VAHHS Legislative Report

For the week ending April 27, 2007

Political Overview

The House and Senate Committees packed their schedules this week in order to pass priority bills and to allow conference committees to do their work prior to adjournment.

The Senate passed Instant Runoff Voting (IRV) this week. Instead of just voting for one candidate you would rank your favorites and when ballots are counted the first candidate with more than 50 percent wins. Despite winning a close vote, the bill's future is uncertain. The Senate held its final vote on the issue following a short floor debate. Advocates say IRV does away with the spoiler effect, the perception that voting for a third party candidate might come at the cost of a major party candidate. The bill passed on a roll call vote of sixteen to twelve, with two senators absent. Democrats are nervous that the Progressives might eat into the base of support. Some Democrats may consider it a political advantage. The bill limits the measure to congressional races to test before expand later to include state races. Governor Jim Douglas is strongly opposed stating that it moves away from an issue-based choice and more to a political game.

FY 2008 Budget Bill

There are three components of the state budget – base funding, one time funding and waterfall. Base funding is what is in the body of the budget; one time funding is just what the name implies, funding done on a one-time basis (this funding often ends up in the base in subsequent years), and the “waterfall” which is a list of items that will be funded if there is sufficient revenue.

The Senate Appropriations will work late today in order to vote out of committee the FY2008 Appropriations Bill. The committee appropriated an increase of $1 million for hospitals ($400,000 general funds and $600,000 federal matching funds). The proposed $1 million increase would go into effect on January 1, 2008. This essentially represents a six month delay, a similar strategy that was utilized last year. The Committee decided to do physician increases effective on July 1, 2007, which will result in a $2 million increase for physicians. During committee deliberations, they opted to increase the physician piece back to $2 million. The Home Health increase is $410,000.

The money for nursing homes, as recommended by the Governor, remains intact in both the House and Senate versions of the budget. The Senate, despite good intentions, was not able to increase the House’s recommended $1/day rate increase for assistive community care services (ACCS). The direct care worker registry is funded with $60,000 in the global commitment funds and $25,000 in one-time spending. The House budget included $100,000 for this program in one-time spending.

In the Governor’s recommend, $200,000 was moved from home health homemaker program in order to adjust property tax assessments for foster care and developmentally disabled providers. Adjustments to the enabling legislation made this transfer unnecessary. The Senate Appropriations Committee decided to divide this money with $75,000 to Area Agencies on Aging, $75,000 to adult day providers, and $50,000 to ACCS. Of the $50,000 to ACCS, $37,000 was needed to make up the shortfall in the House’s appropriation.

The committee will allow for Catamount Health funds to be used for the Blueprint with an appropriation of $1.7 million. The committee may ask for an analysis of the cost shift with an emphasis on specialty providers.

When the Senate added up their adjustments to the Governor’s recommended budget, they were $2.6 million over-budget. In order to correct this deficit, cuts were made and a number of items were moved to the “waterfall” and the “one-time” funding lists.

One key item involved staff positions. The House had proposed eliminating communications or special assistant positions in the executive branch in order to save $750,000. The Senate proposed to instruct the Governor to cut $500,000 in exempt positions, leaving the decision as to which positions up to him.

On Thursday, the Committee had to make the decision to overcome this deficit. They considered postponing scheduled physician increases to either October or January, or decreasing the home health appropriation by either one-half or one-third. In the end, neither of these alternatives was adopted. Instead the Senate reduced the appropriation to higher education by $1.2 million. The decision to move the corrections department electronic monitoring to the waterfall and decreasing South Burlington charter pilot funding finally brought the budget in balance.

The Senate will meet on Monday at 3:30 p.m. in order to do 2^nd reading of the bill and 3^rd reading on Tuesday. A conference committee of six will be appointed immediately (three members of both the House and Senate Appropriations committees) to begin working out a compromise.

Health Care Reform
Blueprint for Health Presentation: Dr. Mark Novotny, Provider Practice Workgroup Co-Chair for the Blueprint for Health and Chief Medical Officer for Southwestern Vermont Medical Center, gave a presentation on the progress and challenges of the Blueprint. Dr. Novotny’s key messages to the group were the Blueprint is the best and most important health care reform agenda to choose because it is the right thing for patients and that Vermont should continue down this path and modify as we go along. Dr. Novotny stated that the Blueprint is a huge coordinated experiment in finding tools to improve care, process and outcome for people with chronic conditions. He stressed to the committee the Blueprint will not save money and will only reduce the rise in cost of care because individuals will be living longer and more people are developing chronic illness especially those with obesity.

Positive aspects of the Blueprint include: changing care patterns for physicians and use of better data to manage patients. The Bennington pilot has 88% of providers participating with over 2000 patients with diabetes entered into the registry. The registry produces reports that give recall lists for patients with missed appointments or abnormal labs, patient summary sheet for the chart, teaching sheets for the patient, and population and outcome reports for the practice.

Some challenges are the Blueprint is much bigger and complex than anyone thought, has many moving parts, measurement and evaluation of results are lagging, communication is inadequate, and the want to spread too fast. Without payment reform, medical practice infrastructure won’t be able to change, information technology strategies are controversial, difficulty using the registry and the Blueprint needs better leadership and management.

Dr. Novotny urged the committees to the hold the mandate because it will kill the Blueprint. Doctors will do the right thing, are very engaged and need to be supported.

H. 531: The Senate Health & Welfare voted out H. 531, An Act Relating to Ensuring Success in Health Care Reform this week. Provisions of the bill include: outreach and enrollment for Catamount Health and state benefits programs to achieve the goal of 96% of Vermonters with health insurance by 2010; requires the Agency of Human Services to adopt a simplified application form to enable individuals to assess their potential eligibility for any of the state health benefit programs; enables health care professionals to assist individuals apply for health benefit programs; limits premium assistance for Catamount Health plans to the amount of assistance for the lowest priced plan, such that individuals receive the same dollar amount of premium assistance, regardless of the cost of the higher cost plans.

Related to the Blueprint it creates a high level exempt position in the agency of administration; adds a representative of the state employees’ health plan to the Blueprint for Health executive committee and the Director of the Health Care Reform Commission as a nonvoting member; establishes principles and benchmarks to guide development and implementation of the Blueprint for Health, and requires VDH to facilitate participation in the Blueprint; establishes a project for integrated early implementation of the Blueprint programs by VDH, including a medical home project, a chronic care payment reform project, and a community‑based care coordination team development project. It directs the commissioner of the Department of Banking, Insurance, Securities and Health Care Administration (BISHCA) to prepare an implementation plan, including recommendations for enhanced authority, outlining the steps necessary to ensure that health insurers will successfully implement the Blueprint by January 1, 2009; appropriates $75,831.00 in general funds plus the federal matching funds ($185,000.00 total) to VDH for use by the Vermont Rural Health Alliance for early integration of the Blueprint projects, upon receipt of matching funds by the Alliance.

Related to information technology, it moves the oversight of the Vermont Information Technology Leaders (VITL) from BISHCA to the Department of Information and Innovation; and requires VITL to establish both a permanent and an interim loan and grant fund (goal is to raise $1 million for pilot projects) to provide for the capitalization of electronic health records systems in Blueprint communities and at other primary care practices serving low and moderate income Vermonters (enable providers, especially primary care providers, to create and share electronic health records).

Other provisions of the bill include: a requirement for the Commissioner of Health, the Director of the Office of Professional Regulation and Board of Health to study eliminating the requirement that advance practice nurses have a collaborative practice with a physician; health care provider bargaining groups language that upon publication of the requests for proposals, health care professional and trade associations may register with the Secretary of Administration to be provided a list of bidders and submit information about the business practices of these bidders to the Secretary of Administration to consider when evaluating bids; requires BISHCA to annually survey health insurers to determine the reimbursement paid for the ten most common billing codes for primary care health services and to report back to the House Health Care and Senate Health & Welfare committees; and requires an annual report on the alignment of the state employees’ health plan with the Blueprint for Health and the adequacy of networks and reimbursements for that plan.

Provisions not included in the bill were the creation of the electronic master provider index, expansion of Catamount Health to farmers and businesses with less than 3 employees and limiting VITL’s liability regarding data services and exchange.

The bill was referred to the Senate Appropriations committee for their review and will then go to the Senate floor next week.

H. 229: The Senate Finance committee heard testimony on the employer assessment, insurance and premium sections of the bill this week. The Senate postponed action on the floor until next week.

H. 380 – An Act Relating to the Regulation of Health Care Facilities

The Senate Health & Welfare committee passed H. 380 this week. VAHHS proposed some minor technical amendments as well as having the health information technology expedited review section of the bill become effective upon passage. Virginia Renfrew, lobbyist for the nurses union, presented consensus language around the nurse staff section of the bill. The Senate suspended the rules and took action on this bill immediately. The House will concur with the Senate amended version and the bill will then be sent to the Governor for action.

H. 137 – An Act Relating to the Restoration of a Department of Mental Health and Commissioner of Mental Health

The House agreed with the Senate proposal of amendment. This bill now goes to the Governor for his action.

H. 304 – An Act Relating to the Vermont Hospital Security Plan
The House Health Care Committee took testimony this week from a number of individuals on H. 304. They heard from the Joint Fiscal Office, independent physicians, Dr. Elliott Fisher from Dartmouth Medical School, Meg O’Donnell from Fletcher Allen Health Care, Bea Grause from VAHHS, and Deputy Commissioner of BISHCA Christine Oliver.

The bill calls for the Commissioner of BISHCA in collaboration with AHS to develop a global hospital budget for the state and individual hospital budgets for each hospital located in Vermont. It will consider portions of the Health Resource Allocation Plan and all budget and revenues received by hospitals in the in the development of the global hospital budget, which will be reported to the legislature on or before January 15 for the following fiscal year. The global budget for the state will serve as a spending cap which hospital costs may be controlled, resources directed, and quality and access assured. Annual growth will be limited to the Consumer Price Index plus three percent. Standards and procedures for implementation of the program will be done by rules. Payment amounts will be based on the global hospital budgets and will take into consideration information and revenues from other sources. Sources for the fund will be from a combination of: transfers from the general fund, authorized by the general assembly; proceeds from grants, donations, contributions, and taxes and any other sources of revenue as may be provided by statute or by rule; transfers of all federal receipts for health care purposes provided by hospitals, including all Medicaid receipts and all Medicare receipts upon federal approval; and revenue from the sources established to fund the Vermont hospital security plan established under this subchapter.

A special committee will be created to recommend to the commission on health care reform the appropriate funding mechanisms for the Vermont hospital security plan if a Medicaid waiver is not approved by the Centers of Medicare and Medicaid Services and the following funding sources and include: an income tax; payroll tax; premiums or cost‑sharing measures; value‑added tax; and an annual hospital care fee or another consumption tax..

VAHHS and Fletcher Allen Health Care testimony focused on our collaboration on health care reform. Hospitals don’t care how the dollars flow, but we do care that we get paid fairly for what is offered. The goals of the bill are laudable and we are very supportive of continued dialogue in this area. O’Donnell stated the bill is based on the faulty premise that Vermont’s health care system is in crisis. On the contrary, Vermont hospitals are regularly and consistently regarded as high quality and low costs. The budget review process that hospitals undergo each year has helped as well as the HRAP, which shows Vermont’s infrastructure is the right size for right now. We are not grossly over resourced. While hospitals are the largest sector we are only about 36% of the system, so expecting large cost reductions from them without addressing the rest of system will not be effective. O’Donnell suggested that H. 304 will not enhance access to hospitals and will not drive down administrative costs. Insurance companies will still be writing policies and it is questionable how insurers will carve out the hospital portion of their policies. With the state taking responsibility for billing out-of-state residents, how will the state create the infrastructure to do this? Hospitals will lose some administrative and billing pieces, but not much.

The bill does not acknowledge the work being done by hospitals and others on many of the areas it purports to focus on. O’Donnell pointed out that much is already happening to contain costs – for example, the Blueprint for Health, VITL, and efforts at reducing administrative burdens, like the common claims committee. Hospitals are actively involved in all of these activities, and have been willing to keep working with the legislature and other interested parties on all of these issues. Finally, O’Donnell also noted that the legislature still needs to address the cost shift issue. Closing that gap would be the single most important thing we as a state could do to contain the increasing costs of health care premiums.

The committee will continue to take discussion on this bill.

H. 368 – An Act Relating to the Regulation of Professions and Occupations

This bill passed the Senate on Thursday. It replaces the Board of Nursing Home Administrators with two advisors. Under the provisions, the Secretary of State will appoint two advisors for five-year terms (one of the initial advisors may be for less than five years). One of the appointees will have at least three years experience as a nursing home administrator immediately preceding the appointment and is actively engaged in nursing home administration in Vermont during his/her term. The other appointee will have at least three years experience as a licensed health care provider engaged in the care of the chronically ill. The advisors will advise the Director of the Office of Professional Regulation. The Director will have all the authority previously held by the Board of Nursing Home Administrators. This will take effect on July 1, 2007.

S. 124 – An Act Relating to Planning and Evaluating Options for Inpatient Psychiatric Hospital Services

This legislation provides for an independent evaluation by the general assembly of the options available to the state regarding the provision of inpatient psychiatric services now provided at the Vermont State Hospital. The legislation became law on Wednesday without the Governor’s signature.