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H.763

Introduced byRepresentatives Seibert of Norwich, Alderman of Middlebury, Almy-Smith of Underhill, Baird of Burlington, Bjerke of Burlington, Bouricius of Burlington, Christiansen of East Montpelier, Clarkson of Newfane, Cleveland of Pittsford, Cochran of Jericho, Corren of Burlington, Crocker of Woodstock, Deen of Westminster, DiMario of Fayston, Dunne of Hartland, Emmons of Springfield, Farrar of Chester, Fox of Essex, Harris of Windsor, Kehler of Pomfret, Kreitzer of Rutland City, Kurt of Colchester, Lauritsen of Weathersfield, Lingelbach of Thetford, MacDonald of Williamstown, McCormack of Rutland City, Milkey of Brattleboro, Obuchowski of Rockingham, Pitkin of Cabot, Pugh of South Burlington, Smith of Burlington, Stafford of Brighton, Starr of Troy and Sullivan of Burlington

Referred to Committee on

Date:

Subject: Health; Vermont health security plan

Statement of purpose: This bill proposes to establish the self-insuring Vermont health security plan, a single-payer health care system providing comprehensive health care benefits to all Vermonters, and to establish the Vermont long-term care program.

AN ACT RELATING TO THE VERMONT HEALTH SECURITY PLAN

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1. 18 V.S.A. 9402 is amended to read:

9402. DEFINITIONS

As used in this *[subchapter]* chapter:

(1) "Authority" means the Vermont health care authority created under section 9403 of this title.

(2) "Board" means the Vermont health care authority board created under section 9403 of this title.

(3) "Dependent" means the spouse, minor child, a child with permanent disability, or legal dependent of an insured person.

(4) "Disability" means a physical or mental impairment that substantially limits one or more of the activities of daily living of the individual.

(5) "Employer" means any person that has one or more individuals performing services for compensation for the employer within this state.

(6) "Balance billing" means to charge or collect from an insured person any amount in excess of the amount paid or to be paid for an insured service by the trust.

(7) "Global budget" means a comprehensive, binding annual budget setting forth in advance the aggregate compensation to be received by each hospital and nursing home for theprovision of all insured services. A global budget shall consist of:

(A) an operating budget authorized by the authority to reimburse operating expenses, exclusive of depreciation charges; and

(B) an annual capital budget setting forth the capital expenditures authorized by the authority for the provision of insured health services, regardless of whether the source of funds for the capital expenditure is derived from accumulated depreciation charges, operating surpluses or retained earnings, expenditure of accumulated fund notes, debentures or other evidence of indebtedness, borrowed funds, or any other source, including equity capitalization.

*[(3)]* (8) "Health care facility" means all facilities and institutions, whether public or private, proprietary or nonprofit, which offer diagnosis, treatment, inpatient or ambulatory care to two or more unrelated persons. The term shall not apply to any facility operated by religious groups relying solely on spiritual means through prayer or healing, but includes all facilities and institutions included in section 9432(10) of this title, except health maintenance organizations.

*[(4)]* (9) "Health care provider" means a person, *[partnership or corporation, other than a facility or institution,]* licensed or certified or authorized by law to provide professional health care service in this state to an individual during that individual's medical care, treatment or confinement other than a hospital, nursing home or a person who provides health services in a hospital or nursing home.

*[(5)]* (10) "Health insurer" means any health insurance company, nonprofit hospital and medical service corporation, health maintenance organization, and, to the extent permitted underfederal law, any administrator of an insured, self-insured, or publicly funded health care benefit plan offered by public and private entities.

*[(6)]* (11) "Health resource management plan" means the plan for distribution of the health care resources in Vermont adopted in accordance with the provisions of section 9405 of this title.

(12) "Hospital" means a general hospital licensed under chapter 43 of this title.

(13) "Insurance administrator" means the agency of this state, or nonprofit corporation certified by the authority to be the administrator for the plan. The insurance administrator may be a nonprofit corporation organized or doing business in Vermont under the authority of chapter 123 or 125 of Title 8 or a nonprofit insurance company authorized to do business in Vermont. The insurance administrator must have a governing board composed of Vermont residents and meet the requirements of 8 V.S.A. 4513(a).

(14) "Insured person" means any of the following:

(A) A resident of Vermont.

(B) A nonresident individual (and his or her dependents) who:

(i) works in Vermont for a Vermont employer, all of whose compensation is included in the calculation of the employer's payroll tax liability under this chapter;

(ii) enrolls in the plan; and

(iii) pays the tax assessed by section 9420(b)(1)(B) of this title on individuals.

(C) An employee of the state of Vermont, the Vermont state colleges, or the Universityof Vermont who resides and works in another state.

(D) The minor children of a resident who reside in another state.

(15) "Insured services" means all services, supplies, prescription drugs, and equipment covered by the plan in accordance with this title.

*[(7)]* (16) "Integrated system for health care delivery" means an organized private or public, proprietary or nonprofit delivery system for a continuum of health care services. The system may include the following elements:

(A) Care that is coordinated through a primary care manager chosen by the patient from a network of providers.

(B) Continuous quality improvement processes to ensure quality of care, patient satisfaction and efficiency.

(C) *[Financing methods that provide incentives for health care providers and patients which]* Methods that encourage quality care, efficiency, successful outcomes and appropriate use of health care services.

(17) "Long-term care" means a range of services delivered in the home, the community or in an institution to persons who have functional limitations and need assistance with performing one or more activities of daily living. Long-term care services may include care delivered in a nursing home as well as personal assistance services delivered in an individual's home by a nurse, health aid or personal attendant who assists with personal care.

(18) "Nursing home" shall be defined as that term is defined in 33 V.S.A. 7102(7).

(19) "Payroll" shall mean all remuneration paid by an employer for services rendered by an employee and remuneration for services an employer pays to himself or herself, including commissions and bonuses and the cash value of all remuneration paid in any medium other than cash. Gratuities customarily received by an individual in the course of employment from persons other than the employer shall be treated as payroll.

(20) "Plan" means the uniform benefits plan established under section 9416 of this title.

*[(8)]* (21) "Resident" means a person who is domiciled in Vermont as evidenced by an intent to maintain a principal dwelling place in Vermont indefinitely and to return to Vermont if temporarily absent, coupled with an act or acts consistent with that intent, except that a 12-month waiting period shall be applied to preexisting conditions for new residents who cannot demonstrate the existence of health insurance coverage for a period of 12 months preceding their move to Vermont. This 12-month waiting period does not apply to prenatal or maternity benefits.

(22) "Trust" means the health care purchasing trust fund established under this title.

*[(9)]* (23) "Unified health care budget" means the budget established in accordance with section 9406 of this title.

Sec. 2. 18 V.S.A. chapter 221, subchapter 2 is added to read:

Subchapter 2. Uniform Benefits Plan

9415. ELIGIBILITY

All insured persons shall be eligible for insured services provided by the plan on uniformterms and conditions.

9416. INSURED SERVICES GENERALLY; COMPREHENSIVENESS

(a) The uniform benefits plan shall provide comprehensive, medically necessary, and appropriate medical care benefits, including:

(1) primary, secondary and tertiary health care for acute and chronic conditions;

(2) preventive care;

(3) rehabilitative care;

(4) wellness education;

(5) mental health services;

(6) prescription drugs; and

(7) durable medical equipment and supplies.

(b) The authority shall establish the plan, which shall include the following health care services:

(1) Hospital: inpatient (semiprivate), intensive care, operating room, ancillary.

(2) Medical: in-hospital, surgical, outpatient surgery, lab and x-ray, primary and preventive care, specialty care and major oral surgery, OB/GYN specialty care, periodic OB/GYN exam.

(3) Other:

(A) ambulance;

(B) physical, occupational, speech and nutrition therapy to restore function andmaintain capacity or minimize limitations;

(C) hospice;

(D) home care;

(E) skilled nursing facility (subacute care);

(F) chiropractic services;

(G) vision and hearing care;

(H) medical supplies and nutritional supplements on a case by case basis if essential to avoid more costly care.

(4) Durable medical equipment.

(5) Mental health: inpatient and outpatient services.

(6) Alcohol and substance abuse: inpatient and outpatient services.

(7) Prescription drugs.

(8) Emergency room.

(9) Dental:

(A) comprehensive dental services for children through age 17, including preventive dental care and screening, restorative services, annual exam and cleaning, and limited corrective services;

(B) emergency services for adults for control of pain or infection.

(c) All insured persons who are Medicare recipients shall be covered by the plan. The plan shall cover insured services not covered by the Medicare program. The trust shall pay for anypremiums assessed under section 1839 of the Social Security Act for insured persons who are entitled to enrollment under part B of the Medicare program.

(d) All insured persons who are Medicaid recipients shall be covered by the plan. The plan shall cover insured services not covered by the Medicaid program. The authority shall take advantage of all federal Medicaid options to maximize eligibility and services, and take steps to maximize participation in all plans with federal participation.

(e) Notwithstanding any provision to the contrary, the trust shall act as the exclusive agency of the state of Vermont for the purpose of funding the state's share of each federal health care program such as Medicaid and to use revenues paid into by the trust for such purposes. The authority shall seek federal waivers, exemptions or agreements necessary to permit all federal payments for health care made to the state to be paid directly to the trust.

9417. ADMINISTRATOR OF PLAN; POWERS AND OBLIGATIONS

(a) The authority, after a competitive bidding process, shall contract with a nonprofit corporation or agency of this state to operate as, and exercise the powers of, the insurance administrator as set out in this chapter.

(b) Before executing a contract under this section, the authority shall determine that the proposed insurance administrator has complied or will comply with requirements of this chapter and any other requirements adopted by the authority by rule.

(c) A contract executed under this section shall be for a period of three years. The contract shall include such other terms and limitations as the authority determines are necessary to carryout the provisions of this chapter.

(d) Subject to the terms and limitations set forth in the contract, the insurance administrator shall have the following powers:

(1) To make payments to hospitals and health care providers for the provision of insured services to insured persons according to the terms and conditions established by the authority.

(2) To act as the exclusive subrogee and assignee of all insured persons who may be beneficiaries of collateral sources of health and other insurance, both public and private, and to have all lawful powers necessary or convenient to collect reimbursements from any available collateral source for insured services provided to insured persons. Any person with control over such collateral sources shall transfer to the administrator, upon demand by the administrator and without the need for any further act by the insured person or any other person, funds equal to the amount otherwise due and payable to the insured person.

(3) To perform any other acts determined by the authority to be necessary for efficient and effective administration of the plan.

(e) The insurance administrator shall be subject to an annual audit of its accounts and financial transactions by the auditor of accounts.

(f) In the event any of the provisions of this chapter are inconsistent with the provisions of chapters 123 and 125 of Title 8, the provisions of this chapter shall control.

9418. COVERAGE FOR SERVICES PROVIDED OUT-OF-STATE

(a) The plan shall provide that when insured services are

provided in another state or outside the United States to an insured person, payment will be made on the basis of the amount that would have been paid for similar services rendered in Vermont, with due regard in the case of hospital services to the size of the hospital, standards of service and other relevant factors.

(b) The authority may require the insured person to obtain prior approval from the insurance administrator for elective insured services provided in another state or country to temporarily absent Vermont residents. Prior approval is required if the services in question are available on a substantially similar basis in this state. For the purposes of this section, the term "elective insured services" means insured services other than services which are provided in an emergency or in any other circumstances in which medical care is required without delay.

9419. REIMBURSEMENT AND COST CONTAINMENT

(a) Hospitals and nursing homes. The authority shall reimburse hospitals and nursing homes from the trust for the payment to hospitals and nursing homes for the reasonable cost of providing insured services to insured persons by means of a global budget for each hospital and nursing home. No extra billing shall be made by a hospital or nursing home to an insured person for the provision of insured services.

(b) Health care providers.

(1) Within the limits of the unified health care budget established under this title, the authority shall provide for reasonable reimbursement for all insured services rendered by health care providers to insured persons. The authority shall establish reimbursement amounts andmechanisms which promote cost containment. Such amounts and mechanisms may include amounts and mechanisms relating to fee for service reimbursement or capitated fees, as appropriate.

(2) The authority shall establish payment schedules and programs to encourage the education and training of health care providers appropriate to the needs of Vermont, and induce physicians to practice in underserved areas by means of scholarships, tuition and living stipends and student debt retirement.

(3) The authority shall negotiate reimbursements for insured services under this section with organizations that represent integrated systems of health delivery and other health care providers. The authority shall hold at least one public hearing prior to commencement of negotiations under this section. If the authority and health care providers cannot agree on reimbursements, the authority shall establish reimbursement by administrative order.

(4) Reimbursement by the authority shall be payment in full for insured services, and no extra billing shall be made by the health care provider to the insured person for the provision of insured health services.

(5) No insured person shall be subject to any extra billing, deductible, or co-payment for choosing to obtain insured services from a health care provider which is not part of an integrated system of health care delivery.

(6) All health care providers receiving reimbursement on a fee for service basis shall be subject to a limit established in the unified health care budget on aggregate fee for servicereimbursements. Compliance with this limit shall be reviewed and enforced by the authority periodically. If the total amount of fee for service expenditure for any quarter exceeds that provided in the unified health care budget, the authority shall, commencing in a timely manner, reduce the fees allowed for such duration as is necessary to bring aggregate fee for service expenditure back within authorized budget limits.

(7) The authority shall maintain a data system which creates a profile of providers' practices with respect to services provided. Providers whose profiles deviate from their peer group shall, in addition to the measures described in subdivision (5) of this subsection, be subject to review and reductions in allowed reimbursement rates for compensated procedures authorized by the authority.

(8) In order to create incentives for providers to engage in cost-effective practices with respect to services provided, the authority may develop and implement reimbursements based upon outcomes rather than solely the volume or number of procedures performed.

(9) The authority shall approve integrated systems of health care delivery in accordance with standards adopted by the authority by rule. The authority shall review compliance with such standards, and may withdraw its approval upon determining that there has been substantial noncompliance with such standards.

(c) Any person aggrieved by a decision of the authority under this section may appeal such decision to the superior court.

9420. FINANCING OF THE UNIFORM BENEFITS PLAN

(a) Health care purchasing trust established.

(1) The health care purchasing trust is established, separate and apart from all other public monies or funds of the state, for the purposes of financing the plan.

(2) The provisions of subchapter 5 of chapter 7 of Title 32 shall not apply to the trust. The authority shall have the power to administer and withdraw trust funds without an annual legislative appropriation. Fund balances in the trust at the end of each fiscal year shall carry forward and remain in the trust.

(3) The fund shall consist of all tax revenues assessed by this chapter, all other taxes or monies paid into the state treasury and credited to the fund, all monies appropriated to the fund, all property and securities acquired by and through the use of monies belonging to the fund, and all interest earned by the fund.

(4) The fund shall also include deferral payments by the United States Secretary of Health and Human Services under health care programs established under Title XVIII and Title XIX of the Social Security Act, 42 U.S.C. 301.

(5) The authority shall have such powers as are necessary to administer the trust. The authority shall withdraw from the fund such amounts as necessary to pay for insured services and the costs of administration of the plan.

(b) Taxes established to finance the uniform benefits plan.

(1) Taxes are imposed to fund the trust for the provision of services under the plan as follows:

(A) A tax upon the payroll of each employer in the state at a rate of eight percent upon the amount by which annual total payroll exceeds $50,000.00.

(B) A tax upon adjusted gross Vermont income as defined by 32 V.S.A. 5811 at a rate of two percent provided that $12,000.00 of adjusted gross income of each joint return and $6,000.00 of adjusted gross income of all other returns filed with the Vermont commissioner of taxes shall be exempt.

(C) A tax upon cigarettes imposed by 32 V.S.A. 7771 of $0.02 per cigarette, with the revenues obtained from this increase to be paid into the trust.

(D) The commissioner of taxes shall administer and enforce this section. The commissioner may adopt rules necessary to assist such administration and enforcement. All taxes assessed by this section shall be paid into the state treasury and credited to the trust.

9420a. MISCELLANEOUS

(a) Enforcement. Any person who is eligible for health care services under this chapter has the right to equitable access to insured services, and shall have standing to enforce this chapter.

(b) Prescription Drugs. The authority shall implement a program for the direct purchase of prescription drugs covered by the plan at the lowest possible prices, and for distribution to pharmacists in the state.

Sec. 3. 18 V.S.A. chapter 222 is added to read:

CHAPTER 222. LONG-TERM CARE

9501. ESTABLISHMENT; POLICY AND PURPOSE

(a) The Vermont long-term care program is established effective January 1, 1995, in accordance with this chapter.

(b) It is the policy of the state of Vermont to promote long-term care services which allow individuals to live in the least restrictive setting possible, when their lack of good health threatens their independence. Because Vermont's aged population will double in the next 40 years, a blend of government intervention and individual responsibility is needed now to sustain the services Vermonters will need to be cared for in home and family based environments. The Vermont long-term care program will redirect government resources from an institutional model of care to one which promotes more independent living. The Vermont long-term care program will support a continuum of care which recognizes that in order for Vermonters to attain and maintain their highest level of independence, a variety of coordinated services is necessary, including institutional care. This program establishes the financial underpinnings required so that no Vermonters become financially insolvent in order to receive health care for their long-term care needs.

(c) The purpose of the Vermont long-term care program is to:

(1) Provide Vermonters with basic protection from and the means to meet long-term care costs.

(2) Assure dignity, independence, and self-sufficiency, support self-determination, and enhance quality of life.

(3) Maximize the use of federal funds in financing benefits.

(4) Balance the principle of social adequacy, which means providing a floor of protection for all residents, with the principle of individual equity, by which the level of benefits for which an individual is eligible has a relationship to the amount contributed to the program.

9502. DEFINITIONS

Unless a different meaning is plainly required by the context, the following words and phrases as used in this chapter shall have the following meanings:

(1) "Activities of daily living" or "ADL" shall mean bathing, dressing, transferring, toileting, continence and eating.

(2) "Acute care services" means time-limited medical and hospital services, primarily curative or restorative in nature.

(3) "Authority" means the Vermont health care authority established by chapter 221 of this title.

(4) "Beneficiary" means any person in receipt of services as provided by this chapter.

(5) "Benefit credits" means credits earned in the Vermont long-term care program based on years of credited contributions as defined in 32 V.S.A. 6005.

(6) "Covered services" means long-term care services authorized by the authority in accordance with section 7504 of this title.

(7) "Department" means the department of aging and disabilities.

(8) "Long-term care" means a range of services delivered in the home, the community or in an institution to persons who have functional limitations and need assistance with performingone or more activities of daily living. Long-term care services may include care delivered in a nursing home as well as personal assistance services delivered in an individual's home by a nurse, health aid or personal attendant who assists with personal care.

(9) "Long-term care trust fund" or "trust fund" means the trust fund created by chapter 155 of Title 32.

(10) "Act No. 160 Recommendations" means those long-term care recommendations made by the authority pursuant to Act No. 160 of the Acts of the 1991 adjourned session.

9503. BENEFITS

(a) Benefits shall be provided to eligible beneficiaries from and after January 1, 1997. The maximum daily benefit shall be calculated by the service coordinator assigned to each individual, in accordance with the level of service agreed upon in the individual's plan of care pursuant to section 9507(a) of this title.

(b) The amount and scope of the benefits provided to eligible beneficiaries shall be consistent with the tax rate established by the general assembly to support the long-term care trust fund, and shall be consistent with maintaining the solvency of the fund.

(c) The maximum daily benefit payable on behalf of any individual in calendar year 1997 shall not exceed $45.00. Annual increases or decreases in the maximum daily benefit shall be determined by the authority by rule. The rate of increase in any calendar year shall not exceed the lesser of five percent per year or the increase in per capita personal income in the state during the preceding calendar year as determined by the authority. Notwithstanding the foregoing, thelong-term care program is intended to be self-supporting, and expenditures from the trust fund shall not exceed its revenue.

(d) Consistent with the recommendations in Act No. 160 of the Acts of 1992, the authority shall establish by rule effective January 1, 1997, a methodology for aggregating benefits to maximize efficacy of the program within the established fiscal limits.

(e) Benefits shall not be provided in cash but shall be provided in the form of covered services to the beneficiary and paid from revenues in the trust fund, subject to the maximum daily benefit.

9504. COVERED SERVICES

(a) Covered services shall be defined by rule of the authority, including where and when provided. Covered services for adults may include the following:

(1) Case management and service coordination.

(2) Nursing home care.

(3) Adult day services.

(4) Skilled nursing care.

(5) Physical, occupational, and speech therapy.

(6) Attendant care.

(7) Homemaker services.

(8) Meal preparation.

(9) Assistive technology.

(10) Respite care.

(11) Chore services.

(b) Covered services for children shall include only respite care and shall be limited in any one year to 30 times the maximum daily benefit.

(c) Individuals shall be allowed as much discretion as is reasonable in determining the appropriate mix of services to meet their needs. Services authorized by this chapter and intended to assist with performing activities of daily living shall be consumer-directed whenever feasible. For the purposes of this chapter, "consumer-directed" means services that are provided by an individual who is selected and managed and, at the individual's option, trained by the individual receiving services.

(d) The following shall not be covered services unless specifically authorized by the general assembly:

(1) Services related to mental and nervous disorders other than Alzheimer's disease and related diseases.

(2) Services for mental retardation, substance abuse, occupational diseases and injuries, or acute care.

(3) Dental care, prescription drugs, and services for which there is no legal obligation to pay.

(4) Services provided outside the United States.

9505. ELIGIBILITY FOR BENEFITS

(a) Residents and former residents who have made the requisite contributions to the long-term care trust fund established by 32 V.S.A. 6001 and who require long-term care for reasons other than mental retardation or chronic mental illness shall be eligible for covered services in accordance with this section and the provisions of 32 V.S.A. 6005. The authority shall establish by rule eligibility criteria and procedures and payment procedures reflecting both the need for covered services as set forth under subsection (b) of this section, and earned benefit credits as set forth in 32 V.S.A. 6005. The income of the applicant or beneficiary shall not be used to determine eligibility for benefits.

(b) The need for covered services shall be based upon a person's physical and mental ability to function independently. Physical condition shall be based on ability to perform the activities of daily living and on cognitive ability. A person who needs supervision or assistance from another person in performing two or more activities of daily living, or such other equivalent determinant as may be established by the authority by rule, shall be eligible for covered services. In addition, a person who is unable to recognize and interact safely in his or her surroundings, or is disoriented as to time and place and unable to care for himself or herself because of severe cognitive impairment, shall be eligible for covered services regardless of ability to perform specific activities of daily living.

9506. WAITING PERIOD; RESIDENCE

(a) Coverage shall become effective 90 calendar days subsequent to establishing eligibility.

(b) Once coverage is effective, covered services shall be provided until the individual nolonger meets eligibility criteria and for 180 days thereafter. However, following each period of 180 days when no covered services are used, a new eligibility period shall be established with a new 90-day waiting requirement.

(c) Once eligibility for benefits has been established by a Vermont resident by earning benefit credits, continued residence in the state shall not be required for the delivery of covered services.

9507. SERVICE DELIVERY AND CASE MANAGEMENT

(a) Each applicant shall be given initial screening and, if apparently in need of long-term care services, a functional assessment to identify the type, combination, and frequency of services necessary to meet his or her individual needs. The individual and family members shall be fully involved in and in control of the development and periodic review and revision of an individual plan of care.

(b) In consultation with the department and with representatives of the aging, disabilities, and children's networks, consumers, health and long-term care providers, government, business, advocacy groups, and interested legislators, the authority shall adopt rules as necessary to implement a long-term care delivery system for the purposes of providing the services authorized under this chapter.

(c) In designing a long-term care delivery system, the authority shall ensure that effective eligibility determination, development of a plan of care, case management, and service delivery and coordination are provided to each beneficiary.

9508. COMPREHENSIVE INFORMATION SYSTEM

The authority, with the assistance and cooperation of the agency of human services, shall develop a data system sufficient to carry out the provisions of this chapter, including, but not limited to the characteristics and needs of beneficiaries, utilization of services and expenditures by beneficiaries, the benefits and outcomes of services provided. The information system shall provide support for appropriate quality assurance procedures, eligibility determination and assessment tools, service coordination processes, and other administrative and management procedures related to the program.

9509. PROGRAM ADMINISTRATION

(a) The authority shall be responsible for the administration of this chapter. The authority may contract or enter into interagency agreements to carry out its administrative functions and to carry out the purposes of the program.

(b) The state treasurer shall invest and account for the trust fund in accordance with 32 V.S.A. 6003.

9510. COORDINATION WITH MEDICAID AND MEDICARE

Every feasible means shall be examined to maximize the effective use of federal funds. Procedures shall be developed and implemented which, over time, will lead to a fully integrated service system for beneficiaries. Appropriate waivers and amendments of federal regulations shall be requested by the authority in collaboration with the appropriate department when necessary.

9511. PERIODIC REPORTS; QUALITY ASSURANCE

(a) On or before January 1 of each year beginning in the year 1998, the authority shall issue a report to the general assembly on the utilization of benefits, the effectiveness and financial status of the program, proposed additions or limitations on covered services, a summary of quality assurance activities, and any recommendations designed to improve the administration of the program.

(b) The authority shall maintain a quality assurance program for services provided to beneficiaries which shall include routine feedback and evaluation of the program from beneficiaries and providers.

(c) The authority shall establish and maintain adequate procedures for the timely resolution of disputes and grievances for all participants, including beneficiaries, potential beneficiaries, facilities, and providers.

Sec. 4. 32 V.S.A. chapter 155 is added to read:

CHAPTER 155. LONG-TERM CARE TRUST FUND

6001. DEFINITIONS

Unless a different meaning is plainly required by the context, the following words and phrases as used in this chapter shall have the following meanings:

(1) "Adjusted gross income" means both earned and unearned income as reported on federal income tax forms.

(2) "Authority" means the Vermont health care authority established by chapter 221 of Title 18.

(3) "Beneficiary" means any person in receipt of services as provided by chapter 222 of Title 18.

(4) "Benefit credits" means credits toward the maximum long-term care benefit earned in the Vermont long-term care program based on years of credited contributions as defined in this chapter.

(5) "Board" means the board of trustees of the trust fund, appointed in accordance with section 6002 of this chapter.

(6) "Covered services" means long-term care services authorized by the authority in accordance with 18 V.S.A. chapter 222.

(7) "Long-term care trust fund" or "trust fund" means the trust fund created by this chapter.

6002. LONG-TERM CARE TRUST FUND; TRUSTEES

(a) The long-term care trust fund is established as a special fund subject to the provisions of sections 585-590 of this title. The general administration and responsibility for the proper operation of the long-term care trust fund and for making effective the provisions of this chapter are hereby vested in a board of six trustees. The board shall consist of the governor or his or her designated representative, state treasurer, commissioner of aging and disabilities, and the members of the authority.

(b) The trustees as such shall serve without compensation, but they shall be reimbursed from the trust fund for all necessary expenses that they may incur through service on the board oftrustees.

(c) Subject to the limitations of this chapter, the board shall, from time to time, establish rules and regulations for the administration of the funds of the long-term care system and for the transaction of its business.

(d) The board shall keep a record of its proceedings, which shall be open to public inspection.

6003. INVESTMENTS; INTEREST RATE; DISBURSEMENTS

(a) The members of the board shall be the trustees of the funds created by this chapter, and with respect to them may invest and reinvest the funds, and hold, purchase, sell, assign, transfer and dispose of the securities and investments in which the funds have been invested and reinvested, subject to the terms, conditions, limitations and restrictions imposed by the laws of this state upon life insurance companies in making and disposing of investments.

(b) The state treasurer shall be the custodian of the trust fund. All payments from the trust fund shall be made by him or her or by the deputy treasurer, with approval of the board.

(c) Money in the trust fund shall be used to pay for benefits and administrative expenses of the long-term care program and for no other purpose. The trust fund shall be invested to produce the highest available income consistent with prudent fiduciary goals. Expenditures from the trust fund shall not exceed the fund balance. The state treasurer shall issue an annual report detailing the financial status of the trust fund.

6004. CONTRIBUTIONS TO THE LONG-TERM CARE TRUST FUND

(a) Beginning in calendar year 1995, the income contribution thresholds for each Vermontresident shall be $9,388.00 of adjusted gross income for single tax filers, and $11,256.00 of adjusted gross income for joint tax filers. Annually thereafter the general assembly shall establish the income contribution thresholds to be consistent with the Medicaid protected income level or such other level that will preserve the receipt of federal funds and maintain the viability of the trust fund.

(b) Beginning in calendar year 1995, each Vermont resident whose annual adjusted gross income is above the contribution threshold shall make a contribution to the long-term care trust fund. The annual contribution rate for calendar years 1995 to 2009 shall be 0.7 percent of adjusted gross income.

(c) The authority shall cause to be prepared and reported to the general assembly on or before January 1 of each year an actuarial report containing both short-range and long-range projections of future income, expenditures, and financial soundness of the trust fund. The actuarial report shall also contain recommendations for adjustments to the contribution threshold, the contribution rate, and the maximum daily benefit amount that may be needed.

6005. BENEFIT CREDITS

(a) Each Vermont resident whose adjusted gross income is above the contribution threshold and makes a full contribution in accordance with this chapter in any calendar year shall earn one year of benefit credits. Benefit credits shall be awarded to taxpayers and spouses who file income taxes either singly or jointly, and to children with disabilities. Current benefit credits and permanent benefit credits shall be awarded according to the following criteria:

(1) No benefit credits shall be earned in 1995 or 1996, or in the first two years of contribution by a taxpayer.

(2) Current benefit credits earned in calendar year 1997 or in the third year of contribution, whichever is later, shall entitle the beneficiary to 50 percent of the maximum monthly benefit. This entitlement ratio shall increase by a 10 percent increment each year that the full contribution is made, so that in the eighth years of contributions and thereafter, the current benefit credit shall entitle the beneficiary to 100 percent of the maximum monthly benefit. However, the current benefit credit shall be reduced for any taxpayer in the amount of 10 percent for each year in which no contribution is made.

(3) Permanent benefit credits earned in calendar year 1997 or in the third year of contribution, whichever is later, shall entitle the beneficiary to 2.5 percent of the maximum monthly benefit. An additional 2.5 percent of the maximum monthly benefit shall be awarded for each year of contribution thereafter, so that after 40 years of contributions the permanent benefit credits shall equal 100 percent of the maximum monthly benefit. Once earned, permanent benefit credits shall not be reduced.

(b) When a beneficiary becomes eligible to receive benefits, services shall be provided in the amount of either the taxpayer's current benefit credit or permanent benefit credit, whichever is greater.

(c) The department of taxes shall maintain records of contributions and benefit credits awarded to each taxpayer, spouse, and child with a disability. Each contributing family shallreceive a report annually disclosing the current status of its contributions and benefit credits. Such information shall be confidential unless released by the contributor, except that such information may be disclosed to the authority or the department of aging and disabilities when necessary to authorize payment of benefits, or for purposes associated with the administration of the program.

6006. LIABILITY OF LONG-TERM CARE PROGRAM

(a) Anything in this chapter to the contrary notwithstanding, the long-term care system shall not be liable for payment for any services or other benefits on behalf of beneficiaries under this chapter, for which reserves have not been previously created from funds contributed by such beneficiary for such benefits.

(b) The state of Vermont shall not be liable for payment of long-term care services beyond the extent of funds available in the long-term care trust fund.

Sec. 5. 18 V.S.A. 9403 is amended to read:

9403. VERMONT HEALTH CARE AUTHORITY; BOARD; CREATED

(a) A Vermont health care authority is created. The authority shall be supervised and directed by the Vermont health care authority board.

(b) A Vermont health care authority board is created. The board shall consist of *[three]* five members, all of whom shall be appointed by the governor with the advice and consent of the *[senate]* house of representatives. Three members shall be individuals who:

(1) represent the interests of health care consumers; and

(2) are not health care providers, as defined by section 9421(4) of this title, including any health care insurer, nonprofit hospital or medical service corporation, or health maintenance organization.

(c)(1) Members shall be appointed for terms of *[six]* four years *[, except that of the initial members, one member shall be appointed for a term of two years, one shall be appointed for a term of four years, and one shall be appointed for a term of six years. The terms of initial members shall include an additional period of time between appointment and March 1, 1993]*.

(2) Transition. Of the three members appointed before July 1, 1994, the governor shall designate one member whose seat shall become vacant on July 1, 1994, one member who shall serve an initial term of one more year after July 1, 1994, and one member who shall serve an initial term of two more years after July 1, 1994. Of the two new members appointed on or after July 1, 1994, the governor shall designate one member to serve an initial term of three years, and two members to serve an initial term of four years.

(d) The *[governor]* board shall *[designate]* elect one of the members to serve as chair for a term of two years.

(e) *[Members shall serve at the pleasure of the governor.]* The members may be removed for cause only.

(f) Vacancies shall be filled in the same manner as the original appointment for the unexpired portion of the term of the original appointee.

(g) The members shall be full-time exempt employees. The annual salary of the chair shallbe the same as the annual salary fixed for the administrative judge. The annual salary of each of the other members shall be the same as the annual salary fixed for a superior court judge.

(h) A member shall not participate in a quasi-judicial proceeding in which he or she has a personal or financial interest.

Sec. 6. 18 V.S.A. 9406(a)(1) is amended to read:

(a)(1) Health Care Expenditure Target. On or before July 1, 1993 the board shall adopt a health care expenditure target, consisting of the total amount of money to be spent in fiscal year 1994 for all services provided by health care facilities and providers in Vermont, and for all health care services provided to residents of this state. *[Except as applied in the certificate of need process under subchapter 5 of this chapter, the expenditure target shall not be binding.]*

Sec. 7. 18 V.S.A. 9406(b) is amended to read:

(b) Unified Health Care Budget. Beginning July 1, 1994, and annually thereafter, the board shall adopt a binding unified health care budget to accomplish the policies set forth in section 9401 of this title. The annual rate of increase or decrease in the unified health care budget shall be presumptively limited to the sum of the rate of inflation plus the rate of growth in Vermont's population, unless the board finds otherwise by clear and convincing evidence.

(1) The budget shall:

(A) Serve as the basic framework within which health care costs are controlled, resources directed, and quality and access assured.

(B) Establish the total amount of money to be expended annually for all health careservices provided by health care facilities and providers in Vermont, and for all health care services provided to residents of this state.

(C) Be consistent with the health resource management plan.

(D) Establish the total amounts to be paid for services provided by various sectors of the health care system.

(E) Apply to the hospital budget review and the certificate of need processes, and any other regulatory mechanism in which its application is authorized by statute.

(2) When preparing the budget, the board shall consider health care costs and the impact of the budget on those who receive, provide and pay for health care services.

(3) The board shall adopt, by rule, the various sectors of the health care system to be separately identified in the budget, the methods and processes to be used to allocate resources among such sectors, the economic indicators to be used to define the parameters of the rate of growth in the cost of the system and various sectors of the system, and processes and criteria for responding to exceptional and unforeseen circumstances which affect the system and the budget.

(4) The board shall enter into binding discussions *[or nonbinding]* and negotiations with health care facilities and with any health care provider bargaining groups created under section 9409 of this title concerning matters related to the sectors of the unified health care budget. On or before May 1, 1994, and annually thereafter, the board shall present a proposed budget to the health policy council for review and comment. The council shall hold public hearings on the proposed budget in the manner set forth in section 9424(3)(B) of this title, and forward itscomments and recommendations to the board. After receiving the council's recommendations and prior to adoption of a unified health care budget, the board shall hold one or more public hearings for the purpose of receiving oral and written comment on the proposed budget.

Sec. 8. LONG-TERM CARE; SPECIAL STUDY OF INTEGRATED LONG-TERM CARE

SERVICE DELIVERY; TRANSITION; INTERIM REPORTS

(a)(1) The Health Care Authority, in consultation with the department of mental health and mental retardation, and the department of aging and disabilities shall conduct a special study of ways to integrate delivery of the long-term care services listed in 18 V.S.A. 9504(d) into the Vermont long-term care program. The study shall include specific consideration of children with special health care needs, and persons with mental retardation or severe and persistent mental illness.

(2) The Health Care Authority shall evaluate the special study of integrated long-term care services and report back to the general assembly no later than January 1, 1997 with recommendations for expansion and integration of the Vermont long-term care program to include the services referred to in this subsection, and any recommendations relating to changes in the financing plan.

(3) The report shall also include recommendations regarding the integration of long-term care reforms with Vermont's health care reforms, including methods for delivering long-term care services through systems of care that are integrated.

(4) The Health Care Authority shall seek federal waivers and other regulatory or statutorychanges as necessary to implement the long-term care plan described in this act.

(b) The Vermont Health Care Authority shall adopt rules governing the comparability of benefits in the long-term care program with benefits obtained through continuing care retirement communities and through the purchase of long-term care insurance.

(c) The Vermont Health Care Authority, the department of aging and disabilities, the department of taxes, and the state treasurer shall jointly issue interim reports on or before January 1, 1995, January 1, 1996, and January 1, 1997. Each interim report shall accurately indicate the state of preparation for administration of the long-term care program, including adoption of eligibility rules; procedures for collecting, reporting and investing contributions; calculating and reporting benefit credits; paying providers; actuarial projections of the future soundness of the long-term care trust fund; and other items as determined by the responsible departments or requested in writing by any committee of the general assembly. Each interim report shall contain the recommendations of each agency regarding transition issues and other issues not adequately dealt with in this act.

Sec. 9. REPEAL

(a) 18 V.S.A. 9407 (health insurer cost management plans) is repealed.

(b) 18 V.S.A. 9409 (health care provider bargaining) is repealed.

(c) 18 V.S.A. 9413 (Vermont health care purchasing pool) is repealed.