Green Mountain Care Board Price Variation Analysis

Green Mountain Care Board Price Variation Analysis report cover
May 2016

Contact: Susan Barrett

The Green Mountain Care Board (GMCB) has broad authority to develop policy in Vermont to stabilize health care costs while improving the quality of care.  The GMCB’s authority includes oversight of the rates paid by insurance companies and Medicaid to health care providers. 
Previous reports documented in detail that there is wide variation in health care prices. The GMCB referenced a January 2012 report commissioned by the Department of Vermont Health Access that found “there was significant variation in the amount paid for the same services to different hospitals.” The Vermont Association of Hospitals and Health Systems (VAHHS) then produced a report documenting the wide variation in payments that each provider receives from the same payer for the same service. 

The GMCB contracted with the University of Vermont, College of Medicine (UVM), and UVM’s  subcontractor, the University of Massachusetts Medical School (UMass), to explain why health care providers are paid differently for essentially the same service.  In order to address this question, we conducted interviews with key stakeholders and analyses of claims data. 

As noted in the box below, we use the term “price” to refer to the total amount that a payer pays to a health care provider plus the amount the patient owes out of pocket.  A provider’s charge for a service is similar to the “manufacturer’s suggested retail price” in a car dealership.  Providers rarely receive the full amount they charge for a service.

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