TO THE HONORABLE SENATE

     The Committee on Health and Welfare, to which was referred House Bill H.861, entitled “AN ACT RELATING TO HEALTH CARE AFFORDABILITY FOR VERMONTERS”

respectfully report that they have met and considered the same and recommend that the Senate propose to the House that the bill be amended by striking all after the enacting clause and inserting in lieu thereof the following:

Sec. 1.  HEALTH CARE REFORM PRINCIPLES

The general assembly adopts the following guidelines, modeled after the Coalition 21 principles, as a framework for reforming health care in Vermont:

(1)  It is the policy of the state of Vermont to ensure universal access to and coverage for essential health care services for all Vermonters. 

(2)  Health care coverage needs to be comprehensive and continuous. 

(3)  Vermont’s health delivery system must model continuous improvement of health care quality and safety. 

(4)  The financing of health care in Vermont must be sufficient, equitable, fair, and sustainable. 

(5)  Built-in accountability for quality, cost, access, and participation must be the hallmark of Vermont’s health care system.

(6)  Vermonters must be engaged, to the best of their ability, to pursue healthy lifestyles, to focus on preventive care and wellness efforts, and to make informed use of all health care services throughout their lives.

Sec. 2.  LEGISLATIVE PURPOSE AND INTENT

(a)  It is the intent of the general assembly that all Vermonters receive affordable and appropriate health care at the appropriate time and that health care costs be contained over time.  The general assembly finds that effective first steps to achieving this purpose are the prevention and management of chronic conditions, coverage of the uninsured through catamount health, a self-insured, comprehensive benefit plan with sliding-scale premiums, and providing immunizations for all Vermonters.  The general assembly finds that chronic care management is one tool to contain health care costs and ensure that the costs of Vermont’s health care system becomes sustainable.

(b)  It is also the intent of the general assembly to ensure that any reduction in the “cost shift” is returned to consumers by slowing the rate of growth in insurance premiums.  The cost shift results when the costs of health services are inadequately paid for by public health care programs and when individuals are unable to pay for services.  Raising Medicaid payment rates and reducing the number of uninsured will reduce the cost shift.  In addition, standardizing the minimum criteria and reporting requirements for uncompensated care and bad debt write-offs by hospitals will more clearly identify and account for the cost shift. 

Sec. 3.  3 V.S.A. § 2222a is added to read:

§ 2222a.  HEALTH CARE SYSTEM REFORM; QUALITY AND

               AFFORDABILITY

(a)  The secretary of administration, working in collaboration with the general assembly, shall be responsible for the coordination of health care system reform among executive branch agencies, departments, and offices.

(b)  The secretary shall ensure that those executive branch agencies, departments, and offices responsible for the development, improvement, and implementation of Vermont’s health care system reform do so in a manner that is timely, patient-centered, and seeks to improve the quality and affordability of patient care.

(c)  Vermont’s health care system reform initiatives include:

(1)  the state’s chronic care infrastructure, prevention, and management program contained in the blueprint for health established by chapter 13 of Title 18, the goal of which is to achieve a unified, comprehensive, statewide system of care that improves the lives of Vermonters with or at risk for a chronic condition.

(2)  the Vermont health information technology project pursuant to section 9417 of Title 18.

(3)  the multi-payer data collection project pursuant to section 9410 of Title 18.

(4)  the common claims administration project pursuant to section 9408 of Title 18.

(5)  the consumer price and quality information system pursuant to section 9410 of Title 18.

(6)  any information technology work done by the quality assurance system pursuant to section 9416 of Title 18.

(7)  the hospital default insurance program established in section 9421 of Title 18.

(8)  the public health promotion programs of the department of health and the department of disabilities, aging, and independent living.

(9)  Medicaid, the Vermont health access plan, Dr. Dynasaur, VPharm, and Vermont Rx, established in chapter 19 of Title 33, which are programs to provide health care coverage to elderly, disabled, and low to middle income Vermonters.

(10)  Catamount health, established in subchapter 6 of chapter 19 of Title 33, which provides a comprehensive benefit plan with a sliding-scale premium based on income or premium assistance for employer-sponsored insurance to uninsured Vermonters.

(d)  The secretary shall report to the commission on health care reform, the health access oversight committee, the house committee on health care,  the senate committee on health and welfare, and the governor on or before December 1, 2006 with a five-year strategic plan for implementing Vermont’s health care system reform initiatives, together with any recommendations for administration or legislation.  Annually, beginning January 15, 2007, the secretary shall report to the general assembly on the progress of the reform initiatives.

(e)  The secretary of administration or designee shall provide information and testimony on the activities included in this section to any legislative committee upon request and during adjournment to the health access oversight committee and the commission on health care reform.

* * * Chronic Care Infrastructure and Prevention * * *

Sec. 4.  BLUEPRINT FOR HEALTH

(a)  The general assembly endorses the “blueprint for health” chronic condition prevention and chronic care management initiative as a foundation which it intends to strengthen by broadening its scope and coordinating the initiative with other public and private chronic care coordination and management programs.

(b)  The charge and strategic plan for the blueprint for health are codified in Section 5 of this Act as chapter 13 of Title 18. 

(c)  The department of health shall revise the current strategic plan for the blueprint for health and provide the revised plan to the commission on health care reform, the health access oversight committee, the house committee on health care, and the senate committee on health and welfare no later than October 1, 2006.  The revised strategic plan shall provide that a model for the patient registry under the blueprint for health is fully designed no later than January 1, 2007.

Sec. 5.  18 V.S.A. chapter 13 is added to read:

Chapter 13.  CHRONIC CARE INFRASTRUCTURE

AND PREVENTION

§ 701.  DEFINITIONS

For the purposes of this chapter:

(1)  “Blueprint for health” means the state’s plan for chronic care infrastructure, prevention of chronic conditions, and chronic care management program.

(2)  “Chronic care” means health services provided by a health care professional for an established disease or condition that is expected to last a year or more and that requires ongoing clinical management attempting to restore the individual to highest function, minimize the negative effects of the disease, and prevent complications related to chronic conditions.  Examples of chronic conditions include diabetes, hypertension, cardiovascular disease, cancer, asthma, pulmonary disease, substance abuse, mental illness, and hyperlipidemia.

(3)  “Chronic care management” means a system of coordinated health care interventions and communications for individuals with chronic conditions, including significant patient self-care efforts, systemic supports for the physician and patient relationship, and a plan of care emphasizing prevention of complications utilizing evidence-based practice guidelines, patient empowerment strategies, and evaluation of clinical, humanistic, and economic outcomes on an ongoing basis with the goal of improving overall health.

(4)  “Health care professional” means an individual, partnership, corporation, facility, or institution licensed or certified or authorized by law to provide professional health care services.

(5)  “Health risk assessment” means screening by a health care professional for the purpose of assessing an individual’s health, including tests or physical exams and a survey or other tool used to gather information about an individual’s health, medical history, and health risk factors during a health screening.

(6)  “Patient registry” means the electronic database developed under the blueprint for health that will include information on all cases of a particular disease or health condition in a defined population of individuals.

§ 702.  BLUEPRINT FOR HEALTH; STRATEGIC PLAN

(a)  In coordination with the secretary of administration under section 2222a of Title 3, the commissioner of health shall be responsible for the development and implementation of the blueprint for health, including the five-year strategic plan.

(b)(1)  The commissioner shall establish an executive committee to advise the commissioner on creating and implementing a strategic plan for the development of the statewide system of chronic care and prevention as described under this section.  The executive committee shall consist of a representative from the department of banking, insurance, securities, and health care administration, the office of Vermont health access, the Vermont medical society, the Vermont program for quality in health care, the Vermont association of hospitals and health systems, and two representatives of private health insurers. 

(2)  The executive committee shall engage a broad range of health care professionals who provide services under section 2024 of Title 33, health insurance plans, professional organizations, community and nonprofit groups, consumers, businesses, school districts, and state and local government in developing and implementing a five-year strategic plan. 

(c)(1)  The strategic plan shall include:

(A)  a description of the Vermont blueprint for health model, which includes general, standard elements established in section 703 of this title to be used uniformly statewide by private insurers, third party administrators, and public programs;

(B)  a description of prevention programs and how these programs are integrated into communities and with chronic care management;

(C)  a plan to develop and implement reimbursement systems aligned with the goal of managing the care for individuals with or at risk for chronic conditions in order to improve outcomes and the quality of care;

(D)  the involvement of public and private groups, health care professionals, insurers, third party administrators, associations, and firms to facilitate and assure the sustainability of a new system of care;

(E)  alignment of any information technology needs with other health care information technology initiatives;

(F)  the use and development of outcome measures and reporting requirements, aligned with existing outcome measures within the agency of human services, to assess and evaluate the system of chronic care;

(G)  target timelines for inclusion of specific chronic conditions to be included in the chronic care infrastructure and for statewide implementation of the blueprint for health; and

(H)  a strategy for ensuring statewide participation no later than January 1, 2009, in the chronic care management plan, including common outcome measures, best practices and protocols, data reporting requirements, payment methodologies, and other standards.

(2)  The strategic plan shall be reviewed biennially and amended as necessary to reflect changes in priorities.  Amendments to the plan shall be reported to the general assembly in the report established under subsection (d) of this section.

(d)(1)  The commissioner of health shall report quarterly on the status of implementation of the Vermont blueprint for health to the house committee on health care, the senate committee on health and welfare, and the health access oversight committee.  The quarterly report shall include the number of participating insurers, health care professionals, and patients, the progress for achieving statewide participation in the chronic care management plan, including the measures established under subsection (c) of this section, the expenditures and savings for the period, and other information as requested by the committees.  At least annually, the commissioner shall report the results of health care professional and patient satisfaction surveys. The surveys shall be developed in collaboration with the executive committee established under subdivision (b) of this section.

(2)  If statewide participation in the blueprint for health is not achieved by January 1, 2009, the commissioner shall recommend to the general assembly statutory changes to create alternative measures to ensure statewide participation by health insurers, third party administrators, and health care professionals.

§ 703.  CHRONIC CARE MANAGEMENT; CATAMOUNT HEALTH;

             REQUEST FOR PROPOSALS

(a)(1)  The secretary of administration or designee shall issue a request for proposals no later than January 1, 2007 for health services for individuals with chronic conditions who are enrolled in Medicaid, the Vermont health access plan, or Dr. Dynasaur and for health services for individuals enrolled in catamount health. 

(2)  With the goal of including all individuals, the secretary may initially target the chronic care management program to certain groups of individuals to ensure successful implementation and quality of services and to maximize cost savings.  Individuals with chronic conditions who are enrolled in catamount health shall be included in the chronic care management program upon enrollment.  In the request for proposals, the secretary may provide a time period for implementing chronic care management to individuals currently enrolled in Medicaid, the Vermont health access plan, or Dr. Dynasaur in order to allow sufficient time for health care professionals and the entity administering the proposal to identify and enroll these individuals.

(3)  The secretary or designee shall apply for a waiver or other approval from the Centers for Medicare and Medicaid Services to include individuals who are dually eligible for Medicare and Medicaid.   

(b)  The secretary shall include in the request for proposals a broad range of chronic conditions for chronic care management.

(c)  The request for proposals shall stipulate that responses include:

(1)  a method involving the health care professional in identifying eligible patients, including the use of the patient registry, an enrollment process which provides incentives and strategies for maximum patient participation, and a standard statewide health risk assessment for each individual;

(2)  the process for coordinating care among health care professionals;

(3)  the methods of increasing communication among health care professionals and patients, including patient education, self-management, and follow‑up plans;

(4)  the educational, wellness, and clinical management protocols and tools used by the care management organization, including management guideline materials for health care professionals to assist in patient-specific recommendations;

(5)  process and outcome measures to provide performance feedback for health care professionals and information on the quality of care, including patient satisfaction and health status outcomes;

(6)  payment methodologies which create financial incentives and rewards for health care professionals to improve the management of chronic conditions and the quality of care, including case management fees or pay for performance;

(7)  payment to the care management organization which would guarantee net savings to the state or put the care management organization’s fee at risk if the management is not successful in reducing costs to the state;

(8)  a requirement that the data on enrollees be shared, to the extent allowable under federal law, with the secretary in order to inform the health care reform initiatives under section 2222a of Title 3;

(9)  a method for the care management organization to participate closely in the blueprint for health and other health care reform initiatives; and

(10)  participation in the pharmacy best practices and cost-control program under subchapter 5 of chapter 19 of Title 33, including the multi-state purchasing pool and the statewide preferred drug list.

(d)  The secretary shall require that the entity administering the proposal under this section be a Vermont nonprofit corporation and administer the program in the state.  The secretary may allow the nonprofit entity to contract with a for-profit entity for the administration of chronic care management if the secretary finds that it is in the best interest of the programs and the program enrollees.

(e)  The secretary shall review the request for proposals with the commission on health care reform prior to issuance.  The issuance of the requests for proposals is conditioned on the approval of the commission in order to ensure that the request meets the intent of this section and section 702 of this title.

(f)  The secretary shall ensure that the responses to the requests for proposals, including future requests, shall comply with the Vermont blueprint for health strategic plan and to the extent feasible, collaborate in its initiatives.

Sec. 6.  PREVENTION AND CHRONIC CARE

             MANAGEMENT; AGENCY OF HUMAN SERVICES;

             IMPLEMENTATION PLAN

(a)  No later than January 1, 2007, the agency of human services shall develop an implementation plan for prevention of chronic conditions and for chronic care management which at minimum meets the criteria and requirements of chapter 13 of Title 18.  The agency’s implementation plan shall be revised periodically to reflect changes to the Vermont blueprint for health strategic plan.  In addition to the chronic care management provided under section 703 of Title 18, the agency may provide additional care coordination services to appropriate individuals as specified in its strategic plan.  The agency shall ensure that Medicaid, Medicaid waiver programs, and Dr. Dynasaur change the payment methodologies in order to comply with the recommendation of the strategic plan and the request for proposals developed under chapter 13 of Title 18.  The agency shall analyze and include a recommendation as to any waivers or waiver modifications needed to implement a chronic care management program.

(b)  The agency shall require recertification or reapplication for Medicaid, the Vermont health access plan, and Dr. Dynasaur no more often than once a year.

Sec. 7.  PREVENTION AND CHRONIC CARE MANAGEMENT;

             STATE EMPLOYEES

The commissioner of human resources shall include in any request for proposals for the administration of the state employees health benefit plans a request for a description of any chronic care management program provided by the entity and how the program aligns with the Vermont blueprint for health strategic plan developed under section 702 of Title 18.  The commissioner shall also work with the secretary of administration or designee, and the Vermont state employees’ association on how and when to align the state employees’ health benefit plan with the goals and statewide standards developed by the Vermont blueprint for health in section 702 of Title 18.

* * * Medicaid Reimbursement * * *

Sec. 8.  MEDICAID REIMBURSEMENT

(a)  For fiscal year 2007, the office of Vermont health access shall increase Medicaid reimbursement for evaluation and management procedure codes to enhance payment to primary care specialties for primary care services under Medicaid and the Vermont health access plan to a level equivalent to rates in the Medicare program.  Starting in fiscal year 2008, the office shall also align Medicaid rates to reflect the changes in reimbursement for the prevention and chronic care management program provided for in chapter 13 of Title 18.

(b)  For fiscal year 2007, the office of Vermont health access shall increase Medicaid reimbursement rates for inpatient services to hospitals by X percent effective January 1, 2007.

(c)  In fiscal years subsequent to 2007, Medicaid reimbursement increases to health care professionals and hospitals under Medicaid, the Vermont health access plan, and Dr. Dynasaur should be tied to the standards and quality or performance measures developed under the Vermont blueprint for health strategic plan established in section 702 of Title 18.  Prior to implementation, these standards shall be approved by the general assembly through the appropriations process.

Sec. 9.  HOSPITAL SERVICE AREA PILOT PROJECTS

(a)  The office of Vermont health access, in consultation with the department of health, shall issue requests for proposals for community pilot projects in two separate hospital service areas.  The goal of the projects shall be to increase integration and collaboration among health care professionals and community partners to coordinate the delivery of quality health care services in an efficient manner for implementation of the Vermont blueprint for health and catamount health.

(b)  The requests for proposals shall require that the responses shall include:

(1)  a comprehensive evaluation process that would establish test measures to monitor improvements and changes in access, clinical outcomes, quality, and cost‑containment;

(2)  parameters for evaluation of financial risk sharing and any savings; and

(3)  developing payment methodologies which include cost containment and realignment of incentives.

(c)  The office shall negotiate with the applicants to determine the scope and duration of the project.  The office shall provide incentive grants of $100,000.00 each to successful applicants to be used to coordinate and enhance the effectiveness of the pilot projects

Sec. 10.  VHAP PREMIUM ADJUSTMENTS  

Sec. 147(d) of No. 66 of the Acts of 2003, as amended by Sec. 129 of No. 122 of the Acts of the 2003 Adj. Sess. (2004) and Sec. 279 of No. 71 of the Acts of 2005, is further amended to read:

(d)  VHAP, premium-based.

* * *

(2)  The agency shall establish per individual premiums for the VHAP Uninsured program for the following brackets of income for the VHAP group as a percentage of federal poverty level (FPL):

(A)  Income greater than 50 percent and less than or equal to 75 percent of FPL:  $11.00 $7.00 per month.

(B)  Income greater than 75 percent and less than or equal to 100 percent of FPL:  $39.00 $25.00 per month.

(C)  Income greater than 100 percent and less than or equal to 150 percent of FPL:  $50.00 $33.00 per month.

(D)  Income greater than 150 percent and less than or equal to 185 percent of FPL:  $75.00 $49.00 per month.

Sec. 10a.  33  V.S.A. § 1973 is amended to read:

§ 1973. VERMONT HEALTH ACCESS PLAN

(a)  The department of prevention, assistance, transition, and health access agency of human services or its designee shall establish the Vermont health access plan (VHAP) pursuant to a waiver of federal Medicaid law.  The plan shall remain in effect as long as the a federal 1115 demonstration waiver is granted or renewed.

(b)  The purpose of the Vermont health access plan is to provide health care coverage for uninsured or underinsured low income Vermonters.  The commissioner of the department of prevention, assistance, transition, and health access agency of human services or its designee shall establish rules regarding eligibility and administration of the plan.

(c)  If approved by the Centers for Medicare and Medicaid Services, the agency shall establish a premium assistance program to assist individuals eligible for or enrolled in the Vermont health access plan to purchase an approved employer-sponsored insurance plan if available to that individual.  

 (1)  For individuals enrolled in the Vermont health access plan on January 1, 2007 who have access to an approved employer‑sponsored insurance plan, the premium assistance program shall contain:

(A)  A subsidy of premiums or cost‑sharing amounts based on the household income of the eligible individual, with greater amounts of financial assistance provided to eligible individuals with lower household income and lesser amounts of assistance provided to eligible individuals with higher household income.

(B)  A requirement that eligible individuals enroll in an approved employer‑sponsored insurance plan as a condition of continued public assistance under this section or under any other health benefit program offered or administered by the office of Vermont health access, except that dependents who are children of eligible individuals shall not be required to enroll in the premium assistance program.

(C)  Standards to ensure that eligible individuals are not obligated to make out‑of‑pocket expenditures for premiums and cost‑sharing amounts which are greater than their premium and cost‑sharing obligations on an annual basis under VHAP.

(D)  Standards to ensure that eligible individuals have health insurance coverage of services which meet a minimum level of coverage as specified by the agency. 

(E)  Any supplemental benefit coverage to such individuals offered by the agency.

(2)  For individuals who apply for enrollment in the Vermont health access plan on or after January 1, 2007 who have access to an approved employer‑sponsored insurance plan, the premium assistance program shall contain:

(A)  A subsidy of premiums or cost‑sharing amounts based on the household income of the eligible individual, with greater amounts of financial assistance provided to eligible individuals with lower household income and lesser amounts of assistance provided to individuals with higher household income.

(B)  A requirement that eligible individuals enroll in an approved employer‑sponsored insurance plan as a condition of continued public assistance under this section or under any other health benefit program offered or administered by the office of Vermont health access, except that dependents who are children of eligible individuals shall not be required to enroll in the premium assistance program.

(C)  Any supplemental benefit coverage to such individuals offered by the agency.

(3)  In consultation with the department of banking, insurance, securities, and health care administration, the agency shall develop criteria for approving employer‑sponsored health insurance plans to ensure the plans provide comprehensive and affordable health insurance when combined with the assistance under this section.  At minimum, the criteria shall:

(A)  include chronic care management meeting the criteria in section 703 of Title 18;

(B)  provide a financial incentive for participating in the chronic care management program;

(C)  conform to the standards established for coverage under the Global Commitment waiver; and

(D)  provide a minimum level of health services as defined by the secretary.

(4)  In the event that the agency determines that appropriations for the premium assistance program are insufficient to meet the projected costs of enrolling new program participants, the agency may suspend or terminate new enrollment for participants in the program or restrict enrollment to eligible lower income individuals.

Sec. 10b.  FEDERAL APPROVAL

The agency of human services shall request federal approval for an amendment to the Global Commitment Section 1115 Medicaid waiver for the premium assistance program authorized by Sec. 10a of this act.

Sec. 11.  DR. DYNASAUR AND SCHIP PREMIUM ADJUSTMENTS 

Sec. 147(f) of No. 66 of the Acts of 2003, as amended by Sec. 280 of No. 71 of the Acts of 2005, is amended to read:

(f)  Dr. Dynasaur and SCHIP premium changes.

(1)  The agency is authorized to amend the rules for individuals eligible for Dr. Dynasaur under the federal Medicaid and SCHIP programs to require beneficiary households to pay a monthly premium based on the following:

(A)  for individuals living in households whose incomes are greater than 225 percent of FPL and less than or equal to 300 percent of FPL, and who have no other insurance coverage:  $80.00 $40.00 per household per month.

(B)  for individuals living in households whose incomes are greater than 225 percent of FPL and less than or equal to 300 percent of FPL, and who have other insurance coverage:  $40.00 $20.00 per household per month.

(C)  for individuals living in households whose incomes are greater than 185 percent of FPL and less than or equal to 225 percent of FPL:  $30.00 $15.00 per household per month.

* * *

* * * Private Insurance Cost Shift Reviews* * *

Sec. 12.  8 V.S.A. § 4062d is added to read:

§ 4062d.  COST SHIFT REVIEW OF HEALTH INSURANCE PREMIUMS

In connection with insurers’ rate filings made pursuant to sections 4062, 4062b, 4515a, 4587, and 5104 of this title and any other applicable provisions of law, the commissioner shall ensure that health insurers appropriately account for reductions in hospital and provider charges attributable to any increase in Medicaid or other public insurance program reimbursements for health care providers or facilities and to a reduction in bad debt or charity care.

Sec. 13.  COST SHIFT TASK FORCE

The department of banking, insurance, securities, and health care administration shall convene a task force of health care professionals, insurers, hospitals, employers offering private health insurance, and other interested parties to determine how to ensure that reductions in hospital and provider charges are reflected in a slower rate of growth in health insurance premiums.  The task force shall make written recommendations on statutory or administrative changes needed to ensure that a reduction in the cost shift is reflected in health insurance premiums to the commission on health care reform no later than December 1, 2006.

* * * Catamount Health * * *

Sec. 14.  33 V.S.A. chapter 19, subchapter 6 is added to read:

Subchapter 6.  Catamount Health

§ 2021.  POLICY AND PURPOSE

Catamount health is established to provide uninsured Vermont residents a defined benefit package of primary, preventive, hospital, acute episodic care, and chronic care, including assistance in preventing and managing chronic conditions, through a self-insured product or the individual’s

employer-sponsored health plan.  Catamount health will also provide certain minimum preventive services without cost to all Vermonters.

§ 2022.  DEFINITIONS

As used in this subchapter:

(1)  “Agency” means the agency of administration.

(2)  “Approved employer-sponsored insurance plan” means a health insurance plan, which meets the criteria under section 2025 of this title, offered to an individual eligible under section 2023 of this title for catamount health.

(3)  “Benefits” means health services and amounts of coverage provided by catamount health, including allocation of cost-sharing amounts, deductibles, and benefit limits.

(4)  “Catamount health” means the health benefit plan offered under this subchapter.

(5)  “Chronic care” means health services provided by a health care professional for an established disease or condition that is expected to last a year or more and that requires ongoing clinical management attempting to restore the individual to highest function, minimize the negative effects of the disease, and prevent complications related to chronic conditions.  Examples of chronic conditions include diabetes, hypertension, cardiovascular disease, cancer, asthma, pulmonary disease, substance abuse, mental illness, and hyperlipidemia.

(6)  “Chronic care management” means a system of coordinated health care interventions and communications for individuals with chronic conditions, including significant patient self-care efforts, systemic supports for the physician and patient relationship, and a plan of care emphasizing prevention of complications utilizing evidence-based practice guidelines, patient empowerment strategies, and evaluation of clinical, humanistic, and economic outcomes on an ongoing basis with the goal of improving overall health.

(7)  “Health care professional” means an individual, partnership, corporation, facility, or institution licensed or certified or authorized by law to provide professional health care services.

(8)  “Health risk assessment” means screening by a health care professional for the purpose of assessing an individual’s health, including tests or physical examinations and a survey or other tool used to gather information about an individual’s health, medical history, and health risk factors during a health screening.

(9)  “Health service” means any medically necessary treatment or procedure to maintain, diagnose, or treat an individual’s physical or mental condition, including services ordered by a health care professional and services to assist in activities of daily living.

(10)  “Preventive care” means health services provided by health care professionals to identify and treat asymptomatic individuals who have developed risk factors or preclinical disease, but in whom the disease is not clinically apparent, including immunizations and screening, counseling, treatment, and medication determined by scientific evidence to be effective in preventing or detecting disease.

(11)  “Primary care” means health services provided by health care professionals specifically trained for and skilled in first-contact and continuing care for individuals with signs, symptoms, or health concerns, not limited by problem origin, organ system, or diagnosis, and shall include prenatal care and the treatment of mental illness.

(12)  “Uninsured” means an individual who does not qualify for Medicare, Medicaid, the Vermont health access plan, or Dr. Dynasaur, had no private insurance or employer-sponsored coverage that includes both hospital and physician services within 12 months prior to the month of application, or lost private insurance or employer-sponsored coverage during the prior 12 months for the following reasons:

(A)  the individual’s employer-sponsored coverage ended because of:

(i)  loss of employment;

(ii)  death of the principal insurance policyholder;

(iii)  divorce or dissolution of a civil union;

(iv)  no longer qualifying as a dependent under the plan of a parent or caretaker relative; or

(v)  no longer qualifying for COBRA, VIPER, or other state continuation coverage; or

(B)  college or university-sponsored health insurance became unavailable to the individual because the individual graduated, took a leave of absence, or otherwise terminated studies.

(13)  “Vermont resident” means an individual 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.

§ 2023.  ELIGIBILITY

(a)  An individual shall be eligible for catamount health if the individual is an uninsured Vermont resident.  Any Vermont resident shall be eligible for the minimum preventive care offered under section 2026 of this title. 

(b)  An individual receiving Medicaid, the Vermont health access plan, or Dr. Dynasaur within 12 months of applying for catamount health shall not be required to wait 12 months to be eligible for catamount health.  An individual who has coverage under catamount health may purchase an insurance policy designed to provide health services not covered by catamount health or the individual’s employer-sponsored insurance plan and remain eligible.

(c)  The agency shall establish rules pursuant to chapter 25 of Title 3 on the specific criteria to demonstrate eligibility, including criteria for and proof of residency, income, and insurance status.

(d)  Nothing in this subchapter shall require an individual already covered by health insurance to terminate that insurance or enroll in catamount health.

(e)(1)  If the monies available in the catamount fund established under section 2029 of this title are insufficient to support ongoing, new enrollment in catamount health, the agency shall recommend to the health access oversight committee a plan to cap or limit enrollment.

(2)  The agency’s determinations that monies available are insufficient shall be based on monthly enrollment figures and the official revenue estimates for the catamount fund under section 305a of Title 32.

(3)  A plan to cap or limit enrollment submitted to the health access oversight committee under this section shall be deemed approved unless the committee disapproves the plan within 21 days of submission by the agency.

(4)  If at any time after enrollment is capped or limited under this subsection, expenditures are anticipated to be equal to or less than the aggregate amount of funds appropriated for catamount health, the agency shall recommend to the health access oversight committee a plan to open enrollment in catamount health.

§ 2024.  BENEFITS

(a)  The agency shall develop by rule pursuant to chapter 25 of Title 3 a comprehensive benefit package of health services and chronic care management to be provided under catamount health beginning October 1, 2007.  Individuals eligible for catamount health with access to an approved-employer sponsored insurance plan are eligible for the premium assistance program under section 2025 and not for benefits under this section. 

(b)(1)  The benefits under this section shall include primary care, preventive and chronic care, acute episodic care, and hospital services.  The benefits shall be actuarially equivalent to the Vermont Freedom Plan with the $200.00 deductible offered by Blue Cross and Blue Shield of Vermont in 2006.  

(2)(A)  The agency shall propose to the general assembly reasonable sliding‑scale premiums for individuals up to 350 percent of the federal poverty level, deductibles, co-payments, benefit limits, or other cost‑sharing amounts applicable to the catamount health benefits under this section.  Co-payment amounts shall not apply to chronic care for individuals in chronic care management or to preventive care.  Individuals with incomes above 350 percent of federal poverty level shall be charged a premium reflecting the actual cost of catamount health.

(B)  For an individual who enrolls 13 months or more after the initial month of eligibility for catamount health, premiums shall increase one percent per month for each month thereafter when the individual was eligible for but did not enroll in catamount health.

(B)  The agency may include financial or other incentives to encourage healthy lifestyles and patient self‑management.  These incentives shall comply with the rules developed by the department of banking, insurance, securities, and health care administration for health promotion and prevention programs offered by health insurers.

(c)  To the extent catamount health provides coverage for any particular type of health service or for any particular medical condition, it shall cover those health services and conditions when provided by any type of health care professional acting within the scope of practice authorized by law.  Catamount health may establish a term or condition that places a greater financial burden on an individual for access to treatment by the type of health care professional only if it is related to the efficacy or cost-effectiveness of the type of service.

(d)  The agency shall ensure that catamount health will provide a choice of services and health care professionals, contain costs over time, include chronic care management, and improve quality of care and health outcomes.  In determining the amount, duration, and scope of benefits to be provided under this subchapter, the agency shall consider:

(1)  credible, evidence-based, scientific research and comment by health care professionals both nationally and internationally concerning clinical efficacy and risk;

(2)  the cost-effectiveness of health services and technology; and

(3)  revenues anticipated to be available to finance catamount health.

§ 2025.  BENEFITS; PREMIUM ASSISTANCE PROGRAM

(a)(1)  The agency shall develop, by rule pursuant to chapter 25 of Title 3, criteria for approving employer-sponsored insurance plans to ensure that the plan is comprehensive and affordable.  An approved employer‑sponsored insurance plan must:

(A)  include chronic care management meeting the criteria in section 703 of Title 18;

(B)  provide a financial incentive for participating in the chronic care management program; and

(C)  be actuarially equivalent or greater, when combined with the premium and cost-sharing criteria in this section, to the catamount health benefits under section 2024 of this title.

(2)  The secretary shall consult with the department of banking, insurance, securities, and health care administration in developing criteria under this subdivision.

(b)(1)  Beginning October 1, 2007, an individual eligible for catamount health with access to an approved employer-sponsored insurance plan shall receive financial assistance with the employee’s share of the premium or

cost-sharing amounts in order to assist the individual or family in purchasing the approved employer-sponsored plan.

(2)  The financial assistance shall be provided on a sliding-scale, based on the household income of the eligible individual, with greater amounts of financial assistance provided to eligible individuals with lower household income and lesser amounts provided to individuals with higher household income.

§ 2026.  MINIMUM PREVENTIVE CARE

(a)  Notwithstanding the eligibility, premium, and cost-sharing criteria in this subchapter, every Vermont resident may receive immunizations through catamount health.

(b)  For the purposes of this section, catamount health shall be the secondary payer to Medicaid, the Vermont health access plan, Dr. Dynasaur, Medicare, and any federal health insurance or federal program covering immunizations.

§ 2027.  ADMINISTRATION

(a)  The agency shall contract with a third party administrator to administer catamount health under procedures requiring requests for proposals as provided for in section 703 of Title 18.  For catamount health, the agency shall include criteria for an aggressive enrollment strategy by the administrator.  The agency shall ensure that each individual receives a health risk assessment upon enrollment in catamount health.  The agency shall weigh the costs and benefits of purchasing a reinsurance policy for catamount health as a method of managing risk and reducing the cost of the premium amounts.  The agency may purchase reinsurance if it determines that it is

cost-effective and prudent to do so.

(b)  The agency or administrator of catamount health shall make available the necessary information, forms, and billing procedures to health care professionals to ensure payment for health services covered under catamount health.  The agency or administrator shall use a single, uniform, simplified form to determine eligibility for Medicaid, any Medicaid waiver program, Dr. Dynasaur, any state‑funded pharmacy program, and catamount health to ensure that any individual eligible for these programs has the opportunity to enroll.  The agency shall collect data necessary to evaluate catamount health, including the individual’s reason for not having insurance, whether the individual’s employer offers insurance, and how the individual got information about catamount health.  Receipt of this information shall not be an eligibility requirement.  The agency shall require individuals to reapply or recertify no more often than annually.  

(c)  The agency shall structure the administration of catamount health to ensure that individuals may transition smoothly between Medicaid, the Vermont health access plan, Dr. Dynasaur, and catamount health.  The agency may also modify the administrative systems for Medicaid, the Vermont health access plan, or Dr. Dynasaur to achieve this purpose.

(d)  If pharmacy benefits are offered under catamount health, the agency or administrator shall ensure that catamount health complies with the pharmacy best practices and cost-control program under subchapter 5 of this chapter.  The agency or administrator shall collaborate with the office of Vermont health access in negotiating prescription drug prices and shall participate in the

multi-state drug purchasing pool and the preferred drug list administered by the office of Vermont health access.  To the extent feasible, the agency or administer shall offer pharmacy benefits through pharmacies able to access the federal Section 340B of U.S. Public Law 102-585 price.

(e)  An individual aggrieved by an adverse decision of the agency or the administrator may grieve or appeal the decision under rules and procedures consistent with 42 C.F.R. § 438.402.

§ 2028.  PAYMENT; HEALTH CARE PROFESSIONALS; HOSPITALS

(a)  Except as provided for in subsection (b), the agency shall pay health care professionals using the Medicare payment methodologies at a level at least ten percent greater than for levels paid under the Medicare program.  Payments under this subsection shall be indexed to the Medicare economic index developed by the Centers for Medicare and Medicaid Services.  

(b)  Payments for hospital services shall be calculated using the Medicare payment methodology adjusted for each hospital to ensure payments at 110 percent of the hospital’s actual cost for services. Payments under this subsection shall be indexed to changes in the Medicare payment rules.

(c)  Payments for chronic care and chronic care management shall meet the provisions in the request for proposals under section 703 of Title 18.

(d)  If Medicare does not pay for a service covered under the plan, the commissioner shall establish some other payment amount for such services determined after consultation with affected providers.  Members of catamount health shall not be billed any additional amount for health services, except as provided for as cost sharing in section 2024 of this title.

§ 2029.  Catamount Fund

(a)  The catamount fund is established in the treasury as a special fund to be a source of financing for catamount health.

(b)  Into the fund shall be deposited:

(1)  transfers of receipts received as strategic payments under the Master Tobacco Settlement Agreement from the tobacco litigation settlement fund as provided for in section 425a of Title 32;

(2)  22 percent of the revenue from the cigarette tax levied pursuant to chapter 205 of Title 32;

(3)  the health care affordability and stability assessment under section 2002 of Title 21;

(4)  premium amounts paid by individuals and employers unless paid directly to a third-party administrator; and

(5)  the proceeds from grants, donations, contributions, taxes, and any other sources of revenue as may be provided by statute, rule, or act of the general assembly.

(c)  The fund shall be administered pursuant to subchapter 5 of chapter 7 of Title 32, except that interest earned on the fund and any remaining balance shall be retained in the fund.  The agency shall maintain records indicating the amount of money in the fund at any time.

(d)  All monies received by or generated to the fund shall be used only as allowed by appropriation of the general assembly for the administration and delivery of catamount health and transfers to the state health care resources fund established in section 1901d of this title.

Sec. 15.  CATAMOUNT HEALTH; PREMIUMS; COST-SHARING

Subject to amendment in the fiscal year 2008 budget, the agency of administration shall establish individual and family premium amounts for catamount health under subchapter 6 of chapter 19 of Title 33.  The agency shall establish family premium amounts by income bracket based on the individual premium amounts and the average family size.  The individual premiums shall be by income bracket as a percentage of federal poverty level (FPL):

(1)  Income less than or equal to 200 percent of FPL:  $X.00 per month.

(2)  Income greater than 200 percent and less than or equal to 225 percent of FPL:  $X.00 per month.

(3)  Income greater than 225 percent and less than or equal to 250 percent of FPL:  $X.00 per month.

(4)  Income greater than 250 percent and less than or equal to 275 percent of FPL:  $X.00 per month.

(5)  Income greater than 275 percent and less than or equal to 300 percent of FPL:  $X.00 per month.

(6)  Income greater than 300 percent and less than or equal to 325 percent of FPL:  $X.00 per month.

(7)  Income greater than 325 percent and less than or equal to 350 percent of FPL:  $X.00 per month.

(8)  Income greater than 350 percent of FPL:  the actual cost of catamount health, which for fiscal year 2008 is estimated at $X.00 per month.

Sec. 16.  RULES PROCESS AND OVERSIGHT

(a)  The secretary of administration or designee shall submit any final proposed rules, developed under chapter 25 of Title 3, required to implement this act to the commission on health care reform established by Sec. 277c of No. 71 of the Acts of 2005 and the health access oversight committee for consideration.  The commission and committee may submit separate recommendations, limit comment to certain provisions in the rules, or to the extent feasible, make joint recommendations to the joint legislative committee on administrative rules.

(b)  The health access oversight committee shall monitor the development, implementation, and ongoing operation of catamount health established by subchapter 6 of chapter 19 of Title 33.  The agency of administration shall submit to the committee quarterly progress reports that shall include revenue and expenditures for catamount health for the prior months, enrollment and projected enrollment, projected expenditures related to enrollment for the fiscal year, and other information as requested by the committee.  At least annually, the secretary shall report the results of health care professional and patient satisfaction surveys regarding the administration of catamount health.

(c)  The agency shall submit annual reports on the receipts, expenditures, and balances in the catamount fund established in section 2029 of Title 33 to the joint fiscal committee at its September meeting.

Sec. 17.  GLOBAL COMMITMENT FINANCING

To the extent feasible and allowable under federal law, the agency of administration and human services shall finance catamount health through the Global Commitment for Health Medicaid Section 1115 waiver.  No later than July 1, 2006, the agency shall seek a waiver amendment from the Centers for Medicare and Medicaid Services to include catamount health in the premium amount paid to the office of Vermont health access under Global Commitment.  The agency may require the office of Vermont health access to use revenue from the capitation payments related to beneficiaries covered under Global Commitment as described in Term and Condition 40 to finance some or all of catamount health.  The agency may administer catamount health in the manner required by the Global Commitment waiver.

Sec. 18.  FUND TRANSFERS

As provided for in section 2029 of Title 33, up to $10,000,000.00 of any balance remaining in the catamount fund at the end of fiscal years 2007 and 2008 shall be transferred to the state health care resources fund established in section 1901d of Title 33.

Sec. 19.  8 V.S.A. § 4062d is added to read:

§ 4062d.  NONGROUP MARKET SECURITY TRUST

(a)  The commissioner shall establish the nongroup market security trust for the purpose of lowering the cost of and thereby increasing access to health care coverage in the individual or nongroup health insurance market.

(b)  The nongroup market security trust shall permit nongroup carriers to transfer up to five percent of the carriers’ claims costs, based on the anticipated expenses, in accordance with rules adopted by the commissioner.  The individuals incurring the claims shall remain enrolled policyholders, members, or subscribers of the carrier’s or insurer’s plan, and shall be subject to the same terms and conditions of coverage, premiums, and cost sharing as any other policyholder, member, or subscriber. At the close of the fiscal year, the commissioner shall reconcile the anticipated expenses against the actual expenses of the carriers and collect or expend the necessary funds to ensure that no more than the five percent of the actual expenses are paid under this section.    

(c)  The commissioner may develop the nongroup market security trust in a manner that permits the trust to be eligible for a federal grant to administer the trust, including a grant under the federal Trade Adjustment Act.

(d)  All of the revenues received from X fund shall be deposited into the nongroup market security fund to be administered by the commissioner for the sole purpose of providing financial support for the nongroup market security trust authorized by this section.  The fund shall be administered in accordance with subchapter 5 of chapter 7 of Title 32, except that interest earned shall remain in the fund.

(e)  The commissioner may adopt rules for the nongroup market security trust relating to:

(1)  The creation of a private, nonprofit business organization to operate the trust and the appointment of individuals to govern the organization.

(2)  Criteria governing the circumstances under which a nongroup carrier may transfer to the trust up to five percent of the actual claims expenses of the carrier.

(3)  Eligibility criteria for providing financial support to carriers under this section, including carrier claims’ expenses eligible for financial support, standards and procedures for the treatment and management of chronic conditions, and any other eligibility criteria established by the commissioner.

(4)  Rules for operation of the trust.

(5)  Any other standards or procedures necessary or desirable to carry out the purposes of this section.

(f)  As used in this section:

(1)  “Health insurer” means a health insurance company, a hospital or medical service corporation, or a health maintenance organization.

(2)  “Nongroup carrier” means a nongroup carrier registered under section 4080b of this title.

* * * Hospital Default Insurance and Budget Reviews * * *

Sec. 20.  18 V.S.A. § 9456 is amended to read:

§ 9456.  BUDGET REVIEW

(a)  The commissioner shall conduct reviews of each hospital’s proposed budget based on the information provided pursuant to this subchapter, and in accordance with a schedule established by the commissioner.

(b)  In conjunction with budget reviews, the commissioner shall:

(1)  review utilization information;

(2)  consider the goals and recommendations of the health resource allocation plan;

(3)  consider the expenditure analysis for the previous year and the proposed expenditure analysis for the year under review;

(4)  consider any reports from professional review organizations;

(5)  solicit public comment on all aspects of hospital costs and use and on the budgets proposed by individual hospitals;

(6)  meet with hospitals to review and discuss hospital budgets for the forthcoming fiscal year;

(7)  give public notice of the meetings with hospitals, and invite the public to attend and to comment on the proposed budgets;

(8)  consider the extent to which costs incurred by the hospital in connection with services provided to Medicaid beneficiaries are being charged to non-Medicaid health benefit plans and other non-Medicaid payers;

(9)  require each hospital to file an analysis that reflects a reduction in net revenue needs from non-Medicaid payers equal to any anticipated increase in Medicaid reimbursements resulting from appropriations designed to reduce the Medicaid cost shift.

(c)  Individual hospital budgets established under this section shall:

(1)  be consistent with the health resource allocation plan;

(2)  take into consideration national, regional, or instate peer group norms, according to indicators, ratios, and statistics established by the commissioner;

(3)  promote efficient and economic operation of the hospital;

(4)  reflect budget performances for prior years;

(5)  include a finding that the analysis provided in subdivision (b)(10) of this section is a reasonable methodology for reflecting a reduction in net revenues for non-Medicaid payers;

(6)  include any physician’s practices owned or operated by the hospital;

(7)  include all revenue received by hospitals; and

(8)  include the amount of care provided under the default insurance plan offered by the hospital.

(d)  For hospital fiscal year 2007 and thereafter, each hospital’s budget shall serve as a spending cap within which hospital costs are controlled, resources directed, and quality and access assured.  The commissioner shall establish the annual rate of growth of each hospital’s costs, taking into consideration utilization rates and any other relevant information.  The rate of growth established for each hospital shall ensure that the total annual rate of growth for statewide hospital costs is not greater than the Consumer Price Index plus the rate of growth of the gross state product.

(d)  Annually, the commissioner shall establish a budget for each hospital by September 15 followed by a written decision by October 1.  Each hospital shall operate within the budget established under this section.

(e)  The commissioner may establish, by rule, a process to define, on an annual basis, criteria for hospitals to meet, such as utilization and inflation benchmarks.  The rule shall permit the commissioner to waive one or more of the review processes listed in subsection (b) of this section, but not for more than two years consecutively.  Tertiary teaching hospitals shall not be eligible for a waiver.

(f)  The commissioner may, upon application, adjust a budget or spending cap established under this section upon a showing of need based upon a significant unbudgeted increase in volume, or exceptional or unforeseen circumstances in accordance with the criteria and processes established under section 9405 of this title.  The department may adopt rules for the development of a voluntary three-year hospital budget process to facilitate long-term planning and to moderate variation in utilization.  The rules shall include a process for an annual budget adjustment within the three-year period.

(g)  The commissioner may request, and a hospital shall provide, information determined by the commissioner to be necessary to determine whether the hospital is operating within a budget established under this section.

(h)(1)  If a hospital violates a provision of this section, the commissioner may maintain an action in the superior court of the county in which the hospital is located to enjoin, restrain or prevent such violation.

(2)  After notice and an opportunity for hearing, the commissioner may shall impose on a person who knowingly violates a provision of this subchapter, or a rule adopted pursuant to this subchapter, a civil administrative penalty of no more than $40,000.00, or in the case of a continuing violation, a civil administrative penalty of no more than $100,000.00 or one-tenth of one percent of the gross annual revenues of the hospital, whichever is greater.  This subdivision shall not apply to violations of subsection (d) of this section caused by exceptional or unforeseen circumstances.

(3)(A)  The commissioner shall require the officers and directors of a hospital to file under oath, on a form and in a manner prescribed by the commissioner, any information designated by the commissioner and required pursuant to this subchapter.  The authority granted to the commissioner under this subsection is in addition to any other authority granted to the commissioner under law.

(B)  A person who knowingly makes a false statement under oath or who knowingly submits false information under oath to the commissioner or to the public oversight commission or to a hearing officer appointed by the commissioner or who knowingly testifies falsely in any proceeding before the commissioner or the public oversight commission or a hearing officer appointed by the commissioner shall be guilty of perjury and punished as provided in section 2901 of Title 13.

Sec. 21.  18 V.S.A. § 1905 is amended to read:

§ 1905.  LICENSE REQUIREMENTS

Upon receipt of an application for license and the license fee, the licensing agency shall issue a license when it determines that the applicant and hospital facilities meet the following minimum standards:

* * *

(19)  All hospitals shall provide default insurance under section 9421 of this title and shall submit to the licensing agency a report as required by the agency.

Sec. 22.  18 V.S.A. § 9405b is amended to read:

§ 9405b.  HOSPITAL COMMUNITY REPORTS

(a)  The commissioner, in consultation with representatives from the public oversight commission, hospitals, and other groups of health care professionals shall adopt rules establishing a standard format for community reports, as well as the contents, which shall include:

* * *

(11)  information on the hospital’s default insurance program as described in section 9421 of this title. 

* * *

Sec. 23.  HOSPITAL DEFAULT INSURANCE; FINDINGS

(a)  The general assembly finds that all of Vermont’s community hospitals are nonprofit charity hospitals which provide care regardless of patient ability to pay for it.  Any uncompensated care received is paid for by someone other than the patient receiving it.  Uncompensated care is by definition a third party payment and therefore a form of default insurance which comes into play when all other forms of coverage fail. 

(b)  This default insurance is substantial.  In 2004, it amounted to $70 million.  The hospital budgets approved by the department of banking, insurance, securities, and health care administration are estimated to be over $78 million in uncompensated care in 2006.

(c)  This default insurance is already being paid for.  It is subsidized through the “cost shift” and is absorbed principally by the payers of private health insurance premiums, including self‑insurance plans.  This cost shift functions as a hidden surcharge for the cost of care to lower income individuals.

Sec. 24.  18  V.S.A. § 9421 is added to read:

§ 9421.  HOSPITAL DEFAULT INSURANCE PROGRAM

(a)  It is the policy of the state to view and manage uncompensated care as an essential resource to help achieve universal health care coverage for all Vermonters.  To further this policy, uncompensated care shall be recognized in the health facility planning under subchapter 5 and the hospital budgeting process under subchapter 7 of this chapter

(b)  For the purposes of this subchapter, “hospital” shall have the same meaning as in section 9451 of Title 18 and shall include physicians employed by the hospital, the hospital’s holding company, and the hospital’s management company.

(c)  The commissioner shall establish by rule standards and procedures for a hospital to provide a default insurance program for patients under 350 percent of the federal poverty level with no insurance. The standards and procedures shall include:

(1)  payment forgiveness for the complete cost of health services received by eligible patients with incomes at or under X percent of the federal poverty level;

(2)  a sliding scale payment amount for eligible patients with incomes above X percent and at or under 350 percent of the federal poverty level with the maximum payment per bill of $X.00 per individual; and

(3)  a method of calculating the value of the health services received under this section for inclusion in the hospital budgets.

(d)  The hospital shall report on and account for the health services provided under the default hospital insurance program in the hospital budgets required under section 9456 of this title

Sec. 25.  HOSPITAL DEFAULT INSURANCE; SLIDING SCALE

The agency of human services shall consider any sliding scale payment schedule for patients with incomes above 200 percent and at or under 350 percent of the federal poverty level with the maximum payment per bill of $2,000.00 per individual developed by the Vermont association of hospitals and health systems if provided to the secretary no later than November 1, 2006.

Sec. 26.  SCHEDULE FOR ATTAINING UNIVERSAL HEALTH CARE

(a)  By February 15, 2007, the commission on health care reform shall recommend to the general assembly a schedule and benchmarks for incremental expansions over time to Vermont’s health care system with the goal of achieving universal health care for all Vermonters no later than 2011.

(b)  In making its recommendations, the commission shall give priority to:

(1)  extending universal access to diagnostic or other services to all Vermonters;

(2)  methods of reducing the cost of health insurance or providing alternative coverage through catamount health to individuals who pay 10 percent or more of their gross income for premiums and cost-sharing or medical expenses;

(3)  strategies for reducing the cost of health insurance or providing alternative coverage through catamount health to individuals in the individual or other high cost markets; and

(4)  determining criteria for whether a health insurance requirement or other method for increasing coverage is necessary to achieve universal health care coverage by 2011.

(c)  Recommendations by the commission shall be based on data received by the secretary of administration or designee, review of the strategic plan developed under section 2222a of Title 3, information on Vermont’s current health care system reform initiatives, other research and assistance provided by the commission’s staff, and public input received by the commission.

Sec. 27.  21 V.S.A. chapter 25 is added to read:

Chapter 25.  Health Care Affordability

and Security Assessment

§ 2001.  DEFINITIONS

For the purposes of this chapter:

(1)  “Employee” means an individual employed full-time or part‑time by an employer to perform services in this state.

(2)  “Employer” means a person who is required under subchapter 4 of chapter 151 of Title 32 to withhold income taxes from payments of income with respect to services; but shall not include the government of the United States.

(3)  “Nonproviding employer” means an employer who does not offer to pay for or arrange for the purchase of health insurance coverage for its employees.

§ 2002.  ASSESSMENT

(a)  The department shall assess each nonproviding employer with 10 or more employees an annual premium of $X.00 per employee and each nonproviding employer with fewer than 10 employees an annual premium of $X.00 per employee.  The department shall establish rules for the administration of this assessment, but shall ensure that the process shall be as summary and simple as reasonable.  To the extent feasible, any reporting shall be streamlined with other information collected from employers by the department.

(b)  Revenues from this assessment shall be deposited into the catamount fund established under section 2029 of Title 33 for the purpose of financing health care coverage under catamount health, as provided under subchapter 6 of chapter 19 of Title 33.

* * * CIGARETTE TAX AND TOBACCO FUNDS* * *

Sec. 28.  32 V.S.A. § 7771 is amended to read:

§ 7771.  RATE OF TAX

A tax is imposed on all cigarettes held in this state by any person for sale or by any person in possession of more than 10,000 cigarettes, unless such cigarettes shall be:

(1)  in the possession of a licensed wholesale dealer;

(2)  in the course of transit and consigned to a licensed wholesale dealer or retail dealer; or

(3)  in the possession of a retail dealer who has held the cigarettes for 24 hours or less.  Such tax shall be at the rate of 59.5 89.5 mills for each cigarette, and the payment thereof to be evidenced by the affixing of stamps to the packages containing the cigarettes, as hereinafter provided.  Any cigarette on which the tax imposed by this chapter has been paid, such payment being evidenced by the affixing of such stamp, shall not be subject to a further tax under this chapter.  Nothing contained in this chapter shall be construed to impose a tax on any transaction the taxation of which by this state is prohibited by the constitution of the United States.  The amount of taxes advanced and paid by a licensed wholesale dealer or a retail dealer as herein provided shall be added to and collected as part of the retail sale price on the cigarettes.  All taxes upon cigarettes under this chapter are declared to be a direct tax upon the consumer at retail and shall conclusively be presumed to be precollected for the purpose of convenience and facility only.

Sec. 29.  32 V.S.A. § 7814(b) is amended to read:

(b)  Cigarettes.  Notwithstanding the prohibition against further tax on stamped cigarettes under section 7771 of this title, a floor stock tax is hereby imposed upon every dealer of cigarettes in this state who is either a wholesaler, or a retailer who at 12:01 a.m. o’clock on July 1, 2003 2006, has more than 10,000 cigarettes for retail sale in his or her possession or control.  The rate of tax shall be 13 30 mills for each cigarette in the possession or control of the wholesaler or retailer at 12:01 a.m. o’clock on July 1, 2003 2006, and on which cigarette stamps have been affixed before July 1, 2003 2006.  A floor stock tax is also imposed on each Vermont cigarette stamp in the possession or control of the wholesaler at 12:01 a.m. o’clock on July 1, 2003 2006, and not yet affixed to a cigarette package, and the tax shall be at the rate of 26 60 cents per stamp.  Each wholesaler and retailer subject to the tax shall, on or before September 25, 2003 August 25, 2006, file a report to the commissioner in such form as the commissioner may prescribe showing the cigarettes and stamps on hand at 12:01 a.m. o’clock on July 1, 2003 2006, and the amount of tax due thereon.  The tax imposed by this section shall be due and payable on or before September 25, 2003 August 25, 2006, and thereafter shall bear interest at the rate established under section 3108 of this title.  In case of timely payment of the tax, the wholesaler or retailer may deduct from the tax due two and three‑tenths of one percent of the tax.  Any cigarettes with respect to which a floor stock tax has been imposed under this section shall not again be subject to tax under section 7771 of this title.

Sec. 30.  32 V.S.A. § 435a(d) is added to read:

(d)  Any monies received by the state for strategic payments under the Master Tobacco Settlement Agreement shall be transferred to the catamount fund established in section 2029 of Title 33.

Sec. 31.  33 V.S.A. § 1901d is amended to read:

§ 1901d.  STATE HEALTH CARE RESOURCES FUND

(a)  The state health care resources fund is established in the treasury as a special fund to be a source of financing health care coverage for beneficiaries of the state health care assistance programs under the global commitment to health care waiver approved by the Centers for Medicare and Medicaid Services under Section 1115 of the Social Security Act.

(b)  Into the fund shall be deposited:

(1)  revenue from the cigarette and tobacco products tax established in  all revenue from the tobacco products tax and 78 percent of the revenue from the cigarette tax levied pursuant to chapter 205 of Title 32;

(2)  revenue from health care provider assessments pursuant to subchapter 2 of chapter 19 of this title; and

(3)  the proceeds from grants, donations, contributions, taxes, and any other sources of revenue as may be provided by statute, rule, or act of the general assembly.

(c)  The fund shall be administered pursuant to subchapter 5 of chapter 7 of Title 32, except that interest earned on the fund and any remaining balance shall be retained in the fund.  The agency shall maintain records indicating the amount of money in the fund at any time.

(d)  All monies received by or generated to the fund shall be used only as allowed by appropriation of the general assembly for the administration and delivery of health care covered through state health care assistance programs administered by the agency under the global commitment Global Commitment waiver.

Sec. 32.  32 V.S.A. § 435(b) is amended to read:

(b)  The general fund shall be composed of revenues from the following sources:

* * *

(8)  Cigarettes and tobacco products taxes levied pursuant to chapter 205 of this title;

* * *

Sec. 33.  ALLOCATION OF FLOOR STOCK TAX REVENUE

The revenue from the floor stock tax under subsection 7814(b) of Title 32 as amended by this act shall be deposited in the catamount fund.

* * * Technical Amendments * * *

Sec. 34.  32 V.S.A. § 305a is amended to read:

§ 305a.  OFFICIAL STATE REVENUE ESTIMATE

On or about January 15 and on or about July 15 of each year, and at such other times as the emergency board or the governor deems proper, the joint fiscal office and the secretary of administration shall provide to the emergency board their respective estimates of state revenues in the general, transportation, education, and health access trust catamount, state health care resources, and Global Commitment funds.  The January revenue estimate shall be for the current and next two succeeding fiscal years, and the July revenue estimate shall be for the current and immediately succeeding fiscal years.  Federal fund estimates shall be provided at the same times for the current fiscal year.  Within 10 days of receipt of such estimates, the board shall determine an official state revenue estimate for deposit in the respective funds for the years covered by the estimates.  For the purpose of revising an official revenue estimate only, a majority of the legislative members of the emergency board may convene a meeting of the board.  The health access trust fund estimate secretary shall include estimated caseloads and estimated per member per month expenditures for the current and next succeeding fiscal years for each population category eligible for state health care assistance programs supported by the fund.

* * * Oversight and Reporting * * *

Sec. 35.  REPORTS

(a)  The agency of administration shall report to the general assembly no later than January 15, 2009 on any changes to catamount health needed to increase enrollment to achieve a 98 percent rate of insured Vermonters.  The agency shall consider whether mandating participation in public health care programs and health insurance coverage is necessary to increase enrollment or whether mandating that those who choose not to have health insurance coverage should be required to pay some of the health care costs.  The report shall include recommendations, a discussion of the considerations, and information and data supporting the recommendations.  The department of banking, insurance, securities, and health care administration shall complete the survey of insurance status in time sufficient for the data to be used in the secretary’s recommendations.

(b)  No later than January 15, 2009, the agency of administration shall report to the general assembly on:

(1)  the percentage of uninsured Vermonters and the number of insured Vermonters by coverage type;

(2)  an analysis of the trends of catamount health costs and trends in the revenue sources for catamount health;

(3)  the feasibility of allowing individuals who are not uninsured and employers to buy into catamount health at full premium cost;

(4)  the number of individuals enrolled in catamount health who are eligible for employer-sponsored insurance and the per‑member per‑month costs of these individuals;

(5)  the number of individuals enrolled in any chronic care management program which complies with the requirements in chapter 13 of Title 18, including those covered by private insurance; and

(6)  the feasibility of removing or capping the premium increases for enrollment outside the initial enrollment period.

Sec. 36.  ENROLLMENT INITIATIVES

The secretary of administration or designee and the director of the office of Vermont health access shall engage interested groups and parties in assisting with outreach and informational initiatives to ensure Vermonters have information about health care coverage options provided by Medicaid, the Vermont health access plan, Dr. Dynasaur, and catamount health.  

Sec. 37.  COMMISSION ON HEALTH CARE REFORM

Any reports required by this act shall be provided to the commission on health care reform established by Sec. 277c of No. 71 of the Acts of 2005 until the time that the commission dissolves.

Sec. 38.  APPROPRIATIONS

(a)  For fiscal year 2007, the sum of $2,900,000.00 is appropriated from the Global Commitment fund for the increase in Medicaid rates under Sec. 8 of this act.

(b)  For fiscal year 2007, the sum of $200,000.00 is appropriated from the general fund for the incentive grants for the hospital service area payment pilot projects under Sec. 9 of this act.

Sec. 39.  EFFECTIVE AND IMPLEMENTATION DATES

(a)  This act shall take effect upon passage, except as follows:

(1)  Secs. 8 (Medicaid reimbursement), 12 (cost shift review), 18 (catamount fund transfers) and 26 (tobacco litigation fund) shall take effect July 1, 2006

(2)  Secs. 10 (VHAP premiums) and 11 (Dr. Dynasaur premiums) shall take effect July 1, 2007

(3)  Sec. 28 (cigarette tax rate increase) shall apply to taxable cigarettes on and after July 1, 2006.  Amendments to the provisions of 32 V.S.A. § 7771 in H.843 (An Act Relating to Miscellaneous Tax Policy Amendments), if enacted, shall not be repealed or amended by this act; except that the tax rates in Secs. 28 and 29 of this act shall take effect and supersede any provisions in H.843 affecting the rate of the cigarette tax.

(4)  Those provisions of Sec. 14, adding 33 V.S.A. § 2029, establishing the catamount fund, and Sec. 31, amending 33 V.S.A. § 1901d, relating to the state health care resources fund, shall be effective on June 30, 2006.

(b)  Catamount health shall be implemented on October 1, 2007.  The agency of administration shall make application forms available and allow individuals to apply for the program at least 90 days prior to implementation.