Submitting Budgets in Compliance with Green Mountain Care Board Guidelines, UVM Medical Center Budget Reduces Commercial Insurance Rates -7.9%, CVMC Reduces Rates -3.3%

Vermont Business Magazine The leaders and Board of Trustees of University of Vermont Health Network have prioritized efforts to advance the ongoing regional effort to make health care more affordable. As part of that work, Central Vermont Medical Center, Porter Hospital and University of Vermont Medical Center submitted budgets for Fiscal Year 2026 that follow Green Mountain Care Board (GMCB) guidelines for revenue, operating expenses and commercial insurance rates, include further administrative cuts, and seek to maintain essential patient care services close to home. 

UVM Medical Center and CVMC both submitted budgets that include negative commercial insurance rate requests. UVM Medical Center’s proposed budget reduces commercial insurance rates by -7.9%; CVMC’s budget reduces commercial insurance rates by -3.3%. Porter Hospital requested a 3% increase to commercial rates. UVM Medical Center and CVMC’s  rate requests are the result of submitting budgets that follow GMCB commercial rate guidance of 3%, less the impact of rate enforcement actions for FY23 and recently passed legislation in Vermont to cap prices on prescription drugs. Our efforts to reduce expenses and drive efficiencies to meet this moment represent our continued commitment as a partner to begin to address the health care affordability crisis in Vermont. 

The budget submissions for CVMC, Porter, and UVM Medical Center were built with these main goals:

• Provide the highest quality patient care.
• Accelerate ongoing efforts to address the rising cost of health care in the region.
• Invest in maintaining or improving access to care, focusing on outpatient care and telehealth.

“These budgets reflect the thoughtful, disciplined and challenging work of leaders throughout our health system,” said Sunny Eappen, MD, MBA, president and chief executive officer of UVM Health Network. “They are the framework for improving the value and sustainability of the rural academic health care we provide.” 

Dr. Eappen acknowledged that to build budgets that control expense growth and protect access to care – while hospitals nationwide continue to face rising costs for supplies, pharmaceuticals and staffing – the health system will reduce expenses. More detail will be shared in the coming weeks. The health system’s Board of Trustees has also decided to pause variable pay for all leaders this year. 

Margin

For nonprofit health systems to recruit and retain talented staff, update facilities and equipment to provide the highest-quality care, and plan for future community needs, it is vital to have an operating margin remaining after accounting for the expenses of providing care. UVM Health Network has budgeted for a 2.1% operating margin in FY ‘26. 

Mid-Year Budget Adjustment
Tracking performance against the GMCB-approved FY ‘25 budget, the health system recognized that more care had been provided to patients than planned in the first half of the fiscal year, bringing in more commercial net patient revenue than approved. In addition to the rate reductions included in the FY ‘26 budgets filed yesterday, the health system has proposed mid-year rate reductions of $20 million for UVM Medical Center and $6 million for CVMC for FY ‘25 which we propose will be implemented with BCBSVT, Cigna and MVP in the form of reduced payments for prescription drugs administered in outpatient or office settings. This approach is part of our effort to focus reductions on Vermont’s three largest insurers and is one of several steps proposed to address affordability immediately. 

From UVM Health Network’s board chair and Vermont hospital presidents:
Tom Golonka, chair of UVM Health Network’s Board of Trustees:
“As members of the Board, we take seriously our job to keep the health system strong, sustainable, and accountable to the communities we serve both now and for future generations. These budgets reflect responsible choices made with input from our leadership teams and local trustees; all focused on making care more affordable while improving access and quality. We value our partnership with the Green Mountain Care Board and are committed to working openly and responsibly to meet the challenges ahead.” 

Stephen Leffler, MD, president and chief operating officer at UVM Medical Center:

“When we look at the expense reductions in these budgets, there are some developments that are really positive for our patients and our teams – we’ve been able to reduce the number of travelers we rely on, and we’re working harder than ever to reduce unnecessary tests and services through clinical integration, which cuts costs for patients and the health care system overall. That said, some of the choices we’ve had to make to reduce expenses, or delay capital projects, have been difficult, and they will have an impact on our people.” 

Anna Noonan, BSN, MS, president and chief operating officer at CVMC:
“We have reduced expenses to help make care more affordable for the people who rely on us and are reducing the rates commercial insurance companies pay for the care we provide by 3.3 percent. We remain focused on continuing to deliver high-quality services to those we serve.” 

Bob Ortmyer, president at Porter Medical Center and Elizabethtown Community Hospital in New York state:
“We continue to leverage Lean management practices and process improvements while deepening our collaboration with partners across the health system. By aligning through shared leadership and other key resources, we’re focused on expanding access to high-quality, affordable care throughout the region.” 

Submissions are the Latest Step in Affordability Commitment
In April, UVM Health Network and the GMCB reached an agreement to work together on the health system’s portion of addressing the regional affordability crisis. Submitting budgets that follow GMCB guidance for growth in net patient revenue, operating expenses and commercial insurance rate requests is the latest step following that agreement. 

Prior to these budget submissions, UVM Health Network had committed $158 million in cuts and investments to make health care more affordable and sustainable, including: 

• $40 million in administrative savings over the last two years;
• $80 million in rate relief carried out through the FY25, FY26 and FY27 budgets;
• $11 million investment into community-based (non-UVMHN) primary care, with a focus on reducing preventable Emergency Department visits;
• $12 million direct payment to BCBSVT;
• $15 million (maximum) on consultants overseen by the joint UVMHN/UVMMC/GMCB workgroup to help identify opportunities to make care more affordable over the long term.

Next Steps and State, National Concerns

Vermont’s hospitals are submitting their budgets during a time of deep concern for Medicaid funding on the national level. Congress is considering Medicaid spending reductions and preliminary analysis by the American Hospital Association shows that Vermont and New York would face serious negative impacts from substantial cuts. 

The GMCB will review all Vermont hospital budget submissions, hold public hearings in August and release budget decisions in September. We welcome these meetings and look forward to an open, transparent and collaborative dialog to work together to approach these challenges together. The fiscal year begins October 1.

About University of Vermont Health Network
University of Vermont Health Network is an integrated system serving the residents of Vermont and northern New York with a shared mission: working together, we improve people’s lives.  The partners are:

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