News from the Vermont Statehouse - An analysis from DRM's Government & Public Affairs Team

by Downs Rachlin Martin PLLC
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Committee Decides Physician Acquisition Disclosure Bill Is Unnecessary

The Senate Health and Welfare Committee has decided not to pursue consideration of  S.245, a proposal to require disclosure of new affiliations between hospitals and providers to the Attorney General’s office and the Green Mountain Care Board. Bill sponsor Sen. Tim Ashe, D/P- Chittenden, told the committee that his intent was to expose antitrust issues in health care and the potential for increased costs to consumers. The committee was persuaded by testimony delivered over the past two weeks that the bill would be unhelpful and duplicative.

Assistant Attorney General Wendy Morgan re-emphasized that theirs is a compliance-responsive office and that an antitrust investigation would not be triggered only by a statement that a private practice is being acquired by a hospital. Referring to the bill’s disclosure requirements, Morgan said “there’s nothing here for us that’s particularly useful” that would allow the office to determine if an acquisition process was anti-competitive.

The committee also confirmed that the GMCB currently receives the proposed reporting information in its budget review process. The Vermont Association of Hospitals and Health Systems said that notice of provider acquisition is given to consumers in most situations, and it committed to confirm with the committee that its member hospitals will give acquisition notice to all consumers and include a statement that the acquisition “might impact” the consumer’s health care costs.

Senate Education Committee Passes Higher Ed Bill

Before adjourning for Town Meeting week, the Senate Education Committee completed discussion of its higher education bill, S.180, and approved it by a vote of 5-0-1. As expected, the committee did not include the governor’s proposed Universal Child Savings Account or MoveUp802 program. The committee did recommend a small amount of funding to continue and evaluate the current ManUp program.

The bill also provides that General Fund appropriations to the Vermont State Colleges, University of Vermont, and the Vermont Student Assistance Corporation would be “increase no less than that fiscal year’s percentage increase in the General Fund transfer to the Education Fund.” The largest request in the bill is $3 million for the Complete College Program that improves support services and recruitment at UVM and the VSC for first generation and low income students. The committee does not expect full funding for this proposal, and it intends to list it as the last priority in a letter it will provide to the Appropriations Committee.

House Approves Water Resources Enforcement Measure

The House has passed a bill that would prevent a business from receiving state-funded economic development grants if it is in violation of water quality standards. The bill, H.507, also calls for a study of whether the provision should apply to other environmental permits. The rule would apply if a company was named in an active administrative order, consent decree, or judicial order.

Although the House Fish, Wildlife and Water Resources Committee did not hear about any specific grants that would be denied to any current entity after passage of the bill, nor any current problem that is being addressed, the group decided it was an important principle that should be enacted into law.

Antitrust Penalty of $1 Million Part of Consumer Protection Bill

The Vermont Attorney General's Office has proposed to increase the penalty for violations of the state's antitrust law from $10,000 to $1 million. The provision is contained in a miscellaneous consumer protection bill which was unveiled in the House Commerce and Economic Development Committee on Thursday. According to Assistant Attorney General Jill Abrams, the change is needed to allow the state to maximize the penalties it receives when participating in a multi-state enforcement action against antitrust activity.

The comprehensive draft unveiled Thursday incorporates a number of consumer protection ideas under study in the committee. They include changes to structured settlement agreements, penalties for improper or incomplete registration of business entities, extension of the discount membership program protection statute to third parties and a new penalty for non-residential property improvement fraud.

The Attorney General’s Office had hoped to include revisions to the state’s security breach law in the draft bill. After extensive negotiations with interested parties, however, the AG’s office was unable to reach agreement on proposed changes – a precondition that the House Commerce and Economic Development Committee had apparently placed on its willingness to consider the proposal.

VEGI Reauthorization Included in Miscellaneous Economic Development Initiative

A provision in a 128-page bill dealing with economic development would reauthorize the Vermont Economic Growth Incentive Program for another two years, establish a working group to review the program and call for an audit by the State Auditor. After two years the existing law governing the program would be repealed, and it would be replaced with a law intended to describe it in plain English.

The draft was prepared from a number of measures being considered by the committee. Other provisions would expand the borrowing and lending authority of the Vermont Economic Development Authority, allow cooperatives to conduct electronic voting, allow the Vermont Training Program to fund certain workplace training programs for secondary and post-secondary students and recognize block chain technology as a legitimate method of authenticating documents.

One significant section of the bill will revise statutes that govern how corporations change from one legal entity to another. The revision is one of a series of rewrites of the state’s business law statutes proposed by the Vermont Bar Association and coordinated by Business Law Attorney Tom Moody of DRM. Moody was recognized by the VBA in 2015 for his work on updating the statutes.

In testimony Thursday on behalf of the Regional Development Corporations of Vermont, RDC President Bob Flint of Springfield supported many provisions in the bill but asked the committee to go a step further. “It would be nice if we could just decide that VEGI is a good program and move on,” he said, flagging the two-year extension and call for an audit in the current draft of the bill. “Our highest priority for the session is to extend the sunset on the VEGI program for at least five years, or eliminate the sunset altogether.”

Economic development officials believe the VEGI program leads to significant job creation and growth, but it is routinely attacked by many in the legislature as an unneeded give-away to businesses that would have expanded anyway.

House Adopts Resolution Calling for Coal and Oil Divestment

The House of Representatives on Friday rejected a substitute amendment that would have directed the State Treasurer and the Vermont Pension Investment Committee to study divestment of generic commodities, and instead adopted a resolution urging the treasurer to divest of coal and ExxonMobil stocks as soon as prudently possible. Debate over the measure lasted more than an hour and a half and ranged from calls to keep all fossil fuels in the ground, to honoring the rights of 50,000 state retirees, to the need to protect the pension plan from political influence. In the end, the divestment side won, 76-59.

The House action is meant to forestall efforts to require divestment by statute if a Senate-sponsored bill, S.28, is sent over later in the session. In a largely party-line vote, the House rejected a substitute resolution that would have required VPIC and the Treasurer to engage in a process to evaluate divestment, which Treasurer Beth Pearce has already said she will do. Pearce has fiercely opposed the Senate bill.

Agency Permit Measure Advancing in Senate

The Senate Natural Resources and Energy Committee has advanced a bill that would make changes in the way permits are issued by the Agency of Natural Resources. Under S.123, a permit process that currently has 85 separate notice requirements would be consolidated into five standard processes, and future appellants would have to comment during the administrative process in order to have appeal rights later before the Environmental Court.

The bill simplifies a number of procedures during the consideration of a permit application, calls for more public disclosure early in the process and establishes a standard method for posting information and notifying parties. It tries to makes a distinction between simple and complex applications as a way of expediting some permits.

Earlier versions of the bill called for appeals to be “on the record,” which means that a hearing officer would review the administrative record that was created as permits were being considered and decide whether to accept or reject the appeal. The committee rejected that change.

Committee Bill Allows Prescription Drugs Outside Original Container

By a vote of 5-0 on Wednesday, the Senate Health and Welfare Committee passed S.190, a bill that allows an individual with a regulated prescription drug to maintain up to a 14-day supply for personal use outside the original container as long as the following conditions are met:

  • The drug was prescribed for the individual;
  • The individual is in possession of the original or copy of the prescription label;
  • The individual intends to use the drug for legitimate medical use as prescribed; and
  • The individual maintains the limited supply in a receptacle that constitutes a more transportable format.

It is currently illegal in Vermont to carry more than a two-day supply outside the original container.

Regulation of Hospitals, Health Insurers, and Managed Care Organizations Reviewed

The Senate Health and Welfare Committee took testimony on Wednesday on S.255, a bill that would further regulate hospitals, health insurers, and managed care organizations. Agency of Administration Special Counsel Devon Green presented the committee with a consensus document agreed to by insurers, hospitals, the administration, and legal aid outlining changes to the original bill. The bill calls for a statewide comparative hospital quality report and would expand the information health insurers must report annually to the Department of Financial Regulation to include data on claims processing, denials and grievances. DFR would post this information on its website.

The proposal would require the director of health care reform to look for opportunities to align accountable care organizations, managed care organizations and the Medicaid program and to report back to the legislature by Dec. 15, 2017. Sen. Ginny Lyons, D-Chittenden, strongly believes that Medicaid should be subject to the same regulations imposed on health insurers and MCOs.

Vermont Legal Aid Health Care Advocate Lila Richardson advocated for more reporting of consumer and provider complaints of violations of standards for managed care organizations. Richardson said the state is moving to a system where there will be less reporting by insurance carriers. The reports are necessary to identify any patterns of violation. DFR Director of Health Insurance Policy David Martini opposed the reporting requirement.

Panel Close to Finalizing Opiate Legislation

The Senate Health and Welfare Committee is near completion of work on a bill to combat opiate abuse. The current draft of S.243 includes the following:

  • Provides standards and guidelines for health care providers and dispensers of controlled substances;
  • Implements a statewide unused prescription drug disposal program;
  • Expands access to substance abuse treatment with buprenorphine;
  • Develops a pilot program for patients taking buprenorphine to receive treatment through telemedicine;
  • Expands the role of pharmacies and pharmacists to provide patient care within their scope of practice;
  • Requires the Department of Health, the Board of Pharmacy and pharmacists to consider the role of pharmacies in preventing opioid misuse, abuse and diversion;
  • Requires continuing education for providers on abuse, diversion, safe use, storage, and disposal of controlled substances; and
  • Requires the Agency of Administration, the Department of Vermont Health Access and Blue Cross Blue Shield of Vermont to perform separate evaluations on the use of acupuncture as a modality for treating and managing pain.

The committee asked Health Commissioner Harry Chen for a proposal for a statewide drug disposal program and public information campaign, which he estimates would cost about $375,000. The committee is expected to consider imposing a fee on manufacturers to fund the program.

Proposal Would Increase Bill-Back to Hospitals and Insurers

The House Ways and Means Committee reviewed a proposal from Agency of Administration Special Counsel Devon Green for funding a shortfall in the Office of Health Care Advocate. The administration has proposed new bill-back authority to fund $510,000 of the HCA budget.

Joint Fiscal Officer Nolan Langweil provided the committee with a proposed budget. It reduces the state portion of the bill-back by half, to 20 percent of the total, with hospitals and insurers funding the remainder. Rep. Patti Komline, R-Dorset, said, “I am appalled that the state’s contribution goes down and the others double when it’s the state’s fault that they need an increase in the first place. We, the legislature, created this mess.” The majority of calls handled by the HCA relate to issues with Vermont Health Connect.

Green Mountain Care Board Director of Finance Kate Jones said the board hopes more sustainable funding mechanisms are considered for the HCA and a suitable state entity can be identified to monitor its work without any conflict, whether perceived or actual. The GMCB currently administers the bill-back for the HCA, but doesn’t see it as the appropriate way to fund the entity charged with advising the board on policy matters and representing the interests of Vermonters before the board.

More proposals will be offered by committee members after the Town Meeting break.

Single Drug Formulary Will Be Costly for Vermont

The Senate Finance Committee heard from a number of stakeholders on Tuesday about an amendment to S.216 that would require a statewide single drug formulary. Department of Vermont Health Access Director of Pharmacy Nancy Hogue referenced a 2012 report prepared by DVHA that said requiring all insurers to use a single formulary regardless of their advantageous manufacturer discounts and rebates would result in each plan sacrificing significant cost savings from negotiated contracts. Hogue said this likely would result in plans paying higher pharmacy benefit manager contract costs and higher drug costs. Representatives from health insurers echoed Hogue’s comments.

Vermont Medical Society Deputy Executive Vice President Madeleine Mongan said a single formulary with one drug list, one set of utilization management rules and procedures, and one point of contact would eliminate much of the administrative burden experienced by providers and patients.

The committee agreed not to pursue a provision that would have required extensive price transparency and controls for pharmaceutical manufacturers.

GMCB Provides Hospital Enforcement Analysis

Green Mountain Care Board Chairman Al Gobeille told the House Health Care Committee on Thursday, “We have a problem. I hope to define that problem today.” Gobeille’s comment was in reference to the nine hospitals whose 2015 net patient revenue came in higher than the 3.5 percent guidance required by the GMCB. Five hospitals came in lower. Only two hospitals fell within 0.5 percent of budget and outside the GMCB enforcement policy. His presentation can be found here.

Gobeille said overall net patient revenues exceeded the amount allowed by regulators to treat patients by $49 million. This increase in revenues was primarily driven by lower bad debt and free care of $47 million, because more individuals now have insurance. Hospitals also saw an increase in utilization.

Gobeille said hospital financial data should be looked at over a period of time and not just one year. In many ways, he said, he is more concerned about those hospitals that came in below their budgeted NPR. “Porter is down 2.2 percent and we see in the press the results of this (layoffs). Springfield Hospital is over by 2.9 percent. We took action and cut their revenue. They did come in over, but in prior years they were financially in trouble. After a period of negative results, they have a positive balance sheet, which is important for them.”

Gobeille said the GMCB staff would continue to work with each individual hospital to determine next steps. He said, “These are very different entities with different problems and they need to be handled individually.”

Panel Votes to Keep Large Group Market Off Exchange

On a vote of 5-0-2, the Senate Finance Committee voted not to allow entities in the large group market to purchase qualified health plans through the state’s health insurance exchange starting in 2018. Representatives from health insurers and Agency of Administration Director of Health Care Reform Robin Lunge testified in support of S.214, a bill that would repeal this existing law.

The Green Mountain Care Board was charged with analyzing the projected impact on rates in the large group market if large groups were allowed to purchase qualified health plans on Vermont Health Connect. The report reveals that even if significant VHC enrollment gains are realized, allowing large employers to enter VHC will produce higher premiums on average in the large group market. It also shows that small group employees and individual policyholders would be negatively impacted.

Workers' Compensation Installment Payments

A measure to require that workers' compensation insurance carriers offer all employers the option of paying premiums in installments didn't attract much support in a hearing this week before the House Commerce and Economic Development Committee.

A representative of the American Insurance Association argued that the provision would require carriers to provide policies on credit to businesses that may have little or poor credit history. The Department of Financial Regulation also opposed the provision, arguing that Vermont's assigned risk pool has the lowest threshold in the country for requiring up-front premium payments. Only employers in the assigned risk market with policies of less than $1,000 are required to make payments up front.

The committee heard little testimony in support of the provision, which appears to have arisen as a result of a handful of private business complaints to lawmakers.

The committee voted on Friday to strike this provision from a larger insurance bill that includes a study by DFR on credit-based insurance scoring. The credit-score study requires DFR to analyze the prevalence of its use, its impact on consumers, and how limitations on the use of credit scoring would affect the affordability and availability of policies. The bill is likely to be voted out of committee when they return from Town Meeting break.

Independent Contractor Debate Continues

In fits and starts, the House Commerce and Economic Development Committee is getting closer to consensus on legislation to clarify the rules that determine whether a sole proprietor is an independent contractor or an employee of a general contractor.

Under the draft legislation, sole proprietors, LLC managers and corporate officers would no longer be required to show that they engage in "separate and distinct" work from general contractors to be considered independent. They could continue to opt out of workers' compensation coverage, but a new registration process would be created that would eliminate the "after-the-fact" determinations that now often find such individuals to be employees.

The committee is still considering whether to include a requirement in the bill that a company  use only one independent contractor at a time to avoid creating an employment relationship, and whether to require that an independent contractor demonstrate that he or she has more than one client to avoid being considered an employee.

The committee is expected to conclude work on the bill shortly after the Town Meeting Day break.

Appropriations Considers Increase in Child Care Subsidies

With the state facing a perennial gap between revenues and expenditures, lawmakers find it difficult to increase spending for any state program. Nonetheless, the House Appropriations Committee is considering whether to increase state subsidies for child care.

Advocates, including the YMCA of Greater Burlington -- the state's largest child care provider -- argue that subsidy rates remain tied to 2008 market rates, which means that they don't nearly cover the cost of providing services for low-income families. As a result, families living in poverty face copayments that can be as high as one-quarter of their gross incomes. In addition, many families face long waiting lists due to the lack of providers, a problem that is exacerbated by high costs of service that many families can't afford to pay.

On Friday, the House Appropriations Committee identified an increase in subsidy rates as one of its priorities for additional funding. A final decision about any increase will depend on the size of the budget gap the committee has to fill and the trade-offs it is willing to make to pay for the increase.

Siting Bill Nears Approval

The Senate Natural Resources and Energy Committee spent much of the week working on a bill, S.230, that would create new standards for siting renewable energy plants. The bill, called the “Energy Development Improvement Act,” is a response to a growing outcry from individuals and some organizations about the growing dispersal of solar and wind projects around the state.

The bill creates greater authority for municipalities and regional planning commissions to control the siting of renewable projects. That control to date has rested largely with the Public Service Board. Regional planning commissions would be given the right to participate in siting decisions before the board. Municipalities would be authorized to create plans that designate where renewable sources could be sited. The PSB would be required to give substantial deference to municipal and regional plans if they meet certain criteria.

The bill also identifies “preferred locations” for siting renewable sources, including existing buildings, brownfields, previously developed tracts and landfills. The PSB is required to promote siting in preferred locations.

The bill makes changes in the state’s net metering law, including siting, colocation and permissible production rules.

Finally, the bill prohibits utilities from using eminent domain power if the company has executed nondisclosure agreements with landowners in connection with the project.

The committee is expected to spend much of the week of March 8 working on the bill, with the goal of passing it by March 11.

Committee Takes Up Telecom Bill

The House Commerce and Economic Development Committee has packaged a number of separate telecommunications bills, and it took them up as one bill on Friday afternoon. The bill would:

  • Clarify the deference that the Public Service Board must give to municipal decisions about siting telecommunications towers;
  • Establish a new School Connectivity Grant Program to help fund the capital costs associated with state-of-the-art educational equipment;
  • Increase the Universal Service Fund by .005 (currently at .02), with the increased revenue used to support the Connectivity
  • Initiative (which funds broadband expansion programs);
  • Expand the Connectivity Initiative to promote universal availability of mobile telephone service;
  • Provide USF support for a “telecommunication news service” that provides access to newspapers and other printed materials to individuals who are blind.

The committee has scheduled hearings on the bill for the week of March 8.

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