For the week ending Friday, March 30, 2001

The House of Representatives gave final approval to an FY 2002 budget plan that proposed $873 million in general fund expenditures, including funding for the Circumferential Highway in Chittenden County, $16 million in increased funding for student block grants under Act 60 and increased funding for child care workers. The budget adopted by the House reflects a 4.5% increase in state spending over the current year’s operating budget, a figure slightly lower than that proposed by Gov. Howard Dean. The budget, the first crafted by Republicans in 16 years, took nearly four full days of debate to complete, and was the subject of many floor amendments and roll call votes. Partisanship was prevalent throughout the debate, as Democrats derided the plan as unsustainable, and lacking in vision for future spending needs.

Language was added to the bill to address the Medicaid cost shift, setting in place a policy statement on behalf of the legislature of its intention to bring Medicaid reimbursements to that provided by Medicare by the year 2006. This amendment replaced the original language approved by the House Committee on Appropriations and as currently written will still allow hospitals to shift costs that are above the Medicare reimbursement level.

The bill passed the House, largely without amendment, by a vote of 95-39. The budget now moves to the Senate, where Democrats hold a slim majority, but are likely to take a different view and approach to the budget than did the Republicans in the House.

House members spent the majority of their time in floor debate on the budget this week, however, a new plan for changes to Act 60 emerged late in the day on Wednesday, and is a modification of a proposal presented by House Speaker Walt Freed (R-Dorset) two weeks ago. With the goal of a eliminating the "sharing pool" in Act 60, the proposal under consideration by the Committee on Ways and Means would increase the statewide property tax rate from $1.10 to $1.26, and would add a penny to the state sales tax in all counties except those bordering New Hampshire. The proposal is expected to be controversial, and faces an uncertain future.

With thirteen weeks completed in this session, there is still much work yet to be done. The Senate must review and complete its work on the FY 2002 budget; the House intends to pass legislation to deal with Act 60, which must then be dealt with by the Senate; the two other major "money bills" the Capital Construction bill and Transportation bill must still be adopted by the House and then dealt with by the Senate. Add to this other policy-related bills that are pending, including Act 250 reform, and it appears that the legislature is headed for a mid-May adjournment this year.

Nursing Homes and Hospital Budgets

This week the Senate Committee on Health and Welfare heard testimony from Patrick Flood, Commissioner of the Department of Aging and Disabilities and from Mike Davis with the Health Care Administration.

Commissioner Flood gave an overview of the overall health of the nursing home and home health care industry in Vermont and agreed with the chair of the committee, Sen. Nancy Chard (D-Windham), that there are great disparities among home health care services throughout the state. He told the committee that Medicare reimbursement rates have steadily increased to approximately $320 per day. As Medicare rates increase, the acuity of care has remained flat, which is a positive result. The committee also discussed the trend of shifting care from nursing homes to home health. Flood also told the committee that the Department has a plan for right-sizing the nursing home industry and has worked with individual nursing homes to achieve this goal. He used the example of the negotiations between the state and the Helen Porter Nursing Home. He stated that it is the state’s job to give consumers a choice while recognizing there needs to be a core capacity in the nursing home industry.

Mike Davis discussed the hospital budget process with the committee, which was very interested in what was not reviewed in the POC process – namely salaries, community education, and advertising. When Mr. Davis told the committee that the POC uses the previous year’s budget as a starting point for comparison, the committee suggested this approach is flawed. Sen. Chard suggested that as hospitals "build penthouses" that they are allowed to continue to cost shift because not all items are reviewed. She specifically asked, "Can you deny hospitals are adding services to increase revenue by virtue of cost shifting?" She went on to say, "Hospitals can cost shift plus add all the bells and whistles. No one is looking at what the hucksters are doing in the hospitals." Mr. Davis responded by saying that the value of the hospital budget review is not cost containment but instead understanding what they are doing and gathering information. Sen. Chard did stress that the cost of care in Vermont hospitals is much better here than in other states. Sen. Chard charged Mr. Davis and Susan Gretkowski with bringing back to the committee their thoughts on whether or not there are areas of the hospital budget review process that the committee should be addressing. She suggested that perhaps the state designed a review system a decade ago that is no longer appropriate.

Clinical Trials

The full House approved a compromise on the Clinical Trials bill as recommended by the House Committee on Health and Welfare. The compromise was agreed to by insurers, providers and BISHCA and authorizes rules to put in place a voluntary agreement proposed last year which calls for Blue Cross Blue Shield, MVP, CIGNA and Medicaid to pay for routine patient care costs (cancer trials only) for trials conducted under the auspices of the Vermont Cancer Center at Fletcher Allen Health Care, the Norris Cotton Cancer Center at Dartmouth-Hitchcock, and approved trials being administered by a Vermont hospital and its affiliated providers.

The Senate Committee on Health and Welfare heard testimony on the bill early last week and the committee is expected to act upon this bill quickly.

Prescription Drugs

The House Committee on Appropriations is expected to begin work H.31, the initiative to address the high cost of pharmaceuticals as passed by the House Committee on Health and Welfare. The Committee must complete its work on other major spending initiatives such as the Capital Construction bill and the Transportation bill prior to dealing with other proposals with attached appropriations. H.31 is one of the key House bills and calls for nearly $2.5 million in new general fund spending.

Coming Up

House Committee on Health and Welfare – The committee will focus attention this week on H.416, the health care information and medical privacy proposal.

Senate Committee on Appropriations – The committee will receive overviews on various agencies and departments of state government including the Agency of Human Services (Jane Kitchel), the Department of Prevention, Assistance, Transitions and Health Access (Eileen Elliot), and the Department of Aging and Disabilities (Patrick Flood).

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