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NO. 180. AN ACT TO COORDINATE THE OVERSIGHT AND REGULATION OF HEALTH CARE AND HEALTH CARE SYSTEMS.

(S.345)

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

* * * Department of Banking, Insurance, Securities,

and Health Care Administration * * *

Sec. 1. 3 V.S.A. 253(c) and (d) are amended to read:

(c) The commissioner of banking, insurance, *[and]* securities, and health care administration, with the approval of the governor, shall appoint a deputy commissioner of banking and a deputy commissioner of insurance and a deputy commissioner of securities and a deputy commissioner of health care administration. The commissioner of banking, insurance, *[and]* securities, and health care administration may remove the deputy commissioners at pleasure and *[he or she]* shall be responsible for their acts. The *[department of banking, insurance, and securities shall be so organized that, subject to the supervision of the commissioner of banking, insurance, and securities, the]* functions and duties that relate to banks and banking shall be in the charge of the deputy commissioner of banking*[, and]*; those that relate to the business of insurance shall be in the charge of the deputy commissioner of insurance *[and]*; those that relate to the business of securities shall be in the charge of the deputy commissioner of securities; and those that relate to health care administration shall be in the charge of the deputy commissioner of health care administration.

(d) In case a vacancy occurs in the office of any appointing official who by law is authorized to appoint a deputy, or such official is absent *[therefrom]*, his or her deputy*[, and in the case of the commissioner of banking, insurance, and securities one of the deputies appointed by him or her,]* shall assume and discharge the duties of such office until such vacancy is filled, or such official returns *[thereto]*. In the case of a vacancy in the office of the commissioner of banking, insurance, securities, and health care administration, one of the deputies appointed by the commissioner shall assume and discharge the duties of that office until the vacancy is filled or the commissioner returns. In case a vacancy occurs in the office of the commissioner of agriculture, food and markets the deputy commissionerfor administration and enforcement shall assume and discharge the duties of the commissioner until such vacancy is filled, or the commissioner returns *[thereto]*.

Sec. 2. 8 V.S.A. 3 is amended to read:

3. CREATION OF DEPARTMENT

The department of banking, insurance, *[and]* securities, and health care administration, created by section 212 of Title 3, shall have jurisdiction over and shall supervise *[banks]*

(1) Banks, savings and loan institutions, credit unions, small loan companies, insurance companies, broker-dealers, investment advisors and other similar entities *[as herein provided]* subject to this title and chapter 131 of Title 9. *[The service of banking, insurance, lending money, and related and similar activities in this state by persons or corporations subject to this title shall be conducted, regulated and supervised as herein provided.]*

(2) The administration of health care, including oversight of the quality and cost containment of health care provided in this state, by conducting and supervising the process of health facility certificates of need, hospital budget reviews, health care data system development and maintenance, and funding and cost containment of health care as provided in chapter 221 of Title 18.

Sec. 3. 8 V.S.A. 72(a) is amended to read:

(a) To enforce this title *[and]*, Title 9A and Title 18, chapter 221, the commissioner may issue subpoenas, examine persons, administer oaths and require production of papers and records. In addition to this authority, in the case of a corporation, section 441 of Title 11 shall also apply.

Sec. 4. 8 V.S.A. 75 is amended to read:

75. RULES AND REGULATIONS

In addition to other powers conferred by this title and Title 18, chapter 221 the commissioner may *[promulgate such]* adopt rules as shall be authorized by this title *[and such additional rules as shall be necessary or desirable]* or necessary to carry out the purposes of this title and Title 18, chapter 221 *[all of which shall be published and filed with the secretary of state]*.

Sec. 5. 8 V.S.A. 5102(d) is amended to read:

(d) The commissioner shall approve or deny such application within 60 days, based on the commissioner's determination that the application promotes the general good of the state, and of the reliability and financial condition of the applicant. *[The commissioner shall consult with the Vermont health care authority established in 18 V.S.A. chapter 221 on each application before issuing the applicant a certificate of authority.]*

Sec. 6. REDESIGNATION

Chapter 221 of Title 18 shall be redesignated as follows:

CHAPTER 221. *[HEALTH CARE AUTHORITY]* HEALTH CARE ADMINISTRATION

Sec. 7. 18 V.S.A. 9401 is amended to read:

9401. POLICY

(a) It is the policy of the state of Vermont to insure that all residents have access to quality health services at costs *[which]* that are affordable. To achieve this policy it is necessary *[to develop a health care system which is integrated and subject to the direction and oversight of a single state agency]* that the state ensure the quality of health care services provided in Vermont and, until health care systems are successful in controlling their costs and resources, to oversee cost containment. *[Comprehensive health planning through the application of a statewide health resource management plan linked to a unified health care budget for Vermont is essential.]*

(b) It is further the policy of the state of Vermont that the health care system should:

(1) Maintain and improve the quality of health care services offered to Vermonters.

(2) *[Contain]* Promote market or other mechanisms that contain or reduce increases in the cost of delivering services so that health care costs do not consume a disproportionate share of Vermonters' incomes or the moneys available for other services required to insure the health, safety and welfare of Vermonters.

*[(3) Avoid unnecessary duplication in the development and offering of health care facilities and services.]*

*[(4)]* (3) Encourage regional and local participation in decisions about health caredelivery, financing and provider supply.

*[(5)]* (4) Promote market or other mechanisms that will achieve rational allocation of health care resources in the state.

*[(6)]* (5) Facilitate universal access to preventive and medically necessary health care.

Sec. 8. 18 V.S.A. 9402 is amended to read:

9402. DEFINITIONS

As used in this *[subchapter]* chapter, unless otherwise indicated:

*[(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.]*

(1) "Commissioner" means the commissioner of the department of banking, insurance, securities, and health care administration, or the commissioner’s designee.

(2) "Department" means the department of banking, insurance, securities, and health care administration.

(3) "Division" means the division of health care administration.

(4) "Expenditure analysis" means the expenditure analysis developed pursuant to section 9406 of this title.

*[(3)]* (5) "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)]* (6) "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.

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

*[(6)]* (8) "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]* March 15, 1996.

*[(7) "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 encourage quality care, efficiency, successful outcomes and appropriate use of health care services.]*

(9) "Health maintenance organization" means any person certified to operate a health maintenance organization by the commissioner pursuant to chapter 139 of Title 8.

(10) "Managed care organization" means any financing mechanism or system that manages health care delivery for its members or subscribers, including health maintenance organizations and any other similar health care delivery system or organization.

(11) "Public oversight commission" means the commission established in section 9407 of this title.

*[(8)]* (12) "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.

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

(14) "State health plan" means the plan developed under section 9405 of this title.

(15) "Technical panel" means the panel established in section 9407 of this title.

Sec. 9. 18 V.S.A. 9403 is amended to read:

9403. *[VERMONT HEALTH CARE AUTHORITY; BOARD; CREATED]*

DIVISION OF HEALTH CARE ADMINISTRATION; PURPOSES

*[(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 members, all of whom shall be appointed by the governor with the advice and consent of the senate.]*

*[(c) Members shall be appointed for terms of six 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.]*

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

*[(e) Members shall serve at the pleasure of the governor.]*

*[(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 shall be 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.]*

The division of health care administration is created in the department of banking,insurance, securities, and health care administration. The division shall assist the commissioner in carrying out the policies of the state regarding health care delivery, cost and quality, by providing oversight of health care quality and expenditures through the certificate of need program and the unified health care budget for the state or with respect to Vermont residents, establishment and maintenance of consumer protection functions, and oversight of quality assurance within the health care system. The division shall also establish and maintain a data base with information needed to carry out the commissioner’s duties and obligations under this chapter and Title 8.

Sec. 10. 18 V.S.A. 9404 is amended to read:

9404. ADMINISTRATION OF THE *[AUTHORITY]* DIVISION

(a) The *[board]* commissioner shall supervise and direct the execution of all laws vested in the *[authority]* division by virtue of this chapter, and shall formulate and carry out all policies relating to this chapter.

(b) *[The board shall employ an executive director, who shall be an exempt employee and shall serve at the pleasure of the board. The executive director shall be the chief administrative officer of the authority and shall direct and supervise the administrative affairs and technical activities of the authority in accordance with policies and procedures established by the board.]* The *[board]* commissioner may delegate the powers and assign the duties *[of the authority to the executive director as it]* required by this chapter as the commissioner may deem appropriate and necessary for the proper execution of the provisions of this chapter, including the review and analysis of certificate of need applications and hospital budgets; however, the *[board]* commissioner shall not delegate *[its]* the commissioner’s quasi-judicial and rulemaking powers*[, its]* or authority *[to adopt the health resource management plan or the unified health care budget, or any other powers or duties specifically granted or assigned to the board by statute]*, unless the commissioner has a personal or financial interest in the subject matter of the proceeding.

* * *

Sec. 11. 18 V.S.A. 9405 is amended to read:

9405. HEALTH RESOURCE MANAGEMENT PLAN; STATE HEALTH PLAN

(a) *[Beginning March 15, 1993, and every third year thereafter, the board]* No later than March 15, 1999, the secretary of human services shall adopt a *[health resource management plan for the distribution of health resources in this state]* state health plan that sets forth the health goals and values for the state, after receipt of public comment. The secretary may amend the plan as the secretary deems necessary and appropriate.

(b) *[The board shall establish guidelines to insure that health resource management plans are developed in a consistent manner.]* In order to attain the goals of the state plan, no later than March 15, 1999, and annually on January 1 thereafter, the secretary shall adopt a state health action plan that outlines the priorities and concerns for that year. The action plan shall consider the changing realities of the health care distribution system and the needs and values of the state. The secretary may consult other health care plans created by the state or any of its subdivisions or any persons that create or compile health care information to the extent the secretary determines such consultations are useful in formulating the state health action plan. On January 1, 2000, and annually thereafter, the secretary shall report to the general assembly on the success in meeting the goals of the annual state health action plan and the state health plan.

(c) Prior to adoption of a state health plan, the health resource management plan*[, the board shall hold one or more public hearings for the purpose of receiving oral and written comment on]* *[the plan recommended by the health policy council in accordance with the provisions of section 9424 of this title. After hearings have been concluded, the board may adopt the plan recommended by the health policy council or modify the council's recommended plan, in whole or in part]* shall continue in effect until March 14, 1999.

Sec. 12. 18 V.S.A. 9406 is amended to read:

9406. EXPENDITURE *[TARGET]* ANALYSIS; UNIFIED HEALTH CARE BUDGET

*[(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.]*

*[(2) The health care expenditure target may include sectors or subsectors for health care facilities, health care providers, or any other part of the health care system, that the board determines is necessary. The board shall adopt processes and criteria for responding to exceptional and unforeseen circumstances which affect the system and the target. Prior to developing the target, the board shall adopt the methods and processes to be used to allocate resources among sectors and the economic indicators to be used to define the parameters of the rate of growth in the cost of the system and the various sectors of the system.]*

*[(3) The expenditure target shall be consistent with the health care resources management plan adopted under section 9405 of this title.]*

*[(4) Before adopting the health care expenditure target the board shall:]*

*[(A) develop a proposed expenditure target and discuss the proposed target with health care providers, health care facilities, health insurers, and the health policy council, and with any health care provider bargaining groups approved by the board in accordance with the provisions of section 9409 of this title; and]*

*[(B) hold one or more public hearings for the purpose of receiving public comments and the recommendations of the health policy council pursuant to section 9424 of this title.]*

*[(b) Unified Health Care Budget.]* Beginning July 1, 1994, and annually thereafter, the *[board]* commissioner shall adopt a unified health care budget *[to accomplish]* and developan expenditure analysis to promote the policies set forth in section 9401 of this title.

(1) The budget shall:

* * *

(B) *[Establish]* Identify the total amount of money that has been and is projected to be expended annually for all health care services 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 or the state health plan, whichever applies.

* * *

(3) *[The board]* Based on the advice and recommendations of the technical panel, the commissioner 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]* commissioner shall enter into discussions *[or nonbinding 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 its comments 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. 13. 18 V.S.A. 9407 is amended to read:

9407. *[HEALTH INSURER COST MANAGEMENT PLANS]* PUBLIC

OVERSIGHT COMMISSION; TECHNICAL PANEL

(a) *[Each health insurer shall prepare a cost management plan which includes integrated systems for health care delivery, and file its plan with the board no later than January 15, 1993. The board may use plans filed under this section in the development of the unified health care budget.]* With the advice and consent of the senate, the governor shall appoint a public oversight commission to be composed of 13 members who shall reflect in the broadest sense the various health care needs and the demographic and geographic diversity of the state of Vermont. Nine members shall be sitting members, and four members shall be designated alternates to be assigned to create a quorum or to replace any sitting member who has a conflict of interest. The governor shall appoint a chair. Members of the commission shall be appointed for staggered terms of three years and shall serve no more than two consecutive terms. The commission shall review hospital budgets and certificate of need applications and make recommendations thereon to the commissioner.

(b) *[The plans required by this section shall be developed in accordance with standards and procedures established by the board.]* The commissioner shall appoint a technical panel to be composed of nine members and shall designate a chair. The panel shall include experts in medicine, law, business, hospital administration, economics and consumer health care issues. The technical panel shall advise the public oversight commission and the commissioner on technical matters arising under this chapter relating to the unified health care budget, resource allocation, utilization review recommen-dations, hospital budgets, quality assurance, the state health plan, and make recommendations regarding amendments to the health resource management plan and any other matter the commissioner may deem appropriate. The commissioner may impanel additional members as needed to advise on specific technical issues, who shall not serve as permanent members.

(c) *[The provisions of this section shall not apply to dental insurance.]* Members of thepublic oversight commission and members of the technical panel shall be compensated as provided in 32 V.S.A. 1010(b) and (c).

Sec. 14. 18 V.S.A. 9408 is amended to read:

9408. COMMON CLAIMS FORMS AND PROCEDURES

No later than January 15, 1993, the commissioner *[of banking, insurance and securities, after consultation with the board,]* shall adopt by rule uniform health insurance claims forms, and uniform standards and procedures for the processing of *[such]* claims, including electronic claims forms submission.

Sec. 15. 18 V.S.A. 9409 is amended to read:

9409. HEALTH CARE PROVIDER BARGAINING GROUPS

(a) The *[board]* commissioner may approve the creation of one or more health care provider bargaining groups, consisting of health care providers who choose to participate. A bargaining group is authorized to negotiate, on behalf of all participating providers *[:]*

*[(1) with the authority, with respect to any matter authorized by section 9406 of this title related to sectors of the unified health care budget, and any matter related to reimbursement of health care providers; and]*

*[(2) with the Vermont health care purchasing pool, with respect to any matter authorized by section 9413 of this title, and any matter related to reimbursement of health care providers.]* with the commissioner, the secretary of human services or the commissioner of labor and industry with respect to any matter in this chapter; chapters 9 and 11 of Title 21; and chapter 19 of Title 33, in regard to provider regulation, provider reimbursement or quality of health care.

* * *

(c) The rules relating to negotiations *[pertaining to sectors of the unified health care budget]* shall include *[provisions for]* a nonbinding arbitration process to assist in the resolution of disputes. Nothing in this section *[or rules adopted under this section]* shall be construed to limit the *[board's]* authority of the commissioner, the commissioner of labor and industry or the secretary of human services to reject the recommendation or decision of the arbiter *[or limit the board's authority under section 9406 of this title to establish theunified budget]*.

*[(d) Contracts for reimbursement of health care providers negotiated under this section shall be consistent with the unified health care budget and the health resource management plan, and shall not take effect unless approved by the board.]*

*[(e) One or more health care providers and health care provider organizations are authorized to jointly comment on rules proposed by the board and to discuss any other matters related to negotiations between the authority and health care providers.]*

*[(f) The negotiations authorized by this section shall be limited to the right to discuss the matters identified in subsection (a) of this section and shall not be construed to authorize a bargaining group to engage in any other type of activity. The board shall adopt rules to implement the provisions of this subsection.]*

Sec. 16. 18 V.S.A. 9410 is amended to read:

9410. HEALTH CARE DATA BASE

(a) The *[authority]* commissioner shall establish and maintain a unified health care data base to enable the *[authority to]* commissioner to carry out the duties under this chapter and Title 8, including:

(1) *[Determine]* Determining the capacity and distribution of existing resources.

(2) *[Identify]* Identifying health care needs and *[direct]* informing health care policy.

(3) *[Evaluate]* Evaluating the effectiveness of intervention programs on improving patient outcomes.

(4) *[Compare]* Comparing costs between various treatment settings and approaches.

(5) *[Provide]* Providing information to consumers and purchasers of health care.

* * *

(d) The *[board, after consultation with the]* commissioner *[of banking, insurance, and securities,]* may by rule establish the types of information to be filed under this

section, and the time and place and the manner in which such information shall be filed.

* * *

(g) Any person who knowingly fails to comply with the filing requirements of this section or rules adopted pursuant to this section shall be fined not more than $1,000.00per violation.

Sec. 17. 18 V.S.A. 9411 is amended to read:

9411. *[BOARD;]* OTHER POWERS AND DUTIES

*[(a)]* In addition to any other power or duty authorized by law, the *[board]* commissioner may:

* * *

*[(b) The board shall appoint an 11 member technical review panel consisting, at a minimum, of experts in medicine, law, and economics, and two public members. The technical review panel shall review and advise the authority on technical matters relating to the common benefits package, procedures for developing and applying practice guidelines for utilization in the universal access plan, provider and facility contracts with the state, utilization review recommendations, expenditure targets and uniform health care benefits and their impact upon the provision of quality health care.]*

Sec. 18. 18 V.S.A. 9412 is amended to read:

9412. ENFORCEMENT

(a) In order to carry out *[its]* the duties under this chapter, the *[board]* commissioner, in addition to the powers provided in 8 V.S.A. 72, may examine the books, accounts and papers of health insurers, health care providers and health care facilities*[. The board]* and may administer oaths and may issue subpoenas to a person to appear and testify or to produce documents or things. *[A subpoena issued by the board shall be subject to the provisions of sections 809a and 809b of Title 3.]*

* * *

Sec. 19. 18 V.S.A. 9415 is added to read:

9415. ALLOCATION OF EXPENSES

(a) Expenses incurred to obtain information and to analyze expenditures, review hospital budgets and for any other related contracts authorized by the commissioner shall be borne as follows: 40 percent by the state from general fund monies, 15 percent by the hospitals, 15 percent by nonprofit hospital and medical service corporations licensed under chapter 123 or 125 of Title 8, 15 percent by health insurance companies licensed under chapter 101 of Title 8, and 15 percent by health maintenance organizations licensed under chapter 139 of Title 8.

(b) Expenses under subsection (a) of this section shall be billed to persons licensed under Title 8 based on premiums paid for health care coverage, which for the purposes of this section include major medical, comprehensive medical, hospital or surgical coverage, and any comprehensive health care services plan, but does not include long-term care, limited benefits, disability, credit or stop loss or excess loss insurance coverage.

Sec. 20. REPEAL

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

* * * Quality Oversight and Consumer Protection * * *

Sec. 21. 18 V.S.A. 9414 is amended to read:

9414. QUALITY ASSURANCE FOR *[HEALTH MAINTENANCE]* MANAGED CARE ORGANIZATIONS

(a) The *[authority]* commissioner shall have the power and responsibility to ensure that each *[health maintenance]* managed care organization provides quality health care to its members, in accordance with the provisions of this section.

(1) In determining whether a managed care organization meets the requirements of this section, the commissioner shall annually examine the organization’s administrative policies and procedures, quality management and improvement procedures, utilization management, credentialing practices, members’ rights and responsibilities, preventive health services, medical records practices, grievance and appeal procedures, member services, financial incentives or disincentives, disenrollment, provider contracting andsystems and data reporting capacities. The commissioner may establish, by rule, specific criteria to be considered under this section.

(2) A managed care organization shall, in plain language, disclose to its members:

(A) Any provision of its enrollment plan or provider contracts that may restrict referral or treatment options or that may require prior authorization or utilization review or that may limit in any manner the services covered under the members’ enrollment plan.

(B) The criteria used for credentialing or selecting health care providers with whom the organization contracts.

(C) The financial inducements offered to any health care provider or health care facility for the reduction or limitation of health care services.

(D) The utilization review procedures of the organization, including the credentials and training of utilization review personnel.

(E) Whether the organization’s health care providers are contractually prohibited from participating in other managed care organizations or from performing services for persons who are not members of the managed care organization.

(F) Upon request, health care providers available to members under the enrollment plan.

(3) A managed care organization shall not include any provision in a contract with a health care provider that prohibits the health care provider from disclosing to members information about the contract or the members’ enrollment plan that may affect their health or any decision regarding health care treatment.

* * *

(g) *[(1)]* If the *[authority]* commissioner determines that a health maintenance organization has violated or failed to comply with any of the provisions of this section, the *[authority may notify the commissioner of banking, insurance, and securities of the violation or failure to comply. The]* commissioner *[of banking, insurance, and securities]* may sanction the violation or failure to comply as provided in Title 8, including*[, but not limited to,]* sanctions provided by or incorporated in sections 5108 and 5109 of Title 8 andmay use any information obtained during the course of any legal or regulatory action against a managed care organization.

*[(2) In order to enforce the provisions of this section, or the provisions of Title 8, the authority may disclose any information obtained by it to the commissioner of banking, insurance, and securities. The commissioner may use such information during the course of any legal or regulatory action against a health maintenance organization. In accepting any such information from the authority, the commissioner agrees to abide by the confidentiality code adopted by the authority, unless the commissioner has in place a confidentiality code providing equivalent or greater protection to the information.]*

Sec. 21a. 18 V.S.A. 9416 is added to read:

9416. VERMONT PROGRAM FOR QUALITY IN HEALTH CARE

(a) The commissioner shall contract with the Vermont Program for Quality in Health Care, Inc. to implement and maintain a statewide quality assurance system to evaluate and improve the quality of health care services rendered by health care providers of health care facilities, including managed care organizations, to determine that health care services rendered were professionally indicated or were performed in compliance with the applicable standard of care, and that the cost of health care rendered was considered reasonable by the providers of professional health services in that area.

(b) The Vermont Program for Quality in Health Care, Inc. shall file an

annual report with the commissioner. The report shall include an assessment of progress in the areas designated by the commissioner, including comparative studies on the provision and outcomes of health care and professional accountability.

(c) Expenses incurred under this section by the Vermont Program for Quality in Health Care, Inc. shall be borne as follows: 35 percent by the hospitals, 15 percent by nonprofit hospital and medical service corporations licensed under chapter 123 or 125 of Title 8, and 50 percent by health insurance companies licensed under chapter 101 of Title 8, and health maintenance organizations licensed under chapter 149 of Title 8. Expenses allocated under this section to persons licensed under chapters 101 and 149 of Title 8 shall be billed based on premiums paid for health insurance coverage as defined insection 9415(b) of this title. Expenses allocated under this section shall not exceed 75 percent of the operating budget of the Vermont Program for Quality in Health Care, Inc.

Sec. 22. REPEAL

18 V.S.A. 9421-9424 are repealed.

* * * Health Facility Planning * * *

Sec. 23. 18 V.S.A. 9432 is amended to read:

9432. DEFINITIONS

As used in this subchapter:

(1) *["Ambulatory surgical facility" means a facility which is not physically attached to a health care facility and which provides surgical treatment to patients not requiring hospitalization, and does not include the offices of physicians or dentists, whether in individual or group practices.]* "Ambulatory surgical center" means a facility or portion of a facility that provides surgical care not requiring an overnight stay. The office of a dentist in which activities are limited to dentistry and oral or maxillofacial surgical procedures shall not be deemed an ambulatory surgical center for purposes of this subchapter. In order to be considered an ambulatory surgical center, a facility shall meet all the following criteria:

(A) Charge, or intend to charge, a facility fee in addition to professional fees for the services performed.

(B) Have an operating room or recovery room in the facility.

(C) Use an anesthesiologist or nurse anesthetist.

(D) Provide one or more outpatient services for which Medicare coverage is provided.

(2) "Applicant" means a person who has submitted an application or proposal requesting issuance of a certificate of need.

*[(3) "Authority" means the Vermont health care authority established under section 9403 of this title.]*

*[(4)]* (3) "Bed capacity" means the number of licensed beds operated by the facility under its most current license under chapter 43 of this title and of facilities under chapter 71 of Title 33.

*[(5) "Board" means the Vermont health care authority board established undersection 9403 of this title.]*

*[(6)]* (4) "Capital expenditure" means an expenditure for the plant or equipment which, under generally accepted accounting principles, is not properly chargeable as an expense of operation and maintenance and includes acquisition by purchase, donation or leasehold expenditure calculated over the length of the lease for plant or equipment. A capital expenditure includes the cost of studies, surveys, designs, plans, working drawings, specifications and other activities essential to the acquisition, improvement, expansion or replacement of the plant and equipment.

*[(7)]* (5) "Construction" includes actual commencement of any construction or fabrication of any new building, or addition to any existing facility, or any expenditure of more than *[$300,000.00]* $750,000.00 relating to the alteration, remodeling, renovation, modernization, improvement, relocation, repair, or replacement of a health care facility, including expenditures necessary for compliance with life and health safety codes.

*[(8) "Council" means the health policy council established in section 9422 of this title.]*

*[(9)]* (6) "To develop," when used in connection with health services, means to undertake activities which on their completion will result in the offer of a new

institutional health service, or the incurring of a financial obligation in relation to the offering of a service.

*[(10)]* (7) "Health care facility" means all facilities and institutions, whether public or private, proprietary or not for profit, 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 for healing, but shall include but is not limited to:

(A) hospitals, including general hospitals, mental hospitals, chronic disease facilities, birthing centers, maternity hospitals and psychiatric facilities including any hospital conducted, maintained or operated by the state of Vermont, or its subdivisions, or a duly authorized agency thereof, and health-related therapeutic community residences;

* * *

*[(11)]* (8) "Health care provider" means a person, partnership, corporation, 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.

*[(12) "Health maintenance organization" means any person certified to operate a health maintenance organization by the commissioner of banking, insurance, and securities pursuant to chapter 139 of Title 8.]*

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

*[(14)]* (9) "Health services" mean activities and functions of a health care facility that are directly related to care, treatment, or diagnosis of patients.

(10) AHome for the terminally ill@ means a place providing services specifically for three or more dying people, including room, board, personal care and other assistance for the residents’ emotional, spiritual and physical well-being.

*[(15)]* (11) "Obligation" means an obligation for a capital expenditure which is deemed to have been incurred by or on behalf of a health care facility or health maintenance organization.

*[(16)]* (12) "To offer," when used in connection with health services, means that a health care provider holds itself out as capable of providing, or as having the means for the provision of, specified health services.

*[(17) "Person" means an individual, trust, state, partnership, committee, corporation, association, and other organizations such as joint-stock companies and insurance companies, or a political subdivision or instrumentality of a state, including a municipal corporation.]*

*[(18) "Secretary" means the secretary of the agency of human services]**[.]*

*[(19) "Unified health care budget" means the budget adopted by the board in accordance with the provisions of section 9406 of this title.]*

*[(20)]* (13) "Annual operating expense" means that expense which, by generallyaccepted accounting principles, is incurred by a new health care service during the first fiscal year in which the service is in full operation after completion of the project.

*[(21) "Health care expenditure target" means the target adopted by the board in accordance with the provisions of section 9406 of this title.]*

*[(22) "Home for the terminally ill" means a place providing services specifically for three or more dying people, including room, board, personal care and other assistance for the residents' emotional, spiritual and physical well-being.]*

Sec. 24. 18 V.S.A. 9433 is amended to read:

9433. ADMINISTRATION

* * *

(c) The *[council]* commissioner shall consult with hospitals, nursing homes and professional associations and societies, the public oversight commission, the technical panel, the secretary of human services and other interested parties in matters of policy affecting the administration of this subchapter.

(d) The *[council]* commissioner shall administer the certificate of need program.

*[(e) The secretary of human services shall be a party in any certificate of need review.]*

*[(f) The authority shall provide the council with the staffing necessary for the council to perform its duties under this subchapter.]*

Sec. 25. 18 V.S.A. 9434 is amended to read:

9434. CERTIFICATE OF NEED

(a) No new institutional health service shall be offered or developed within this state by any person, without a determination of need and issuance of a certificate of need by the *[board]* commissioner, as provided in this subchapter. "New institutional health service" includes:

(1) the construction, development, or other establishment of a new health care facility except for the purchase or lease of an existing health care facility other than the purchase of a hospital;

(2) any expenditure by or on behalf of a hospital in excess of $1,500,000.00 or any expenditure by or on behalf of any other health care facility in excess of *[$300,000.00]*$750,000.00, which, under generally accepted accounting principles, consistently applied, is a capital expenditure;

(3) acquisition by purchase, or by lease or other comparable arrangement, by or on behalf of a health care provider of a single piece of diagnostic or therapeutic equipment for which the cost, or in the case of a donation the value, is in excess of *[$250,000.00]* $500,000.00. For purposes of this subdivision, the purchase or lease of one or more articles of diagnostic or therapeutic equipment which are necessarily interdependent in the performance of their ordinary functions or which would constitute any health care facility included under section 9432(10)(B) of this title, as determined by the *[council]* commissioner, shall be considered together in calculating the amount of an expenditure. The *[council's]* commissioner’s determination of functional interdependence of items of equipment under this subdivision shall have the effect of a final decision and is subject to appeal under this subchapter;

(4) a change from one licensing period to the next in the number of licensed beds of a health care facility through the addition or conversion, or through the relocation from one physical facility or site to another*[, of four beds or 10 percent, whichever is less, provided that a change exempted by this section may occur only once in a four-year period]*;

(5) the offering of health services in or through a health care facility which were not offered on a regular basis in or through such health care facility within the twelve-month period prior to the time such services would be offered if such services have an annual operating expense in excess of *[$150,000.00;]* $300,000.00 or the offering of any home health services;

(6) *[expenditures in excess of $300,000.00 made in preparation for, or any arrangement or commitment regarding financing for, the offering or development of any new institutional health service. Such expenditures include expenditures for studies, architectural designs, plans, working drawings, and specifications which are essential to the offering or development of the new institutional health service.]* the purchase of an existing hospital.

(b) If the *[council]* commissioner determines that a person required to obtain a certificate of need under this subchapter has separated a single project into components in order to avoid cost thresholds or other requirements under this subchapter, the person shall be required to submit *[to the council]* an application for a certificate of need for the entire project, and the *[council]* commissioner may proceed under section 9445 of this title. The *[council's]* commissioner’s determination under this subsection shall have the effect of a final decision and is subject to appeal under this subchapter.

Sec. 26. 18 V.S.A. 9436(a) is amended to read:

(a) In making its determination as to whether a certificate of need shall be issued, the *[board]* commissioner shall consider only the criteria which have been duly adopted and published 90 days prior to the submission of the original application for certificate of need. At a minimum, such criteria shall include:

(1) The recommendation of the *[council]* public oversight commission;

(2) The relationship of the proposed new institutional health service to the health resource management plan or state health plan, whichever applies, and*[, from July 1, 1993 until July 1, 1994, the health care expenditure target, and, beginning July 1, 1994,]* the unified health care budget;

* * *

(18) The contribution of the proposed service in meeting the needs of medically underserved groups and the goals of universal access to health services*[ .]* ;

(19) The impact of the proposal on state Medicaid dollars; and

(20) In the case of a new institutional health service proposed by a hospital subject to budget review under subchapter 7 of this chapter, the budget established by the commissioner for the fiscal years in which the service will have an impact; and

(21) Whether the proposal promotes the general good of the state.

Sec. 27. 18 V.S.A. 9437 is amended to read:

9437. REQUIRED FINDINGS

In addition to the provisions of section 9436 of this title, with regard to any proposed new institutional health service for the provision of health services, the *[board]*commissioner shall not grant a certificate of need, or otherwise find that such proposed new institutional health services are needed, unless *[it]* the commissioner finds that:

* * *

(5) the proposed new institutional health service is consistent with the health resource management plan and*[, from July 1, 1993 until July 1, 1994, is within the portion of the health care expenditure target applicable to the proposed health care facility, and beginning July 1, 1994,]* is within the portion of the unified health care budget applicable to the proposed health care facility.

Sec. 28. 18 V.S.A. 9439 is amended to read:

9439. COMPETING APPLICATIONS

(a) The *[board]* commissioner shall provide by rule a process by which any person wishing to offer or develop a new institutional health service may submit a competing application when a substantially similar application is pending *[with the council]*. The competing application must be filed and completed in a timely manner, and the original application and all competing applications shall be reviewed concurrently. A competing applicant shall have the same standing for administrative and judicial review under this subchapter as the original applicant.

* * *

(d) The *[board]* commissioner may, by rule, establish regular review cycles for *[certain types of facilities or services for which frequent and continual applications are received. Rules relating to such reviews shall include criteria for categorizing substantially similar health care facilities or services, and the time intervals between regular review cycles]* the addition of beds for skilled nursing or intermediate care.

(e) In the case of *[review cycles]* proposals for the addition of beds for skilled nursing or intermediate care, the *[council]* commissioner*[, after consultation with the secretary,]* shall identify in advance of the review the number of additional beds to be considered in that cycle or the maximum additional financial obligation to be incurred by the agencies of the state responsible for financing long-term care. The number of beds *[identified by the council]* shall be consistent*[, over the period of time covered by the health resourcemanagement plan,]* with the number of beds determined to be necessary by the health resource management plan or state health plan, whichever applies, and shall take into account the number of beds needed to develop a new, efficient facility.

Sec. 29. 18 V.S.A. 9440 is amended to read:

9440. PROCEDURES

(a) The application shall be in such form and contain such information as the *[board]* commissioner establishes. In addition, the *[council]* commissioner may require of an applicant *[for a certificate of need]* any or all of the following information that *[it]* the commissioner deems necessary:

* * *

(7) additional information as needed by the *[department or council]* commissioner.

In addition to the information required for submission *[to the council]*, an applicant may submit, and the *[board]* commissioner shall *[duly]* consider, any other information

relevant to the application or the review criteria.

(b) The application process shall be as follows:

(1) Prior to filing an application for a certificate of need, an applicant shall file a letter of intent with the *[council]* commissioner no less than 30 days prior to the date on which the application is to be filed. The letter of intent shall form the basis for determining the applicability of this subchapter to the proposed expenditure or action. A letter of intent shall become invalid if an application is not filed within six months of the date that the letter of intent is received *[by the council]*.

(2) Upon a determination by the *[council, after consultation with the secretary,]* commissioner that a certificate of need is required for a proposed expenditure or action, an application for a certificate of need shall be filed *[with the council. If the council determines that a certificate of need is not required, the council shall notify the board. The board may, on its own motion, review the letter of intent and declare that a certificate is required, in which case an application for a certificate of need shall be filed with the council]*.

(3) The *[council]* commissioner, upon making an interim determination on the basisof a letter of intent that a project will be uncontested, may accept a preliminary application immediately upon making such a determination *[. The council shall, upon making such an interim determination, immediately solicit the advice of the secretary]* and issue proper public notice. If no interested party comes forth, *[and if the secretary concurs, the council]* the commissioner may then formally declare the application uncontested and *[the board]* may issue a certificate of need without further process or *[the board]* may declare, on its own motion, that the application is contested.

(4) Within 15 days of receipt of an application, *[which is not reviewed under subdivision (3) of this subsection the council immediately shall transmit a copy of the application to the secretary if the secretary has indicated his or her intention to participate in the review process. The secretary shall comment to the council upon the completeness of the application, indicating specifically and in writing, any additional information which the secretary requires before he or she can consider the application complete. The council, after considering the requirements of the secretary,]* the commissioner shall notify the applicant that*[:]*

*[(A) The]* the application contains all necessary information required and is complete*[; or]* , or that

*[(B) Additional]* additional information is required *[by the secretary or by the council, or both]*.

*[If the application or additional information is filed on or before the 15th day of the month, such notification by the council shall be made on or before the last day of that month. If the application or additional information is filed after the 15th day of the month, the council shall notify the applicant as to completeness, or request additional information, on or before the last day of the following month.]*

(5) If an applicant fails to respond to an information request *[by the council]* under subdivision *[(4)(B)]* (4) of this subsection within six months, the application will be deemed inactive. If an applicant fails to respond to an information request within 12 months, the application will become invalid.

(6) For purposes of this section, "interested party" status shall be granted topersons who demonstrate that they will be substantially, adversely and directly affected by the new institutional health service under review or that they will materially assist the *[board]* commissioner by providing nonduplicative evidence relevant to the *[board's]* determination. *[A person denied interested party status, or a party aggrieved by the council's decision, may, within 15 days of such decision, appeal that decision to the board.]* Once interested party status is granted *[by either the council or the board, the council]* the commissioner shall provide the information necessary to enable the party to participate in the formal hearing *[before the board]*. Such information includes*[, but is not limited to,]* information about procedures, copies of all written correspondence and copies of all entries in the application record.

(7) Once an application has been deemed to be complete, public notice of the application will be provided in newspapers having general circulation in the region of the state affected by the application. The notice shall identify the applicant, the proposed new institutional health service and the date by which a competing application under section 9439 of this title must be filed.

(c) The review process shall be as follows:

(1) The public oversight commission shall review the application materials provided by the applicant and the arguments raised in favor of or against the proposal, if any, and may request the technical panel’s advice, recommendations and comments on the merits of the application.

*[(1)]* (2) *[A]* The public oversight commission shall hold a public hearing *[shall be held]* during the course of a review *[by the council]* if requested by persons directly affected by the review.

*[(2)]* (3) A review shall be completed and the *[board]* commissioner shall make a decision within 120 days*[, or within 90 days if the application is uncontested,]* after the date of notification under subdivision (b)(4)*[(A)]* of this section. *[The department, after consulting with the secretary, shall establish criteria for determining when it is not practicable to complete a review within 120 days.]* Whenever it is not practicable to complete a review within 120 days, the *[department, after consultation with the secretary,]*commissioner may extend the review period up to an additional 30 days. Any review period may be extended with the written consent of all applicants.

*[(3)]* (4) After reviewing each application and after considering the recommendations of the *[secretary and the council]* public oversight commission, the *[board]* commissioner shall make a decision either to issue a certificate of need or to deny the application for a certificate of need. Notice of the decision shall be sent to the applicant*[, the secretary and the council]*. This notice shall state the basis of the decision. *[If the decision is not consistent with the recommendations of the secretary or council, the board shall provide the secretary and the council with a copy of the decision.]*

(d) The *[board]* commissioner shall adopt rules governing procedures for the expeditious processing of *[emergency]* applications*[. Emergency applications include]* *[applications]* including those regarding expenditures for replacement, repair, rebuilding, or re-equipping of any part of a health care facility or health maintenance organization destroyed or damaged as the result of fire, storm, flood, act of God, or civil disturbance, or any other *[emergency]* circumstances where the *[council]* commissioner finds that the circumstances require action *[by the council]* in less time than normally required for review.

(e) *[Provisions of the Administrative Procedure Act under chapter 25 of Title 3 shall apply to proceedings before the board.]* Any party aggrieved by a decision of the commissioner under this section may appeal the decision to the supreme court.

Sec. 30. 18 V.S.A. 9441(b) is amended to read:

(b) The maximum fee shall not exceed *[$10,000.00]* $20,000.00 and the minimum filing fee is $250.00 regardless of project cost. No fee shall be charged on projects amended as part of the review process

Sec. 31. 18 V.S.A. 9443 is amended to read:

9443. EXPIRATION OF CERTIFICATES OF NEED

The *[board]* commissioner shall adopt rules providing for the expiration of certificates of need*[, except that in no case shall a certificate be valid for more than five years measured from the date of issuance to the date the project is completed]*.

Sec. 32. REPEAL

18 V.S.A. 9438 (additional criteria: health maintenance organizations) is repealed.

* * * Hospital Budget Reviews * * *

Sec. 33. 18 V.S.A. 9451 is amended to read:

9451. DEFINITIONS

As used in this subchapter:

*[(1) "Board" means the Vermont health care authority board established under section 9403 of this title.]*

*[(2) "Council" means the hospital data council.]*

*[(3)]* (1) "Hospital" means a general hospital licensed under chapter 43 of this title.

*[(4) "Health resource management plan" means the plan for the distribution of the health care resources in Vermont adopted pursuant to section 9405 of this title.]*

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

*[(6)]* (2) "Volume" means the number of inpatient days of care or admissions and the number of all inpatient and outpatient ancillary services rendered to patients by a hospital.

Sec. 34. 18 V.S.A. 9453 is amended to read:

9453. POWERS AND DUTIES

(a) *[The board]* With the advice and recommendations of the technical panel, the commissioner shall:

* * *

*[(c) The council shall be a party in any hearing before the board under this subchapter.]*

Sec. 35. 18 V.S.A. 9456 is amended to read:

9456. BUDGET REVIEW

(a) The *[council]* commissioner shall conduct reviews of each hospital's proposed budget based on the information provided pursuant to this subchapter, and in accordance to a schedule established by the *[board]* commissioner.

(b) In conjunction with budget reviews, the *[council]* commissioner shall:

(1) review utilization information;

(2) consider the goals and recommendations of the health resource management plan or state health plan, whichever applies;

(3) *[from July 1, 1993 until July 1, 1994, consider the portion of the health care expenditure target applicable to hospitals, and, beginning on July 1, 1994, consider the portion of the uniform health care budget applicable to hospitals]* 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; and

(8) seek the advice and recommendations of the public oversight commission.

*[(c) The council shall meet with hospitals to review and discuss hospital budgets for the forthcoming fiscal year. The council shall recommend a budget for each hospital to the board. Beginning in 1993, the total of all budgets recommended by the council shall be within the portion of the health care expenditure target or the unified health care budget, as appropriate, applicable to hospitals and shall reflect the relative needs of all institutions.]*

*[(d)]* (c) Individual hospital budgets *[recommended or]* established under this section shall:

*[(1) be consistent with the provisions of subsection (c) of this section;]*

*[(2)]* (1) be consistent with the health resource management plan or state health plan, whichever applies;

*[(3)]* (2) *[reflect]* take into consideration national, regional or instate peer group norms, according to indicators, ratios and statistics established by the *[board, by rule]* commissioner;

*[(4)]* (3) promote efficient and economic operation of the hospital; and

*[(5)]* (4) reflect *[prior year]* budget *[performance]* performances for prior years.

*[(e) In 1992 and 1993, the board shall consider the recommendations of the council and recommend a budget for each hospital. Each hospital shall consider the recommendation of the board and adopt a budget.]*

*[(f)]* (d) Beginning *[in 1994,]* October 1, 1996, and annually thereafter, the *[board]* commissioner shall consider the recommendations of the public oversight commission *[council]* and*[, after notice and an opportunity for hearing pursuant to chapter 25 of Title 3]*, establish a budget for each hospital, and each hospital shall operate within the budget established under this *[subsection]* section.

*[(g)]* (e) *[The board]* The commissioner may, upon application, adjust a budget established under *[subsection (f) of]* this section upon a showing of need based upon exceptional or unforeseen circumstances in accordance with the criteria and processes established under section 9406 of this title.

*[(h)]* (f) The *[board]* commissioner may request, and a hospital shall provide, information determined by the *[board]* commissioner to be necessary *[for the board]* to determine whether the hospital is operating within a budget established under *[subsection (f) of]* this section.

*[(i)]* (g) If a hospital violates a provision of this section, the *[board]* 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.

Sec. 36. REPEAL

18 V.S.A. 9452 (hospital data council established), 9455 (public hearing process) and 9458 (costs; to be shared) are repealed.

* * * Miscellaneous Provisions * * *

Sec. 37. REPEAL

8 V.S.A. chapter 110 (Vermont health insurance plan) is repealed.

Sec. 38. GENERAL AMENDMENTS

(a) Wherever they appear in Vermont Statutes Annotated, the words "commissionerof banking, insurance, and securities", "health care authority" and "health care authority board" are amended to read "commissioner of banking, insurance, securities, and health care administration", the words "department of banking, insurance, and securities" are amended to read "department of banking, insurance, securities, and health care administration" and where the words "authority", "board", and "council" appear in chapter 221 of Title 18, they are amended to read "commissioner".

(b) Wherever they appear in 18 V.S.A. 9414, the words "health maintenance organization" are amended to read "managed care organization".

(c) In Rule 40 of the rules regarding workers’ compensation of the department of labor and industry, "health care provider" shall mean the same as the definition in 21 V.S.A. 601(22).

Sec. 38a. 21 V.S.A. 601(22) is amended to read:

(22) "Health care provider" shall mean *[the same as defined in 18 V.S.A.]*

*[ 8432(11)]* a person, partnership, corporation, facility or institution, licensed or certified or authorized by law to provide professional health care service in this state to an individal during the individual’s medical care, treatment or confinement.

Sec. 39. TRANSITIONAL PROVISIONS

(a) The rules of the department of banking, insurance, and securities, the rules of the department of health adopted pursuant to 18 V.S.A. chapter 55 and the rules of the Vermont health care authority board shall be the rules of the department of banking, insurance, securities, and health care administration to the extent that they are consistent with the provisions of this act, until amended or repealed by the commissioner. All references in those rules to the "commissioner of banking, insurance, and securities" or the "health care authority" or the "health care authority board" or "hospital data council", "health policy council" or "council" shall be deemed to refer to the "commissioner of banking, insurance, securities, and health care administration" or "commissioner", as appropriate.

(b) An order of the Vermont health care authority board and any order of the commissioner of banking, insurance, and securities shall be treated as an order of thecommissioner of banking, insurance, securities, and health care administration on the effective date of this act.

(c) Jurisdiction over pending contested cases before the commissioner of banking, insurance, and securities and the health care authority board and certificate of need applications or hospital budgets pending before the health care authority board shall be transferred on the effective date of this act to the department of banking, insurance, securities, and health care administration. Any applicant or hospital with a matter pending before the health care authority shall be considered in accordance with the provisions of this act.

(d) The hospital data council and the health policy council shall remain in existence for the limited purpose of participating in the final adjudication of contested cases to which they are parties.

(e) Until the secretary of human services adopts a state health plan and a health action plan pursuant to 18 V.S.A. 9405, any reference to the state health plan or state health action plan shall be deemed to refer to the health resource management plan adopted on March 15, 1996, and the commissioner of banking, insurance, securities, and health care administration shall consider the goals and recommendation of the 1996 health resource management plan in carrying out the provisions of subchapter 5 of Title 18, relating to certificate of need reviews, and subchapter 7 of Title 18, relating to hospital budget reviews.

(f) All employees, professional and support staff, consultants and provisions and all remaining balances of grants and appropriation amounts for personal services and operating expenses for the department of banking, insurance, and securities and the health care authority are transferred to the department of banking, insurance, securities, and health care administration.

Sec. 40. REPORTS (a) No later than January 15, 1997, the commissioner of banking, insurance, securities, and health care administration shall make a report to the general assembly that shall include the following:

(1) Recommendations for mechanisms to ensure consumer protection and participation in managed care organizations that address:

(A) Managed care marketing and enrollment practices.

(B) Consumer information materials for managed care organization applicants and members.

(C) Consumer participation in the development of managed care organizations’ medical policies and utilization review, quality assurance and health care provider credentialing procedures.

(D) Effective consumer representation in the development, operation and review of public policies and practices that affect the quality and accessibility of health care.

(2) Guidelines for postpartum care, the extent to which managed care organizations adhere to those guidelines and the need to develop additional clinical guidelines for other areas of clinical care management. These guidelines shall allow health care providers to determine the appropriate length of postpartum hospital stay based on relevant factors including the complexity of the delivery, whether the delivery was vaginal or caesarian, the clinical condition of the infant and the mother, their social situation and available community support systems.

(3) Recommendations on how to regulate mergers between or among health care providers, health care facilities, and health insurers, including managed care organizations and community service networks.

(4) Any emerging public policy health care issues.

(b) No later than December 1, 1997, the commissioner of banking, insurance, securities, and health care administration shall report to the general assembly on whether and at what point capitation sufficiently controls health care costs so that regulatory review of costs through certificate of need and hospital budgets becomes unnecessary. The report shall also include recommendations on how to implement the findings and recommendations of the report.

(c) No later than January 1, 1998, the commissioner of banking, insurance, securities, and health care administration shall report to the general assembly on the status of themerger of the former Vermont health care authority into the present department of banking, insurance, securities, and health care administration, including any improved regulatory efficiency or cost savings, or both, that have resulted from the consolidation of health care administration into one department; and future savings in governmental spending that may result from the merger. This report shall also include an analysis of the information obtained pursuant to 18 V.S.A. 9414(a)(2) and any resulting recommendations regarding consumer protection issues in regard to managed care organizations.

Sec. 41. TRANSFER OF POSITIONS

The 14 positions presently in the Vermont health care authority shall be transferred to the department of banking, insurance, securities, and health care administration.

Approved: May 22, 1996