Labor Commissioner Proposes Independent Contractor Legislation

Few issues have proven to be as perennially vexing to the legislature as the definition of “independent contractor.” Legislators hear repeated complaints from constituent business owners about how Vermont’s existing law is a trap for the unwary, ensnaring legitimate businesses in a morass of regulatory and insurance obstacles.

Underscoring the political drive to resolve the issue, virtually every member of the House Commerce & Economic Development Committee on Monday identified it as one of their top priorities for the session.

Labor Commissioner Annie Noonan submitted a proposal to the committee this week that would revise the Supreme Court’s Chatham Woods decision. The Court in Chatham Woods adopted a “nature-of-the-business” test, holding that if the subcontractor’s work is in the “nature” of the general contractor’s business, the subcontractor is an employee and not an independent contractor. The decision has resulted in a wide range of independent businesses being considered as employees of general contractors.

Under Noonan’s proposal, a subcontractor’s work need not be distinct and separate from that of the general contractor, so long as the “individual or … partner owners operate a separate and distinct business from that of the person with whom they contract….” The proposal would preclude an employer from hiring multiple sole proprietors to perform the same work on a project or jobsite.

A handful of committee members are reviewing the proposal and are expected to introduce a bill within the next few weeks.

Senate Judiciary Approves Privacy Bill

The Senate Judiciary Committee worked pre-session on a bill to enhance consumer privacy, and they wasted little time this week in passing it. The bill as amended, S.155, creates a private right of action for disclosure of protected health information; establishes standards for law enforcement and non-law enforcement use of drones; restricts the use of automatic license plate recognitions systems and retention of the data; and limits the state’s ability to compel production of electronic information.

Agency Permit Reform on Legislative Agenda

The Senate Natural Resources and Energy Committee is poised to take up a bill that would change the way environmental permits are handled at the Agency of Natural Resources. The proposed changes include judging permit appeals according to the record established during the review process, rather than as a new procedure. The bill, S.123, was introduced to the committee by its sponsor, Sen. Diane Snelling, R-Chittenden, on Thursday.

Developers have long complained that project opponents can wait until a permit is issued and then appeal it, dragging out the process. The bill would consolidate a number of “notice” provisions into an electronic system and require opponents to join the process early or forfeit the right of appeal. It would also establish a new internal process whereby another ANR staff person could hear an appeal of a decision or condition before it goes to environmental court. ANR supports the bill but is expected to propose amendments.

Commissioner Wants to Delay Income Tax Refunds Until March 1

Commissioner of Taxes Mary Peterson told the legislature this week that the tax department will delay payment of personal income tax refunds until after March 1 to combat identity theft. Peterson made the announcement during an overview of tax department accomplishments before the Senate Finance Committee on Tuesday.

Last year in Vermont and many other states, scam artists used legitimate taxpayer identification numbers to file fake income tax returns and claim fraudulent refunds. The scam was discovered when actual taxpayers filed real returns later during tax season. Peterson says the delay until March 1 will allow the tax department to match gross income reported by employers with records included with early returns, reducing the chance of fraud.

Shumlin Wants Pension Divestment, But Treasurer Remains Opposed

In his final State of the State Address on Thursday, Gov. Peter Shumlin called on the legislature to divest state pension funds of the stock of coal companies and investor-owned oil company ExxonMobil, but State Treasurer Beth Pearce told an important House committee the next day that divestment is a bad idea.

“Divestment creates additional risk and additional cost and it will not change the sale price of that stock at all,” she said before the House Ways and Means Committee. “We want retirement security for our retirees and reasonable costs for our taxpayers. I have a fiduciary responsibility to act in the interest of the beneficiary. Obviously, I am pretty passionate about it.”

The state pension system serves more than 48,000 active and retired workers through the state employee, teacher and municipal retirement systems. Pearce said the $4 billion fund would lose $9 million per year if it were divested of fossil fuel stocks, and cited a number of practical reasons why removing individual stocks is problematic. She also said she prefers a policy of active engagement and is a leading force across the country in addressing climate change through engagement.

Administration Seeks Legislation to Opt Out of SHOP

The House Health Care Committee expects to move quickly on H.524, a bill that directs the Medicaid office to seek a waiver from the federal government to allow small businesses to continue to purchase health benefit exchange plans directly from insurance carriers. The current waiver for direct enrollment expires at the end of 2016.

The Affordable Care Act requires that states establish an Internet-based small business health options program, or SHOP, to assist qualified small employers to enroll their employees in private health insurance plans. The Shumlin Administration believes the state has substantially achieved the SHOP requirements with Vermont Health Connect and hopes for approval of the waiver in order to save the state $7 million.

Service Providers Apprehensive of All-Payer Model

The Senate Health and Welfare Committee this week heard from a number of service providers over their concerns with the state’s pursuit of an all-payer model that moves the state away from fee-for-service payments. The state is seeking a waiver from the federal government to align payments, improve outcomes and control costs.

Area Agencies on Aging Executive Director Michael Hall told the committee that the all-payer model proposal is misguided. He said the state is aggressively pushing a hospital-centric proposal by empowering tertiary hospitals to manage Vermont’s health care system. Hall said that health happens at home and not in hospitals. “Some argue that the state is focusing on hospitals because that is where the money is. The truth is this: the money is in the hospitals only because we do a terrible job of keeping people out of hospitals in the first place,” said Hall.

Hall told the committee that for many years the state has underinvested in primary and community-based care, even while it grants annual rate increases to hospitals and nursing homes. Hall said it is time to incent primary care and community-based providers to prevent disease. He strongly believes that the legislature should require hospitals to build care coordination capacity by investing in existing community-based infrastructure and primary care and not building internal, redundant capacity.

Department of Mental Health Praised for Staffing Initiatives

Department of Mental Health Commissioner Frank Reed testified before the House Human Services Committee on Thursday on steps to address the hiring of registered nurses and mental health recovery specialists at the Vermont Psychiatric Care Hospital in Berlin. Since the opening of the hospital in May 2014, the hospital has experienced significant recruitment and retention problems.

Reed identified several steps to help increase nursing staff in the short term. The department has implemented a merit recognition process that provides additional financial compensation to direct care personnel, a new “hire-into-range” pay scale adjustment, and an initial sign-on bonus for new nurses upon completion of their probationary period.

Committee members praised the department for its commitment to hiring appropriate personnel and reducing its reliance on contracted personnel; but they also expressed concern for individuals who continue to wait for placement in inpatient hospital beds. The committee asked the commissioner to explain the reasons and provide potential solutions.

Vermont Health Connect Issues Continue

Chief of Health Care Reform Lawrence Miller gave an update on the progress of Vermont Health Connect to the House Health Care Committee on Thursday. On the renewal front, Miller said this year’s open enrollment process was “night-and-day” better than last year, while acknowledging more must be done to improve the experience for customers who encounter problems. A top priority for the administration is to increase automation and integration with the state’s billing and carrier partners.

Committee members told Miller that they continue to hear from constituents regarding billing, payment and termination of insurance. Miller said Optum, the state’s development contractor, and Benaissance, a subcontractor responsible for billing and payment, are focused on the defects of the system and implementing the state’s priorities.

Finally, Miller informed the committee that the federal government has approved the state plan for Medicaid redetermination. The ACA provides a method for calculating income eligibility for all programs based on what is called “modified adjusted gross income.” By using one set of income eligibility rules across all insurance affordability programs, the new law makes it easier for individuals to apply for health coverage through one application and enroll in the appropriate program. The goal is to have all redeterminations completed by November.

Analysts Detail the Cost of Medicaid

On Wednesday, Joint Fiscal Office analysts Nolan Langweil and Stephanie Barrett briefed the House Health Care on the Medicaid program and its funding sources. The total Medicaid budget for state fiscal year 2015 is $1.59 billion. The state portion is $627 million. Langweil said 204,000 Vermonters are enrolled in Medicaid or the children’s health insurance program. Medicaid is the primary source of coverage for 156,000 Vermonters.

Langweil reported that the administration is negotiating another extension of the Global Commitment for Health waiver with the Centers for Medicare and Medicaid Services. The waiver allows the state to be more flexible in the way it uses Medicaid funding. According to its terms and conditions, any revenue that remains after making payments for the existing Medicaid program can be used for a variety of health-related purposes.

Barrett provided the committee with the FY15 expenditure detail for the Medicaid program. Medicaid program expenditures total $900.3 million. The top five programs account for approximately 68 percent of the total. They include inpatient services, outpatient services, physician services, prescription drugs, and nursing home care. The Medicaid program funds a number of other state departments valued at approximately $461.5 million. The departments of mental health and aging and independent living account for 73 percent of the total.

Rep. Chris Pearson, P-Burlington, said the Medicaid program is a very complicated financial structure. His fear is that this is causing the state to lose efficiencies.

Lyons Bill Would Limit Development at Interstate Interchanges

Sen. Ginny Lyons, D-Chittenden, has introduced a bill that would restore restrictions on development at interstate highway interchanges that were adopted by the Howard Dean Administration. The bill, S.229, got a first look in the Senate Natural Resources and Energy Committee on Wednesday.

Development at interstate highway interchanges was originally blocked by an executive order issued by Dean in 2001. An administrative panel later issued the Vermont Interchanges Planning and Design Guidelines, which state agencies were required to obey when evaluating proposals along the interstate highway. The guidelines expired in 2010.

Lyons bill was inspired, in part, by a developer’s proposal for a visitor center, commercial complex and housing near Exit 4 of Interstate 89. The committee seems unlikely to take up the bill.