Political Overview

Lawmakers face a key "crossover" deadline this week for advancing legislation that must pass this year. All bills must be voted out of most committees by the end of the day on Friday, February 27th to have a chance of passing this biennium. Of course there are exceptions to this rule, including any bill coming out of a money committee, such as the House and Senate Appropriations Committees, the Senate Finance Committee and the House Ways and Means Committee, and a bill drafted and introduced by a committee as a whole. As a result, committees will be working overtime to advance their priority bills by the end of the day on Friday. Lawmakers will then take a week off for Town Meeting recess.

A number of health care bills of interest to VAHHS will likely meet this crossover deadline, including a prescription drug bill, a health insurance market reform bill, a workers' compensation reform bill, a bill to revamp Vermont's advance directives law and a bill to license respiratory therapists, to name just a few. The biggest threat and opportunity for hospitals and nursing homes for the remainder of the session continues to be Medicaid. The House Appropriations Committee is marking up the FY05 budget bill, which includes Medicaid, and hopes to complete its work by Friday, February 27th.

VAHHS Issues

FY 05 Medicaid Budget
As reported last week, Commissioner John Michael Hall of the Department of Prevention, Assistance, Transition and Health Access (PATH) is proposing a $580 million Medicaid budget for FY05, up from $538 million in FY04. We met with department officials this week and learned more about the FY05 Medicaid budget and its affect on hospitals and nursing homes.

With regard to hospitals, the Douglas Administration is proposing a $1.5 million increase in FY05 for hospital inpatient rates. There is no proposed increase in hospital outpatient rates. The administration is proposing that Disproportionate Share (DSH) payments be increased by approximately $5.2 million in FY05. This $5.2 million consists of a projected $4.386 million from the DSH cap being increased by 16 percent under the federal Medicare bill and the approximate remaining $800,000 coming from a slight increase in the base to reach the 6 percent cap that exists under the present federal DSH law. The provider tax on hospitals may need to be revised in FY05. The actual provider tax rate for FY 05 will be a longer discussion and negotiation between VAHHS and the department over the next few months.

Regarding nursing homes, rebasing, inflation and the provider tax are all in play in FY05. First, the cost to rebase is $13 million annualized. Only 5 months of this cost, or $5.4 million, will show up in FY05 because rebasing starts on January 1, 2005, and nursing home cost reports for January 2005 are not filed until February 2005 so the state will only pay the increased rate due to rebasing for five months (February, March, April, May and June) in FY05. There is also approximately $1 million budgeted for inflation. On the other hand, the nursing home bed tax is proposed to be increased by $315.13, from $3,388.25 per bed to $3,703.38 per bed. This is expected to generate an additional $2.7 million.

The state anticipates two decreases in its nursing home budget for FY05 - $4.073 million savings due to a reduction in wage supplements when the rebase occurs on Jan. 1, 2005 and $600,000 attributable to the Bradford closure. These savings are used to offset all the increased pressures, including rebasing, the inflation factor, additional ancillary costs for rebasing, and other anticipated increases.

Agency of Human Services Reorganization

On Friday, February 20th, Agency of Human Services Secretary Charlie Smith presented his final agency reorganization plan to lawmakers and interested parties at the State House. The proposal is to reorganize the current six departments and two offices within the agency into four departments and one independent office, effective July 1, 2004, as follows:

The Department of Health - DOH will retain all its current duties (except Healthy Child Care Vermont, Vermont Infant and Toddler program, Health Babies, Kids and Families Programs) but will now be responsible for Mental Health Services and the Vermont State Hospital.
The Department of Children and Family Services - This newly created department will be responsible for all functions from the Department of Social and Rehabilitation Services, all programs in PATH (except Reach Up and Economic Benefits Program such as food stamps, etc.), the Office of Child Support, Children's Upstream Services from DDMHS, the Office of Economic Opportunity, Healthy Child Care Vermont, Vermont Infant and Toddler program, Health Babies, Kids and Families Programs from the Department of Health, Vocational Rehabilitation from DAD and Juvenile Justice from the Secretary's Office.
The Department of Aging and Independent Living - This newly created department will be responsible for all functions currently performed by the Department of Aging and Disabilities, including overseeing nursing homes, except for vocational rehabilitation. This department will also be responsible for developmental disabilities and will be responsible for hi-tech medical services and personal care.
The Department of Corrections - Same responsibilities as today, namely, to oversee Vermont's correctional facilities.
The Office of Health Access - This department includes all programs currently operated by the Office of Vermont Health Access except personal care services and the hi-tech medical services. This office will report directly to the Secretary and, significantly for hospitals, includes Medicaid.
By law all budget-related recommendations and transfers between departments in the plan must be approved by the Legislative Joint Fiscal Committee, with advice from the Legislative Oversight Committee on Human Services Restructuring. The law provides the Oversight Committee with 30 days to offer advice and the Joint Fiscal Committee has a total of 45 days to act. The agency expects this to be complete by mid-April 2004. Here is a link to the final report from the Agency of Human Services webpage (open the link then click on "Final Reorganization Report"): https://www.ahsnet.ahs.state.vt.us/council/

Advance Directives (H.752)

This week the House Health and Welfare Committee advanced H.752, a bill related to advance directives for health care, by a 8-2-1 vote. The bill proposes to improve end-of-life care for Vermonters by simplifying the legal requirements for advance directives (such as living wills and health care proxies) and creating a registry of advance directives for the use of health care providers, including emergency medical personnel, health care facilities, and residential care facilities. Rep. David Sunderland, R-Rutland, and Rep. Linda Kirker, R-Essex, voted against the bill because of a provision related to the newly created Do-No-Resuscitate Orders (DNRs). Specifically, Sunderland and Kirker are concerned about section 5287(c) of the bill that states that a patient's physician may issue a DNR order for patient who is neither terminally ill nor chronically debilitated, provided the physician is satisfied that the patient has personally given informed consent to the DNR order. Rep. Sunderland gave an example of an electrician who gets electrocuted and needs CPR to bring him/her back to life. This bill would not allow that to happen if the electrician has a DNR order. Some felt that DNR orders should only be allowed when patients are terminally ill or chronically debilitated to avoid this unintended consequence. Here is a link to the text of the bill.

http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2004/bills/intro/H-752.htm

Hospital Licensing Fees/X Ray Equipment Fees

The House Ways and Means Committee took additional testimony regarding the proposed new hospital licensing fees the Department of Health (DOH) is proposing as part of the miscellaneous fee bill. The proposal is to increase the hospital licensing fee from a $10 application fee (established in 1949) to a $7,250 base fee, plus impose a new fee of $25 per hospital bed. A hospital can reduce the base fee to $4,250 if it is accredited by the Joint Commission on Accreditation of Health Care Organizations. These fees are estimated to generate an additional $120,825 per year, which the DOH proposes to use to cover the cost of staff that handles the licensure process. Bea Grause appeared before the committee and explained that VAHHS met with DOH and offered to increase the hospital license fee to $75,000 to cover most of the costs of DOH's proposed hospital licensing program. DOH representatives testified that they needed to collect the entire $120,825 in fees per year to run the program. The committee did not make a determination but stated that they were sympathetic to VAHHS's overall concerns of keeping expenses down. The Committee asked VAHHS and DOH to continue discussing the issue, which both parties agreed to do.

Health Insurance Reform (H.713, H.615)

This week the House Health and Welfare Committee took additional testimony on H.713, the Governor's health insurance reform bill, as well as H.615, a bill that would allow small employers to buy into the Vermont Health Access Plan to provide health insurance coverage for their employees. The committee's work on health insurance reform was interrupted by committee work on advance directives. The committee will return to these bills during the upcoming week in an attempt to move either one of these bills or a combination of the two before the crossover deadline of Friday, February 27th.

Prescription Drugs (S.288)

This week the Senate Health and Welfare Committee voted unanimously to advance S.288, a prescription drug bill. The bill has provisions related to the Healthy Vermonters Program, expanding the use of federal 340B programs, filling in the "donut hole" in the federal Medicare prescription drug bill and requiring a study of how the Medicare bill will affect Vermont, disclosure of retail drug prices, regulation of pharmacy benefit managers (PBM's), audits of PBM contracts and coverage for prescription drugs purchased from pharmacies outside of country, among other things. The bill was referred to the Senate Finance Committee, which has been taking lengthy testimony on many of these same prescription drug issues for the past few weeks. If the Senate Finance Committee moves the bill, the bill may make a brief stop in the Senate Appropriations Committee before being voted on by the full Senate. Here is a link to the Senate Calendar for Friday, February 20, 2004, which contains the full text of S.288, as it was advanced by the Senate Health and Welfare Committee.

http://www.leg.state.vt.us/docs/2004/calendar/SC040220.htm

Naturopathic Physicians (S.184)

S.184, a bill that requires insurance companies to cover services provided by naturopathic physicians, passed the Senate this week. The bill was then referred to the House Health and Welfare Committee. Here is a link to the bill as it passed the Senate.

http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2004/bills/senate/S-184.HTM

International Emergency Management Assistance Compact (S.290)

This week the Senate Government Operations advanced S.290, the International Emergency Management Assistance Compact. This bill will allow Vermont hospitals to share human resources, equipment, supplies and pharmaceuticals with our Canadian partners in the event of a disaster. VAHHS supports the bill. The bill was then referred to the Senate Appropriations Committee.

Public Hearing on End of Life Care

The House and Senate Health and Welfare Committees will jointly hold a public hearing regarding "End of Life Care: Choices and Challenges," on Thursday, February 26, 2004, at 7 pm in Room 11 of the State House.