VAHHS Legislative Report

For the week ending March 24, 2006

Political Overview

The House continued to spend most of its time on the floor this week debating education funding changes and the 2007 Appropriations bill.

The House approved legislation that makes some significant changes to the statewide tax rates and rebate system of Act 60 after much spirited debate. The legislation addresses one of the chief complaints about Act 60: the concern that rebates for people who qualify for income sensitivity are mailed out at a different time than property tax bills. Under this bill, the state will send money directly to towns to cover the cost of all the residents who qualify for the income sensitivity program. Towns will then send out a tax bill that reflects the lower tax burden to ensure that the relief money is used directly to lower property tax bills. The bill includes a new cap on tax burdens for lower income property owners. A group of lawmakers, primarily Republicans, tried to remove this new cap and attempted to block an expansion of eligibility levels for the income sensitive program. They argued that the statewide tax rates could be lowered by an additional three cents if their plan was adopted.

2007 Budget Bill
The House voted out the FY 2007 budget today. The bill passed with no amendments and no debate on a vote of 120-10. The bill has reimbursement to hospitals level funded, with a modest increase for physicians. Despite a pending Medicaid deficit that will total $212 million over five years, the House Appropriations Committee is not recommending any significant changes for the budget year that begins July 1. The bill increases funding for the Area Agencies on Aging by $500,000 to assist with Medicare Part D, increases adult day centers by $133,000 and funds $100,000 for Healthy Aging Initiatives. Developmental and mental health services funding is increased by 7.5%, an agreement they reached two years ago with the Administration. The bill fully funds the chronic care initiative, funds dental programs in schools, increases funding for community clinics by $170,000, funds the Area Health Education Centers at $500,000 and increases funding for tobacco prevention and cessation programs by 5.2%. Also included in the Office of Vermont Health Access budget are one-time disproportionate share hospital funds of $20 million that was postponed last year by the legislature.

The bill attempts to prepare for long term fiscal challenges by allocating $20 million through the health care bill for FY2008 deficit and reserves $1.8 million for state retiree health care fund. The bill fully funds the Vermont State Hospital, including the $1 million for the planning process. (See Mental Health Oversight Committee below).

The bill also calls for the Health Access Oversight Committee to study options for and develop a plan to eliminate the Medicaid deficit by considering opportunities in the Global Commitment, methods to streamline administration and regulation in Medicaid, the Vermont Health Access Plan and Dr. Dynasaur, and determine if there are efficiencies to control costs.

In regards to nursing homes, the bill requires that the commissioner of the Department of Aging and Independent Living convene a task force to analyze Medicaid reimbursement rates for nursing homes and coordinate their work with the task force on the future sustainability of nursing homes. The task force will make recommendations on changes to the rules, methods, standards, and principles for establishing Medicaid payment rates for long term care facilities.

VAHHS Issues

Health Care Reform

H. 861
The Senate Health and Welfare Committee came out with yet another version of the health care reform bill. The plan attempts to join elements from the proposals by the House and the Governor’s plan. The proposal includes: the Blueprint for Health, Medicaid reimbursement for primary care physicians, hospital service area pilot projects, cost shift reviews and task forces, Catamount Health, employer-sponsored insurance, hospital default insurance and budget reviews. The Administration proposed the employer-sponsored insurance with subsidies to enable workers to buy their employers health care coverage where coverage is offered. The Senate plan takes that idea a step further by imposing a fee on employers who do not offer coverage.

The Senate proposal carried over the House’s version of the Catamount Health plan.. The state would offer subsidies to those who could not afford market rates. The Senate proposal requires that every Vermonter obtain health insurance (“individual mandate”), either through their employer, the state Medicaid plan for the poor or through Catamount Health or another private provider. The Senate proposal also requires every employer that does not provide coverage to employees to pay an annual set fee per employee, a step short of the payroll tax that drew the governor's veto last year.

VAHHS’ conclusion after our initial review of the bill is that this bill would have a disastrous effect on employers, hospitals and the insurance market. Among other things, the Senate bill proposes to take a “new view” of current hospital expenses on bad debt and charity care by deeming those expenses “default insurance” for the uninsured. For some individuals enrolled in Catamount Health, their hospital “benefit” would be covered by the hospital’s charity care policy. This bill also creates incentives for small businesses to enroll employees in Catamount Health, which will insulate them from provider charges because the legislation sets lower payment levels for both hospitals and physicians. The result is an increased number of patients seeking hospital care who would qualify for “free care” under revised hospital charity care policies and a decreased base of employers absorbing the cost-shift created not only by the charity care and bad debt, but by Medicare and Medicaid shortfalls.

VAHHS was asked to testify in both the Senate Finance and Health & Welfare committees this week on bad debt and free care provided by hospitals. We will be going in again next Thursday for a joint hearing with these committees and will have hospital CEOs and CFOs testifying.

S. 310 - Common Sense Initiatives

The House Health Care committee took testimony on electronic medical records and pharmaceuticals this week. The committee will continue to look at others sections of the Common Sense Initiatives Bill next week.

Workers Compensation Fee Schedule

Senate Economic Development, Housing and General Affairs met today to discuss workers comp bill proposal. The committee recommended that VAHHS, the Department of Banking, Insurance, Securities and Health Care Administration, the Joint Fiscal Office, and Department of Labor meet on Monday to discuss alternatives and to report back with a consensus agreement. VAHHS is working on a methodology that would be based on a percentage of each individual hospital’s relationship of hospital operating expenses to gross revenue.

Mental Health Oversight Committee

The Mental Health Oversight Committee voted unanimously to accept the plan put forward by Deputy Commissioner of Mental Health Paul Blake and Beth Tanzman, director of the Futures Project. Representative Anne Donahue, R-Northfield, offered two amendments: 1) request for the renewal and ongoing work of the Futures Group as the plan moves forward and continues to develop, and 2) review of collaboration with a private hospital for a new inpatient facility must be simultaneous with and not prior to dealing with VSH staffing/employment issues.

Tanzman delivered an overview of the Futures Plan as developed by the Futures committee. The overarching philosophy behind the plan was an effort to continue the trend for community-based care and decrease reliance on institutional care. Community-based care is not seen as a replacement for inpatient beds.

The core of the proposal is a 32 bed intensive and specialized care facility. Fletcher Allen Health Care is the lead location and partners in this effort include Rutland and Retreat Healthcare. The plan also includes: a residential programs which are 24 long-term, sub-acute or secure beds; 10 crisis beds (diversion from inpatient beds) for stabilization and subsequent transfer; and care management which would include development of common admission, transfer utilization and communication protocols. Tanzman noted that lack of housing for the mentally ill is a significant destabilizing factor and precipitator for needed access to inpatient care (i.e. the lack of housing causes a mental health crisis; it does not cause a stable patient to seek inpatient care for housing purposes). The plan would address housing issues.

The Administration has committed to a 3 year funding cycle to sustain programming.

The Health Access Oversight Committee will meet with BISHCA for the purpose of reviewing language in Act 53 to determine whether a certificate of need is necessary.

The committee will meet again on April 5.

S. 27 – An Act Relating to a Safe Haven Defense to the Crime of Abandoning a Baby

The House Judiciary passed S. 27 on a vote of 9-0-2 and passed 2nd reading on the floor Friday. The bill allows mothers or family members to abandon babies up to 30 days old at "safe havens" without facing criminal charges. The bill allows the parent to call 911 to arrange a pickup location, in addition to health care facilities, churches, police and fire stations.

Bills of Interest Introduced

H. 881 - AN ACT RELATING TO MAKING APPROPRIATIONS FOR THE SUPPORT OF GOVERNMENT (Committee on Appropriations): This bill proposes to make appropriations in support of government for the fiscal year beginning July 1, 2006.