 Okay, it's one o'clock, so I'll call the Green Mountain Care Board's meeting of April 12th, 2023 to order. Today we have two agenda items. The first being potential vote relating to their revisions to the certificate of need monetary thresholds. And the second is a presentation by Christopher Whaley from the RAND Corporation relating to healthcare market concentration. So first I'll turn to Ms. Susan Barrett to the executive director's report. Thank you, Mr. Chair. Good afternoon, everyone. First, I do wanna mention that I was reminded by Kristen Legendess, our executive assistant, that the state of Vermont is experiencing some network issues, so I don't know whether that's what you ran into, Tom. And if we do get disconnected for any reason, that we would just ask people to just sign back on. But fingers crossed, ADS works really hard. That's our digital services division of the state to keep us all online, and we thank them for that. We also have a couple of ongoing or public comment periods. One is ongoing, and that is the one I mentioned every week about the all-pair model, the next potential model. Please submit any of those comments to us. We share those with our colleagues at the Agency of Human Services and the Governor's Office as they are leading those negotiations and implementing the current model. We also have an open public comment period on the OneCare Vermont resubmission. We would appreciate any comments you have by April 28th so that the Board could take those into consideration as they review that resubmission. And then we did post a public comment period for the CON thresholds, which we talked about last week and which we are voting on today. So with that, I will turn it back to you, Mr. Chair. Thank you. And we'll take up the meeting minutes from April 5th, 2023. Is there a motion to approve the minutes? I'll move approval. I'll move. Second. Is there any board discussion? Those in favor of approving the minutes from April 5th, 2023, please say aye. Aye. Aye. Aye. And the motion carries unanimously and the minutes are approved. And we'll turn to Mr. Barber, our general counsel for the potential revisions to Certificate of Need Monetary Thresholds. Thank you, Mr. Chair. For the record, my name is Michael Barber, general counsel. I'm here to follow up on presentation from last week on these jurisdictional thresholds. 3-7-7-0-1-9-4, please leave me a message and I'll get back to you as soon as I can. Thank you. Marissa, I think you might not be muted. So I just have three slides for this presentation. So this is a slight variation on the slide that I showed in the presentation last week. The column labeled category lists the different CON jurisdictional thresholds that are in the statute. Just to remind you, there are several categories that don't have any sort of monetary value associated with them. And those aren't kind of an issue today. The column labeled base is showing you the dollar amounts that are in the statute. The column current shows you where the thresholds are as they stand today. At 8-0-2-3-7-7-0-1-9-4, please leave me a message. I'll just, and then, so there was a error in last week's slides. I just wanted to note that for you. I believe I had said last week that the increase that the board had approved last year was 12.8%. It was actually 12.18%. So I apologize for that. But so again, the current column is showing you where the thresholds are today. And then the future column is showing you what the thresholds would be if you increase them by, I just changed it to 20%. It's CPI growth since July 2018 is just over 20%. I figured just around down to have some round numbers would be good. So that's what that is showing you. So that's 20% over the base dollar values that are in the statute. It's 6.97% over the current thresholds. So any questions there before I move on to potential motion language? Okay, based on the discussion last week, I heard support from the people who were numbers who were speaking. And so I figured I'd just draft some motion language for you to consider. So the current revision language would effectuate a 20% increase over the base amounts as reflected in the prior slide. And then I'd heard Dr. Merman ask about, can we automate this so we don't have to deal with this each year? Yes, you can. Here's how you might do that. And so that's there for your consideration if you would like to do that. And that's all I have. Mike, I had one question. If we automate it, but then for whatever reason in a particular year we choose not to follow the automated process, what would we do? Or how would we flag that for consideration? I think you'd have to vote to not do that. And I'm not sure how, whether I suppose a board member, if they were concerned about that could approach Susan or I, and we could put it on the board calendar for a discussion. But I think there would need to be a vote to kind of take it out of this automatic adjustment. And Mike, would it, sorry, Owen, were you done? Yeah, I'm done. Anyone else can go ahead. Just on that same topic. So I think in order then for that to work, there would have to be some sort of like notice, right? So there'd have to be some publication of the update that would happen automatically so that there's something that triggered a board member to say, hey, that doesn't look right. So, and I think those process details could be worked out by staff. But I would think that if we want to automate it, what I would suggest is that we make sure that there's some sort of sort of publication with an opportunity for public comment, which then gives the board members an opportunity to put it on an agenda. I don't know if people think that makes sense or not, but to me, that makes sense. That way everybody's sort of alerted. Here's what would happen automatically if there's some issue with it. It could be brought to our attention either by through public comment or by a board member noticing it on their own. I did just want to note, because I think that all makes sense. I had included a January here. You guys are really busy at the end of the year. So January may not be the best time if there's like a notice that you get that here, this is what the standards are gonna change to so that might not be the best month if that makes sense. Yeah, I know that does make sense because things are often pretty busy in December with the ACO regulatory process, but certainly we could do it by the end of like by February 1st or something. That might make sense. I mean, I'm supportive of that. I think it'd be fine if it was rounded to the nearest percent. I don't think it has to be super specific down to a 10th or a hundredth of a percent. February 1st seems like a reasonable time. It's reasonable to me that the thresholds would increase over time based upon these indices of inflation. So I support it. Any other board comment or questions? I do not have a comment or question, but I'm happy to make a motion when you're ready for it, Chair. I think I'm going to let the HCA in public comment first before a motion, but that'd be great, Robin, after that. Does healthcare advocate have any questions or comments? Comments. Nothing for most, Chair Foster, thank you. Great, and I'll turn to public comment via the raise the hand function. Ms. Lunge, if you have a motion, I think we can go ahead. Great, I'm gonna do this as two motions because I think it'll just be a little cleaner. So I move to increase the monetary thresholds for certificate of knee jurisdiction to be 20% greater than the amount specified in 18 VSA section 9434A through C. Second. Are there any board discussion? All those in favor, please say aye. Aye. Aye. Aye. Aye. And the motion carries unanimously. So this second motion, so I'll change this a little bit to reflect the discussion and in term, but before I do that, in terms of the rounding, I did have a question. Does it make sense to round to the nearest percent or to the nearest like $10,000? So that it's kind of an even amount. I think I would recommend nearing to the nearest, rounding down to the nearest $10,000 rather than changing the percent and the CPI. That's a little bit easier maybe for people to keep track of too. All right, so I'll jump in with the motion. I moved to modify the monetary thresholds for certificate of knee jurisdiction specified in 18 VSA 9434A through C. By February 1st of each year to reflect changes in the consumer price index for all consumers, U.S. city average all items since July, 2018, rounded down to the nearest $10,000 after a period of notice and public comment as specified by the general council. So just to clarify my intent there is that Mike can figure out the specifics of the process and public comment period and that that wouldn't have to come back before us for a vote. I heard a second. Is there any board discussion? All those in favor, please say aye. Aye. Aye. And the vote carries unanimously and the motion is approved. Mr. Barber, thank you very much for your help on this and your presentation. This was great. Thank you. All right. Our next agenda item is a presentation, a roundtable discussion with Chris Whaley from RAND and I'm going to turn to member Walsh to introduce Mr. Whaley. Thank you, Chair Foster and want to welcome Chris Whaley. He's a health economist from RAND. His work has been very influential over the past several years, including considerable input to the Congressional Budget Office. He's visited the board before several years ago when the RAND Healthcare Pricing Project began. That's a four-part series that Chris was instrumental in. He's also done influential work and deep work on hospital pricing drivers, the effect of consolidation or in regions of the U.S. without consolidation, just the pure effect of market power. This is the third of our three-part series that began with Jeff Stensland several weeks ago that has highlighted the impact of market power on price setting. Recall that Jeff from MedPAC, his work began in 2010, which taught us that the old thinking about cost shifting really hasn't proven to be true in the 13 years since. It's more a case of price discrimination. Our second speaker, Zach Cooper from Yale, built upon Stensland's work, which was really a small study. Zach's work was notable because it included all hospitals in the U.S. His work also included all payers, which had important implications for our understanding of Dartmouth's findings and with Medicare. Chris has built upon those and the work of those projects and others. And the reason that I was very interested in having Chris with us, he goes further to detail what states can do as we come to understand the effects of market power. What are the policy and regulatory options available to us and how big an impact they might have? So with that for a background, I'll turn it over to Chris. Thanks for joining us, Chris. Great, thank you for inviting me, Tom. And it's really great to present to this audience. And it's also really great to take part in what sounds like a really great series. And so both Jeff Stensland and Zach Cooper are fantastic researchers and it's really great to be a part of this series. Just for some quick kind of overview or agenda items, I mean, I'll touch a little bit on consolidation and its impacts and consolidations, although frankly, Zach is really an expert in that area and it sounds like it's already been pretty well versed in what we know about consolidation and its impacts. I'll then talk a little bit about what we've done on hospital prices. This is actually pretty overall very similar to what Zach Cooper and team have done around looking at prices across the country. We've done slightly different analyses using different data, but have frankly come up with basically the same conclusion. So using two different research groups, two different national sources of data, we end up with roughly the same conclusion that the prices in the United States for the commercial education population are high and those prices don't necessarily lead to improvements in quality or patient outcomes. And also importantly, and again aligning with Jeff Stensland early work, not driven by underpayments from Medicare or other public payers. I'll then, as Tom mentioned, talk about what are the options and what are the potential policies solutions. So if we know these are in some sense the challenges of the healthcare system, how can regulators and policy makers like yourself actually think about what to do next and how to make a healthcare system United States in Vermont that is more equitable and affordable. So with that, just diving in. So a key challenge in the United States is just the levels of market concentration in the United States. So if we use data, you're not from outside researchers, but actually from the American Hospital Association and apply definitions of market concentration that the Federal Trade Commission and the Department of Justice and other regulators commonly use to determine whether or not a market is concentrated or competitive. One of the things that I think really stands out about hospital markets in the United States is just the extreme degree of concentration. So over half of people in the United States live in a market that is either incredibly concentrated so they're the highly concentrated market definition that FTC and DOJ use or moderately concentrated. Less than 30% of Americans actually live in a hospital market that is considered competitive if we were to think about any other good or service that we'd have access to. So for policy makers and economists and regulators, this is a huge concern for how we should think about access to care and use of services in healthcare. So we know that hospitals are incredibly important for patients and for communities, but we also know from every other market and every other setting that monopolies lead to much higher prices. And we also have lots of evidence that monopolies do not improve quality of care. And so it's really important that we have access to affordable and high quality care and the levels of concentration in the United States for hospital care are certainly a factor that I think dilutes a lot of that access to affordable and high quality care. And so just probably following up very similar to what Zach presented, we know from many, many studies that hospital mergers and hospital consolidation lead to increases in prices, no improvements in the quality of care or access to care and in many cases actually reductions in care quality. And I think importantly also reductions in wages for nurses, physicians and other health professionals. And so while there is certainly more money being made by dominant healthcare systems and providers, those resources actually don't trickle down to the people providing care. Just a quick summary of what we know about hospital markets. Again, actually highlighting in the third bullet point Zach's paper, if we look at just the range of studies that have looked at what happens when hospital markets get more and more concentrated, what happens to prices, all but one study actually found a pretty sizable increase in prices. Prices increases range from about a 5% increase all the way up to above 50% increase in prices. And so there is, I think, robust and irrefutable evidence from the academic literature and from independent researchers that hospital consolidation leads to increases in prices. Another study that I wanna highlight from Professor Lee Moore Daphne and team at Harvard Business School actually looked at what happens to quality. And so they looked at every single hospital merger over roughly a 20-year period and looked at what happened to both experience of care and clinical quality metrics such as readmission rates and mortality rates. For both the patient experience measures and also clinical measures, there's actually a slight reduction in quality outcomes. And for clinical processes, we actually don't find any change in quality. And so while hospital mergers and hospital consolidation certainly lead to higher prices, they don't lead to the improvements in quality that I think advocates and proponents of hospital consolidation argue are naturally occurring through consolidation. So a common, I think, argument is that hospitals are going to, provider groups are going to consolidate maybe raise prices, but those prices increases are really needed to finance improvements in quality and access to the care. But when we look at the data, we find lots of evidence that first step of increases in prices, but no change in that second step that's promised benefits and improvements in quality of care. Another consolidation trend that I want to raise is just the rise of not hospital mergers, but actually what happens when hospitals and healthcare systems acquire physician practices. In many senses, I think this is the dominant trend in healthcare markets in the United States. So if we were to kind of go back in the 2000 to 2010 period, that's really when a lot of the hospital mergers happened. And the more recent trend of the last decade has been this form of vertical consolidation or acquisition of physician practices. So in a recent paper that we had where we looked at this type of consolidation for three large physicians, especially practices and groupings, we found roughly a doubling in the share of physicians that are correctly employed by a hospital system or their physician practice has been acquired by a healthcare system. So again, this is the dominant trend that I think is really fundamentally reshaping healthcare markets and how care is delivered in the United States. We as researchers and policy makers, I think are especially concerned about vertical integration in physician acquisition by hospital groups, healthcare systems due to what I call the arbitrage opportunity in healthcare. So if you're a physician and you're independent and you wanna say refer a patient to say get a MRI or a colonoscopy, you have lots of places to refer that patient to and then you might send those patients to community providers and non-hospital providers, but the same service that's done in a hospital system actually both in Medicare and also in commercial payers costs roughly double the price. And so the kind of low hanging arbitrage opportunity if you will in the healthcare system is to acquire a physician practice and ask that physician to or direct that physician rather to refer their patients not to community providers but actually back to the healthcare system and that again roughly doubles the prices for many common downstream services. This is something that leads to effectively the same price increases as going out and acquiring all these providers without raising that the level of regulatory scrutiny that might potentially limit these types of acquisitions. And so through these referral pattern changes in where care is delivered, vertical integration can essentially operate as a backdoor way towards horizontal and hospital consolidation. We've seen in a number of settings actually this exact effect where once a hospital requires a physician practice for common services like laboratory tests and imaging tests, the physician refers their patients back to the hospital system that acquired them and prices both in Medicare and commercial payers increase quite a bit. And so for example, just for five common imaging and lab tests in one year following physician consolidation there was about a $75 million increase in spending for Medicare and this happened really instantaneously following consolidation. And so this exact same trend is happening across the United States impacts not just Medicare but also commercial payers. And again, it's not just limited to these five common tests, but is really anything that requires a physician referral. And so this is something that is again, a dominant trend in healthcare markets that's leading to higher prices and increased spending. Then the final thing I wanted to point on just kind of the background is what we've done around hospital prices. Again, this really echoes some earlier work that we've done and also again aligns very closely with Zach Cooper and his team. And what we've done is actually taking a little bit different approach instead of acquiring or using data from national data vendors that Zach and team have done. We actually went out and got data from self-funded employers. So employers from across the country. We also got data from many state all-payer claims databases including actually the Vermont APCD. The benefit of getting data from these pathways is that we can actually name individual provider prices and healthcare system prices rather than just keeping things at the aggregate geographic level. In our data, we've actually measured prices in two different ways. So one is relative to a Medicare benchmark. And so essentially what we've done is we've taken what Medicare pays for services and essentially said, okay, how much would Medicare pay for the exact same service at the exact same provider on the exact same day and what is the relative price for what a commercial payer would pay for that same service at the same provider. The benefit of using the Medicare benchmark is that Medicare incorporates lots of additional payment sources that contribute to actual reasons when maybe we wanna pay some providers differently. So for example, some providers do have a larger share of uncompensating care patients. And so Medicare does some adjustment for that. Medicare also adjusts based on the cost of hiring physicians and other staffers. And so those are probably reasonable things to adjust for. If you don't wanna add in those Medicare additional payments, we also have a standardized price, which is essentially adjusting based on the procedural complexity in the patient composition across different hospitals. And so even though hospitals treat different patients and perform different services, we can have much more of an apples to apples comparison on prices. We've put this data in a public report where we have kind of our high level summary. And we also have data on prices for individual facilities and systems. And we've put this data in a tool called state transparency, which I can show you a quick screenshot in a couple of slides. What we find in the study is just that there is a tremendous range in prices across the country. And so for example, if we look at states like Hawaii, Arkansas, and Washington, prices are around 150% Medicare. The same time states like Florida, West Virginia, and South Carolina, prices are over 300% of Medicare. And so just comparing average prices for hospital care, there's roughly a two X range in prices across the country. Now, of course, you can access care in Washington and hospitals still provide services in Arkansas, but they're able to operate at a level of prices that's roughly half of what we see in other parts of the country. So this is a huge and important industry and it's a market where we have a tremendous range in prices. What I think we as researchers worry about is whether or not this range in prices is actually driven by maybe things that we wanna pay for more. So our hospitals again in Florida, West Virginia, and South Carolina, much better than in other parts of the country. Or is this something that is maybe due to market forces and differences in market structure across markets? And so I should also highlight that we actually find on average, Vermont prices are slightly below the national average at about 200 and 15% Medicare compared to the average of 250% Medicare. But even within Vermont, we find roughly the same level of variation as we would across the country. So in some large healthcare systems in Vermont, prices are close to 300% of Medicare. Whereas among independent hospital systems and the Springfield Medical Center, prices are closer to 175% of Medicare. So again, if we're to look at just the level of prices and the range of prices in the state of Vermont, there's almost the same level of price variation as if we were to compare nationally. And so price variation is not something that just happens across different markets. It's also something that in healthcare exists within markets and in between different markets. We've, as I mentioned earlier, put a lot of this data in a online dashboard. So the link here is in blue. And if you just Google state transparency, this is the first thing that pops up. And so instead of just looking at kind of average healthcare system prices, this actually looks at prices for individual hospitals in Vermont. And again, for the individual hospitals, we also find a tremendous range of prices from over 300% of Medicare for Southwest Vermont Hospital to around 150% of Medicare for the Red Mount Ascension or Sydney Hospital, rather. The blue bars here are the price that we see in our data. And so again, this is using the national collection of data in Vermont, the Vermont All Pair Claims Database. And so we really have a robust set of data for Vermont. And then also the green bars are what we call the breakeven price. And so this is using actually data that hospitals report to CMS on their pair mix and also their costs for treating patients and the revenue for patients for different payers and how much they would have to charge hospitals to breakeven. And so for example, the bar or the gap rather between the blue bar and the green bar represents rather the margin that hospitals make on commercial payers. And so for some hospitals, you can see that that margin or that gap between the blue and green bars is very large indicating that those hospitals do well financially on commercial payers. We've then tried to unpeel the onion a little bit and look at what actually drives prices. And so one of the kind of most common, I think, arguments and it sounds like you've had experience thinking through these arguments is whether or not prices or rather commercial prices are due to underpayments on public payers, so Medicare, Medicaid or uncompensated care patients. And so this is the cost-shifting argument. And there, and I'll present some data on this in the slide, we actually don't find any evidence that cost-shifting drives prices. The, I think the argument on cost-shifting really has to go in both directions. So if cost-shifting is true, then Medicare is raising prices or Medicare payments to hospitals and it's largest amount in several decades this year. And so if cost-shifting is true, then what that would require is that commercial prices are gonna come down next year. I don't think we expect that that's gonna happen. We find some, but actually rather minimal, correlation with the patient quality and safety outcomes. And so it's not the case that hospital prices on the commercial side are really funding improvements in patient care and outcomes. Where we do find a pretty strong relationship is between market power and provider concentration. So providers that have a dominant marketing or negotiation power with insurers are the ones that are able to negotiate higher prices and command higher prices in the market. And again, that's consistent with the monopoly story and also I think what really drives and is the motivation for many types of hospital consolidation. So just to dive into the cost-shifting story a little bit, we actually used our data to test that and actually see whether or not that's true. And so how we did that is we took each hospital's price, so again, this is relative to Medicare on the left-hand axis, on the vertical axis, and then plotted that against the hospital's share of patients that are non-private insurance. And so this includes Medicare patients, Medicaid patients, uninsured patients and charity care patients. And so if it's the case that hospitals are charging higher prices to offset having more public patients and non-commercial patients, then what we should see is that the hospitals that have lots of Medicare, Medicaid and uninsured patients should be the ones that are charging the highest prices. And those that have relatively few public and uninsured patients should be the ones charging lower prices. Now that should be kind of an increasing trend through this chart. Now, when you look at this, at least I see just a random scattering of dots and if we do the statistical test, we don't find any relationship between the two. And so it's not the case that hospitals are charging higher prices to offset underpayments from Medicare, Medicaid and uninsured patients. In a recent study, we also looked at whether or not hospital price increases led to improvements in quality. And therefore, several dimensions of clinical quality, we actually don't find any change in quality. So all the changes here are very small and they're not statistically significant. And so it's again, not the case that hospital prices lead to improvements in patient quality outcomes. So that's a maybe dire, if you will, view of hospital markets and spending. But I think it's also important to recognize that this is not just a problem needs to stand alone and continue, but there are actually many policy options that have really been proposed and lots of thought that's been gone into these questions. And so how should we as a society, regulators and researchers think about these types of questions? And so the policy options that are really kind of on the table range from things like, well, what if we just have more price transparency and say give patients incentives to go out and shop for care or think about what hospitals are high versus low quality or think about the value of care. And also things ranging from antitrust enforcement. So maybe the FTC should just go through and break up large hospital systems or prevent future mergers. They're thinking more a little bit about prices. So whether this is kind of direct regulation or thinking about public option policies that would have a indirect cap on prices. And one of the things that we really noticed as we started this work is that while there's many studies out there, there's not really kind of a systematic comparison of what policies will work. And so if we do one policy versus the other, what's gonna happen and what are the potential savings? And then what are the potential costs to implementing those policies? So what we wanna do in our study is really try and create what we call a menu of policy impacts and think about if you were to do policy A versus policy B and then think about if you were to shape the construction of one policy versus another, what might be the potential impacts? And so what we did is we thought about the policies that have actually been proposed by either policy makers. So this is people in DC or people in different states or researchers, so academic researchers or people in think tanks or at other organizations. Then we wanted to say, well, if you slice and dice one policy one way versus another, what might happen and what's gonna the way of policy would actually be implemented. And then we use data from what's called the hospital cost report information system, which is the cost report data that hospitals report to Medicare on their actual financial status and a lot of their pricing data. And then we use these types of data to estimate what would happen under each of the policy options. And so again, we think of this as a policy menu. And so our kind of three courses, if you will, range from regulating prices to improving price transparency to increasing market competition through market regulations. And so when we thought about regulating prices, this is a policy to either directly or indirectly cap prices for healthcare. We thought about different considerations, including how much are you gonna cap prices? So if you say cap prices at 100% Medicare, that's probably gonna have a pretty big bite versus if you let prices be capped at anything above say 500% Medicare. So those are gonna be two important considerations that are gonna pretty clearly impact how you implement this policy. We also thought about the scope of payers and providers. And so we could say, well, we're going to set all prices in kind of a Maryland style all payer model, but increased prices for Medicare to 150% Medicare. So have a 50% increase in Medicare payments, but then bring down commercial payments again to 150% Medicare. We could also think about only capping providers who have prices above a certain threshold. If we think that threshold or those providers are getting those prices through anti-competitive reasons. So for example, if a hospital is a monopoly hospital or has a dominant market position, then maybe that's a hospital that we've targeted, a hospital that is a much more competitive market but has the same price, maybe wouldn't be impacted. So we kind of thought about the scope of both payers and providers and how these policies would be designed. Then we also wanted to be cognitive of political receptivity. And so if we're trying to do something like cap prices, that's something that I am sure everyone on the call is much more aware than I am. Just what the political kind of process of doing that would be in some of these, maybe policies that would save more money, probably frankly wouldn't be that viable to actually make it through the political process. And then we also wanted to think about quality of care. And so while small changes in provider prices from year don't seem to have a huge change in the quality of healthcare delivered or access to care, it certainly is the case that if we were to take a huge amount of money, so a trillion dollars out of a healthcare system, that's going to have quality and other access repercussions. And so we wanna acknowledge those potential impacts as well. We then thought about improvements in price transparency. So this is the policy that I think of the ones on the table has actually gotten the most traction and we have actually seen the last couple of years, federal and more recently state policies designed to improve price transparency. And so this seems to be a policy that actually has gotten off the ground and has actually led to some changes in how we think about prices in healthcare. And so what we really wanted to think about is what's the type of data that would be out there and how could we actually think about policies that would improve price transparency, but then also how would this data be used? So there's really, I think two main ways that the price transparency information can be used. The first way, and I think the way that's maybe gotten the most political and traction and attention is the idea that patients are probably, you're gonna use this data to go out and shop and say, I need a knee replacement, should I go to hospital A versus B and I can use price transparency to compare prices, quality of care and access to care. I'm frankly a bit skeptical of that argument or at least in other studies, we haven't seen that the kind of consumer focus use of price transparency really leads to drastic changes in provider prices. The second way is use of price transparency both by employers. So my employer can go out and say, I now know prices in a market and we're going to kind of collectively on behalf of everyone in the organization design say a network plan or a plan that funnels patients to high quality and lower price providers. Another similar way is used by regulators. And so for example, everyone here is aware of price transparency largely from the work that Zach and myself and others have done around provider prices and are now thinking about ways to address provider markets and provider prices. So in that sense, price transparency is in some sense not a policy endpoint rather but more so a wheel that enables many other types of policies to be enabled and acted. We also thought about the time horizon. So if you're regulating prices that's something that's going to be pretty instantaneous. If you were relying on patients to really change how they consume care and then providers did to think about this type of data that's something that's going to take a little bit longer. Another potential concern about price transparency is the collusion idea. And so there's a potential concern that lower price providers may now all of a sudden see that they actually are lower priced and underpaid and asked for for higher prices. And so we wanted to think about those potential adverse consequences as well. The next thing we thought about or the third kind of entree, if you will is ways to increase provider competition. And so these policies range from increased state review of hospital consolidation or especially around nonprofit providers or federal trade commission, Department of Justice review of consolidation. And we also wanted to consider policies that would go out and be proactive in improving the competition in healthcare markets as well as policies that are maybe a little more passive and try to keep healthcare markets as they are and prevent future consolidation or healthcare markets from getting more consolidated. Our high level summary is presented in this table and just from a kind of high level impact, we found much larger impacts for policies as maybe you expect that try to directly think about prices. And so policies such as rate setting lead to the largest reductions but it's really important to think about how prices and how these policies are actually designed. So for example, if prices are set too high at a level that's higher than the prices currently are then that's actually gonna be something that's actually potentially going to lead to increases in prices. So for example, if we were to design a public option and set prices in this bottom level here at 175% Medicare, that would actually lead to a slight increase in hospital spending of about 2 percentage points or about $2 billion per year. And that's because many exchange plans or AC exchange plans are actually priced below 175% Medicare. If we were to do the same policy and have a public option but have exchange plans or public option plans rather be at Medicare rates or just pay the exact same as Medicare, that would lead to about a 4.5 percentage point rather reduction in hospital prices. The largest impacts for rate setting rather the rate settings are all blue would be to directly cap prices for all private plans. So including ERISA plans, state regulator non-ERISA plans as well as exchange plans. And there we'd find as you might expect much larger impacts based on the scale of Medicare rates. So if all private plans were capped at 100% Medicare rates or at exactly Medicare rates that would save about 40% on hospital prices per year. If that rate were 200% of Medicare rates that would be about 7.5% of hospital spending per year because the average price for private plans is actually above 200% of Medicare rates. We also go into this detail in the report but there would also be as you might expect much more potential for disruption and change to hospital and provider markets if you were to implement some of these more stringent policies. But in some sense maybe that's the trade-off that has to be made, saving money and reducing spending in healthcare is going to require some level of disruption. Our findings were a little bit less supportive of things like price transparency and increased market competition. So as you can see here the orange for price transparency and the gray for increased market competition. We find much smaller changes in hospital prices as well as reductions in spending for these two types of policies. For price transparency, a lot of the existing evidence is shown as I mentioned earlier that patients really don't try and shop or aren't that effective of shoppers for healthcare services. And so even if patients were I think using these services pretty well, we'd estimate that kind of the maximum level of those would save about $11 billion per year on healthcare or hospital spending per year. If employers were to be the conduit and use this data to design networks and then push patients to in some sense be the shoppers for patients, we'd estimate that that would actually lead to about 13.2 to 26.6 billion dollars in savings per year. And so we do estimate certainly that the employer use of price transparency kind of the policymaker use of price transparency is probably a more efficacious use of price transparency than just relying on patients to shop. We also found much smaller effects for market competition. The basic idea here is that while healthcare markets are certainly concentrated and we know that that concentration does lead to higher prices. If we were to kind of wave a magic wand and get that level of competition down, that would have maybe a less impact on prices while it was still large than directly thinking about prices. A important mechanism or driver here is just the context in which hospital prices and insurers negotiate. And even a hospital in a pretty competitive market or a hospital without much market share is still able to negotiate much higher prices than what Medicare pays. And so there we estimate that the impacts would actually be well greater than price transparency less than thinking about directly addressing prices in hospital markets. And so those are our high level findings and I wanted to save time and answer any potential questions. Chris, thank you very much. Very informative, lots packed in there. I'll turn it back to Chair Foster for questions from board members, the Advocates Office and the public. Thank you. Thank you very much, Mr. Whaley. I'll go last. Tom, do you want to go first? Many questions or comments you may have? Sure, I just have a couple of things. It was thought it was a great point, Chris, this is more of a comment, but, you know, Stensland's work really flipping our understanding of the way we think about cost shifting, reversing the causality for all intense purposes. It was a very small study. Cooper, all hospitals, but arranged in groups, hospital referral regions, and then your approach different. So it's three different ways of looking at that phenomenon coming to the same conclusion that it's not insufficient payments from government payers that compel hospitals to charge more to private payers. It's market power that allows hospitals in concentrated markets to raise prices. I think that's just a key point that we've learned along the way this spring. And I thank you for pointing out the different methods that have arrived at the same conclusions. You mentioned through your slides, we talked often about mergers and consolidation. And we have had some mergers and consolidation in Vermont, but certainly not on the scale that other parts of the country have seen. Still, even without the degree of consolidation, markets were concentrated before the mergers and acquisitions really took off because we're rural, we have 14 hospitals, right? So each hospital is in a fairly concentrated market. So could you tell, do your findings, do you know, do your findings hold in markets that are just concentrated, even if there hasn't been mergers or acquisitions that have produced the concentration? Yeah, so one of the things we've noticed is where a lot of the higher price hospitals in the country are sitting. And many of them are actually not in markets where they've gone out and acquired other hospitals and consolidated. It tends to be the much more, what we would call the natural monopoly markets. And so this is a market where, frankly, there's just only room for one or two hospital systems just because there's just not the population or the market-based to support more hospitals. And those tend to be the markets where the market's consolidated and the prices are high, but it's not the kind of story that we often, I think tell ourselves of hospitals go out and merge and consolidate and then raise prices. The higher market concentration and their right prices are in some sense much more just a feature of how that market, not just for healthcare, but overall is constructed. And so economists in general tend to, in those types of markets, acknowledge that there's just not a lot of room that antitrust enforcement can do just because again, that's how the market is. And so those tend to be the markets where many economists view thinking much more sort of a public utility environment and that type of regulation to be more appropriate. Thank you, thank you for that. And so that kind of you got to one of my follow-ups that transparency in a rural state where the market is concentrated, has been concentrated transparency wouldn't be thought to have much effect if I'm understanding you correctly because just knowing the price doesn't mean there are alternatives. Knowing the price requires, so for transparency work that there are two things that need to be required. So one, you need to have alternatives and so you need to have the option to go from a high price to a lower price provider. And then the second thing that needs to happen for transparency is the consumer in this case that the patient needs to have the agency to make that choice. And so if I'm at the grocery store and I see Coca-Cola is cheaper than Pepsi, I can grab to one shelf versus another and that's as most agencies I have if my doctor refers me to a high priced MRI provider I don't have the agency really to say that to my doctor. No, I know better than you send me to a different MRI provider. And so in healthcare I think in many markets both conditions aren't really met which is one reason why I think many studies have looked at the effect of kind of consumer focus price transparency, including some of my own in our study just really aren't I think supportive of maybe the hype that price transparency at least on the consumer focus side has generated. That's very helpful. One final thing and it's kind of nerdy and I know you won't mind but I hope other people will be okay. Could you, is it possible to pull your slides back up and go to slide 14? Sure. I think it's a really important slide but it's also a bit, it's a bit technical. So I want to make sure that I understand it. Yeah, this one. And so let me have a go at explaining it and you just correct me wherever I go off crack. So with this, if the old thinking about cost shift were true the way that I thought about it when I was in private practice myself back in the late 90s, early 2000s essentially everything before Stensland's work in 2010 if the old way of thinking about it were true we would expect these blue circles and dots to form a line at about a 45 degree angle up into the right. Because as the proportion of Medicare, Medicaid and uninsured patients in my practice approaches 100% which is what the one represents as it approaches that I would have been compelled to charge private payers more. So the line would slope up into the right at about a 45 degree angle if the old argument were true. And because the lines flat and the dots are spread around like a shotgun shell. This is further a further argument that the old way of thinking about it doesn't really hold. Is that correct or am I off? No, that's entirely correct. So the cost-shifting argument is I as a provider have no choice to break even if I want to break even but charge higher prices to offset underpayments from public providers or uninsured patients. And that is really the only reason I'm charging higher prices. And so if that's the case then well we should see that providers and hospitals that have lots of non-private payers so that's Medicare, Medicaid, uninsured and charity care patients should be the ones charging the higher prices. I mean that is the cost-shifting argument. And providers who have relatively few of those patients are actually the ones that are charging the lowest prices just because they don't have that need to charge higher prices. And as you said, when I looked at this I find no pattern, no discernible pattern. And so it's not the case that a provider's price and variation provider prices has anything to do with that provider's share of patients who are not commercial payers whether that's Medicare, they're Medicaid or uninsured or charity care. And if we were to separate this out and say well let's just look at Medicaid or let's just look at Medicare or let's just look at uninsured versus charity care we'd find the exact same pattern. And so the I think the main takeaway here is that providers charge what the market will bear and when a provider is sitting down at a table across from a commercial payer negotiating prices they say look, we've got the best orthopedic surgery department in town or we're critical provider for your patients to have access to or in some cases the only provider have access to. And those are the types of arguments and factors that lead to whether or not a provider is paid more or less on commercial payers. And that has nothing to do with the non-commercial patients that they're treating. Thank you, that is really helpful. And I've been trying to go over this point with each of our speakers because from a regulatory standpoint it's really important because if we do end up wanting to take steps to regulate prices differently than we have been if the argument that provider systems will propose is that any reduction in that rate in their commercial rates because they're not paid well enough for Medicare and Medicaid any reduction in those commercial rates will mean they're unable to break even or have a margin and they'd be forced to close services or reduce access to care. And so I think it's really important for us when we're facing that pressure to understand that that's not the case. It's just not, it's just not the case. I would certainly agree with that. And if you're facing that type of question I would again reiterate what we've been able to do with the Sage transparency tool where we've been able to take our prices. So those are the prices I just showed which are in the blue bars and the break even price. And so this comes from a data resource developed by the National Academy for State Health Policy where they were actually able to use hospitals pair mix. So how many uninsured patients or Medicaid patients or Medicare patients does a hospital treat? And then what are the hospital's costs for treating those patients? And to be clear that those costs and those pair mix don't come from claims data or data that we've been able to come up with. Those come from the cost reports that hospitals report to Medicare as a condition of purchasing the Medicare program. And so if I were a regulator and thinking about that type of break even argument I would grow straight to this type of chart where you can see that for many hospitals in Vermont there is a large gap between what they are charging and their break even price suggesting that if that price were lower many of these hospitals would still make a comfortable margin. Thank you. Back to you chair. I'll go next. That's okay. I got a question sort of related to this. So let's, I forget the exact numbers but UVM or Rutland or Southwest were pretty high 275, 290-ish in Vermont. And they already aren't breaking even or can't make a margin or having difficulty making a margin. So if we were as regulators to remove or lower some of that price down to even the state media and there's a whole lot of money that's coming out of those systems that would save Vermonters a good amount of money but the hospitals would have a lot less. And I guess the question from my perspective is how do you do that without impacting quality or access or various service lines that they have? Where do you, because that money is going somewhere and they're using that money so how do you save the money without having a negative impact? So I guess two points at one. Again, using data that hospitals are reporting to Medicare. This, you know, at least in that data shows that they are at least on the commercial pairs making some margin. And again, this is accounting for negative margins on Medicare and Medicaid and a compensated care patient. So I guess that would be a first kind of data point that I would maybe ask is kind of, you know we see in the data that the hospitals are reporting to Medicare that there, you know is in fact a positive margin. And so if in other data reporting there is a reported negative margin then there is a discrepancy between the two. And so I would look at that. What I would say, you know for the second point is that we know that these variation prices don't, in our study, again, aren't explained by underpayments from commercial or non-commercial pairs rather and don't have a strong link between price and possible performance and quality. And so I would maybe push back a little bit on the assertion that the kind of variation prices that we see in across Vermont is cleanly linked to improvements and differences in the hospital performance. But it is a point. So on some scale, if you were to reduce hospital payments by, you know, in the single digit percentage I think that that would not have a huge impact on hospital performance. If you were to reduce hospital payments by 50% then that's much more drastic change that would have some impact. And so I guess the key regulatory question I would say is what's the level of price reductions and improvements in affordability that you are comfortable with knowing that there's some link between reductions in payments and hospital revenues and affordability or a disruption rather? Is there any particular, like with these systems that have higher prices due to market power, do you have any insights into where they're using that money or where that money is going? Like if the hypothesis is they could have a positive margin on a lot less money, but they have much higher rates, where is that money going? Yeah, so we have tried to do this, not necessarily in Vermont, but in other settings. So we know that hospitals that have higher prices and hospitals that are more consolidated aren't hospitals that pay their positions and healthcare staff born. So it's not going towards the clinician staff. We've done some work showing that it does lead to improvements in investment accounts. And so certainly some of the, again, not necessarily specific to Vermont, but nationally in other large health systems we've seen that higher prices and improvements in revenue do lead to larger investment accounts for hospital systems. Again, that's not a Vermont assertion, that's a national and large health system assertion. But I think just another challenge is that, especially with nonprofit firms, higher revenue has to be spent somewhere. And so whether that's building a fancy atrium or spending money on kind of non-clinical activities, that's potentially where a lot of the money goes. I mean, for example, when a hospital is sitting there, when patients are selecting a hospital, many cases they select that hospital based on, maybe not what's the remission rate, but what's the atrium look like? What's the facility look like? And so that's just a huge incentive for hospitals to invest in kind of those amenity type quality areas. Thank you very much. Other board members? I'll jump in because I have a couple of similar questions. So when I last spoke with Nashby about their tool, I asked them point blank if they thought it was an appropriate tool for regulation, given in their mind it was designed for employer negotiation purposes. And they told me, no, they said they thought you would want to do sort of a deeper dive, more nuanced analysis than using their breakeven tool across the board because of issues in terms of the cost reports and how items get booked. So I don't know if you had talked with them about that at all, but just curious in terms of your reaction to that. So I think that, well, if you're thinking of the exact, say breakeven point, you may also, in addition to cost reports, want to look at things like audit financial statements, but my general new reaction to that is a starting point. I think the Nashby tool actually is appropriate to at least kind of identify high-level issues around breakeven and margins. Thanks. So I did want to talk more about your slide 19 and the regulation of prices. So in our current hospital budget process, we are not regulating prices as a percentage of Medicare, but we are capping commercial growth and overall revenue growth. So certainly I would expect the impact to be different when you're regulating price growth from where it's sort of developed inherently prior to the hospital budget process, which quite frankly would have been probably in the 80s in this state. But I wondered if you had any thoughts on that in terms of regulating percentage growth versus price. So my general thought is that regulating prices is maybe more tractable than regulating overall growth and spending. Just because there are lots of things that contribute to differences in spending and prices, it's maybe easier to think about how would you pay for goods and services rather than everything else that can impact quantity and utilization. I guess my second thought is that I think that the benchmarking to Medicare might release is one way to account for new, say technologies introduced. So if new cancer therapies are introduced, then it's important to think about how those should be incorporated into the spending or price benchmarks. And so percentage of Medicare is a way to account for introduction of new technologies and just kind of general medical inflation that's accounted for in Medicare benchmarks. So essentially if you were to do that then, you're tying yourself to not a state specific rate of growth, but to the national Medicare growth. Because presumably if you're setting it to a percentage of Medicare, you're incorporating all of that Medicare policy that happens annually on a federal basis. That's right. With the caveat that our, so as a Medicare also has geographic adjustments, which we've incorporated in our data. And so if you're incorporating the present Medicare plus the geographic adjustments, then it's making it more specific to Vermont. Of course the caveat that you are still tying yourself to what the Medicare system has decided to pay for services over time, which may or may not be appropriate for an individual state. Thanks, that was helpful. So another area that Vermont has been looking at. So we had a big report around price regulation to the Vermont legislature. The board did a couple of years ago and looked at both incorporating fee for service rate setting along with sort of a more higher level approach where we would look at creating global hospital payments similar to what's happening with Medicare in Maryland and Pennsylvania. And that is an effort that we are currently looking at and we're funded to explore. So I wondered if you had any thoughts in terms of how your research might be applicable to the establishment of global hospital payments, which would, I think in our case, potentially then have the complimentary existing global hospital, our current hospital budget process, which looks, as I said, not just at overall spending but also commercial price growth. Okay, a clarification. So would the potential policy be similar to the Maryland policy where a hospital gets paid on a price level the same per patient by payer or would it be a kind of more global budget where the global budget is more fixed towards spending per patient? Yeah, we're looking at both approaches currently in a stakeholder group, although I think that it would be a heavy lift for us to institute fee for service rate setting if we're moving away from fee for service payments. So my initial reaction, and again, not knowing what you've already done is that the challenge with the Maryland model is that while commercial prices are low, everyone else is much higher. And so it's still not clear on nets whether or not average per patient prices are lower in Maryland versus neighboring states. And I think if economists were to wave a wand or healthcare research or wave a wand and start healthcare policy, go back 40 years, I don't think we'd rely necessarily on the Medicare fee for service system as the most efficient system and would think much more about a global budget based on spending level that's been widely adopted across the country or across the world and outside the United States. And so if, again, not knowing complexities and the lift for doing Maryland style is much lower than non-US global budget systems, but that certainly is I think the way to appropriate align clinical and financial incentives. Great, and if you have a lead on a magic wand store, I'm definitely in the market for one, so. Yeah. Thank you. Jesse, okay, if I go next. Thank you, Chris, that really interesting presentation. I guess I just have a few more questions. I'm just trying to understand this slide 12 with the blue bar and the green bar. And I guess I'm just sort of trying to further expand on chair Foster's question regarding what accounts for the difference between those two and hospitals that are essentially having zero or barely positive or negative, slightly negative margins, because those are pretty dramatic differences for a lot of hospitals. Yes, so they are dramatic differences. I think it's potentially going in, contributing to how net margins are reported and what are the factors that are in overall margins versus what's in the cost report, which from my understanding, much more operational expenses. And so that I think is a first place to look. But yeah, this has always been surprising to me on just the level of margin for many healthcare systems. But this difference is between the blue and the green in the way this is reported is indicated that that is margin that's being made off of commercial adjusted for Medicare, Medicaid and uninsured. That's right. So the green bar is what the hospital have to charge medic or sort of commercial patients after adjusting for their other pair mix and the hospital reported costs for those payers and what they'd have to charge commercial payers to break even on that amount. And then the blue bar is what they're actually charging. And so again, for many of these hospitals, that is a dramatic difference, suggesting large margins. I think part of our hard work may be trying to understand the nuance there, maybe if some of what Robin had mentioned what makes up the green break even price, but really that difference to try to understand why there is such a large difference there without having positive margins. Well, Yusiezo, I think a question is whether or not how true the negative margins are actually given what hospitals reporting on their, essentially their operating statements to Medicare. And just one other question to sort of piggyback on someone else's question regarding potential price regulation benchmarking the Medicare prices. If I mean, it's clear you've thought about this a lot and we've talked about potential benefits of that, but what would be some downsides to benchmarking off of Medicare? Yeah, so I guess this gets into the magic wand discussion where, so the disadvantages of benchmarking to Medicare are that this is a single benchmark that's designed by an agency in Washington, D.C. and who knows exactly how right that price is relative to, Medicare says the right price is relative to a hospital in Burlington, Vermont. The, I think the advantages of the, so if we had a magic wand, we'd develop a benchmarking system for Vermont or New England hospitals. The advantages of the Medicare system are that it's one, it's the kind of most comprehensive benchmarking system that we have in the country. And so it's been developed over decades with lots of input from industry and stakeholders around designing a efficient benchmark. It's also transparent. And so anyone can go out and download how much Medicare pays for a given service. And so it's not like a lot of the, I think other risky gestures that are maybe a little bit more black boxy and it's hard to see exactly what's going on under the hood. And then I think another thing that I, is in favor of the Medicare or using Medicare as a benchmark is that many of the things that I think that many people agree that are reasonable reasons to pay hospitals differently. So whether or not that's, they're in a say higher cost of care region or cost more to higher nurses and physicians in those regions or their patients are more complex or they do a more complex array of services are incorporated into the Medicare benchmark. I think I'm gonna pass off to Jess now, but thank you so much because it's, go ahead. Yeah, with the caveat that, so I mentioned that we also have a secondary price measure that is standardized or case mix adjusted prices. And so that is actually not percent of Medicare but it's just adjust for differences in patient and procedural complexity but it has a average price. And so if the percent of Medicare and the additional payments that go into the Medicare system or maybe not warranted in terms of thinking about addressing prices, then that's a alternative where you could say that in a case mix and desid way, prices above say $30,000 for inpatient discharge or inpatient service are ones that deserve attention versus some other threshold. Thanks for that. Yeah, I'm gonna pass to Jess, but thank you. And this is a great conversation. Yeah, thank you very, very much. So appreciate your time. Chris, it's nice to see you again. And I wanted to say that that pricing study that you've done, I know how much time and effort it takes to pull that all together. And just thought I would share with you that we have incorporated that in our hospital budget process as one of the many data inputs that we have to start to think about prices across our hospital system. So your efforts there are helpful to us. So I know sometimes you do research and you wonder if anybody's using it. So we are using it, so thank you. I appreciate that very much. Actually, my questions were largely asked and answered by others, that's the beauty of going last. And I guess I was just gonna say, I think slide 12 has raised a few questions. For us, that's the slide with the price and benchmark break even price compared to the commercial price. And I guess I would just say, I think maybe this is something we can bring back to our own hospital budget team. If they have time, which I know it's, there's always time is limited, but trying to understand what is, what is the NASHP tool that, you know, is being used to what are the cost inputs that are going into that break even price compared to, you know, that burns analysis that we've done. Chris, you don't know this, but we've done this analysis looking at price to cost ratios from one of our contractors. And so they're just trying to understand, I think that would be helpful. What is in the assumptions there? So something I think for potentially for our hospital budget team to think about and maybe help us do a deeper dive and understanding, but it's really, really helpful to see that data and see a different look at it. And I just, you know, I don't have any additional questions, but I did want to thank you for your time. I know it takes effort to put these presentations together and come, you know, before a board. So thank you very, very much. Hello. Thank you for having me. At eight zero two three seven seven. Should we leave Ms. Melameda message? I'm going to turn to the health care advocate for any questions or comments they may have. They may have. Board. Oh, sorry. Thanks, Chair Foster. I just wanted to ask, do we have a hard stop at 230? Cause if so, I want to ensure there's time for public comment and all kind of triage my questions. Chris, Chris, are you up to 230 here? Yeah. I can tell, I can tell. But I'm hearing that echo. We're a both, we're a both. Hello. Board at two zero two three seven zero one. Christine, Christine, could you mute that person's phone? I just muted it. I just muted it. I'll just go ahead and if interruptions happen, it's all good. Thank you, Dr. Whaley. Appreciate the presentation. I'm hoping to start off just by asking a question related to part four of your Polaroid Transparency Initiative. And specifically there was one Vermont finding that UVM medical centers, their prices for outpatient and patient were in the second and third highest deciles in the nation. And I know some board members have focused on the margin slide that you presented. And the reason I bring this up specifically is when this was asked, we asked about this during the hospital budget hearing process and UVM told the board that your team admitted there was a fundamental fault faults and the methodology for how price was calculated because of the role of factors like graduate medical education money and how different institutions count Medicare costs. So I just wanted to give you an opportunity to comment on that. And if that was an accurate characterization. Yeah, so I still think I echo just go in, just go in. So I had a conversation with Stephen Cappell from Vermont and then heard that that was mischaracterized to say that there's your analysis is flawed. And so yeah, I think that's certainly not obviously what I would characterize it as. I think that as I said earlier, there are probably very good reasons to adjust for many of the additional payments that Medicare makes and including graduate medical education, labor costs, et cetera. And so those are, I think, reasonable adjustments to make. But as I said earlier, if you don't feel like those are reasonable, we have an alternative measure that strips those out. And so it's really up to the user, the policymaker to think about how they actually use those or which price metric to use. The second component or thing that I would say is that those, especially the graduate medical education components of percent of Medicare actually bring down the price relative to Medicare for a academic center. And so if you feel that those are inappropriate, then that's actually going to make academic medical centers higher relative to their Vermont peers. Great, thank you for that. In slide two of the presentation, you did the breakdown of concentrated markets and competitive markets. And I'm wondering if you could just elaborate a little bit on what criteria are used for those. I know you mentioned the FTC. I'm also just curious if you know, offhand find if you don't, how Vermont would fit in, what category they would fit in. So for the second question, I don't know offhand how Vermont would compare, but that's something that I can check actually this afternoon and get back and send if helpful. To construct those, we use metrics that are widely used by, as I said earlier, the FTC, DOJ, and other regulators called the Hirschman-Hirffendall Index. And so that is a range based on market concentrations that basically look at what are the number of providers or firms in a market and what is their respective market share and then how do they essentially add up to contribute to a overall market competitiveness. And so this is a number or an index rather than it ranges from zero. And so if it's close to zero, then that's a small number, then that's a really competitive market. If it's 10,000, then that's a market that's dominated by a single firm. And we use the thresholds that the Federal Trade Commission has developed, a market above 2,500 as a highly concentrated market. Mr. Walsh, I see your hand up. Yeah, Sam, we have those numbers. I can share them with you. But very quickly, we have 14 hospitals, 10 of which have an HHI score of the maximum 10,000, meaning fully concentrated. No hospital has a score below 2,500. So then I guess the analog there would be that on that slide two chart, everyone in Vermont would be in that top highly concentrated market. Thank you for that. Appreciate it, Mr. Walsh. You published a piece with GBI at the end of March in health affairs that looked at primary drivers of losses at nonprofit health systems. So I wanted to ask you about that as well. You found, I believe I'm quoting this correctly that 85% of overall financial losses were related to investment losses. And I'm in one of your conclusions was that the public shouldn't foot the bill for these investment losses. And I'm wondering if you had any recommendations for how a regulator like the board can get at and analyze what percentage, like basically what you did. And if you have any recommendations for how they can make a rate setting decision or a hospital budget decision based on that. Yeah, that's a really good question. So just for clarification, so this is a paper published in health affairs forum in I believe earlier mid-March of this year with GBI who is a Professor of Counting at the John Thompson Carrier School of Business and is a widely recognized national expert in the hospital accounting. What one of the kind of source of this study is that we've heard for, I think, since you're throughout the pandemic that hospitals were being hit hard financially. And if you look at kind of hospital, kind of net revenue statements or the press releases that they put out, they all indicated, especially in the last year, very large operating losses. And so we wanted to dive in that a little bit deeper and looked not at the kind of high level numbers but actually looked at the components of those numbers and in particular looked at for 10 large national healthcare systems, their bond filings or the bond reporting that they were filing to comply with regulations around raising taxes and bonds. And as part of those bond financial statements, there are detailed explanations of income and revenue losses for these health systems. And when we looked a little bit closer, what we found is that for all 10 of the systems, they had all experienced very large financial losses through basic investment losses. So I'm sure many people in the call, my 401k went down a lot. And if you have a billion dollars in the stock market, like many large hospital systems, then they lost a considerable amount of money. And so when we did the add up on how much of the losses are, say, due to labor expenses versus equipment expenses versus these investment losses, nearly all the financial losses were due to investment losses. And so I think that kind of ties back to the point I had earlier around hospital margins. If I were thinking about what are the net margins for a provider, I would think very closely about what are the actual kind of operating expense margins versus the business wide margins, which would include things like investment gains or losses. Great, thank you. That's super helpful. Last question to me, I think the thing that I struggle with is really a true measure of cost, possible costs. I'm wondering if you have any perspectives about if Medicare is cost plus some percentage of margin. And if so, how do we know that? So just to clarify, is the question on whether or not Medicare costs represent a break-even cost for a hospital plus some margin or something else? Something else. Informer, yeah, just what you said. Yeah, okay. Yeah. So Medicare costs and rather payments from Medicare to hospitals for a given service are designed to represent what the Medicare Payment Advisor Commission calls a adequate reimbursement level for efficient hospitals and for efficient hospitals, Medicare payments are designed to represent roughly, I think a break-even plus a margin of, I think around three to 5%. And so for efficient hospitals, Medicare payments are, yes, in fact, designed to be adequate. Great, thank you. Those are all my questions. Back to you, Chair Foster. Well, Robin, go ahead. I just had a quick follow-up on that, Chris. Does that take into consideration the impact of sequestration? Because we used to talk about Medicare for at least for critical access hospitals as being cost, quote unquote, plus 2%, but then the impact of sequestration dropped that to 99% of quote unquote cost. So I was just wondering how you think about sequestration and the impacts. Now, obviously that was not happening during the pandemic, but then is going to be reinstated. That's a question I have to get back to you on. That's actually a question for Jess Densland at MedPAC. So I would defer to him on that. Professor Rayleigh, if you need to get going, respecting your time, you're welcome to. We do public comment yet. Next, you can stick around for that if you want, or if you need to go, that's also totally fine. If there are comments, I can actually stay until the top of the hour. Great. Thank you very much for doing that. We appreciate it. And I'll turn it to public comment via the raise your hand function. Mr. Del Treco, please go ahead. Good afternoon, and thanks for the opportunity to offer public comment, Chair Foster. I found the three presentations on your roundtable, starting with Jeff Steslin, Zac Cooper, to be interesting. I just want to say that Zac Cooper really offered some incredible data, and he did a really nice pause at the end and said, be careful of how we look at this data and make sure we understand the local market. I find this presentation to be dangerous, frankly. We've talked about cost shift, whether there is a cost shift, whether isn't a cost shift. If we look at our own data internally, we do know what our operating margin result is, and nine of our 14 hospitals in 2022 lost money from operating margin, not investments. There were even times where this board contemplated on pulling in those other operating investments in times of where there were plenty in investments coming down. When I look at other supporting evidence around the Commonwealth Fund, where our state of Vermont ranked sixth in our performance on many metrics of cost, quality, access, equity, and health outcomes, I just, there's a large disconnect between this presentation, what's being proposed as margins, what's proposed as being, let's take a look at the accuracy of what has been filed in Medicare Cost Reports, the lack of appreciation, understanding for audited financial statements. I think this is borderline problematic for me. I'm typically a pretty level realistic approach, and I found the other presentations helpful and formative. I do find this one very problematic for many reasons. In the state of Vermont, we had proposed and implemented a health insurance plan called Catamount Health that was paid to Medicare at 120% that failed because the delivery system was happy with those rates, but the funding could not be supported. We have a reform model in place, the all-pair model which all of our hospitals participate in, and actually fund and fund 100%. There's no technical advisory or transitional support funding, and we have an ecosystem that is completely on fire, and when it's on fire, it shows up in our organizations. We can debate economic data, we can debate all of the discussions we've heard over the last three weeks. The information right in front of us is highly problematic, and I know we're working all hard, working in the same direction to solve some of these problems, but I just wanted to share my thoughts today, so thank you. Thank you very much for your comment, Mr. Diltreco. The next hand raises Mr. Ham Davis. How are you? Please go ahead. Mr. Chairman, is it allowed to ask Mr. Whaley a question? Or do you only take comments? Yeah, we can just take comments, but if you have a question, please go ahead. I want to know in his calculations what methodologies he was using to measure the quality of care, which is a critical issue in this whole thing. Could he tell us that? We'll be using PQI here, we're using PQI here, we're using PAU here. No real quality in my judgment is great, but we do have some. And what I just don't know is what methodology you're using to say whether care is high quality or low quality or medium quality. Yeah, having to answer that, I just pulled up the slide so if you can see that. These are the metrics that we used and the peer review paper that we published is listed at the bottom. These include things like mortality rates for a variety of procedures, especially cardiac procedures, knee and hip replacement rate or readmission rates, readmission rates for other procedures, heart failure rates, et cetera. One caveat with this is that this is designed, this is classified among the Medicare population and to the extent to which a hospital's quality and performance for which they treat Medicare patients also is representative of how they treat commercial and Medicaid patients. Then this is probably an indicator of hospital overall quality, but if there are differences in how a hospital treats the two patients or outcomes between the two, the different patient populations, then maybe we need to have a quality metric for those populations as well. I hope that answered your question. Just one quick follow-up. Did you do any of that kind of analysis on the hospitals in Vermont? This is including all hospitals in Medicare and so the slide that I just showed is not specific to just Vermont hospitals, but maybe the hospitals in Vermont have those same quality outcomes and metrics. Thank you. Can I have one comment, Mr. Chair? Please, go ahead. I agree with Mike Del Treco. I think that the difference between, I don't doubt the whole rest of the United States, but this is the only system that I know of in the United States where the regulator has power over the ability to, over the amount that the provider can charge the payer that is completely controlled by the Green Mountain Care Board. And I just don't, and I don't know myself of any other system that does that. I wonder if you do. Mr. Whaley, if you have a response, you'd like to share, go ahead and if not, Tom Walsh has his hand raised as well. Yeah, I mean, so my quick response is that I certainly agree with Zach Cooper's comments that every healthcare market is local and so it's important to have local insight onto local markets. And so I think that's where the Green Mountain Care Board has been, I think, really important in taking data and trying to learn nationally lessons that can be applied locally and how policies that are maybe proposed nationally need to be modified locally. Thank you, sir. Thank you for your comments and questions. Go ahead, Tom. I think you're muted, Tom. Thanks and thank you, Dr. Whaley. I think it's important with the slide that you just had up about quality and prices that the key there is that as prices have risen, quality has not changed, right? So it's not as though the increased prices that have come from consolidation have been accompanied by improvements in outcomes or quality as the system has come together. And the original idea about consolidation was that there'd be better communication, better care coordination, and better outcomes. And unfortunately, I was part of health policy people thinking the same thing at the same time. We just haven't seen that. So that slide isn't making a point about the quality of care in Vermont. The quality of care in Vermont's been high as far as we've been able to see. Just hasn't gone up as the prices have gone up. Second, every state has a regulatory board for health care. Many states have multiple. Vermont is unique in that we have one board that looks at hospital budgets, insurance rate review, certificate of need, and health care reform efforts. Currently, we talk about that as ACOs. But every state has a health care regulatory board that looks at quality, safety, and prices. Maryland has set prices since the 1970s. Other states have followed, but it's been going on for my lifetime. It's not new. We're not the only one that's talked about. Yeah. So I just want to agree with both of those points. I think the, as I mentioned earlier, kind of purported goal of consolidation and price activity in health care, especially on the hospital side, is that maybe prices will go up and then markets will become more consolidated. But in some sense that is financially needed to fund care coordination, improvements in quality, and things that we actually do highly value. And if we look, especially nationally, we've seen that the first part, but as I said earlier, the second part on how those increased spending and financial resources to providers actually do in turn improve the quality of care for patients. Thank you. And Walter, how are you? Please go ahead. Hi, Ellen. Thanks again. I enjoyed the presentation. I am of the opinion that this is the report, in essence was, again, problematic, for reasons different than what Mike Del Treco listed is. I think this is what we should have been looking at, doing far more of. The question Chris asked of where is the money going is a really good question. Because, and then he said doctors and staff are not being paid well, et cetera, et cetera. You know, there's a reason for all the strikes that have been going on. Another issue I have looking at it from 40,000 feet as a patient, and I've been through the hospital system before in Vermont, hospital and insurance system. And I can tell you that it is not a system geared for care. It's a system geared for profit. And the patient is looked at not as a patient in many cases by the whole system, not individual cases as a consumer because that is where the revenue comes from. And there's something very grotesque about that. So in other words, from 40,000 feet, the problem is that we look at hospitals, et cetera, healthcare as a marketplace. And human lives shouldn't be a marketplace. And when you say the words affordability, affordability is what the market can afford. And if you can't afford it, well, tough luck. So I think we should be really looking at this report. Great. Thank you very much, Walter. I appreciate your comments. Mr. Whaley, I think that's it for the public comments. And thank you very much for taking the time to put all this together. It was certainly thought-provoking and important information for us to receive and to contemplate in our work. Thank you for doing it because I think it makes all of us more informed and better at these jobs. So thank you. Well, thank you for having me. Of course. And with that, I'll turn to, is there any old business to come before the board? Any new? And is there a motion to adjourn? So moved. Second. All those in favor, please say aye. Aye. Aye. Aye. Aye. Thank you all very much and have a nice afternoon.