Week in Review

Governor Jim Douglas delivered his budget address this week and the news is not particularly good for hospitals, while long-term care is slated to get a small increase in state funding under the Governor's proposal.

Medicaid Budget

Governor Douglas's plan to cut approximately $7 million in state spending in the Medicaid program has been widely reported in the papers. For your reference: a link to Douglas's Medicaid plan that outlines these cuts.

Of significance to hospitals is the 5 percent co-insurance obligation for inpatient or outpatient hospital services with a $100 out-of-pocket cap per fiscal year that is proposed for approximately 37,000 adults in traditional Medicaid. (Adults enrolled in the Vermont Health Access Plan will be subject to the tiered deductibles outlined in Douglas's Medicaid plan contained in the Internet link above.) According to Paul Wallace Brodeur, hospitals will be required to collect the $100 based on the amount Medicaid pays the hospital, not what the hospital charges. Federally required exemptions to the coinsurance will apply, including if the patient is under 18 or pregnant, and if the service is family planning related or an emergency. The state is expecting to save $302,741 in state funds by instituting this co-insurance requirement.

According to Wallace Brodeur, there are no provider increases in the Governor's proposed budget, nor are there funds dedicated toward an inflation factor for hospital inpatient reimbursement. You may recall that in FY 03, hospital received a 1.5 percent inflation factor for inpatient hospital reimbursement.

What has not been widely reported is that the Governor's budget actually increases Medicaid by slightly over $18 million in FY 04 over last year. According to Paul Wallace Brodeur, the $18 million will be spent to cover increases in caseload, additional funding to long-term care and more funds to cover increased utilization. According to early reports, the long-term care proposal includes an inflation factor for nursing homes that will be paid for by an increase in the bed tax. The new inflation factor for nursing homes or the amount of the increased bed tax is not known at this time.

H.1, Substance Abuse/H.6, Drug Testing for Reach Up Participants

The House Health and Welfare Committee continued to take testimony on H.1, the bill that proposes to create a department of substance abuse within the Agency of Human Services (AHS). Some committee members want to attach H.6, a bill that proposes to require drug testing for Reach Up recipients (Vermont's welfare-to-work program for family members applying for or receiving ANFC benefits) to H.1. They want to do this because they believe H.6 will have a better chance of passing the House if it is attached to H.1. Low-income advocates strongly oppose H.6.

It is unclear at this time if there is enough support in the House Health and Welfare Committee to vote out H.1. Some committee members believe that moving forward with H.1 has the potential to be at cross-purposes with the AHS reorganization plan. There is some support from the Douglas administration on this point. AHS Secretary Charlie Smith told the committee that he hoped to make significant progress on agency reorganization by this time next year. Smith believes that the incremental approach to restructuring found in H.1 will take too long.

Dr. Fritz Engstrom, Senior Vice President of Medical Affairs at Retreat Healthcare, also testified that he strongly appreciates the intent of the bill, but philosophically has issues with certain aspects of the legislation. The bill as introduced does not address co-occurring conditions. Dr. Engstrom supports the reorganization report done by former Secretary of the Agency of Human Services Jane Kitchel, which looks at the patient holistically with coordination of services. Chairman Koch stated that in the past 9 months co-occurring conditions has come to light and stated that the committee will need to work language into the bill that addresses this.

S.17, Abuse of vulnerable adults

This week the Senate Judiciary Committee continued to take testimony on this bill that proposes to increase criminal penalties for abuse of vulnerable adults in facilities such as nursing homes and hospital psychiatric units. The committee members agreed to remove the entire section on sexual abuse from the bill - they decided it was redundant to existing law, and actually might make prosecution more difficult. There was also some discussion of removing the penalties for institutions. The committee asked for a new draft of the bill that they expect to take up next week.

Bills of interest that were introduced this week

H.55, Open meeting/public records - This bill proposes to require that hospitals not only comply with the open meeting law but they also comply with Vermont's public records law. The bill proposes to broaden the definition of a "public body" (under the open meeting law) and a "public agency" (under the public records law) to include hospital boards, subcommittees of hospital boards, boards of hospitals licensed in other states as a condition of receiving reimbursement from Vermont (presumably Dartmouth Hitchcock), any health insurance plan issued in the state that is regulated by BISHCA and any for-profit or non-profit corporation or other organization that has "the right to exercise substantial control over a hospital" by contract or by virtue of being entitled to at least 25 percent of the voting power of the board of directors (presumably the four entities that appoint members to FAHC's board and possibly some hospital operating companies). BISHCA can define by regulation the standards for "substantial control." The bill was referred to the Government Operations Committee.

H.56, Prescription drugs - This bill proposes to require health insurers to cover prescription drugs purchased from pharmacies located outside this country on the same terms and conditions as those purchased in this country.

H.58, Commissioner of Health - This bill proposes to eliminate the requirement that the commissioner of health be a licensed physician.