View the complete text of this act


ACT NO. 71

(H. 516)

Appropriations; Medicaid; studies

This act is the BIG BILL, the Fiscal Year 2006 Appropriations Act , to provide appropriations for the support of state government during fiscal year 2006. For details and summaries of the amounts appropriated, see the explanatory documents and letter of intent prepared by the Legislative Joint Fiscal Office.

In addition to providing appropriations, this act also amends and adds substantive provisions affecting other laws and programs, including the following:

Commissions and Interim Studies

State Teachers Retirement System. Sec. 34b establishes a commission of 13 members, chaired by the state treasurer, with two members of each House, state government officials, and representatives of education associations to make recommendations to the legislature by November 15, 2005 for funding an adequate, sustainable, and actuarially sound retirement benefit plan for the state teachers' retirement system of Vermont.

Social Security Number Usage and Privacy. Sec. 54b establishes a commission of ten members, including a representative of the attorney general's office to be chair, two members of each House, and officials representing other state agencies, to study the usage of Social Security numbers and other privacy issues and to report recommendations to legislative committees by January 15, 2006.

Forensic Mental Health. Sec. 113c directs the commissioner of health to convene a work group representative of state mental health officials, law enforcement officials, the defender general and court officials, and mental health advocacy groups to report to the legislature by January 31, 2006 recommendations on the appropriate settings for forensic evaluations, transfers and disposition of defendants. In the meantime, Secs. 113a and 113b amend exiting laws giving the commissioner of health more authority to determine the most clinically appropriate hospital for a forensic examination.

Women Offenders, Substance Abuse. Sec. 143a creates a committee of officials representing corrections, the defender general, community mental health programs, alcohol and drug abuse programs, and others to explore recommendations relating to women offenders in the August 2004 report of the governor's commission on corrections overcrowding, and report recommendations to legislative committees by January 15, 2006.

High School Completion Advisory Committee. Sec. 160 creates an advisory committee of two legislators, state education officials, and representatives of education associations to recommend a mechanism and procedure by which funding for high school completion programs carried out by adult education and literacy systems shall be paid to school districts and supervisory unions, and report recommendations to legislative committees by January 15, 2006.

Economic Development Study. Sec. 205c creates an Economic Development Study Committee of six members of the legislature, representatives of local government, business and environmental interests to study and recommend whether targeted business incentive grants and tax incentives are effective, and efficient and cost-effective ways to encourage economic activity and report to legislative committees by January 15, 2006.

Working Group on Growth Centers. Sec. 276 creates a "working group on growth centers" of ten members of the legislature to develop proposed legislation to support mixed use development in designated growth centers and public and private costs associated with development issues related to agricultural lands mitigation under Act 250 and report to committees of the legislature by January 15, 2006.

Commission on Health Care Reform. Sec. 277c creates a Commission on Health Care Reform composed of eight legislators and to gubernatorial appointees (nonvoting) to make recommendations to the General Assembly on actions needed to attain the health care goals and guidelines passed by the 2005 legislature in H.524 (vetoed by the Governor). The commission will commence work on July 1, 2005 and continue through July 2009. The Commission will hire a director and two other staff and has its own appropriation and funds for studies. Sec. 277d specifically directs the commission to undertake or contract for comprehensive studies relating to the economic impact, financing options, and governance and administration of health care reform.

Medicaid and Health Program Changes

Provider Payments. Sec. 104a(a) makes reductions, limitations, and conditions on provider payments and spending for hospitals, home health agencies, and dentist fees.

Global Commitment Approval. Sec. 250 provides that any agreement or waiver under the federal Medicaid law by which funding for Medicaid is to be transformed to a system of global funding or block grants must be approved by the General Assembly, or if not in session, by the Joint Fiscal Committee.

Health Information Technology Plan. Sec. 277 directs the Commissioner of Health to create a health information technology plan to include the implementation of an integrated health information infrastructure for the sharing of electronic health information among health care facilities, health care professionals, public and private ratepayers, and patients. Secs. 277a and 277b amend the Certificate of Need review process as it affects new health information technology.

Publicly Operated Managed Care Organization. Sec. 278 authorizes OVHA to serve as the state's publicly operated managed care organization (MCO) for management of the health care delivery system and reimbursement for eligible services as provided by state and federal law and any "global commitment waiver" thereunder.

Premium Adjustments. Sec 279 increases Vermont Health Access Program (VHAP) uninsured program premiums by 10%, rounded up to the next dollar. Sec. 280 increases Dr. Dynasaur and SCHIP premiums by 10% rounded up to the dollar. Sec. 281 requires OVHA and Department for Children and Families to report disenrollments and terminations of programs subject to premiums.

Provider Assessments. Sec. 285 increases hospital assessment to 6% of net patient revenues; Sec. 286 increases nursing home assessment to $3,787.79 per bed; Sec. 287 retains ICF/MR assessment at 6% of annual expenses, and directs OVHA (rather than PATH) to collect and administer; Sec. 288 increases Home Health Agency assessment to 18.45% of net operating revenues, and provides methodology for assessing the tax on providers beginning after January 1, 2005; and Sec. 289 creates a monthly pharmacy assessment of $0.10 for each prescription filled or refilled.

Program Management. Sec. 296 requires Medicaid program administration changes to provide (a) 24/7 phone line, (b) care coordination, (c) coordination of long-term care, (d) post-hospital care planning, and (e) AHS to negotiate sole-source contracts. Sec. 297 directs the Health Access Oversight Committee, with the assistance of OVHA, the JFO, and Legislative Council, to review and report on costs, benefits, and financing alternative for including dentures, partial dentures, and eyeglasses under Medicaid. Sec. 298 requires AHS to reinstate chiropractic services under Medicaid and VHAP. Sec. 299 directs AHS to begin a premium assistance program by January 1, 2006 to assist persons enrolling in VHAP, Dr. Dynasaur, and VHAP care-taker relative programs. Sec. 300 directs OVHA to develop a capitated program for opiate dependency. Sec. 301 directs OVHA, in cooperation with the Health Department, to undertake primary disease detection activities. Sec. 302 authorizes AHS to utilize emergency (immediate) rulemaking for nursing home rates, premium adjustments, long-term case financial eligibility, and pharmacy mail order rule changes. Sec. 303 directs AHS to make specific changes in asset and income rules for long-term care eligibility, and authorizes emergency rulemaking process for this purpose.

Prescription Drug Programs. Sec. 305 requires program and administrative changes relating to the Preferred Drug List (PDL) and the Drug Utilization Review (DUR) Board. Changes affect prior authorization requirements for drugs used to treat severe and persistent mental illness (SPMI), compensation of the DUR Board, an advisory panel to the DUR Board, generic drug use, new therapeutic classes in the PDL, and modification of prior authorization process.

Sec. 306 deletes the option of a pharmacist not to dispense generic substitutes because the pharmacist does not have the generic drug in stock. Sec. 307 mandates mail for selected pharmacy products under the pharmacy best practices and cost control program. Secs 308 and 308a allows the Drug Utilization Review Board to go into executive sessions to consider confidential information protected from disclosure by federal law or as a condition of rebate authorization under Medicaid. Sec. 309 requires documentation by the prescriber for use of drugs not on the preferred drug list. Sec. 310 allows for the PDL prior authorization process to apply to mental health drugs upon adoption of an agency rule. Under existing law, this prior authorization requirement would have occurred next year, July 1, 2006. Sec. 311 requires OVHA to include direct negotiations with individual pharmaceutical manufacturers to reduce prescription drug costs. Sec. 312 requires health insurers to provide BISHCA with certain encrypted claims data, cross-matched claims data and member, subscribed or policyholder information necessary to determine third party liability for benefits provided, and to collaborate with AHS in the development of a comprehensive health care information system.

Sec. 313 establishes transitional premiums for VHAP Pharmacy, VScript and VScript Expanded from July 1, 2005 through January 1, 2006, the date upon which the V-Pharm Assistance Program will be available to provide supplemental pharmaceutical coverage to Medicare beneficiaries.

Medicare Part D Prescription Drug Wrap Around Coverage. Sec. 314 establishes the V-Pharm Assistance Program, effective January 1, 2006, to provide supplemental pharmaceutical coverage to Medicare beneficiaries (the Medicare part D Prescription Drug Wrap Around Coverage ). Sec. 315 directs AHS to apply to the federal Centers for Medicare and Medicaid Services for federal approval of the V-Pharm Program if required by federal law and any necessary waivers to ensure federal matching dollars. Sec. 316 contains transitional provisions to ensure no loss of coverage and to plan and provide that the V-Pharm & Vermont Rx programs be the successor to and continuation of the VHAP-Pharmacy, VScript, and VScript Expanded programs for those eligible for coverage under Medicare Part D. Sec. 317 directs AHS to adopt rules as necessary to assure that residents in nursing homes have sufficient income to cover any cost-sharing requirements of Medicare part D or other state Rx program. Sec. 318 directs AHS to seek federal approval to eliminate the asset and/or income requirements for Medicare beneficiaries in order to maximize eligibility of those individuals for the Medicare part D low income subsidy program, provided that the agency finds that to do so will be at a minimum cost neutral to the state. Sec. 319 directs the state's commissioner of human resources to evaluate the costs and benefits of modifying the state employee and retiree pharmaceutical benefits to wrap around the Medicare part D program and report to the general assembly for consideration upon expiration of the current collective bargaining agreement. The state treasurer, in consultation with the State Teachers Retirement Board, is directed to make a similar evaluation of the costs and benefits to wrap state teachers' and retirees' pharmaceutical benefits around the Medicare part D program. Sec. 320 directs the Legislative Council to make technical revisions to the V ermont Statutes Annotated to reflect the consolidation of the state's pharmaceutical programs and the establishment of the V-Pharm program. Sec. 321 repeals other pharmaceutical programs upon the effective date of the establishment of the V-Pharm program, January 1, 2006.

Vermont State Colleges, Collective Bargaining

Sec. 178a(a) grants legislative approval to the last best offer recommended by the Vermont Labor Relations Board in the bargaining agreement between the colleges and the colleges' faculty, except for provisions relating to early retirement, and Sec. 178a(b) to recommence negotiations on early retirement with mandatory arbitration. These provisions were deleted by Special Session H.1, June 16, 2005.

Sec. 178a(c), beginning July 1, 2005, removed the Legislature from the collective bargaining process of the Vermont State Colleges. This provision was retained by Special Session H.1, June 16, 2005.

Vermont Economic Progress Council

Deferral and Mitigation of Prior Awards. Sec. 205b extended the deferral and mitigation of disallowance and recapture provisions relating to Economic Advancement Incentive Awards granted by the Vermont Economic Progress Council to awards granted prior to July 1, 2003 (the effective date of deferral and mitigation provisions), and extended the deferral period from 12 to 36 months.

Effective Date: Most provisions, July 1, 2005

Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont