2006 Legislative Updates:

  January 8, 2006

During the first week of the session, the Democrats began to implement their legislative strategy for health care reform. The Democrats are moving to quickly pass narrowly focused measures while keeping the ball rolling on more complex efforts to revamp Vermont's health care system. This is against the backdrop of the governor's call to have a bill on his desk by the end of February.

Senate Health and Welfare Committee: Senator Leddy (D - Chittenden) pointedly told Commissioners John Crowley (BISHCA) and Dr. Paul Jarris (Department of Health) that in order to meet the governor's schedule, the administration would need to provide information to the Senate Health and Welfare Committee in "a timely and expeditious manner". Senator Leddy, chair of the Senate Health and Welfare Committee, challenged the administration to work "quickly and in a collaborate manner" with his committee. "I don't want to be held up waiting for the administration's budget".

Senator Leddy, Crowley and Jarris met several times in the last 10 days to draft legislation that is being dubbed "Robin's bill" -- perhaps neither side want to take credit for "An Act Relating to Common Sense Initiates in Health Care". Robin Lunge is the Legislative Council working with the committee to write a bill the both the Democrats and the Governor will support.

"Robin's bill" contains many elements of the governor's latest health care proposal. The 34 page bill would:

• Provide healthy lifestyle insurance discounts
• Use common claims forms and billing to simplify health insurance administration
• Establish a grant fund for communities to create wellness programs
• Create loan repayment programs to recruit medical providers to serve underserved populations
• Require hospitals to report infection rates with a goal of zero infections
• Allow for a "safe apology"
• Facilitate the development of an integrated statewide health information system

During Friday's committee meeting, Senator Leddy asked Commissioners Crowley and Dr. Jarris to explain the administration's position on each of the bill's 17 sections. This resulted in some unusual (often humorous) banter between the committee chair and the commissioners. Even though BISHCA and the Department of Health had been involved with drafting, Crowley and Jarris could not commit support for many of the provisions. Crowley: "we have not had enough discussion with the administration to support all these provisions." Jarris: "we are waiting for the administration to tell us who should be responsible (for implementing various functions)".

Toward the end of a long afternoon, Senator Leddy, said, "What happened to Senator Crowley? Where did he go? We liked him." Crowley: "I did too. Maybe is playing golf somewhere."

Senate Leddy's goal is to pass the bill out of committee within the next five weeks. Repeatedly, he made it very clear that he was holding the administration, particularly BISHCA, responsible for being timely in getting answers to the committee's questions. Senate Leddy has developed a schedule for hearings on the bill. One week is allocated for each major provision -- see below for the schedule.

Greg Farnun, President of Vermont Information Technology Leaders, told the committee that VITL's vision is to develop an information exchange to share real-time clinical information among health care providers across the state. The goal is to improve patent outcomes while reducing service duplication and decreasing the rate of health care spending. The model is the banking industry's operation of ATM machines. Customers (patients and providers) are able to get cash (medical records) from their own bank (providers) through ATM's located across the state. The ATM's are integrated with the banks through an information exchange.

Last session the House Appropriations Committee provided $200k in seed money plus $500k in dollar for dollar matching funds. VITL is using the funds for two tasks: first, to run a pilot project involving two hospitals; second, to develop and submit an information technology health care plan for Vermont by January 2007.

House Ways and Means Committee: Rep. Obuchowski (D - Bellows Falls) held a hearing on "Health Care Financing -- How much and from what source?" Mike DelTrecco, VP of Finance, Vermont Association of Hospitals and Health Systems, and Tom Huebner, CEO of Rutland Medical Center, along with others, testified before the House Ways and Means Committee.

DelTrecco focused on the cost shift ($80m) perpetuated by Medicare's and Medicaid's under-reimbursements to Vermont hospitals. The Medicaid cost shift alone has increased 59% in the last four years. Payments cover about 70% of costs. This plus "continued cutting of hospital budgets ($16m last year)", DelTrecco said, "will make the financing of hospitals unsustainable in the next 2-4 years".

He continued by saying the gap between gross and net revenue has grown 182% from 1997 - 2004. Meanwhile hospital expenses increased 85% - less that half the increase in the revenue deficit. Asked how the cost shift could be eliminated or drastically reduce, he said, "Medicaid should be the first focus. But a one year solution would not be enough. Medicaid would need to be fully funded plus grow with the rate of inflation". Asked what the long term solution was, DelTrecco responded, "VAHHS supports a broad base tax for funding health care".

Tom Huebner continued the reimbursement theme by telling the Ways and Means Committee that full funding of Medicaid would translate into his hospital being able to reduce charges by 32%. "If hospitals have budgets cuts again, we will be forced to reduce services at the Rutland Medical Center".

Asked where the committee could get the "biggest bang" if they had an extra $50m, Huebner responded, "The additional funds should be used to increase Medicaid reimbursements to doctors. One of the biggest obstacles to recruiting new doctors to Vermont is its low federal Medicaid reimbursement rate - we rank 47th out of 50 states". He continued, "The Medicare gap will widen as Vermont's population gets older".

Rep. Janet Ancel (D - Calais) has joined the Ways and Means Committee. In making the appointment, Speaker Gaye Symington (D - Jericho ) said, "In the 2006 legislative session, it is likely the Ways and Means Committee will have more direct involvement in the financing aspects of proposals to make health care affordable to all Vermonters. Rep. Ancel brings health care reform experience gained from her work on the Health Care Committee and as a former Tax Commissioner in Vermont".

House Health Care Committee: Bea Grause, President, Vermont Hospital and Health Systems, told the House Health Care Committee, "The association was working with the Williston Group to develop a shared concepts draft for health care reform. The group includes MVP, BCBS, Cigna, VMS, the Vermont Chamber and the Business Roundtable. MVP and VAHHS are working with Rep. Tony Klein (D - East Montpelier), Natural Resources and Energy Committee, to introduce a bill based on the reform proposal.

Grause said the VAHHS objective "is to create a financially stable system that provides meaningful access to health care coverage for all Vermonters. The association supports building on the current system with significant improvements".

Grause also told the committee that VAHHS was working with an insurance consultant (Willis) to develop an affordable health insurance option for all noninsured Vermonters. The Basic Benefit Plan would have a price point target of $3,000 per individual and $7,500 per family. Vermonters would receive subsidies based on their ability to pay.

"All Vermonters," Grause said "would be required to purchase health insurance. Proof of coverage would be required to participate in routine activities like taxes and driver's license". Grause continued, "Care will not be denied for those that do not purchase health insurance".

The plan would offer robust preventive and pharmacy coverage, financial incentives for the chronically ill and incentives for participating in wellness programs.

In-network coverage has a $30,000 annual maximum and a $100 deductible for an individual and $200 for a family. The plan provides 100% coverage for preventive care and a 20% co-payment for visits to specialists and emergency rooms.

Outpatient surgery and inpatient care would have 20% co-payments and be subject to $5,000 maximums. This would be supplemented by reinsurance. Mental Health and Substance Abuse would also have a 20% co-pay. Patients would be encouraged to order prescription drugs from a mail order company --- there would be a 30% co-pay.

Out-of-network coverage would include 40% co-pays with $200 individual and $400 family deductibles. The $30,000 annual maximum would also apply to out-of-network coverage.

Senate Health and Welfare Committee Schedule:

Week of January 10: Healthy Lifestyles Insurance Discount, sections 1-5 Week of January 17: Administrative Standardization, sections 11, 12 and 17 Week of January 24: Information Technology, sections 13-17 Week of January 31: Community Grants, section 6; Loan Repayment for Health Care professionals, section 19 Week of February 7: "Sorryworks", sec. 7; Hospital Infection Rate Reporting, sec. 8-10

Vermont Health Care for All would like to thank VPIRG for their generous support of the 2006 Legislative Updates. They are also available on the VPIRG website http://www.vpirg.org. They will be produced throughout the 2006 Legislative session by Paul Forlenza. Forlenza can be contacted at paul@forlenza.us or 802-453-3592.