VAHHS Legislative Report

For the week ending March 20, 2006

Political Overview
This week lawmakers returned from Town Meeting recess. The sense of urgency lawmakers had to complete their work the week before they left for break has dissipated. Town Meeting typically signals the mid-point of the session but the big issues this session – health care reform and transportation to name two - are still far from complete. One bright spot is the FY07 budget bill will likely be debated on the House floor starting next week. The committee plans to meet on Monday to vote the bill out of committee. This is significant because it shows real progress on the only must-pass bill of the session.

Hospital CEOs, trustees and staff amassed at the State House on March 16th for a successful VAHHS-sponsored "Hospital Day." Hospital CEOs, trustees and VAHHS staff met with dozens of legislators at a legislative breakfast, followed by a meeting with Secretary of Administration Michael Smith in the Governor’s absence. Attendees were able to share VAHHS’ message materials on Catamount Health, the Common Sense Initiatives bill, and the cost shift. Secretary Smith stated that in its current form, the Governor is unable to support the health reform bill passed by the House. He is hopeful that the Senate will make changes to the funding mechanism in order to achieve meaningful health reform this year. Many thanks to all who participated.

Starting the week of March 21, the Senate morning committees will meet all day Wednesday and Friday and the afternoon committees will meet all day on Tuesday and Thursday. This will allow committees to dedicate more time on bills.

VAHHS Issues

Health Care Reform

The health reform bills (H. 861 and S. 310) passed body of origin before town meeting break. The process/testimony begins all over in each body.

H. 861

The Senate Health & Welfare committee heard testimony from the Administration this week on the Governor’s health care reform plan. Testimony was heard from John Crowley and Herb Olson, Commissioner and General Counsel of Banking, Insurance, Securities and Health Care Administration (BISHCA). A review of the various Medicaid program populations was provided along with the proposed cost and/or saving to the state. The plan calls for those eligible for Medicaid (whether enrolled or not) to use employer-based insurance with a complete state subsidy up to 150% of the federal poverty level (FPL) with premium assistance for those between 150-300% of the FPL. A Basic Benefit Plan for those between 150-300% of the FPL would provide coverage for those without employer-based plans. Employer participation would be voluntary. Senator Leddy stated that the health & welfare is optimistic that the committee will support the Administration’s Employer Sponsored Insurance proposal.

Joshua Slen, Director of the Office of Vermont Health Access (OVHA), discussed the 5-year Global Commitment waiver. The waiver will provide Vermont with financial and programmatic flexibility to help maintain broad public health care coverage with more effective services, to continue to lead the nation in exploring ways to reduce the number of uninsured and foster innovation in health care by focusing on health care outcomes. The waiver converts OVHA to a public managed care organization. The primary fiscal advantage to the Managed Care Organization (MCO) model is that the MCO can invest in health services irrespective of current funding source, as long as they are responsible investments that provide necessary health care services to Vermonters. This will bring an estimated $135 to $165 million in new federal funds.

Senator James Leddy, D-Chittenden, questioned Director Slen on payment to hospitals. Slen stated that hospitals are being level-funded for 2007. Senator Leddy stated that level funding hospitals in addition to the $16 million cuts last year is insensitive. The reductions result in about 12-13%, plus no cost of living increase results in about 17% decrease over two years. VAHHS’ numbers are slightly higher and are 18% and 21% respectively. Senator Kevin Mullin, R- Rutland, expressed his concern on this as well. Mullin asked if Medicaid paid costs for all providers how much would that cost the state?

Provisions of the bill include: addressing the chronic care infrastructure and prevention, disease management for high-utilization Medicaid and state enrollees, Catamount Health administration and benefit structure, cost-shift reduction for primary care physicians and links future increase in reimbursements to the Blueprint Standards. The bill has language that states the goal of the Medicaid pilot projects to integrate and improve collaboration among health care professionals and community partners. It requires BISHCA to ensure for appropriate reductions in cost shift due to increase Medicaid reimbursement and reduction in bed debt or charity care. It also requires BISHCA to convene a task force to determine how the cost shift reductions are reflected in health insurance premium rates. The benefit structure refers to a comprehensive primary care, preventive, chronic care and hospital services that would be actuarially equivalent to the Cigna plan offered to state employees.

S. 310 - Common Sense Initiatives

The House Health Care Committee did a walk through of S. 310, the Common Sense Initiatives bill. The committee focused its discussion on the information technology, medical event reporting, common forms and procedures, and multi-payer database and consumer price and quality information. Hans Kastensmith, Principal of Capitol Health Associates (CHA) and retained by the Commission on Health Care, testified on his examination of the state of health information technology in the state and the active initiatives taking place.

The committee heard from Paul Harrington, Executive Vice President of the Vermont Medical Society, on sections 13 (common forms and procedures) and 14 (common provider credentialing) of the bill. Harrington expressed his concern that there is no administrative support or resources allocated to the common forms and procedures work group that will be formed. Harrington supports the piece of the bill that authorizes BISHCA to prescribe the credentialing form to be used by hospitals and insurers.

The committee also took testimony on the adverse events reporting section of the bill. They took testimony from VAHHS, the health department and the medical society. The committee asked a number of questions, many of which focused on insuring that the peer review provisions did not protect “bad doctors.” There were also questions related to how quickly the system could be set up and whether cost savings from the program could be calculated. VAHHS representatives pointed out that the report to the legislature already included a provision (added to the “consensus” language by the Senate Health and Welfare Committee) to calculate cost savings. No specific changes to the adverse events section of the bill were proposed or discussed by the committee.

House Health Care also heard from Mark Monson, President and Chief Executive Officer of Rutland Mental Health Services (RMHS). Monson discussed why RMHS opted to go with Baldrige national award program. He stated that it calls for a systematic organized for becoming an excellent organization, aligns an organization with its consumers’ and stakeholders’ needs, includes a diagnostic tool to understand the underlying processes that are driving the organizations performance results, help to improve organizational performance practices, capabilities and results; and to facilitate communication and sharing of best practices.

S. 198 – Act Relating to Reporting Medical Errors and Establishing a Sorry Works Program

The Senate passed S.198 on the floor Thursday. As reported before town break recess, the Senate Appropriations Committee recommended that BISHCA initiate a dialogue with insurers and encourage them to participate in the Sorry Works pilot program with any hospital that is willing to commit to the program in order to gain the participation of insurers necessary to enable hospitals to participate and implement the program. The committee also removed the $75,000 appropriation for the program. Senator Richard Sears, D-Bennington, noted his frustration with the insurance industry for not allowing hospitals to enter into the program. Senator Jane Kitchel, D-Caledonia, stated that the Senate Appropriations Committee was reluctant to appropriate funding for the program because insurers were late in the process of making their concerns known.

Senator Kevin Mullin, R-Rutland, offered an amendment on the floor to include screening panels for medical injury claims. The amendment was ruled not germane. The Senate passed the bill on a 26-0 vote. The bill now moves to the House.

House Appropriations

The House Appropriations Committee met this week to finalize the FY2007 Appropriation Bill. Top on the agenda was the Medicaid budget where the committee recommended additional funding with several highlights including increased primary care reimbursements ($471,637), 1 position for Legal Aid – Healthcare Ombudsman ($65,000), Addition of 5 Nurse Case Managers for Care Coordination/Case Management ($348,072), implementation of a Decision Support System ($350,000), transition of VHAP and Caretaker populations to ESI (Employer Sponsored Insurance) ($7,770,763). The State Hospital was allocated $1,000,000 for continued planning and development of the new facility. Other FY2007 budgetary highlights include an additional $500,000 allocated to the Areas Agencies on Aging.

House Human Services

On Thursday, Joshua Slen, Director of OVHA, testified to provide an overview of the Medicaid budget to the committee. Discussion of future activities related to the Blueprint and Vermont Information Technology Leaders followed along with questions from the committee on adjustments to the Medicare Part D plan. Questions followed on subjects including administration and cost of an ESI plan.

Title 20 – An Act Relating to Emergency Management and Public Safety
The House Government Operations Committee took testimony on draft 1.9 of Title 20, An Act Relating to Emergency Management and Public Safety. Barbara Farr, Director of Vermont Emergency Management, did a walk through of the entire bill for the committee. The health department was successful in proposing amendments dealing with workers' comp coverage for volunteers. Amendments were made to Title 29 to add language that all officers and employees, as defined in Title 3, participate in the state employees’ workers’ compensation fund. The other amendment is in Title 21. The Department recommended language under 21 VSA §650 that states the following: The average weekly wage of a volunteer firefighter, volunteer rescue or ambulance worker, or volunteer reserve police officer, or volunteer for a state agency as defined in section 3 V.S.A. 1101(b)(4) injured in the discharge of duties as a firefighter, rescue or ambulance worker, or police officer, or such state agency volunteer, shall be the employee's average weekly wage in the employee's regular employment or vocation, but the provisions of section 642 of this title relative to maximum weekly compensation and weekly net income rates, shall apply.

The committee plans to hold two public hearings on these changes during the last week of March.

Bills of Interest Introduced

S. 297 – AN ACT RELATING TO WORKERS’ COMPENSATION COVERAGE FOR MEMBERS AND MANAGERS OF LIMITED LIABILITY COMPANIES (Illuzzi of Essex-Orleans District): The bill proposes that members and managers of limited liability companies may exclude themselves from workers’ compensation coverage upon affirmative election and approval of the commissioner. It proposes that the liability to pay for hospital services shall not exceed 110% of the Medicare reimbursement amount for those services. Reimbursement for services and supplies in the commissioner’s fee schedule shall consider medical necessity, clinical efficacy, cost-effectiveness, and safety, and those services and supplies shall be provided on a nondiscriminatory basis consistent with workers’ compensation and health care law. The commissioner shall authorize reimbursement at a rate higher than the scheduled rate if the employee demonstrates to the commissioner’s satisfaction that reasonable and necessary treatment, prescription drugs, or durable medical equipment is not available at the scheduled rate. An employer shall establish direct billing and payment procedures and notification procedures as necessary for coverage of medically‑necessary prescription medications for chronic conditions of injured employees, in accordance with rules adopted by the commissioner.