Primary Care Payment Reform (Act 173 / S.197) - Overview & Analysis

Act 173 reforms how primary care is paid for in Vermont while also laying the groundwork for a broader universal primary care framework, with major topics including Blueprint for Health payment reform, insurer participation and transparency, primary care spending targets, Blueprint funding, health care governance and oversight, care transitions, pharmaceutical coverage notice, and regional universal primary care.

The Details:

• Clarifies legislative intent around universal primary care
  The bill expands beyond payment reform alone (which is how it was originally introduced). It states the Legislature’s intent to invest in primary care and establish a program of universal primary care that is accessible and affordable for all Vermonters, while improving patient experience, population health, costs, and clinician and staff well-being.
• Frames the bill as an information-gathering and system-design measure
  The act now explicitly says its purposes are to gather the information needed to develop a framework for universal primary care, optimize the Blueprint for Health, determine whether the Blueprint is the right vehicle for universal primary care, and explore whether other approaches may better meet Vermont’s needs.
• Clarifies key definitions in the Blueprint for Health statute
  The law refines the definitions of “health insurance plan” and “health insurer” in the Blueprint for Health statute so that the participation and payment requirements clearly apply to major medical plans and to entities that issue, renew, or administer health benefit plans in Vermont, including certain third-party administrators.
• Strengthens health insurer participation and data reporting for the Blueprint
  Health insurers must continue to participate in the Blueprint for Health as a condition of doing business in Vermont and must submit, at least quarterly, all information the Blueprint Director determines necessary to analyze total cost of care and implement sustainable payment models that address capacity, volume, quality, and outcomes.
• Requires per-person, per-month payments to primary care practices with payer parity beginning in 2027
  The Blueprint’s payment reform methodologies must include per-person, per-month payments from each health insurer and Medicaid to medical homes and primary care providers for attributed patients and for shared Blueprint costs, such as community health teams. These payments must be in addition to a practice’s typical fee-for-service or other payments and, beginning in 2027, insurer payments must be at least equal to Medicaid’s amounts.
• Authorizes ongoing adjustment of primary care payment methodologies
  The Blueprint Director, with recommendations from the Blueprint Executive Committee, may recommend changes to payment amounts and methodologies to the Secretary of Human Services, including enhanced payments for medical home practices, support for community health teams, and any payment structures required for Medicaid or Medicare participation. The statute directs the Director to strive for parity across payers and payment methodologies and to adjust them as needed to support participating practices.
• Aligns insurer payments with statewide primary care payment models and federal requirements
  Health insurers must modify payment methodologies and amounts as needed to support the Blueprint and related payment models, including any Centers for Medicare and Medicaid Services requirements tied to federal participation. If Medicare financial participation is not approved, insurers are not required to cover Medicare-related costs.
• Updates appeal rights for insurers regarding required payments
  A health insurer may appeal decisions requiring a particular payment methodology or amount to the Secretary of Human Services or designee, who must provide a hearing under Vermont’s administrative procedures. The insurer may then appeal that decision to Washington County Superior Court within 30 days.
• Directs a broader 2027 Blueprint report on universal primary care design
  By January 15, 2027, the Blueprint Director, in consultation with the Blueprint Executive Committee and the Vermont Steering Committee for Comprehensive Primary Health Care, must report to the Legislature on changes needed to transition Blueprint payments so they include payment for the routine primary care needs of attributed patients covered by participating plans. The enacted version expands this report by requiring definitions of both “primary care services” and “primary care provider,” an operational plan, a proposed timeline for implementation, and a description of how the Blueprint could optimize each of its current initiatives, what it would cost to enhance them, and how much additional per-person, per-month spending would be needed to support those improvements across all Blueprint initiatives.
• Requires interim updates to the Health Reform Oversight Committee
  From July through December 2026, the Blueprint Director or designee must be available on request to provide updates to the Health Reform Oversight Committee on the development of the Blueprint report.
• Adds a new report on transitioning Blueprint funding to the health care claims tax
  A new section requires the Agency of Human Services, in consultation with the Department of Taxes, to recommend by January 15, 2027 a process for transitioning Blueprint for Health funding to the health care claims tax. The recommendations must include any tax-rate changes needed to fully support the Blueprint and a possible timeline for implementation.
• Requires a 2027 baseline analysis of primary care spending using new definitions
  By January 15, 2027, the Agency of Human Services, in consultation with the Green Mountain Care Board, must report baseline per-person, per-month primary care spending for Vermont residents overall and by each health insurer, relevant third-party administrators, Medicaid, and Medicare. Unlike the Senate-passed version, the enacted law ties this report to the primary care definitions developed in the Blueprint report rather than to external federal or regional definitions.
• Establishes primary care spending targets through a report process
  The Agency of Human Services must establish a target for the amount of per-person, per-month spending on Vermont residents that should go to primary care services and develop a transitional schedule that increases the target over time. By January 1, 2028, the Agency must provide the targets, schedule, and any payer-specific adjustment recommendations to the Legislature.
• Adds a new review of health care governance and regulatory responsibilities
  A major addition in the enacted version requires the Agency of Human Services, Green Mountain Care Board, and Department of Financial Regulation, working with the Office of the Health Care Advocate, to evaluate how health care regulation and reform responsibilities are currently divided. Their review must address matters such as hospital transformation, insurance rate review, management of the Office of Health Care Reform, operation of the Blueprint for Health, and other programs. By January 15, 2027, they must submit recommendations on where these functions should be located, including areas of agreement and disagreement, overlaps and gaps, and any legislation needed.
• Requires interim updates on the governance review
  The Agency, Green Mountain Care Board, and Department of Financial Regulation must also be available from July through December 2026 to provide updates to the Health Reform Oversight Committee on their work evaluating the distribution of health care reform and regulatory duties.
• Studies accelerated transition of care from hospitals to community settings
  By January 15, 2027, the Agency of Human Services, in consultation with major stakeholders, must report recommendations for shifting appropriate care from hospital settings to community-based primary care, including ways to reduce the use of inpatient hospital settings for primary care after surgery or acute care when community-based care would be as or more effective and less costly. The recommendations must also address use of community health teams for care transitions and be incorporated into the Statewide Health Care Delivery Strategic Plan as appropriate.
• Explores a regional universal primary care program with other northeastern states
  The Office of the State Treasurer, in consultation with the Agency of Human Services, must work with other northeastern states to explore a regional universal primary care program and report by January 15, 2027 on outreach efforts, interest from other states, barriers, and next steps.
• Requires advance notice to patients when prescription drugs are removed from formularies
  Health insurers must continue to notify covered individuals periodically, at least once each year, of pharmaceutical coverage changes and provide access to their preferred drug lists. In addition, insurers must give at least 60 days’ notice to covered individuals who filled a prescription in the prior 12 months before removing that drug from coverage.

Analysis:

Act 173, remains a significant step in Vermont’s effort to strengthen primary care by reinvigorating the Blueprint for Health while also broadening the conversation toward universal primary care. The most important meaningful change from the Senate-passed version is that the enacted law is no longer framed only as primary care payment reform. It now explicitly states an intent to establish a universal primary care program that is accessible and affordable for all Vermonters, and it adds several planning and governance provisions aimed at determining how that broader goal could actually be achieved.

The core payment-reform structure remains intact. Vermont is still moving toward more stable per-person, per-month support for primary care, continued insurer participation in the Blueprint, clearer payer parity, and future primary care spending targets. Those features continue to reflect a practical belief that underinvesting in primary care leads to greater downstream costs for families, employers, and taxpayers. Stronger primary care can improve management of chronic conditions, reduce avoidable emergency and hospital use, and make it easier for Vermonters to receive care closer to home.

At the same time, Act 173 is more clearly a system-design and information-gathering bill than the earlier version suggested. The enacted law expands the required Blueprint report, adds a new report on whether Blueprint funding could shift to the health care claims tax, and requires a broader review of how health care reform and regulation responsibilities are divided among the Agency of Human Services, the Green Mountain Care Board, and the Department of Financial Regulation. Those changes are meaningful because they move beyond payment methodology alone and begin asking who should administer reform, how it should be financed, and whether the current structure of state oversight is well suited to a universal primary care model.

On transparency and accountability, the act is directionally positive but still incomplete. Quarterly insurer reporting, baseline spending analysis, future spending targets, governance review, and multiple reports to the Legislature all create more visibility into how the system works and where gaps or overlaps exist. The 60-day formulary notice provision also improves transparency for patients directly. But many of the bill’s most significant promises still depend on future reports, later legislative choices, and possible tax or regulatory changes. In that sense, the enacted law improves the roadmap more than it completes the trip.

There are also real trade-offs. A more stable payment model may help independent primary care practices survive and serve patients better, but it adds administrative and regulatory complexity at a time when Vermont’s health care system is already strained. Redirecting care toward community settings may lower costs and improve convenience in many cases, but it also depends on having enough primary care capacity in place. Moving toward universal primary care may be appealing from an access and affordability standpoint, yet it raises hard questions about financing, governance, and how broadly the benefit would extend.

Reasonable people may differ on whether Act 173 is an overdue and thoughtful step toward a more coherent primary care system or a bill that still postpones too many difficult decisions. Supporters are likely to see it as a serious, data-driven effort to strengthen primary care and build a foundation for broader reform. Skeptics may note that the bill leaves major implementation questions unresolved and may eventually require additional spending, tax adjustments, or structural changes that are not yet fully defined. Even so, the enacted version preserves the original case for stronger primary care investment while meaningfully expanding the conversation to include universal access, financing, and institutional accountability.

Current Status:

The bill passed both chambers and was signed into law by the Governor on June 18, 2026, becoming Act 173 and taking effect on passage.

Last updated: 6/28/2026

DISCLAIMER: Generative AI used to assist in the production of this report.