2004 Legislative Report

For the week ending January 14, 2005

Political Overview
This week Governor Douglas presented his FY06 Budget Address to a joint assembly of the House and Senate. The budget proposes $2.9 billion in general fund spending that shifts money from some areas of state government to human services. The Governor’s main area of focus was on the Medicaid deficit and his plan to solve it. In State Fiscal Year (SFY) 2005 the deficit is estimated to be $20 million and SFY 2006 it estimated to climb to at least $70 million. The five areas that have driven this growth are: increase enrollment (expanded and generous coverage policies), increased utilization; medical inflation, decreasing federal match, and economic growth not equal to Medicaid growth.

To address the problem and strive to avoid dramatic programmatic cuts the Governor has proposed eight areas of reduction. The overarching principle of the reductions is to spread the burden throughout the entire system. (i.e. state, providers and beneficiaries). The reduction areas identified are: new relationship with the federal government called “Global Commitment:, full implementation of the Governor’s Chronic Care Initiative (Vermont Blueprint), program restraints and modifications, premium increases, provider savings, premium subsidies to shift coverage from public to private, malpractice reform and transfer of general reserve funds to the Health Access Trust Fund. The two areas with the most immediate impact to providers are the “Global Commitment” and provider savings section.

Global Commitment: Vermont and the federal government are working on entering a five-year agreement to develop an acceptable growth rate of funding. This would enable Vermont to have predictable funding levels and would require implementation of cost controls limiting Vermont’s Medicaid growth below the federal funding levels. In addition to developing predictable funding the Global Commitment would provide Vermont with more flexibility in managing the Medicaid program.

Provider Savings: The identified saving is $21 million dollars for FY 2006. This proposal specifically mentions that the reduction should not add to the burden of other insured Vermonters through the cost shift. The savings identified are not specific and the Governor has asked that providers partner with the state in achieving the expense reduction. Hospitals represent approximately 1/3 of overall Medicaid expenditures. Not included in the $21 million is the proposed increase in provider tax, which has been estimated to save the state approximately $11 million.

At this point there are few details available and as we learn more we will pass the information along. Also, this issue will be the focus of the VAHHS Legal and Legislative call on Monday, January 24th. (attached are the Governor’s Budget Address, the Governor’s Plan to Save Medicaid and Saving Medicaid Appendix A).

VAHHS Issues

Clinical Trials for Cancer Patients: This week the House Human Services committee voted 11-0-0 passage of H. 6, An Act Relating to Clinical Trial for Cancer Patients. This bill removes the sunset provision of law requiring health benefit plans to cover the costs of cancer clinical trials. This bill is currently up for 3rd reading on the House floor.

Mental Health: Senator Leddy, Chair of the Senate Health and Welfare Committee conducted a hearing on Thursday, January 20th on general Mental Health issues. Commissioners Jarris and Wehry led the discussion and provided the committee with a status update on the Department of Mental Health and the Vermont State Hospital (VSH). Bea Grause testified about the hospitals’ role in the VSH debate over this past year and emphasized that hospitals have been and remain “at the table.” She also added that VAHHS hopes the Secretary’s final VSH report will focus more specifically on clinical and financial issues.

Budget Adjustment: Josh Slen, Commissioner of the Office of Vermont Health Access (OVHA), testified in House Appropriations on the SFY 2005 Budget Adjustment. The total budget adjustment is $19,073,680. The major factors impacting the request included: a transfer of financial administration of the Healthy Babies, Kids and Families from the Vermont Department of Health to OVHA, one additional week of claim expenditures (05’ budget was based on 52 weeks rather than 53 weeks), a mistaken assumption of a federal match for VScript Expanded (it’s only a state funded program), an adjustment of the previous assumption that the premium implementation would result in enrollment decreases in the VHAP programs that did not occur, an increase in long term care expenditures due to rebasing of rates in January 2005 and miscellaneous caseload increases to trend and utilization due to inflation.

Drug Reimportation: Senate Committees on Finance and Health Welfare, as well as House Health Care, have devoted much of this week to taking testimony on reimportation. The Senate committees may vote a bill early next week that would authorize the secretary of administration to have Vermont join the I-SaveRx prescription drug program launched in Illinois so that all Vermont residents can purchase lower cost prescription drugs from Europe and Canada.

The committees heard from a former Canadian legislator urging Vermont lawmakers to slow down, stating that Health Canada has warned Canadians about imported drugs because of safety. The response from Vermont lawmakers on this message was cool at best.

Capital Bill: Agency of Human Services Secretary Charlie Smith and Corrections Commissioner Steve Gold testified in House Institutions on the Capital Bill. Secretary Smith stated that he will be asking for $150,000 to be appropriated to continue quality of life improvements at the Vermont State Hospital to include soundproofing, air conditioning and other improvements. He will also be asking for $725,000 for the future vision of the State Hospital. This will include site selection, development, permitting, etc. He believes that there is general agreement that vacating the current State Hospital is the only option. He stated that this will be addressed in more detail in the Futures Report that will be released on February 4, 2005.

Rep. Daryl Pillsbury, I-Brattleboro, stated that he would encourage the Secretary to include funds for local community hospitals to include a “safe room” for patients that present in hospital emergency rooms.

Bills of interest introduced this week:

H. 58 – An Act Relating to Education Loan Forgiveness for Nursing Faculty: This bill proposes to direct the commissioner of health to establish an education loan forgiveness program for expenses related to an advanced nursing degree for nurses serving on the faculty of certain Vermont postsecondary institutions; to establish a nurse educator advocate award; and to appropriate $200,000.00 for the nursing loan forgiveness program.

H. 67 - An Act Relating to the I-SaveRx Prescription Drug Program: This bill proposes to require the secretary of administration to join the I-SaveRx prescription drug program launched in Illinois so that all Vermont residents can purchase lower cost prescription drugs from Europe and Canada.

H. 72 – An Act Relating to Unlawful Employment Practices: This bill proposes to conform Vermont law with federal law and to clarify the prohibition against retaliation against employees by employers.

H. 74 – An Act Relating to Psychotropic Drugs and Special Needs Services for Children: This bill proposes to prohibit school personnel from recommending use of psychotropic drugs; prohibit public schools from requiring a child to take a psychotropic drug as a condition of attending school; require that a child receive supplemental services prior to being identified as a special needs student; create an informed consent process regarding the use of psychotropic drugs prescribed to children; and prohibit the department for children and family services from taking custody of a child because a parent or guardian has refused to consent to the administration of a psychotropic drug to his or her child.