For the week ending Friday, February 2, 2001

The legislature has nearly hit full stride, with the House Committee on Health and Welfare focusing all of its energy for the last several weeks on legislation to address the high cost of prescription drugs. The committee appears poised to move a bill out of committee in the next two weeks. Due to a variety of proposals that need appropriations, the Committee on Appropriations will likely review the bill prior to consideration by the full House. The other major issue in the House is Act 60, Vermont’s education funding law, which is under consideration in the Committee on Ways and Means. Modifying Act 60 is the top priority for House leadership and since the "fix" is estimated to need a minimum of $30 million, all other budgetary concerns, including increased Medicaid reimbursements, are in limbo until this committee settles on a solution.

In the Senate, the spotlight was on that chamber’s consideration of a Senate resolution calling on the U.S. Congress to pass a constitutional amendment to protect the U.S. flag against desecration. Vermont is the only state in the union that has failed to pass such a resolution. The debate was emotional and divided between those who believe that the U.S. flag should be protected against actions such as flag burning, and those who argued that even offensive acts such as flag burning should be protected as free speech. The Senate was evenly split 14-14 on the resolution, forcing Lt. Gov. Doug Racine (D) to cast a tie-breaking vote in opposition to the resolution. Sen. John Campbell (D-Windsor) sought to find a middle ground, and suggested through an amendment to the resolution that Congress enact measures to protect the flag, but through means short of a constitutional amendment. This amendment ultimately passed.

Prescription Drugs
The House Committee on Health and Welfare is wrapping up the initial review of House Bill 31. In a very productive session the chair of the committee, Rep. Tom Koch (D-Barre Town), asked each member of the committee his or her priorities to be included in the bill. Initially the three parts that nearly all members supported were prescription drug education for all parties, a formulary, and the catastrophic relief plan still to be defined. In addition, the committee tentatively agreed to include administrative components-- the creation of one state prescription drug plan, which would require bringing the many confusing plans into one understandable system and development of a method for safe transfer or recycle of prescription drugs. Finally, all agreed to support and include in the bill the work of the regional coalition.

However, creating a formulary, the committee discovered, is a costly and lengthy process and may affect private insurance companies who conduct business in Vermont and have their own formularies. On Friday, the committee had still not decided to create a formulary for only the state-sponsored programs or a formulary for all. Steve Kappel, an analyst from the Joint Fiscal Office, presented a report of the costs of catastrophic pharmacy benefits. Since the money saved from Medicaid formulary is estimated to be $4.3 million dollars that figure becomes the cap for funding catastrophic program. Any family at 100% of the federal poverty level (FPL) spending 8% of their income on prescription drugs would, after meeting that threshold, have all drug expenses covered thereafter. The FPL increases to 499% and the spending threshold to 14% of income. By the end of the week questions remained concerning the estimated savings from the Medicaid formulary and the effect on starting a new program based on such anticipated savings.

Each day of testimony raises more questions, reveals more groups working on the problem and becomes more complicated making a very difficult task for the committee. In addition, the committee makeup reflects the public at large. They engage in the classic argument of those who would like to see an entirely government controlled system and those who want to create a greater private sector marketplace and encourage personal responsibility. Rep. Koch is hoping to call a vote on H.31 this week and move the bill out of committee.

Bi-Partisan Statement on Health Care
Speaker of the House Walter Freed (R-Dorset) and Senate Pro Tem Peter Shumlin (D-Windham) held a press conference on Thursday to present a bi-partisan statement of principles and goals for health care reform in Vermont. The statement was accompanied by the caveat that price regulations on prescription drugs and repeal of community rating will not be included in the principles set forth by this bi-partisan effort.

The key provisions of this statement are:

1. Pharmaceutical Costs - In an effort to lower pharmaceutical costs in Vermont this coalition will be advocating for federal action and cooperation with member states of the Northeast Legislative Association on Prescription Drug Prices.

2. Equitable Payment - The coalition will commit to ending the Medicaid cost-shift over a period of not more than five years, by making the Medicaid program pay providers for services at the Medicare level.

3. Outcome Assessments - Quality of care measurements should be emphasized to determine outcomes of participating in the health care system. Providers should be given a means of determining "best practices." The goal of the coalition is to make it easier to compare costs of comparable services and to measure quality against cost.

4. Prevention and Rehabilitation - The coalition supports rewarding the faithful use of preventive and rehabilitative regimens by consumers. This will help develop a system, which encourages prevention of conditions, which might require treatment together with rehabilitation of conditions, which have already been treated, in order to prevent a recurrence.

5. Increased Incentives - The coalition supports establishing incentives for health care consumers to make healthy life style choices that emphasize prevention. Providers should likewise be encouraged to be competitive in pricing, one of the principal reward being increased market share. Although pre-existing conditions, age or genetic factors cannot be controlled, the health care system in Vermont should provide financial incentives that promote preventive care, exercise, diet stress management and tobacco cessation and prevention.

6. Hospital Construction - The coalition is concerned about the proliferation of proposals for new hospital construction and other capital investment. Therefore, they propose a one-year moratorium on all new proposals for hospital construction and other capital improvements that have not incurred bonded indebtedness. In the interim, the Legislature will examine the needs of the state and the impact of the proposed capital improvements. The coalition also pledges not to enact any new mandates, which might have the effect of increasing the cost of health care.

7. Disclosure of Information - Informed consumer choice depends heavily on the ability to obtain needed information. A group of insureds should know how the group’s claims experiences compares to other groups. Consumers should be fully informed concerning the services for which their insurance carriers are being billed.

Although there are several controversial portions of these guidelines, it’s important to note that under further questioning the guidelines seemed flexible. For instance, when asked about the Central Vermont Medical Center’s CON, both leaders stated that the moratorium would not impact any applications "in the pipeline."

This bi-partisan statement will no doubt receive careful scrutiny by both the House and Senate Committees on Health and Welfare as both chambers move forward on health care reform.

Mazur Introduces Major Health Care Reform Bill
Rep. Frank Mazur (R-South Burlington), vice chair of the House Committee on Appropriations, presented his plans for a comprehensive overhaul of the health care system to the Republican caucus on Tuesday. Rising health care costs were a major campaign theme for many legislators this fall and the ensuing cry from businesses, individuals and taxpayers alike is that health care premiums and costs are too high.

There is general agreement on the cost drivers for health care: Utilization is up, technology is growing, prescription drug costs and utilization are increasing, there are more regulations and mandates, the state and federal Medicaid and Medicare programs are not paying the full amount for the services provided. Even though there have been several studies on the accessibility of health care in Vermont and on the quality of care, the Governor has recently recommended a commission to study the health care system and recommend solutions for bringing costs down. With former Human Services Secretary Con Hogan named as chair of the commission, many agree the recommended solutions will be useful. However, Rep. Mazur is done waiting and apparently so are many of his colleagues. At the end of the caucus presentation, Rep. Mazur invited any legislators interested in co-sponsoring the bill to see him … there was a line waiting to sign on as a sponsor.

The following items are the key provisions in Rep. Mazur’s proposal:

• Basic coverage for small groups and individual plans
• Community ration deviations increased to 30% for small group plans and 40% for individual plans
• A high risk pool for uninsurable individuals
• Common underwriting rules for Blue Cross Blue Shield and other health insurance companies for small group and individual plans
• Basic and affordable health insurance policies, encouraging catastrophic plans with a basic coverage benefit design
• Certificate of need criteria promoting fair and effective competitions in the health insurance industry, and considering the economic burden payors
• Hospital budget review provisions prohibiting hospitals from charging non-Medicaid plans for the costs of Medicaid beneficiaries
• Insurance rate-setting provisions prohibiting health insurance subsidy of Medicaid costs
• Medicaid reimbursement at the reasonable and economically competitive cost of providing services
• A Medicaid cost-shift, cost-sharing and benefit design study
• Cost-benefit analysis of health insurance mandates
• Disclosure of maximum allowable charges when insurance permit balance billing
• Consumer health care cost-containment incentives
• Health insurer and health care facility consumer satisfaction report cards
• Optional Medicaid coverage studies
• Return for reimbursement of dispensed prescription drugs by nursing homes

This proposal will be formally introduced in the next few weeks after which it is expected to receive extensive analysis and testimony in the House Committee on Health and Welfare from health care providers, business representatives and many other constituencies this reform bill will ultimately impact.

DHMC and Rutland Testify Before Senate Health and Welfare
In a joint presentation, Frank McDougall of DHMC and Tom Huebner of Rutland Regional Medical Center testified before the Senate Committee on Health and Welfare last week. The two-hour presentation included a comprehensive overview of Medicaid reimbursement levels using comparisons of Vermont to New Hampshire. This justification was followed by a discussion of how the lack of adequate reimbursement levels affects a particular hospital and a region. Mr. Huebner stated that if the state reimbursed Medicaid at Medicare levels, Rutland could reduce charges to all other payors by 10%.

The committee appeared sympathetic to the message of increasing Medicaid reimbursement to the Medicare level and encouraged Mr. McDougall and Mr. Huebner to present this information to the other committees dealing with this issue.

 

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