Vermont Legislative Update 01-24-2020 - An analysis from DRM's Government and Public Affairs Team

Downs Rachlin Martin PLLC

[co-author: Danielle Bradtmiller]

Vermont Legislative Update Quick Links

Global Warming Solutions Act: asking for too much or not enough?

Minimum wage conference committee finds agreement

Paid family leave on its way to the governor

Agency of Commerce and Community Development rolls out 2020 initiatives

Is there a problem with Act 250 district commissions?

Non-Compete agreements remain under scrutiny

Ways & Means Committee reviews mechanics of VEGI payments

Auditor, city officials spar over TIF program

Committee moves to ban flavored tobacco

The older Vermonters act: a start to making Vermont a great place to age

Task Force for Universal Afterschool

Work begins on reforming the State Board of Education

Pre-K and early child education take center stage at the State House

Cloud tax returns

House health panel turns attention to prescription drugs

Committee considers with buprenorphrine decriminalization

Committee reviews public records proposal

AHS prepares for future loss of IMD funds

Health providers weigh in on competency to stand trial legislation

House Passes Budget Adjustment Act

Human Services Committee begins review of ACO

Global Warming Solutions Act: asking for too much or not enough?

The House Committee on Energy and Technology took testimony this week on the The Global Warming Solutions Act. University of Vermont Professor Jon Erickson stressed that Vermont needs to transition away from “old economy thinking” and embrace “new economy thinking.” He emphasized “it is going to take this coalition of states to do the work required.” Under a business as usual approach, Vermont would only reach a thirteen percent reduction in greenhouse gasses below 1990 levels within the next two years, but the goal is a twenty-five percent reduction. He added, “Incentives are great for innovation and creativity, but regulation is necessary as well.” His testimony ended on a note of contention, urging decisionmakers “not to just give speeches about demographic change and not do a damn thing about it.”

Deputy Secretary of the Agency of Natural Resources Peter Walke expressed concerns about directly moving from the planning process into regulation from the agency. “There is a missing step, in my mind, of legislative oversight after the planning process.” Walke said, while “understanding the urgency of the action we need to take, this concerns me that we would start down an unknown path and end up … in litigation before we figured out our procedure.”

Acknowledging that Gov. Scott made great points in his budget address, Representative Tim Briglin, D-Norwich, said more can be done.

Minimum wage conference committee finds agreement

A conference committee on minimum wage legislation, S.23, reached a compromise this week. The Committee of Conference Report passed the House on Friday by a vote of 93-54 and is expected to easily pass the Senate as well.

The agreed-upon bill would increase the minimum wage to $11.75 on January 1, 2021 and $12.55 on January 1, 2022. Increases in subsequent years will be linked to the consumer price index. The cost to employers is estimated to be over $50 million in 2021 and $142 million in 2022.

Some employees who receive a higher minimum wage stand to lose a significant portion of this new income due to losing low-income benefits. The benefits cliff continues to be a challenge to lawmakers. The general consensus in the State House on Friday was that Governor Scott will not veto the bill.

Paid family leave on its way to the governor

The Paid Family Leave bill Committee of Conference Report, H.107, was voted on in the House on Thursday and passed on an 89-58 vote. Conservatives who opposed the bill objected to the fact that a payroll tax will be imposed on people who may never be able to use the benefit. They also believe that the 0.2 percent payroll tax will increase quickly, further burdening workers.

A handful of liberal legislators who opposed the bill were frustrated that a temporary disability insurance program was not mandatory. The opt-in cost for those who choose this coverage will be an additional 0.38 percent.

The governor is expected to veto the bill. Democratic leaders will need two-thirds of both bodies to override the veto. It is expected that many of the Democrats and Progressives who voted against this bill will switch their votes when it comes to a veto so it is unclear whether Governor Scott will prevail.

Agency of Commerce and Community Development rolls out 2020 initiatives

Agency of Commerce and Community Development staff testified before several committees this week to promote their proposals following the Governor’s Budget Address. A comprehensive handout can be found here.

Business-related highlights include:

  • A new Vermont Investment Incentive Program that would allocate $3 million to encourage large businesses who are projecting to make more than $20 million in capital expenditures to continue to invest in Vermont.
  • A $1 million forgivable VEDA loan to encourage small businesses to create jobs in Vermont.
  • A $1 million Research and Development Grant program for the technology industry to attract small high-tech companies.

There will be much more discussion on these proposals as the session progresses.

Is there a problem with Act 250 district commissions?

The House Committee on Natural Resources, Fish, and Wildlife continued hearing testimony on a proposed package of changes to Act 250 offered in collaboration between the Scott Administration and the Vermont Natural Resources Council, and in competition with a committee bill introduced last session. The jointly-proposed changes address many of the issues raised during many preceding debates over Act 250.

A controversial plan to eliminate the current functions of district commissions while creating a new Enhanced Natural Resources Board was challenged by multiple witnesses. Past and present district commissioners, district coordinators, attorneys and citizens with experience in the process all urged the committee to maintain district commissions as the heart and soul of Act 250.

The joint proposal envisions a three-member board of professionals that would hear and rule on all major Act 250 applications. Joining the board would be two commission members of the district where the permit originates. These two commission members would be involved in findings of fact, but would not vote on the final permit. Appeals would go directly to the Vermont Supreme Court, using findings of fact that are on the record from the district commissions. Witnesses argued this plan weakens the intent of Act 250, placing severe barriers on informal public access during the initial stages of a project.

Delving into the inner workings of district commissions, the committee’s focus was on public participation and preserving the regional “flavor” of a project throughout the permit process. However, Joslyn Wilschek, Esq., Act 250 Alternate District Commissioner, offered that there is no local input now in contested matters, reminding the committee of the current process of de novo appeals. “As soon as decisions leave our district for appeal, our work is thrown into the recycling bin,” said Wilschek. “They start over.” Other witnesses leveled criticism at claims of Act 250 not working. Karl Johnson, former Act 250 District 5 Chair, said “only 20-30 percent of development in Vermont is subject to Act 250, and 95-98 percent of permits are approved. So what's the problem that were trying to solve? As an investor, if I can rely on a 95-98 percent outcome, my money is on that every time.”

Committee Chair Amy Sheldon, (D-Middlebury) said that she still considers the committee bill to be her foundation for any legislation. Several members agreed. The committee plans to make a decision on the permit process early next week, perhaps with a hybrid plan of the two competing visions on the role of district commissions, then begin another walk through of the committee bill. There is interest among legislators to include exemptions for Act 250 jurisdiction in Designated Downtowns and Neighborhood Development Areas as outlined in the joint proposal. Whether or not any of the other ANR / VNRC changes gain traction remains to be seen.

For a comprehensive review of the proposed Act 250 changes click here.

Non-Compete agreements remain under scrutiny

The House Commerce Committee on Thursday continued its review of H.1, a bill to limit the use of non-compete agreements by employers. The committee reviewed a new draft of the bill that was intended to address concerns that have been raised about the bill as introduced. But in fact, the revised version seemed to please no one.

The new version includes several significant provisions:

  • Non-compete agreements could be entered into only with employees who earn at least two times the Vermont median income, or about $117,000.
  • Employers would still be required to pay compensation of “garden leave” or similar consideration. Garden leave is defined as one-half of the employee’s highest wage during the non-compete period.
  • Employers would be required to pay an employee for two hours of attorney consultation before signing an agreement.

Legislative counsel attorney Damien Leonard said that several provisions in the bill would have to be resolved by courts. Committee member Zachariah Ralph, P-Hartland, responded, “This is what makes people hate government. We’ve created a bureaucratic nightmare. Everything in this bill would have to be interpreted by the courts. We should simply prohibit the use of non-compete agreements.”

The committee is not likely to go that far. Yet another draft is under consideration that would allow agreements to be based on any reasonable consideration and would be restricted to employees with salaries above about $87,000.

The committee will take testimony on the new version later next week.

Ways & Means Committee reviews mechanics of VEGI payments

The Vermont Economic Growth Incentive program is one of the few economic development tools that are available to encourage employers to move to and expand in Vermont. Gov. Scott has proposed changes to the program, as well as the creation of an expanded Incentive Program for existing large manufacturers. Committee Chair Janet Ancel, D-Calais, indicated her opposition this week to a key aspect of the program.

Doug Farnham, Tax Department director of policy, testified before the House Ways & Means Committee on Thursday on the somewhat confusing nature of the mechanics of VEGI payments.

VEGI payments are designated as tax expenditures, even though they are cash payments made to businesses that are not dependent upon the recipient’s corporate income. Payments are made from the payroll withholding receipts of the receiving company’s employees. The VEGI program deviates from normal tax expenditures in that it is not a tax deduction or credit.

VEGI payments are contingent upon the receiving company reaching a targeted number of new jobs or making certain capital investments. According to Farnham, the primary role of the Tax Department is to calculate payroll withholding. After withholding verification is made, the Department issues a credit, which is distributed over five years.

Chair Ancel said that VEGI payments should be a state appropriation, and not a tax expenditure. Rep. George Till, D-Jericho, agreed. That change would significantly imperil the program, since it is unlikely that the appropriations committees would fully fund the program.

Farnham said the VEGI program was an inefficient use of his department’s resources, requiring significant staff time that would be minimized if it was an appropriation.

Auditor, city officials spar over TIF program

Hoffer presented the committee with this statement, which outlined a range of objections to the bill.

Dominic Cloud, City Manager of St. Albans, gave a robust defense of the TIF program, saying, “Things are cranking in St. Albans. It doesn’t happen without TIF. We need to do more of this… I was flabbergasted to hear the Auditor say that the education fund was negatively impacted, increasing risk.” Cloud went on to say that a fundamental element of TIF is that 100 percent of the risk is on municipalities. There is no risk to the education fund.

Cloud presented the committee with “before and after” pictures of downtown St. Albans which show the construction of a parking garage, hotel and office building – none of which would have been built, he said, without TIF.

Sen. Cummings described the core of the dispute: whether the projects would have been built without the TIF program. She described that as a religious argument by both sides. Cloud responded emphatically that the development would never have occurred without TIF. He was joined in that assessment by South Burlington City Manager Kevin Dorn and Barre City Clerk and Treasurer Carol Dawes, who presented this statement.

Committee moves to ban flavored tobacco

A group of African-American Burlington high school students gave compelling testimony this week before the Senate Health & Welfare Committee in support of a ban on all flavored tobacco products, including menthol cigarettes. The students spoke of the personal family hardships they have endured as a result of flavored tobacco consumption. They also described the targeted marketing that tobacco companies have used towards youth and African Americans.

Their testimony was reinforced by a heavily research-based presentation by Dr. Philip Gardiner of the University of California.

The committee is likely to approve the bill within the next week or so.

The older Vermonters act: a start to making Vermont a great place to age.

The House Committee on Human Services heard testimony this week from the Department of Disabilities, Aging and Independent Living, Vermont Association of the Area Agencies on Aging, and Community of Vermont Elders on the Older Vermonters Act. The legislation aims to help aging Vermonters live independently, and is intended to work in tandem with the federal Older Americans Act, the Vermont State Plan on Aging, and the Choices for Care program.

DAIL Commissioner, Monica Hutt and Angela Smith-Dieng recommended changes to the bill. DAIL’s main concern is not having the staff or resources to take on some of the tasks outlined in the bill. DAIL suggested that existing reports already assembled each year by the department could be used for the reporting the bill requires.

Ruby Baker, Executive Director of the Coalition of Vermont Elders, recommended that more support be provided for kinship caregivers. Baker said that for every one child in foster care there are twenty children in kinship care, and that there are 1500 children in foster care in Vermont. Finally, she said the committee should try to better understand which older Vermonters are using adult protective services and long-term healthcare services.

Task Force for Universal Afterschool

The Senate Education Committee put the finishing touches on a bill to create a task force to design a framework and determine the costs and funding sources for a universal afterschool program.

The bill lays out a 15-member task force with representation from the legislature, the Administration, public school, independent school and home school organizations, Vermont Boys and Girls Clubs, Vermont Afterschool, Inc. and other afterschool representatives from geographically diverse locales.

The bill requires the task force to review the status and results of the Afterschool for All Grant Program administered by the Department for Children and Families. That grant provided $600,000 for substance use prevention, intervention and treatment for afterschool grants. This grant information is intended to provide the task force with afterschool program data without having to commission a new study. The bill will now move to the Appropriations Committee.

Work begins on reforming the State Board of Education

The Senate Education committee began a very thorough review of a bill to transfer various duties and responsibilities from the State Board of Education to the Secretary of Education. The draft represents the Board’s idealized version of its future direction.

Legislative Counsel Jim DesMarais provided a document, Division of State Board Rules and Practices, which outlines the proposed re-division of rules. Committee members said they wanted to hear the Board’s rationale for keeping rulemaking authority on certain subject areas and not others. The Agency will gain rulemaking authority over certain rules series but the Board would then “review” and advise on those rules – an extra step for the agency. Also under consideration is whether to add two staff positions for the Board.

Committee Chair Philip Baruth, D-Chittenden, plans to have Agency of Education Secretary Dan French and State Board of Education Chair John Carroll testify at the same time so that they can have a dialogue about the bill. French and Carroll are invited to testify next week. This may prove to be a charged conversation.

Pre-K and early child education take center stage at the State House

The House Education Committee got its first thorough look at a pre-K committee bill this week. The bill seeks to reform Vermont’s system of public, private, dually-regulated universal preK. It proposes to eliminate joint administration by the Agency of Education and the Agency of Human Services by putting public school programs under the supervision of AoE, and private programs under the supervision of AHS. The bill also requires the use of uniform administrative forms and processes developed by the Agency of Education, and it simplifies and clarifies the quality criteria for prekindergarten providers. The bill is silent on the subjects of weighting, funding formulas, or the discrepancy between payments to public and private programs.

Representative Carolyn Partridge, D-Windham, walked the committee through a related bill, H.661, which proposes to support preK special education services at the same level as kindergarten through grade 12. Special education services for preK students are currently funded at much lower rates. The committee expressed interest in examining this subject further.

The committee heard testimony from many public school organizations about problems with the bifurcated system. Sandra Cameron, Director of Policy, Vermont School Board Association and Chelsea Myers, Director of Professional Development and Communications, Vermont Superintendents Association presented Act 166 Considerations, reminding the committee of the core principles of Act 166 – Equity, Quality, and Simplicity. The joint administration of the program is generally seen as an impediment to simplicity, and at times to quality and equity as well.

Cameron and Myers laid out several problems with the current system, including data suggesting that students with disabilities do not have equitable access to educational services compared to their peers who do not have disabilities. They referred to limited resources for supervisory districts to provide services outside of the geographic boundary. Families sometimes decline much-needed services or are limited to within-district options and 90 percent of children with Individualized Education Plans were enrolled in their local programs because of limited options.

Another concern is the very wide range in instructional contact hours and the disparity in teacher qualification and licensing requirements between public and private programs. Public schools require direct instruction of preK children by a licensed teacher during all publicly-funded hours, while private centers require a licensed, supervisory teacher “on-site” for only ten hours a week regardless of the number of students.

In the meantime, Let’s Grow Kids held a press conference on the overall importance to Vermont’s demographic challenges of supporting a robust early child care system. Employers, legislators, and childcare providers all spoke to the benefits of strengthening child care opportunities in the state.

Executive Director Aly Richards said that strengthening Vermont’s child care system by increasing pay for providers and forming business partnerships in which child care centers provide guaranteed spots are an economic development measure and make for a better environment for employers to do business. Richards cited new evidence that three out of five young children do not have currently access to the care they need. New parents can face an eight-month to a year‑long waiting list for a spot. The organization estimates that the state needs 2,000 more child care providers and early educators to fill the gap.

Cloud tax returns

The House Ways and Means Committee returned today to testimony on the cloud tax, which would impose the sales tax on on-line software that is provided as a service. The committee heard from Abby Shepard, legislative counsel; Doug Farnham from the Tax Department; Jeff Couture from the VT Tech Alliance; and Joseph Bishop‑Henchman, a Washington DC‑based attorney.

Representative Mike Yantachka, D-Shelburne, walked the committee through his bill H.756 which would repeal the exemption on cloud-based services. He remarked that other states are taxing these services so it should not be too difficult to implement.

The committee’s counsel offered a state-by-state comparison chart which showed that about17 states currently tax software as a service. But Indiana recently re-imposed the exemption after exempting SaaS, largely to present a more business friendly environment.

Farnham showed the committee a DoT Fact Sheet on prewritten software that the department developed for education and outreach purposes. He also described an extensive “roadshow” that the department did with tax preparers and the business community. He said he heard a range of opinions on the issue of cloud tax – some for, some against. Many said that it would be difficult and complicated work for the Tax Department. Farnham said one of the dangers that other states have reported is the confusion between the different segments of digital taxation. Platform as a Service and Infrastructure as a Service can be difficult for states to distinguish from Software as a Service.

Joseph Bishop-Henchman pointed to the compliance difficulties for states presented by the federal Permanent Internet Tax Freedom Act. PITFA generally bans multiple and discriminatory laws, and this pertains to online vs offline versions of the same service. These discrepancies and grey areas are currently being litigated in states.

The Vermont Tech Alliance testified that Vermont’s tech sector is growing three times as fast as other sectors, and the state should not make taxation decisions that are unfriendly to those businesses. It may also muddy the waters regarding the expansion of blockchain businesses. Committee Chair Janet Ancel, a former Tax Commissioner, replied that the advantage Vermont has now is that other streamline states have moved in this direction ahead of us. These issues are already being litigated and the state can learn from their lessons. The Joint Fiscal Office estimates that the tax would raise $5 to 6 million in the first fiscal year.

The committee will continue to hear from the tech and business communities.

House health panel turns attention to prescription drugs

Prescription drugs were the focus of several legislative hearings at the end of the week in the House Health Care Committee. Committee Chair Bill Lippert, D-Hinesburg, told the committee that he “intends to continue to press forward to find every avenue we can at the state level to find any way to make prescription drugs as affordable as we can for Vermonters.”

Ena Backus, Director of Health Care Reform for Vermont’s Agency of Human Services, reported to the committee that AHS is working on an application to the U.S. Department of Health and Human Services to implement a wholesale prescription drug importation program with Canada. In accordance with Act 72 of 2019, the application will be submitted by July 1, 2020.

Backus told the committee that an importation program would result in significant savings to consumers, but several committee members questioned the program’s potential overall price impact and Canada’s willingness to participate and provide adequate supply. Trisha Riley, the Executive Director of the National Academy of State Health Care Policy, said that manufacturers in Canada will not have the authority to export wholesale prescription drugs until there is a program, but said that she is confident that willing partners will be found. The application for the program must include details of those proposed partners.

The committee is also considering amending the drug price transparency reporting statute that requires Department of Vermont Health Access and health insurers to provide certain information annually about the increase in the price of prescription drugs. Jill Abrams, Director of the Consumer Protection Division of the Vermont Attorney General’s Office, presented the report to the committee on Friday.

Abrams told the committee that the flexibility allowed in the reporting statute results in insurers reporting over different year lengths: MVP reports drugs that have increased 15 percent or more in the insurance plan’s net cost during the previous calendar year, while BCBS reports drugs that have increased by 50 percent or more in cost over the past five years. The resulting data provides a skewed cost view. Insurers have said that they can come up with reporting requirements that could provide better data.

Abrams also said that this year’s report doesn’t include required manufacturer explanations for increases due to confidentiality laws.

Lippert questioned whether information required by the current reporting requirements are gathering data of value and wants “to work with NASHP to see how we might strengthen what we are doing in Vermont and see what other states are doing.”

Committee considers with buprenorphrine decriminalization

The House Human Services Committee is taking another look at H. 162, a bill that proposes to remove buprenorphrine from the misdemeanor crime of possession of a narcotic. Buprenorphrine is an opioid used to treat opioid use disorder, acute pain, and chronic pain. The bill was passed out of the House Judiciary Committee last year without amendment, and when it reached the House Floor, Committee Chair Ann Pugh, D-Burlington, requested that it be sent to her committee for review. There was “mixed feelings” in the committee about the bill by the end of last session, so Pugh held the bill for further review this session.

Kate O’Neill, who wrote a series on the opioid crisis for Seven Days after her sister died of a drug overdose, told the committee this week that barriers to treatment mean that people who need medically assisted treatment can’t access needed buprenorphrine. Drug users and family members often resort to purchasing it illegally. Steve Leffler M.D., President of the University of Vermont Medical Center, and Grace Keller, Safe Recovery Program Coordinator of the Howard Center, agreed that legal buprenorphrine is a valid risk mitigation strategy, but both took a neutral position on the bill.

Rep. Haas, P-Rochester, proposed a strike-all amendment that would legalize the possession of 480 mg or less of buprenorphrine. Any minors in possession of the drug would be referred to the Court Diversion Program for enrollment in the Youth Substance Abuse Safety Program. The proposal had luke-warm support from most committee members, and Chair Pugh said that they will add it to their priority list of bills.

Committee reviews public records proposal

On Thursday, the Senate Transportation Committee reviewed public records proposals that were drafted in response to Gov. Scott’s December 2019 directive to the Department of Motor Vehicles to end the practice providing personal information to private investigators, currently a permissive use under the Driver’s Privacy Protection Act.

DPPA is a federal law that requires state motor vehicle offices to limit the release of personal information on motor vehicle records. While Vermont’s public records laws keep most state records open for public inspection, DPPA is an exception. Federal law says certain information may not be given out but is silent on the release of other information not defined as personal, such as vehicular accidents, driving violations, and driver’s status. Where the federal law does not address the privacy of non-personal information, state law takes over and says we must provide access to that information.

The committee reviewed a comparison of current DPPA law and new proposed language adding clarity to permissible release of information, and the fees the department can collect. With the issue of data privacy on the forefront of national discussion, the committee will be returning to the issue.

AHS prepares for future loss of IMD funds

Representatives from the Agency of Human Services appeared before the House Health Care Committee on Wednesday regarding the state’s plan to address the federal Institutes for Mental Disease exclusion, a federal rule that bars payment for treatment in mental health facilities for more than 16 beds for individuals between the ages of 21 and 64.

Department of Mental Health Commissioner Sarah Squirrell said the state was required by the Centers for Medicaid and Medicare Services to submit a phase-down schedule of funding for Vermont IMDs as part of the Global Commitment to Health Demonstration Waiver. Vermont is awaiting approval from CMS for the 2021 phasedown target of 95 percent. CMS indicated that future decreases will be discussed and formalized during negotiations with the state for renewal of its waiver to occur throughout 2021.

Director of Health Care Reform Ena Backus said the Global Commitment waiver was amended in December to enable the state to receive federal financial participation for short-term (60 days or fewer) inpatient services provided to eligible Medicaid beneficiaries while residing in IMDs for diagnosis of serious mental illness. The waiver will ease Vermont’s burden of phase-down planning and allow AHS and its partners the time necessary to prepare for the elimination of IMD funding.

Backus noted that IMD waivers through CMS do not provide federal financial participation for forensic mental health patients. Following phase-down of investment authority, any individual who has a forensic status – currently making up close to half the census at Vermont Psychiatric Care Hospital and accounting for several beds at Brattleboro Retreat –will have to be paid for exclusively with state dollars. This equates to a loss of approximately $6.1 million in federal funding.

Health providers weigh in on competency to stand trial legislation

The Senate Judiciary Committee continued to take testimony on S.183, a bill to extend the time in which a person remains in state custody if the person is adjudicated not guilty by reason of insanity for homicide or attempted homicide. Sen. Dick Sears, D-Bennington, said he expects significant changes to the bill. He continues to advocate for a victim and public notification if an individual is to be released in the community.

Department of Mental Health Deputy Commissioner Mourning Fox and General Counsel Karen Barber said a mandatory three-year initial commitment period takes away clinicians’ ability to treat individuals in the least restrictive setting. It also puts DMH in an untenable situation – either they violate this legislation or they violate the Centers for Medicaid and Medicare Services and Joint Commission accreditation requirements.

Fox said DMH must adhere to laws governing protected health information and are prohibited from disclosing information about patients. There is no general HIPAA exemption that would allow DMH to notify people in the event of discharge from custody where a serious and imminent risk of danger to an identifiable victim is not present. The DMH presentation can be found here.

Vermont Medical Society President-elect Forensic Psychiatrist Simha Ravven advises against extending any period of mandatory commitment for insanity acquittals. The need for inpatient psychiatric hospital care needs to be determined clinically and is highly individual. She said an extended period of commitment makes physicians and hospitals into “jailers” when its treatments are not determined by an individual’s clinical needs. She said the area of greatest need is monitoring for those individuals who transition from hospital to the community in a manner that protects the community from risk of violence and provides the individual with robust treatment.

Vermont Association of Hospitals and Health Systems Director of Policy Analysis and Development Emma Harrigan said that extending commitment orders to three years will impact access to care for individuals waiting for inpatient mental health services. For every patient that stays in an inpatient bed for the entire year, it means there are 30-61 people seeking care that hospitals cannot accommodate. She stressed that care that is custodial in nature—not driven by the need for treatment—is not covered by Medicaid or Medicare. Additionally, Vermont is no longer allowed to use Medicaid funds to support mental health inpatient stays in freestanding psychiatric hospitals that exceeds 60 days or for mental health inpatient stays for forensically committed individuals. Each three-year stay will cost Vermont $1.3-2.7 million in general fund dollars.

Harrigan also supports the need for more transparency, accountability, and resources for Vermont’s forensic mental health system. VAHHS supports the evaluation of psychiatric support services and the formation of a working group to identify gaps and opportunities to improve the forensic mental health system. It also supports the development of a formal competency restoration program, recognizing that more resources will be needed to develop the appropriate settings for providing these services.

House Passes Budget Adjustment Act

The House passed the annual budget adjustment for FY2019 on Thursday, approving $3.9 million in delivery system reform investments and a rate increase for the Brattleboro Retreat.

The DSR payments proposed by the administration were half of what OneCare Vermont had initially proposed in its budget submission to the Green Mountain Care Board, and a small portion of the federal funds that could be drawn down with a state match. The funds are needed to help implement the All Payer Model, Vermont’s plan to achieve the triple aim in health care of access, quality and containing cost. With a lower level of DSR funding, OneCare would not begin new programming, but would continue to fund current programs, including a longitudinal care pilot program, an expansion of RiseVT, and the embedding of mental health counselors in Supports and Services at Home congregate housing sites.

Although legislative committees agreed last year that the short-term funding was best included in the Budget Adjustment Act, rather than as part of the Department of Vermont Health Access base budget, this year legislators expressed concern that the timing of the BAA gave them little time to review DSR programming. To address the issue, the House Appropriations Committee approved language that requires OneCare to collaborate with the Agency of Human Services in designing and prioritizing proposed DSR projects. Additionally, in order to receive the DSR dollars, Agency of Human Services Secretary Mike Smith is requiring OneCare to apply for non-profit status, and if the IRS denies the application, to operate as a non-profit in terms of transparency.

The BAA also includes a rate increase for the Brattleboro Retreat to its base inpatient rate for adult and children served at the facility. This change increases the base per diem rate from $1,425 to $1,493 (4.8 percent increase), effective Nov. 1, 2019.

The bill now moves to the Senate.

Human Services Committee begins review of ACO

The House Human Services Committee received an overview of OneCare Vermont from Chief Executive Officer Vicki Loner on Thursday. The all-payer accountable care organization serves as a mechanism for a group of providers to come together to take care of a patient population for a fixed price. The goals of the provider-led All Payer Model are to improve access to primary care, reduce deaths from suicide and drug overdose, and reduce the prevalence and morbidity of chronic disease.

Loner said hospitals and providers are increasing investments in primary prevention. With advances in data analytics, OneCare is able to identify high-risk patients who benefit most from early intervention and complex care coordination to reduce unnecessary spending. Loner said through OneCare, providers have more flexibility with payment waivers. She said the skilled nursing facility three-day rule waives the requirement for a three-day inpatient hospital stay prior to a Medicare-covered, post-hospital, extended-care service for eligible beneficiaries. This provides greater patient experience.

Committee Chair Ann Pugh, D-South Burlington, focused on the budget and the investments to community providers. Loner said that the OneCare budget grows every year because there are more lives attributed to the model and more accountability. She said the federal government and the state are moving away from fee-for-service payments because it is not predictable or sustainable. She also stressed that delivery system reform dollars go into communities, and not towards administrative costs.

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