notified of the right to a hearing at the time the order is issued. The hearing shall be held within 30 days after receipt of the hospital’s request for a hearing, and a decision shall be issued within 30 days after conclusion of the hearing. The Board may increase the time to hold the hearing or to render the decision for good cause shown.

  (3)(A) The Board shall require the officers and directors of a hospital to file under oath, on a form and in a manner prescribed by the Board, any information designated by the Board and required pursuant to this subchapter. The authority granted to the Board under this subsection is in addition to any other authority granted to the Board under law.

  (B) A person who knowingly makes a false statement under oath or who knowingly submits false information under oath to the Board or to a hearing officer appointed by the Board or who knowingly testifies falsely in any proceeding before the Board or a hearing officer appointed by the Board shall be guilty of perjury and punished as provided in 13 V.S.A. § 2901. (Added 1983, No. 93, § 1, eff. May 4, 1983; amended 1987, No. 96, § 19; 1991, No. 160 (Adj. Sess.), § 13, eff. May 11, 1992; 1995, No. 180 (Adj. Sess.), § 35; 1999, No. 81 (Adj. Sess.), § 1, eff. Oct. 1, 2000; 2001, No. 63, § 123b; 2003, No. 53, § 24; 2005, No. 71, § 77f; 2005, No. 191 (Adj. Sess.), § 25; 2007, No. 27, § 9; 2009, No. 128 (Adj. Sess.), §§ 16, 22-24, eff. May 27, 2010; 2011, No. 21, § 17, eff. May 11, 2011; 2011, No. 48, § 25a; 2011, No. 171 (Adj. Sess.), § 23, eff. May 16, 2012; 2013, No. 79, § 34, eff. June 7, 2013; 2015, No. 54, § 42; 2015, No. 152 (Adj. Sess.), § 2a; 2017, No. 167 (Adj. Sess.), § 5, eff. May 22, 2018; 2017, No. 200 (Adj. Sess.), § 19; 2019, No. 14, § 58, eff. April 30, 2019; 2021, No. 183 (Adj. Sess.), § 30, eff. January 1, 2023; 2023, No. 6, § 240, eff. July 1, 2023; 2025, No. 9, § 4, eff. July 1, 2025; 2025, No. 49, § 2, eff. June 5, 2025; 2025, No. 49, § 3, eff. January 1, 2030; 2025, No. 62, § 7, eff. June 12, 2025; 2025, No. 68, § 5, eff. June 12, 2025.)