For the week ending Friday, February 9, 2001
Week in Review
The House of Representatives gave preliminary approval Friday to the annual Budget Adjustment Act and is expected to give final approval to this bill on Tuesday. As the name implies, this bill makes adjustments to the current year’s general fund appropriations. However, this bill does not usually go without controversy and this year is no different. This week, Governor Dean and Republican lawmakers engaged in one of their first, but certainly not last, fiscal skirmishes of the session. Governor Dean proposed using $24 million of the projected FY 2001 budget surplus to pay for one-time spending initiatives that otherwise would be paid for through bonding. The bill approved by the House Committee on Appropriations this week proposes to reduce that number to $8 million, leaving the balance to roll forward into FY 2002, presumably for other GOP spending priorities, such as Act 60 reform.Medicaid Reimbursement
Eileen Elliot, Commissioner of the Department of Prevention, Assistance, Transitions and Health Access (PATH) spent several hours before the House Committee on Appropriations discussing the various programs within her department including the many Medicaid programs. Chair of the committee Rich Westman (R-Cambridge) questioned Elliot regarding the zero in the budget she presented next to the line item for increasing Medicaid reimbursement rates. When asked Elliot for the Administration’s recommendation for this she responded that they were working on this number. Westman pressed for a dollar amount and time when the committee might expect this from the Administration and Elliot responded that she hoped to give it to the committee next week.The committee has scheduled two "advocate" days, Wednesday and Friday, this week. This is the only opportunity they are providing for organizations to ask for specific appropriations in the FY02 budget. VAHHS is slated to testify before the committee on Wednesday afternoon. However, since each organization has been allotted only 10 minutes each, it is unlikely a comprehensive explanation of the $25.9 million cost shift problem will be fully presented.
Meanwhile, VAHHS representatives have been meeting individually with each member of the House Committee on Appropriations to fully explain the cost shift issue and to present the three-year plan for fixing it. These meetings have gone well with very little opposition to the concept of pumping more money into the Medicaid reimbursement levels. However, most committee members have the same two problems: 1) where does the money come from and 2) in the first year, the committee is cognizant of the budget neutrality issue which limits the amount of state money that can be put into the system.
Also this week, it is anticipated that the Joint Fiscal Office will be presenting its analysis of the cost shift problem. VAHHS has been working with the JFO for the past two weeks to find common ground on these numbers. By all reports, these meetings are progressing well.
Property Tax Exemptions
As part of their review of Act 60, the education funding law, both the House Committee on Ways and Means and the Senate Committee on Finance have heard very brief overviews of the property tax exemptions allowable under law. In both committees discussion of exemptions, which include hospitals, were limited to last year’s proposals, H.53. Neither committee at this time appears willing to revisit this issue which consumed a fair amount of committee time during the last biennium with no results.HRSA State Planning Grant and Administration
The Senate Committee on Finance heard testimony regarding the Health Resources and Services Administration (HRSA) grants that have recently been awarded to states that have made significant progress in providing health care to all citizens. Meeting that criteria, last year Vermont was awarded a $1.3 million grant for the purpose of gathering information which will lead to development of a plan which would provide health access for all state uninsured. The Lewin Group has been hired on a $450,000 contract to evaluate the conditions that lead to health insurance premium increases, cost shift of providers, costs due to private payers because of bad debt and free care, analysis of methods to provide coverage in the public and private sector. Action Research has a subcontract to conduct focus groups with employers, providers and others. Lewin Group will consider:
- What are options to expand private sector coverage? What are the attitudes of small business of providing coverage? Under what conditions would they be willing to provide coverage?
- Under what conditions can public sector coverage be expanded?
- What is the capacity of providers to cover the additional numbers that will come into the system?
- To what extent does reimbursement levels (cost shift) reflect market price?
- What is the availability of products in the insurance marketplace? How does Vermont encourage newly designed products to assist in meeting the goal?
- Is the current Vermont environment conducive to expansion of insurance coverage?
After the presentation several Senators raised the following issues:
Community rating (Crowley)
Single payer systems (Munt and Rivers)
Divorce of health care coverage from employment (Rivers)
Cost and sustainability of funding related to total coverage (Gossens)
How does HRSA grant fit with the governor’s latest commission?
(Rivers)Governor’s Chief of Staff Julie Peterson addressed the last question saying that the Lewin report would have some information by late spring in time for the Governor’s latest commission to make use of it. However, the entire work of the grant will not be completed until next October.
Prescription Drugs Cost Containment and Affordable Access (H.31 Draft 4)
This week House Committee on Health and Welfare continued its work on H.31, the pharmaceutical pricing proposal. By late Friday afternoon, Draft 4 was available and will be discussed further on Tuesday. The current draft requires that the Secretary of Human services establish an independent office, the office of prescription drug cost control within Agency of Human Services. The office will include the Drug Utilization Review Board, the pharmacy and therapeutics advisory committee and any other board with functions relating to best practices in the use of prescription drugs. It will develop a utilization review program, uniform statewide formulary, standards for utilization, and a uniform script for the state sponsored Medicaid programs and any public or private health benefit plan that agrees to participate. The office has authority to contract on behalf of VSCRIPT programs with drug manufacturers and suppliers, separately or in concert with any public or private health plan or drug purchasing entity for discounts, price schedules or rebates, and with a third party to administer a pharmacy utilization and cost control program. The office may create an electronic database to promote cost effective use of prescription drugs. The office is required to provide information education to physicians, medical students and other prescribers on therapeutic and cost effective use of prescription drugs. Authority falls to the pharmacist to select the equivalent lowest price drug on the formulary.BISHCA will develop a statewide formulary for use in health insurance plans. If a drug is prescribed that is not on the formulary, the patient will have to pay the difference in price. As currently drafted, the bill includes expansion of the Federally Qualified Health Centers and restores the cut in Medicaid reimbursements to pharmacists made by the administration last year. It also includes aid to those who experience catastrophic prescription drug costs based on costs in relation to income. The committee believes savings will be realized as a result of using the formulary and anticipates these savings could fund this program. However, it has included language to limit the program to available appropriations.
The committee is expected to vote H.31 out of committee this week for consideration by the full House.