In Re Central Vermont Medical Center Fiscal Year 2025

2025 VT 53
CourtSupreme Court of Vermont
DecidedSeptember 12, 2025
Docket24-AP-326
StatusPublished

This text of 2025 VT 53 (In Re Central Vermont Medical Center Fiscal Year 2025) is published on Counsel Stack Legal Research, covering Supreme Court of Vermont primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Central Vermont Medical Center Fiscal Year 2025, 2025 VT 53 (Vt. 2025).

Opinion

NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal revision before publication in the Vermont Reports. Readers are requested to notify the Reporter of Decisions by email at: Reporter@vtcourts.gov or by mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801, of any errors in order that corrections may be made before this opinion goes to press.

2025 VT 53

No. 24-AP-326

In re Central Vermont Medical Center Fiscal Year 2025 Supreme Court

On Appeal from Green Mountain Care Board

May Term, 2025

Owen Foster, Chair

Shapleigh Smith, Jr., Anne B. Rosenblum, and Alexander Hunter of Dinse P.C., Burlington, for Appellants Central Vermont Medical Center, Inc. and the University of Vermont Medical Center, Inc.

Charity R. Clark, Attorney General, and Ryan P. Kane, Deputy Solicitor General, Montpelier, for Appellee Green Mountain Care Board.

Bridget Asay and Michael Donofrio of Stris & Maher LLP, Montpelier, for Amicus Curiae Blue Cross and Blue Shield of Vermont.

PRESENT: Reiber, C.J., Eaton, Carroll, Cohen and Waples, JJ.

¶ 1. CARROLL, J. Central Vermont Medical Center (CVMC) appeals from the Green

Mountain Care Board’s determination of its fiscal year 2025 (FY25) budget. The Board found

that CVMC failed to justify the proposed growth rates in its budget submission and modified the

budget to adhere more closely to the Board’s benchmarks. CVMC argues on appeal that the Board:

(1) had no constraints on its discretion and issued an arbitrary and capricious order; (2) failed to

identify standards by which hospital budgets would be evaluated, in violation of CVMC’s

procedural due process rights; and (3) failed to regulate CVMC’s revenue on a per-capita basis, in

violation of the Board’s enabling legislation. We reject these arguments and affirm the Board’s

decision. ¶ 2. We begin with an overview of the hospital budget-review process, which

constitutes one of the Board’s core regulatory duties. See 18 V.S.A. §§ 9375(b)(7), 9456. The

review process, including the factors the Board must consider, is governed by statute and informed

by the Board’s rules. See id. § 9456(a)-(h); Green Mountain Care Board Rule 3.000, Code of

Vermont Rules 80 280 003 [hereinafter Board Rule], http://www.lexisnexis.com/

hottopics/codeofvtrules. The Board’s mission “is to drive system-wide improvements in access,

affordability, and quality of health care to improve the health of Vermonters,” and “hospital budget

review is one lever” through which this can be accomplished. Green Mountain Care Board, FY

2025 Hospital Budget Guidance & Reporting Requirements, at 4 [hereinafter FY25 Guidance],

https://gmcboard.vermont.gov/sites/gmcb/files/documents/FY25%20Guidance%20Updated%20

041823_0.pdf [https://perma.cc/Z7NW-XE3J].

¶ 3. The Board establishes proposed hospital budgets annually and must issue its budget

decisions by October 1. 18 V.S.A. § 9456(d)(1). By March 31 each year, the Board adopts

guidance and establishes benchmarks for hospitals to use in developing their budgets. See Board

Rule § 3.202 (“On an annual basis, the Board will establish benchmarks for any indicators for use

in developing and preparing the upcoming fiscal year’s hospital budgets” and “[t]he established

benchmarks shall be included in the uniform reporting manual, which shall be provided to the

hospitals by March 31.”); 18 V.S.A. § 9456(e) (enabling Board to “establish a process to define,

on an annual basis, criteria for hospitals to meet, such as utilization and inflation benchmarks”).

¶ 4. While each budget is reviewed on its own merit, the benchmarks “recognize the

system-wide approach necessary for improving health care affordability” and “underscore the

importance of hospital financial sustainability to ensure Vermonters’ continued access to high

quality care.” FY25 Guidance at 4. Compliance with the benchmarks presumably “reflect[s] a

budget that considers both health care affordability and hospital financial sustainability.” Id. at 8.

This “assum[es] valid, reasonable, and appropriate budget assumptions and a complete

2 submission,” all of which the Board considers “in assessing hospital budgets relative to these

benchmarks.” Id.

¶ 5. “The Board may adjust the proposed budgets of hospitals that do not meet the

established benchmarks.” Board Rule § 3.305; see also Board Rule § 3.303 (explaining that

hospital’s compliance with benchmarks “guide[s] the Board” in deciding “whether or not to adjust

a hospital’s proposed budget”). Hospitals bear the burden of justifying their proposed budgets.

Board Rule § 3.306(a).

¶ 6. The Board issued its FY25 Guidance in March 2024. It set a benchmark for net

patient service revenue (NPR) growth at 3.5% over FY24. As the Board noted, NPR is “the net

revenue a hospital receives for the patient services it provides” and it “includes two forms of

revenue: fee-for-service . . . and fixed prospective payments.” The Board explained how increased

spending, which results in increased NPR for hospitals, has a negative impact on affordability. It

considered the 3.5% NPR growth benchmark “in line with the total cost of care (TCOC) growth

target in the Vermont All Payer Model.” FY25 Guidance at 8.

¶ 7. The guidance required hospitals proposing growth rates above this benchmark to

“provide justification, including credible and sufficient supporting evidence that the excessive

growth reflects an improvement in access or quality of care.” Id. It cited, as examples, “increased

access as justified by lower projected wait times and a means to achieve them, population growth

as justified by demographic trends and projected increases in new patient volumes, etc.” Id. While

the benchmark was “relative to current year budget,” the Board explained that it would “also

consider hospital prior year actuals, and projected current year performance relative to the

respective NPR growth budgeted for those years.” Id. The Board expected hospitals “with

material differences between budget and actual or projected NPR FY23 or FY24 . . . to address

that variation as part of its justification for budgeted FY25 NPR.”

3 ¶ 8. The guidance provided similar information for budget requests that exceeded the

Board’s 3.4% commercial rate growth benchmark. The Board explained that “[c]ommercial rate

growth” means “the total increase in negotiated rate (or price) that a hospital receives from

commercial health insurers.” “Hospitals proposing budgets that exceed this growth rate” needed

“to justify this request with sufficient and credible evidence of hospital efficiency and maximized

productivity of resources.” FY25 Guidance at 9. The guidance provided examples of such

evidence, including “average work RVUs per clinical FTE by department, both the level and the

associated percentile of national benchmarks, or similar; measures of hospital cost and efficiency

used by leadership to assess operational efficiency, both the level and the associated percentile of

national benchmarks, or similar; etc.” Id.

¶ 9. The guidance also “outline[d] the key measures and data sources that [would] be

used to further analyze and evaluate budget requests and provide a basis for understanding

operating factors that might play a role in a hospital’s ability to meet the [established]

benchmarks.” Id. “Where appropriate,” the Board would “compare Vermont hospitals to peer

groups.” Id.

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