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For the week ending March 26, 2004
Political Overview
It is fair to say that the Vermont House put politics aside last week in order to get the peoples' work done. Listening to detailed reports on the floor and in caucuses and participating in hours of floor debate, the House passed the FY05 Budget Bill, a $41 million Capital Construction Bill and a Transportation Capital Bill authorizing about $350 million in transportation fund spending. Minority House Democrats used the debate to point out, in a civil way, that the state faces huge deficits in its Medicaid programs in future years, but most members in the end voted for these important money bills, paving the way for final adjournment by mid-May.
The last few weeks of the session will see important discussion, but uncertain action, on a Senate-passed bill designed to control prescription drug costs and the Governor's proposal to begin reforming the health insurance market by making it more attractive for commercial insurance carriers to do business in the hard-to-serve individual and small group markets in Vermont. These issues probably are not yet ripe for consensus action, as much because of the difficulty and complexity of the issues as the split control of the General Assembly.
Fee Bill - Hospital & Nursing Home Provider Tax/Hospital Licensing Fees (H.772)
This week the House passed H.772, the fee bill. The bill proposes to increase the hospital base licensing fee from $10 to $1,000 and impose a new $25 per bed fee. This is expected to raise $57,225 per year for the Department of Health to administer hospital licensing. Licensing fees for physicians, physician assistants and anesthesiologist assistants are also increased in the bill.
The bill also increases the hospital provider tax from 4.50 to 4.84 percent
of net patient revenue (less chronic, skilled and swing bed revenues) starting
July 1, 2004, in order for the state to draw down the maximum allowable disproportionate
share hospital (DSH) payments. The bill increases the nursing home bed tax
from $3,388.25 to $3,676.06 per bed starting July 1, 2004. The state is proposing
that the three non-Medicaid facilities (Wake Robin, Merten's House and the
Arbors) be reclassified as assisted living facilities which will exempt them
from the tax. The bill was referred to the Senate Finance Committee. Here
is a link to the bill as it passed the House.
Civil Monetary Penalties (H.566)
This week the Senate Judiciary Committee advanced H.566, a bill that proposes to impose civil monetary penalties for provider fraud, by a vote of 4-0-2. The Committee deleted from the bill the section making "reckless disregard" (or unintentional acts) actionable. Therefore, the bill now covers provider fraud only when it is done with "actual knowledge." The Committee revised the advisory opinion provision to make it clear that an advisory opinion based on erroneous or incomplete facts could not be used as a defense in a Medicaid fraud case. The bill will likely be up for action on the Senate floor next week. Here is a link to the Senate Calendar for March 30, 2004, with the text of the bill as it was advanced by the Senate Judiciary Committee.
Capital Bill (H.767)
This week the House passed H.767, the so-called "capital construction bill," a bill that funds capital projects for state government. An amendment on the House floor to increase an appropriation from $147.65 to $100,000 to the department of buildings and general services to assist with the capital costs associated with creating a dialysis center in the Northeast Kingdom passed by voice vote.
Health Insurance Reform (H.759)
This week the House Ways and Means Committee continued taking testimony regarding the small market health insurance reform bill, H.759, which contains the $15 million provider tax on hospitals. They heard from various officials from the Department of Banking, Insurance, Securities and Health Care Administration (BISHCA), including Commissioner John Crowley, Deputy Commissioner Paulette Thabault and General Counsel Herb Olson. The trio explained a new proposal from the administration that would limit the benefits of the proposed reinsurance mechanism to the non-group market and allow BISHCA's proposed 2 percent premium tax on Blue Cross and MVP to be reduced to .5 percent. The existing tax on commercial health insurers would remain at 2 percent. The new proposal would cost between $3.7 and $5.5 million per year, depending on whether it tries to achieve a 10 or 15 percent reduction in premiums, or somewhere in between. Aggressive questioning from committee members led Chairman Dick Marron, R-Stowe, to say toward the end of the hearing, "Now I'm really confused." Most of the confusion revolves around the fact that the number of covered lives in the non-group market has actually increased in the past three years, raising a question about the need for the bill. The committee also is having trouble with the reasoning behind raising a tax that will be passed on to a large group of payers in order to marginally help a very small group of people. The BISHCA officials left with a list of six or seven questions that the committee wants answered. It is uncertain at this time what the committee will do with the bill. Here is a link to the bill as it was introduced.
FY05 Budget (H.768)
The House passed H.768, the FY05 budget bill this week. As reported last week, the bill contains a $1.5 million increase in FY05 for hospital inpatient rates. The bill also proposes that Disproportionate Share Hospital (DSH) payments to hospitals 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 will be revised in FY05 to draw down these funds.
With regard to 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, is in the bill because rebasing starts 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.
There are two health care studies of interest to VAHHS proposed in the budget bill. The first establishes a "sustainable health care special committee" consisting of lawmakers, administration officials and others. The committee is asked to estimate the state health care revenues and spending through fiscal year 2008 with current revenue and programs and estimate the annual and cumulative potential deficits or surpluses. The committee is also directed to review activities in other states and other sources of information on sustainable financing of health care programs and submit a report to the General Assembly. (See Sec. 290). The second study directs the Department of Banking, Insurance, Securities and Health Care Administration, working with interested parties, to propose the development of a self-insurance pool for small businesses in Vermont. (See Sec. 287). The bill was referred to the Senate Appropriations Committee. Here is a link to the bill as it passed the House.
Pain Management/Advance Directives (H.752)
By a vote of 10-1, the House Health and Welfare Committee advanced H.752, a bill related to pain management and advance directives this week. The bill proposes that there be legislative representation on the existing attorney general's end-of-life initiative. The bill also requires the department of health to develop a plan to create and maintain a registry identifying Vermonters who have executed advance directive, among other things. Finally, the department of health, in collaboration with interested parties, is directed to investigate and evaluate methods for improving pain management, and report their findings to the general assembly by January 15, 2005. The nursing home bill of rights statute is amended to require nursing homes to inform residents in writing about eligibility for hospice services. Of particular interest to health care providers and residential care providers is the requirement that they develop systems to ensure that a patient's advance directive is promptly available when the patient is receiving services from the provider, including methods for prominently noting the existence of such documents in paper and electronic records. The bill will be up for action on the House floor on Tuesday, March 30th. Here is a link to the House Calendar for March 24, 2004, with the text of H.752 as advanced by the House Health and Welfare Committee.