Marie Beatrice "Bea" Grause
President and Chief Executive Officer

 January 2002

The second half of Vermont’s 2001-2002 legislative session has begun with health care at the top of the legislative agenda. Governor Dean highlighted several health care priorities in his last state of the state and legislators held hearings on two important health care issues – Certificate of Need (CON), and Medical Privacy – on the first day of the session.

VAHHS’ top legislative priorities include: creating an improved, more predictable CON process, moving toward parity with Medicaid and Medicare payments, improving the annual hospital budget review process, continuing support for RN tuition reimbursement and statewide retention efforts, and addressing the many complex issues of medical privacy. VAHHS remains committed to working collaboratively with the Administration and legislators to devise positive, meaningful outcomes for our top issues, understanding that their successful resolution does not necessarily require legislation.

On the CON issue, legislators have already proposed bills that vary widely. For example, Senator Doyle’s bill eliminates the Banking, Insurance Securities and Health Care Administration (BISHCA), administrator from the CON process while Senator Chard’s bill is expected to contain provisions aligned with the Governor’s priorities. These priorities would tie the CON and budget processes together, calling for CON denials and fines for hospitals that exceed their budgets. VAHHS proposals include: an appeals process, the use of objective benchmarks, and the creation of a two-track CON review process that allows for expedited reviews of CON applications to renovate old facilities or equipment. VAHHS will work with legislators and BISHCA to achieve these objectives.

Increasing Medicaid payments to Medicare levels would help reduce the cost-shift of unfunded health care services onto the private sector. Last year, legislators passed a bill that created a four-year timeline for achieving Medicaid parity with Medicare. VAHHS will urge the legislature to keep pace with this timeline and include inflation costs into current Medicaid payments. VAHHS also plans to engage legislators and others in a proactive discussion about long-term Medicaid issues. Experts predict that Vermont’s Medicaid expenditures will increase at twice the rate of growth for anticipated revenues, meaning that eventually new sources of revenue must be identified or the Medicaid program will need restructuring. To provide short-term assistance to the Medicaid program, VAHHS strongly supports passage of a 67 cent increase in the cigarette tax.

These issues and others will be debated against the backdrop of highly partisan politics and an anemic economic outlook. Revenue estimates anticipate at least a $35 million deficit in FY 2002, a number that will likely increase to $50 million in FY 2003. Cutting program funding to balance this year’s budget will be an extremely difficult task for lawmakers. On the issue of reapportionment, lawmakers will also face tough choices. For the first time, legislative district lines will be revised with one party – Republicans – controlling the House, while Democrats control the Senate. Historically, each chamber has deferred to the other to redraw district lines for their respective chamber’s districts. This session, legislators may cross those historic boundaries to preserve their respective political advantage for this year’s upcoming elections. As such, reapportionment and the economy will likely impact the length of this year’s session and the outcome of many policy issues – including health care.

Vermont Recruitment Center News

The Vermont Recruitment Center’s work continues apace as illustrated by these statistics:
Primary Care Openings: 28
Specialist Openings: 39

Vermont hospitals’ areas of greatest need are:
Primary Care: Internal Medicine
Specialists: Urology; Orthopedic Surgery

Nationwide there is a two-year wait for Urologists and ENT physicians.

The Recruitment Center is using many resources in building the candidate pool. The following are three examples:

• Convention travel
• Mailings to residency programs
• Sourcing techniques

The Vermont Recruitment Center is also working closely with UVM promoting the Freeman Medical Scholars to sites and educating the Freeman Scholars on Vermont’s needs.

The number of openings is fairly consistent from year to year due to steady retirements and additions to staff aimed at serving each hospital’s service area with the highest of quality.

OPPS Rule Update

The December 31, 2001 Federal Register announced the Centers for Medicare and Medicaid Services (CMS) official delay in the implementation of most of the CY 2002 Medicare Outpatient Prospective Payment System (OPPS) changes. This delay is for approximately three months so that CMS can correct a “number of technical miscalculations” and coding errors published in the November 30, 2001 final rule.

This delay was welcome news for the hospitals in Vermont. Both the American Hospital Association and the Vermont Association of Hospitals and Health Systems had advocated strongly for this delay. Initially, CMS had indicated it would go ahead and implement the OPPS changes, but hospitals across the country would need to hold outpatient claims until April 1, 2002. This interim solution was unacceptable and unworkable. This decision by CMS to delay implementation lifts the significant administrative and financial burden hospitals and seniors would have faced with hospitals holding claims.

For hospital outpatient payments between January 1, 2002 and April 1, 2002 this delay means: (NOTE: Some details on the final provisions that are not being delayed are still pending)

Provisions Delayed
· Hospital will NOT receive the 2.3% update factor
· Hospitals will NOT be subject to a pro rata reduction for pass-through drugs and devised

Provisions NOT Delayed
· Implementation of the new coinsurance limit
· Implementation of the new inpatient hospital deductible amount
· Changes in services covered within the scope of OPPS
· Categories of hospital subject to, and excluded from, the OPPS
· Criteria for new technology ambulatory payment classifications
· Provider based issues
· Change to the definition of single-use devices for transitional pass-through payments.

Revised rates and an effective date will be announced by CMS in a new final rule, likely due out in March 2002.

2001 a Busy Year for Certificate of Need

Certificate of Need (CON) activities in 2001 focused the spotlight on a regulatory program that for years has functioned outside the public limelight. The Banking, Insurance, Securities and Health Care Administration Commissioner’s approval of more than $77 million in new hospital construction in 2001, her decision to deny a $12.2 million hospital project and scale-back approval of another triggered the recent interest in the program. Other CON-related activities have also drawn considerable public attention:

· In July, the VT Supreme Court ruled that a Brattleboro Memorial Hospital MRI service did not require CON review as it had been in full operation for more than a year before it passed the $300,000 annual operating threshold for review.
· A proposal from Fletcher Allen Health Care to create a mental health facility on its Fanny Allen campus has stimulated lively debate.
· Central Vermont Hospital’s decision to appeal the denial of a $12.2 million project to upgrade its infrastructure and improve its ambulatory surgery, operating room and OB services has garnered wide community support.
· A proposal by HealthSouth to build a freestanding ambulatory surgery center in Burlington has generated debate about the value of competition in the health system.

It is important keep a broader view of the CON program. First, while the Fletcher Allen Renaissance project is large, we have known for more than a decade that dramatic improvements to the state’s only tertiary care teaching hospital were necessary. If the Fletcher Allen Renaissance project is removed from current CON activity, the remaining projects reflect remarkable stability. Over the past five years, acute care projects for Vermont’s fourteen community hospitals have averaged $12 million per year. Two- thirds of these projects were for renovation of facilities and upgrading of equipment.

Taking the long view, the CON program has facilitated the orderly renewal of needed health care services in Vermont while controlling capital expenditures in health care to the advantage of all. It’s time however, for improvement. Improvements should include a two-track process for projects. CON applications for replacement of facilities and equipment should proceed on an expedited track, while projects proposing new or expanded services should undergo a more thorough review. Finally, the use of objective benchmarks could streamline the process, allowing a relatively quick review of routine projects, while providing the Public Oversight Commission and BISHCA staff with more time to review new, innovative health care projects.

READINESS FUNDING FOR HOSPITALS - Earlier this month President Bush signed into law legislation that allocates $135 million in grants to hospitals and other health care providers to help them respond to disasters. Among other things, this money will help state and regional authorities coordinate readiness plans with hospitals. The new law also provides $140 million in grants to hospitals and other health care providers that were affected by the Sept. 11 terrorist attacks. These funds will help offset the costs these public and private hospitals incurred to clear hospital beds, increase staffing, overtime and security, and boost emergency response services such as emergency morgues, food, housing and transportation.

CONGRESS TO RECONCILE SENATE, HOUSE NURSING SHORTAGE BILLS - Reconciling differences between a House and a Senate version of the Nurse Reinvestment Act will be on Congress’s agenda when it begins the second session of the 107th Congress later this month. VAHHS supports final passage of the Nurse Reinvestment Act (NRA), as part of its 2002 legislative agenda.

The Senate version of the bill, passed December 20, 2001, includes funding for a nursing corps loan repayment program, for hospitals to develop and evaluate models and best practices for retaining nurses, for a student loan fund to fast-track nursing faculty development, and for multimedia nurse recruitment campaigns and community outreach programs to recruit and retain nurses.

The House recently passed their version of the NRA by an overwhelming margin. The House bill would provide for educational scholarships in exchange for a commitment to serve in health care facilities that are experiencing a critical shortage of nurses. It would also provide for public service announcements to promote the rewards of a nursing career. Once the NRA becomes law, VAHHS will work with federal and state officials to ensure that Vermont receives its fair share of funding to enhance existing efforts to recruit and retain Registered Nurses.

 

VAHHS Web Site Revamped

Looking for information related to Vermont hospitals? Look no further than www.vahhs.org, VAHHS’ revised web site, coming at the end of January. The site combines a more modern look with several key features:
• Disaster Readiness: Information from the local, state and federal levels. Hospitals can submit local information to be posted here.
• Calendar of Events: Find out about future educational events and our board meetings.
• Legislative Reports: VAHHS reports on legislative activity, month by month.
• Links to all Vermont hospitals, the Vermont Recruitment Center, Vermont Explor, our HIPAA web site, and more.
• Full text from past Hotline newsletters.
And more!