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

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Committee Makes Progress Towards Resolving Independent Contractor Problem

Support has begun to gel in the House Commerce and Economic Development Committee around a bill that would clarify the status of independent contractors. Many businesses, particularly in the construction industry, have been confused about how to comply with the law following the Vermont Supreme Court’s Chatham Woods decision which created an expansive definition of “employee.”

Under current law, sole proprietors, LLC managers and corporate officers can opt out of workers’ compensation coverage. But they can nonetheless be deemed to be “employees” of general contractors, and even bring workers’ compensation claims against the companies that hire them.

The Commerce Committee bill would create a registration process within the Department of Labor for individuals who opt out of coverage. Once registered, these individuals could not be considered employees of general contractors and could not file workers’ compensation claims. General contractors would no longer find themselves audited and liable for unplanned premium payments for subcontractors.

Many details remain to be resolved, and the legislation could still fall apart in the face of opposition by organized labor.

DCF Describes Child-Care System in Crisis

Reeva Murphy, deputy commissioner of the Department for Children and Families, painted a dire picture of the state of child care in Vermont before the House Appropriations Committee on Thursday.

Murphy described a child-care system that is increasingly stressed by the lack of state support for low-income families. The state pays nearly $50 million for child care subsidies, but the program has been level-funded for several years. Although payments to some providers have increased as they have improved quality and become eligible for higher subsidy levels, that has reduced payments to others.

Vermont’s payments are intended to allow children from low-income families to participate in 75 percent of the state’s child care programs. Rates, however, are based on 2008 market data, so state payments now only pay for services at about twenty percent of registered facilities. A family of three is eligible for a full subsidy with an income below $20,000 per year.

Murphy also said the system is strained by the tremendous growth in the number of young children in state custody. That number has nearly doubled in three years, from 284 kids in 2013 to 532 in 2016.  

Committee members were struck by the high cost of child care for families in poverty. According to Murphy, very low-income families can be forced to pay up to one-quarter of their income on child care.

Consumer Protection Agency Warns Merchants About Skimmers

Consumer Protection Specialist Marc Paquette told a group of more than 100 members of the Vermont Retail and Grocers Association on Tuesday that merchants need to be wary of skimmers placed on keypad devices at gasoline stations, convenience stores and automatic teller machines. The devices intercept identity numbers and passwords as they are entered by the user, and the information can be used to buy gift cards and other services around the world.  

Paquette said one such device has been found in Vermont already, but they are being detected daily in nearby New Hampshire. He urged attendees to work with their service companies and learn how to protect gasoline pumps from tampering. He distributed a guide to detecting skimmers with pictures of what to look for, and encouraged merchants to immediately shut down the device and notify law enforcement if such a device is found.

The store owners and managers were at the Statehouse for their annual briefing, observation and luncheon with legislators. A forum at the luncheon featured all four of the currently-announced gubernatorial candidates moderated by television reporter Stewart Ledbetter.

Ashe Amendment Seeks Drug Price Transparency and Controls

Senate Finance Committee Chairman Tim Ashe, D-Chittenden, surprised his committee Thursday with an amendment to S.216 that would require extensive price transparency and controls for pharmaceutical manufacturers. It would also require a statewide prescription drug formulary of approved medications.

The proposal would require manufacturers to disclose how much is spent on development, marketing, manufacturing and research, how much research was paid for with public funds, and the price of the drug in other countries. It would empower the Green Mountain Care Board to develop a list of critical drugs that are widely prescribed that affect public health programs, the cost of these drugs in Vermont, and the extent to which they are used.

Finally, if the GMCB determines that the price of a prescription drug is significantly high given the medical benefits and the cost to develop and manufacture the drug, the board would be required to forward the relevant information to the Attorney General’s Office. The AG could investigate for anticompetitive practices or possible violations of Vermont’s consumer protection laws.

The Senate Finance Committee plans to spend significant time on the proposal next week.

Act 250 Criterion 9(L) at Issue in Clarendon

The Act 250 criterion aimed at preventing urban sprawl is once again under scrutiny in the State Senate. On Thursday, two committees heard from town officials in North Clarendon as well as the attorney for a proposed development that an interpretation of Act 250 Criterion 9(L) threatens to scuttle plans for a new car dealership that has broad approval and conforms to the municipality’s Town Plan.

Selectman Michael Klopchin, a former legislator, and attorney James Goss of Rutland said the provision that was revised by the legislature in 2014 and aimed at curbing strip development can stop any project in a small town because of a lack of clear definitions in the law. The proposed car dealership would be located next to and across the road from three other new car dealers on land that is zoned commercial. A hearing on the project was postponed after the developer received a letter from the Agency of Natural Resources saying the project fails to comply with Criterion 9(L).

Committee Chair Kevin Mullin, R-Rutland, along with other members of the Senate Economic Development, Housing and General Affairs Committee, asked why a promised guidance document addressing the confusion has not been issued when it was considered imminent a year ago. Natural Resources Board General Counsel Greg Boulbol said the board has been working with stakeholders over the past year, has prepared its third draft of the guidance document, and the proposal will be reviewed by the NRB at its next regular meeting on March 8.

Shumlin Taps McKibben to Bolster Divestment Plan

Activist Bill McKibben made an appearance before a joint meeting of the House and Senate Government Operations Committees on Friday to boost Gov. Peter Shumlin’s call to divest state employee and teacher’s retirement funds from coal and ExxonMobil stocks.

Shumlin called for divestment in his State of the State Address earlier in the session, and the idea has been under review in the Senate committee. State Treasurer Beth Pearce, also a Democrat, has been adamantly opposed, saying investment decisions should be left to the Vermont Pension Investment Committee. Shumlin is scheduled to address the group on Feb. 23.

Opposing Views Aired on Involuntary Treatment

The House Human Services Committee on Thursday heard opposing views of the governor’s proposal to provide more timely treatment for persons who are involuntary hospitalized for mental health purposes. Rutland Regional Medical Center Chief of Psychiatry Dr. Gordon Frankle supports the proposed changes, which he said enhance patients’ rights, allow for a more rapid judicial process, and allow treatment teams more time to work with patients.

Frankle said flexibility in filing a medication application would allow for a more timely process. Often patients are hospitalized with symptoms of an illness, but engage with the treatment team by discussing medications and alternative treatments or starting on small doses of medication. With most patients this engagement results in a treatment plan, which ultimately leads to discharge. However, a subset of patients will not continue to engage, will stop treatments, and will experience a worsening of symptoms, which will require involuntary medication. This proposal is aimed at the latter group.

Mental Health Law Project Director Jack McCullough opposes the proposal, saying it is a violation of patient civil liberties. McCullough said the DMH and stakeholders spent many hours leading to a bill that was passed in 2014, but problems persist. “We should not be having this same conversation in 2016.” He said there are other areas where the department could save money, improve patient care, and reduce its reliance on force.

The committee on Friday said that it will not rush the discussion to meet the crossover deadline. The message to the administration is to not count on the $5 million of savings in their budget it has projected. The committee made it clear that involuntary treatment is a policy issue and should be a stand-alone bill and not be adopted as part of the budget.

Panel Receives Update on Fair Reimbursement for Independent Doctors

MVP Senior Government Relations Specialist Susan Gretkowski and Blue Cross Blue Shield of Vermont Director of Government Affairs Cory Gustafson gave a status report to the Senate Finance Committee on Tuesday on their plan to achieve fair reimbursement for independent physicians. Act 54 of 2015 required health insurers to develop and submit to the Green Mountain Care Board a plan for providing fair and equitable reimbursement for independent physicians by July 1, 2016. The GMCB declined an invitation to testify before the committee.

Gretkowksi told the committee that the GMCB has not given insurers much direction nor has it indicated very clearly what it is looking for in that plan. Gustafson said he does think it is a worthwhile endeavor to analyze differentials, methodology for differentials, and to come up with a plan to reconcile inconsistencies from this analysis. But he said lawmakers have to recognize the competitive market and not expect insurers to disclose fee schedules or differentials between providers and other payers because that would undercut competitive advantages. He also acknowledged that the current way of paying for those services may not be the right way.

Insurers Say Drug Transparency Tool Already Exists

The Senate Finance Committee on Wednesday took testimony on S.216, a bill that would require health insurance plans to make information about their prescription drug formularies available to enrollees, potential enrollees, and health care providers. The committee heard from the American Cancer Society, representatives from the major insurance companies, and the Shumlin Administration.

American Cancer Society Director of Government Relations Jill Sudhoff-Guerin said the goal of the bill is to provide greater drug coverage and cost transparency to enrollees and potential enrollees based on the specific plan they have chosen or may choose. By offering additional information on their plan formularies and plan documents carriers would achieve this.

Blue Cross Blue Shield of Vermont Pharmacy Program Manager Brian Murphy provided screen shots from the company’s web-based system. He said it is a robust tool that allows a member to enter the details of a drug and based on the member’s plan will provide the out-of-pocket cost. Murphy said out of 165,000 members, only 10,000 have signed up for the tool and even fewer actually use it. He said the proposed legislation would be extremely difficult to implement for potential enrollees because BCBSVT offers hundreds of different plans. He said the concept is admirable, but in reality it would not work well.

Agency of Administration Director of Health Care Reform Robin Lunge on Thursday asked the committee to consider a change to current law that limits prescription drug out-of-pocket costs to $1300. She said the cap raises other non-drug out-of-pocket costs for Vermont Health Connect plan designs to unsustainably high levels. Sens. Mike Sirotkin, D-Chittenden, and Kevin Mullin, R-Rutland, said they have very serious misgivings about making changes to the law. “I would hate to give up something that some of us fought hard for. If we give up a little, it will be gone eventually,” said Mullin. Sirotkin and Mullin would prefer the legislature address the issue every year.

Administration Agrees to Independent Assessment of Vermont Health Connect

The House Health Care Committee on Wednesday heard from Gartner Senior Managing Partner Frank Petrus on Vermont Health Connect as lawmakers consider whether the state should use Gartner for its health insurance exchange. The state has entered into a number of contracts with Gartner. He said his firm has been working with Vermont since 2011 on VHC and they have made several recommendations over those five years. Some recommendations were accepted; others were not. Gartner cautioned the state in March 2013 that it was attempting to build more capabilities than were achievable.

Petrus told the committee it would be foolish to go to a federally facilitated exchange until the state has the necessary information to decide if this is the right investment decision. He recommended that the state minimize any further investment in technology and invest the minimum necessary in its core technology until an independent assessment is conducted. He said eligibility automation and customer relations technologies should be the priorities.

Chief of Health Care Reform Lawrence Miller said the administration supports conducting an independent assessment as soon as VHC is stabilized. “We are almost there,” said Miller.

Disclosure of Physician Acquisitions Discussed

A bill that would require disclosure of affiliations between physician offices and hospitals was the subject of a hearing on Friday in the Senate Health and Welfare Committee. S.245 would require notification to patients that a practice has been acquired by a hospital. Green Mountain Care Board Executive Director Susan Barrett told the committee that 70 percent of physicians are now employed by a hospital or a federally qualified health center.   

Barrett said the GMCB has been regulating physician transfers since 2013. Hospitals have to account for that as part of their yearly budget review process. The information reported includes the physician practice budget detail. She said new one-year guidance would be issued in 2017.

GMCB Associate General Counsel Brian Martin testified on the bill’s anti-trust provisions. He said the board is not an anti-trust regulatory agency and lacks the expertise to deal with these types of complaints. If the Board sees something suspicious they would report it to the Attorney General for investigation.

AG Chief of Public Protection Wendy Morgan said if the legislature wants to ensure that there are anti-trust protections for these types of acquisitions, the language in the bill doesn’t accomplish that. Morgan said the AG does not track data about hospitals and physicians and that unless someone contacts the office with a complaint, the AG’s office would not get involved.

Health Care Advocate Funding Questioned

Chief Health Care Advocate Trinka Kerr told the House Health Care Committee on Friday that her organization will lose $160,716 in federal funding and the Shumlin Administration’s budget recommendation will not fill the gap. Kerr said in order to maintain her office’s current staffing level, she is requesting an increase of $109,292 over the proposed budget of $1,297,406. Kerr said her organization doesn’t need the full amount to be restored to maintain the status quo because Vermont Legal Aid is able to fill some of gap.

The HCA represents consumers in forums, stakeholder work groups and board meetings. She told the committee that the need for individual consumer assistance has remained high and almost half of her organization’s calls are related to Vermont Health Connect. In addition, the need for public policy and consumer protection advocacy has increased. As the health care payment and delivery system is radically transformed due to health care reform, she said it is more important than ever that the HCA speak up for consumers and advocate for protections.

Green Mountain Care Board Financial Director Kate Jones said that the board’s authority to bill hospitals and insurance companies to partially fund the HCA expires on June 30. Jones said while the GMCB understands the intent to continue using bill-back authority as a temporary source for the HCA, they find it to be far from ideal. The committee asked the Joint Fiscal Committee, the GMCB, and the administration to develop a proposal for a single source of funding for the HCA.

Proposal Seeks To Relieve Administrative Burden On Physicians

The problem of burdensome reporting requirements on primary care physicians has been repeatedly cited in committee hearings this year as an unfortunate byproduct of the increased use of outcome measures and data collection. The House Health Care Committee passed H.761 on Thursday in an effort to address the perceived problem. The bill requires the Green Mountain Care Board to catalogue all of the performance measures that are imposed on primary care providers in Vermont and develop a plan to reduce the burden they place on physicians.  

The bill’s sponsor, Rep. Chip Conquest, D-Wells River, told the committee that medical practices are spending so much time collecting data that it is detracting from the quality of care that patients are receiving. The amount of time that physicians spend entering data increases the need for support staff while decreasing the number of patients that physicians can see. Conquest said patients believe they are receiving lower quality care because face-to-face interaction is reduced by physicians’ need to be on computers.

Physicians report that they are more and more dissatisfied with the quality of their work-life. Additionally, he said, it is unclear that the outcomes that they are measuring are driving better medical care. Conquest said that as we inevitably move from fee-for-service health care to a capitated system, increased reporting requirements could “eviscerate” the primary care physician community.

Higher Ed Panel Weighs New Programs

For the past several weeks, the Senate Education Committee has seen a procession of proponents visit the committee, each hoping to add their programs to a higher education bill the committee is drafting. Many of the programs focus on increasing post-secondary educational opportunities for first generation students, including the governor’s proposed MoveUp802 and Universal Child Savings Account programs. The committee has also been considering proposals to lock in funding for the Vermont Higher Education Endowment Trust Fund.

Committee members have generally been receptive to the concepts in the new proposals, but are also concerned about funding shortfalls in current programs. They asked Senate Appropriations Committee Chair Jane Kitchel, D-Caledonia, to visit the committee to share budgetary priorities. Kitchel acknowledged that pressures on health care funding have caused collateral impact, including putting higher education on a “starvation diet.” According to Kitchel, higher education still ranks low on the priority list. She said that based on testimony received in the committee’s public hearings, she feels that the area of focus needs to be early child care, saying “we need to do a better job with kids at the front end.”

Taking into account Kitchel’s funding comments, as well as lengthy committee discussion and testimony received, the committee will finalize a small and low-cost higher education bill next week. Members have indicated that they will not include the full MoveUp802 proposal, but will include a small pilot expansion of the current Man Up program. They will also likely not include the Universal Child Savings Account proposal in their bill.

Southern Economic Development Zone Wants Startup Help

The Southern Vermont Economic Development Zone Study Committee, appointed by the governor and legislature in the spring of 2015, has recommended an appropriation of $50,000 to promote economic development in the Southern Vermont Economic Development Zone. The group hopes to spur business development, in part, by creating a Comprehensive Economic Development Strategy for both Windham and Bennington counties.  

The study committee, which included the executive leadership of the Bennington and Windham County regional planning commissions and regional development corporations, presented its recommendations to a joint hearing of the House Commerce and Economic Development Committee and the Senate Economic Development, Housing and General Affairs Committee on Tuesday. The plan, which was originally submitted to the legislature in December, also deals with telecommunications, workforce development, arts, culture and access to capital. The group hopes to build on a successful effort in Windham County.

More information on the legislation, committee and final report are available at the BDCC website.

Judiciary Committee Considers Liability Exemption for Agritourism

Wikipedia defines agritourism as “any agriculturally based operation or activity that brings visitors to a farm or ranch.” Some lawmakers want to encourage these businesses in Vermont by creating limited immunity for injuries that result from risks that are inherent in agricultural activities.

The Senate Judiciary Committee took testimony this week on the proposal, S.231, that was introduced by Sen. Ginny Lyons, D-Chittenden. The bill was strongly opposed by the Vermont Association for Justice (the state’s plaintiffs’ association). Committee members did not appear to be persuaded by the bill’s proponents that it was needed, so further action seems unlikely.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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