Application of Act 55 of 2025

STATE OF VERMONT DEPARTMENT OF FINANCIAL REGULATION 89 Main Street Montpelier, VT 05620-3101 For consumer assistance: [Banking] 888-568-4547 [Insurance] 800-964- 1784 [Securities] 877-550-3907 dfr.vermont.gov Insurance Bulletin #237 Application of Act 55 of 2025 October 3, 2025 The purpose of this bulletin is to clarify the application of Act 55 of 2025 to health insurers, health care providers, and consumers. Part 1: Average Sales Price Act 55, Sec. 4 (18 V.S.A. § 9407(a)) prohibits hospitals from submitting claims to health insurers for reimbursement of a prescription drug administered in an outpatient or office setting more than “120 percent of the average sales price (ASP), as calculated by the Centers for Medicare and Medicaid Services.” Under 42 C.F.R. § 414.904, Medicare Part B uses ASP as the basis for drug reimbursement. Most drugs and biological products covered by Medicare Part B are paid at a rate of ASP plus a 6% administrative fee. ASP is calculated using sales data, including discounts, submitted by drug manufacturers using a methodology set forth in 42 U.S.C. § 1395w-3a(c). Each quarter, the Centers for Medicare and Medicaid Services (CMS) publishes payment amounts online in the ASP Pricing Files. Because ASP is a single component of the Medicare Part B reimbursement methodology, it is the Department’s position that the phrase “average sales price (ASP), as calculated by the Centers for Medicare and Medicaid Services” in Act 55 refers solely to the computation specified in 42 U.S.C. § 1395w-3a(c), and not to the payment amounts published by CMS. Part 2: Exemptions Act 55, Sec. 4 (18 V.S.A. § 9407(d)), exempts any “independent hospital that is designated as a critical access hospital and that is not affiliated with another hospital or hospital network based in or outside of Vermont” from the prohibition on charging more than 120% of ASP for prescription drugs administered in an outpatient or office setting. Under section 410A of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, CMS operates the Rural Community Hospital (RCH) Demonstration Program, in which Medicare pays certain rural hospitals based on reasonable incurred costs. Hospitals in the RCH Demonstration Program are too large to be designated Critical Access Hospitals.1 Therefore, it 1 See Centers for Medicare and Medicaid Services, Fact Sheet: Rural Community Hospital Demonstration (May 2025); see also Centers for Medicare and Medicaid Services, Rural Community Hospital Demonstration (last accessed Sept. 8, 2025). Docusign Envelope ID: 8FD5224D-A6EA-42D2-B983-846472863BD3 is the Department’s position that Act 55’s limitations on hospital charges apply to hospitals in the RCH Demonstration Program based on the plain meaning of the statutory language.2 Inquiries about this Bulletin should be directed to Sebastian Arduengo, Director of Health Insurance Regulation. Kaj Samsom, Commissioner Date 2 See Shires Hous., Inc. v. Brown, 2017 VT 60, ¶ 9 (“we presume that the Legislature intended the plain, ordinary meaning of the statutory language.”). Docusign Envelope ID: 8FD5224D-A6EA-42D2-B983-846472863BD3 10/3/2025