Vermont Act 68: What Employers Need to Know

Vermont has passed a major health care law (Act 68) which will change how hospitals are paid — and it could have widespread impacts on employer healthcare costs and employee access to care.

What the Law Does

The goal is to make hospital prices more predictable, and slow down rising health care costs.

To do this, Vermont will:

Set limits on hospital prices
The state will establish maximum payment amounts for many hospital services using a model called reference-based pricing. Under this model, the Medicare reimbursement amounts are used as a ‘reference point’ to benchmark allowable charges for hospital procedures. The maximum amount will be a percentage of that Medicare reimbursement amount. In most cases, hospitals won’t be able to charge more than that set amount.

Move toward fixed hospital budgets
Over time, hospitals will receive a set amount of revenue for the year instead of being paid more for doing more procedures. This is intended to encourage efficiency and cost control.

The first phase is expected to begin no later than hospital fiscal year 2027, under oversight from the Green Mountain Care Board.

Why This Matters for Employers

Potential for more predictable health plan costs
If hospital prices are capped, employers may see less volatility in claims over time. Healthcare accessed in Vermont hospitals will theoretically cost less under a reference-based pricing model, which should help control premium costs for health insurance in Vermont.

Impact on where employees receive care
Vermont’s hospitals are already very stressed, due to a number of factors including a small and aging population, and higher incidence of chronic conditions. We have already seen hospitals starting to cut back on services that are not profitable. Receiving lower reimbursements for the services they continue to offer will only increase their financial stress, and could lead to further service cutbacks, or the closure of some hospitals altogether. This could make it harder for Vermonters to get access to the care they need, and could require longer travel times to receive care.

What Employers Should Do Now

Stay informed
Track guidance from carriers, administrators, and regulators as implementation details emerge.

Talk with your benefits advisor
Review how your current health plan could be affected and discuss options for managing future cost changes.

Evaluate plan flexibility
Consider adding a virtual primary care or virtual mental healthcare option for employees who will face access to care challenges, especially in rural areas. Large employers should consider a Direct Primary Care solution for their employees with an onsite or near-site clinic.

Communicate with employees
As changes approach, clear communication will help employees understand any impact on where and how they receive care.

The Bottom Line

Act 68 is Vermont’s effort to control health care costs by putting guardrails around hospital pricing.

For employers, the key takeaway is simple: this law could influence what you pay for health benefits, how your plans are structured, and where employees access care in the coming years.

Planning ahead now can help ensure you’re prepared as Vermont’s health care landscape evolves.

Find the location nearest you to reach out to a Vermont team member to learn more about what this could mean for your organization.