Vermont lawmakers are advancing a major restructuring of how primary care is paid for, but the proposal is raising fundamental questions about cost, access, and how much of the system it can realistically change.
The bill, S.197, cleared the Senate in late March after moving quickly through committees and is now under review in the House. Its central goal is to shift primary care away from traditional fee-for-service billing toward a prospective, population-based payment model. In practice, that means primary care providers would receive a fixed monthly payment per patient, rather than billing insurers for each visit or service.
What the Bill Would Change for Patients and Providers
For patients, the most visible change would be the elimination of cost-sharing for routine primary care services. Under the proposal, Vermonters in participating plans would no longer pay copays or deductibles when seeing a primary care provider for covered services. Instead, those costs would be absorbed upstream through insurer and payer contributions into a statewide funding pool.
Supporters argue the change addresses a well-documented imbalance in the healthcare system. Vermont currently spends about 10.2% of total healthcare dollars on primary care, according to a state-commissioned analysis, and the bill sets a target of increasing that share to 15% by 2029. The theory is that stronger investment in primary care leads to earlier intervention, better chronic disease management, and fewer expensive hospitalizations.
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Cost Neutrality Claim Faces Scrutiny
However, the same analysis underpinning that target also notes limitations in the data and stops short of claiming that increased primary care spending alone will reduce total costs. The bill reflects that tension. It states that the shift in spending “shall not result in an increase in total health care spending in Vermont,” but does not include a clear enforcement mechanism if costs rise.
That gap has drawn scrutiny from insurers and other stakeholders. In testimony to lawmakers, insurers broadly supported the goal of strengthening primary care but raised concerns about how the model would be implemented. Several warned that eliminating cost-sharing at the point of service could increase utilization and shift costs into premiums if not offset by measurable reductions elsewhere in the system.
Defining “Primary Care” Becomes a Central Fight
Another major point of contention is how the bill defines what counts as “primary care.” The legislation uses the term “routine primary care services” but leaves the details to be determined later through rulemaking. That definition carries significant financial implications, as it will determine which services are covered without cost-sharing and how the monthly payments to providers are calculated.
Stakeholders have highlighted the risk that a narrow definition could reinforce the existing visit-based model, while a broader definition could include services such as care coordination, behavioral health integration, and community-based support. Vermont’s existing Blueprint for Health framework already includes many of these elements, such as Community Health Teams and patient-centered medical homes, but they are not uniformly funded or available across all payers.
Access Constraints Could Limit Impact
Access remains another unresolved issue. State workforce data show that while Vermont has a relatively high number of primary care providers per capita when including nurse practitioners and physician assistants, capacity has declined in terms of full-time equivalent physicians. In 2022, only about 78% of office-based primary care physicians were accepting new patients, with lower rates for Medicare and Medicaid patients.
That uneven availability raises questions about whether removing cost-sharing alone will significantly change patient behavior. If primary care capacity is already constrained in certain regions, increased demand could lead to longer wait times rather than reduced reliance on emergency departments.
The bill does not include major new funding streams for workforce expansion, patient navigation, or outreach to individuals who rely on emergency care as a substitute for primary care. Instead, it focuses primarily on payment reform, with the expectation that improved financing will stabilize practices and expand access over time.
Federal Law Limits State Reach
Structural limitations also complicate implementation. A significant portion of Vermonters are covered by self-funded employer health plans governed by federal law under the Employee Retirement Income Security Act (ERISA). These plans are generally exempt from many state insurance regulations, meaning they may not be required to participate in the proposed payment system.
That could leave a portion of the market outside the reform while concentrating costs within the fully insured population.
Momentum Continues, but Changes Likely
Despite these challenges, the bill has maintained momentum. Few stakeholders have called for abandoning the effort entirely, and many have instead proposed adjustments to its design. Among the suggested changes are clarifying the scope of covered services, tying increased spending to measurable improvements in access and outcomes, and reconsidering provisions that would make participation mandatory for all primary care practices by 2028.
The pace of the bill’s progress has also drawn attention. While it moved rapidly through the Senate, much of the underlying policy work has been under development for years through Vermont’s broader healthcare reform efforts, including the All-Payer Model and Blueprint for Health initiatives.
What Happens Next
As the House takes up S.197, lawmakers face a series of interconnected decisions: how broadly to define primary care, how to ensure equitable funding across different types of insurance coverage, and how to address persistent gaps in access and workforce capacity.
The outcome will determine whether the bill becomes a foundational shift in Vermont’s healthcare system or a more incremental adjustment to how primary care is financed.
Dave Soulia | FYIVT
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