Introduced by Representative Obuchowski of Rockingham
Subject: Health; health care administration; health facilities; discontinuance of services; licensing of hospitals; open meetings; public records; certificate of need; hospital budgets
Statement of purpose: This bill proposes to require Vermont hospitals to secure a certificate of need before offering new, satellite health services, to conduct public hearings before discontinuing satellite health services, to establish a community membership requirement for the board of directors or other governing body of hospitals, to comply with open meeting and public records laws, to establish the Vermont health care plan board to conduct regulatory reviews of new institutional health services proposed by hospitals and other health care facilities, to establish annual hospital budgets, to establish a global hospital budget to serve as an aggregate spending cap, and to establish a public bidding process for hospital contracts.
AN ACT RELATING TO REGULATION OF HOSPITALS
It is hereby enacted by the General Assembly of the State of Vermont:
* * * Public Meetings, Open Records, and Consumer Representation * * *
Sec. 1. 1 V.S.A. § 310(3) is amended to read:
(3) “Public body” means any board, council, or commission of the state or one or more of its political subdivisions, any board, council, or commission of any agency, authority, or instrumentality of the state or one or more of its political subdivisions, or any committee of any of the foregoing boards, councils, or commissions, except that “public body” does not include councils or similar groups established by the governor for the sole purpose of advising the governor with respect to policy. “Public body” also means:
(A) the board of directors of any hospital as a condition of licensure pursuant to chapter 43 of Title 18;
(B) any subcommittee of a board of a hospital as a condition of licensure of the hospital pursuant to chapter 43 of Title 18;
(C) any such board or subcommittee of any hospital licensed in another state as a condition of receiving reimbursement for health care services by this state or a health insurance plan issued in this state and regulated by the commissioner of banking, insurance, securities, and health care administration under Title 8; and
(D) any other for‑profit corporation, nonprofit corporation, or other organization which has the right to exercise substantial control over a hospital designated in subdivisions (A) through (C) of this subdivision (3) by contract or by virtue of being entitled to at least 25 percent of the voting power on the board of directors or subcommittee of the hospital. The commissioner of banking, insurance, securities, and health care administration shall adopt by rule standards for determining when “substantial control” is being exercised.
Sec. 2. 1 V.S.A. § 317(a) is amended to read:
(a) As used in this subchapter, “public agency” or “agency” means any agency, board, department, commission, committee, branch, instrumentality, or authority of the state or any agency, board, committee, department, branch, instrumentality, commission, or authority of any political subdivision of the state. “Public agency” also means:
(1) the board of directors of any hospital as a condition of licensure pursuant to chapter 43 of Title 18;
(2) any subcommittee of a board of a hospital as a condition of licensure of the hospital pursuant to chapter 43 of Title 18;
(3) any such board or subcommittee of any hospital licensed in another state as a condition of receiving reimbursement for health care services by this state or a health insurance plan issued in this state and regulated by the commissioner of banking, insurance, securities, and health care administration under Title 8; and
(4) any other for‑profit corporation, nonprofit corporation, or other organization which has the right to exercise substantial control over a hospital designated in subdivisions (1) through (3) of this subsection by contract or by virtue of being entitled to at least 25 percent of the voting power on the board of directors or subcommittee of the hospital. The commissioner of banking, insurance, securities, and health care administration shall adopt by rule standards for determining when “substantial control” is being exercised.
Sec. 3. 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:
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board of health may when circumstances warrant, issue a temporary license for
such period or periods and subject to such conditions as the board shall deem
proper, subject to the limitation that such a temporary license shall not be
issued for a total period of more than
thirty-six 36 months .;
(18) All hospitals shall submit to the licensing agency a plan for implementing the provisions of section 1852 of this title and a plan for handling patient complaints, which shall become effective upon approval by the licensing agency. Plans under this subdivision shall include:
(A) the designation of a person or persons qualified as a patient representative;
(B) a method by which each patient shall be made aware of the complaint procedure;
appeals mechanism within the hospital itself;
(D) a published time frame for processing and resolving complaints and appeals within the hospital, and notification that further appeals of the hospital’s resolution of complaints may be made to the licensing agency under chapter 43 of Title 18; and
(E) periodic reporting to the licensing agency of the nature of complaints filed, and action taken;
(19)(A) The board of directors or other governing body of each hospital shall include at least one member appointed to represent the interests of health care consumers in the communities served by the hospital. Such individuals shall be appointed pursuant to the articles of incorporation or bylaws of the hospital, except that where a community advisory board independent of the hospital has been created, such individuals shall be appointed by the community advisory board. Such appointments shall be made in accordance with procedures adopted by rule by the commissioner of banking, insurance, securities, and health care administration.
(B) A member of the board of directors or other governing body holding office under this subdivision shall not be directly or indirectly affiliated with a health care provider. As used in this subdivision, the absence of such affiliation shall be demonstrated by the annual certificate of the member that he or she is not a health care provider, does not hold a fiduciary position or relationship with a health care provider, and does not receive either directly or indirectly through his or her spouse or other immediate family member more than one-tenth of his or her gross annual income from salaries, fees, or other compensation from a health care provider. As used in this subdivision, “health care provider” means a health care facility or health care provider as defined in subdivisions 9402(5) and (6) of this title, or any manufacturer, supplier, or other entity engaged in the business of producing, managing, distributing, or selling health care products, devices, services, or prescription drugs.
* * * Global Hospital Budget, Vermont Health Care Plan Board & CON * * *
Sec. 4. 18 V.S.A. § 9406(a)(1)(A) is amended to read:
§ 9406. EXPENDITURE ANALYSIS; UNIFIED HEALTH CARE BUDGET
commissioner Vermont health
care plan board shall develop a unified health care budget and
develop an expenditure analysis to promote the policies set forth in section
9401 of this title.
(1) The budget shall:
cap within which health care costs are controlled, resources directed, and
quality and access assured. A component of the unified health care budget
shall include a global hospital budget to serve as a spending cap within which
individual hospital budgets are reviewed under subchapter 7 of this title.
Sec. 5. 18 V.S.A. § 9406(c) is added to read:
(c)(1) On or before July 1, 2006, and annually thereafter, the unified health care budget adopted by the Vermont health care plan board shall include an annual capital expenditure budget and a five-year state health care facilities capital expenditure plan for all persons subject to the certificate of need review process under subchapter 5 of this chapter.
(2) On or before July 1, 2006, and annually thereafter, the unified health care budget adopted by the Vermont health care plan board shall include an annual, aggregate hospital sector budget, including hospitals’ total operating and capital expenditures, for all hospitals licensed under chapter 43 of this title for the budget year beginning on the next succeeding October 1. The sum of all individual hospital budgets established by the commissioner under section 9456 of this title shall not exceed the hospital sector budget adopted by the commissioner under this subdivision.
Sec. 6. 18 V.S.A. § 9420 is added to read:
§ 9420. BIDDING PROCESS; APPLICABILITY
The commissioner shall develop by rule a public bidding process modeled after the contracting procedures adopted by the agency of administration, which shall include minimum standards for soliciting vendors of operational services and products purchased by a hospital. The bidding process shall include a formal bid process for contracts in excess of $75,000.00 and a simplified bid process for contracts between $10,000.00 and $75,000.00. The bidding process shall not apply to contracts valued at less than $10,000.00.
Sec. 7. 18 V.S.A. § 9431a is added to read:
§ 9431a. THE VERMONT HEALTH CARE PLAN BOARD
(a) On and after the effective date of this section, and notwithstanding any other provision of law to the contrary, the Vermont health care plan board shall administer the certificate of need program and the annual review of hospital budgets as the successor in interest to the commissioner of banking, insurance, securities, and health care administration and the public oversight commission, pursuant to the provisions of this subchapter and subchapter 7 of this chapter. The board shall exercise all powers and fulfill all duties of the commissioner and the public oversight commission in effect upon passage of this section.
(b) The Vermont health care plan board shall consist of a chairperson and two members appointed by the governor with the advice and consent of the senate.
(c) The term of each member shall be six years. Notwithstanding section 2004 of Title 3 or any other provision of law, members of the board may be removed only for cause.
(d) The chairperson shall have general charge of the offices and employees of the board.
(e) The board shall have such powers as are necessary or convenient in the discharge of its duties under this subchapter, including the power to adopt such rules under chapter 25 of Title 3 as are necessary for the proper administration of this subchapter.
(f) The board may retain professional or other staff to assist in particular proceedings under this subchapter or subchapter 7 of chapter 221 of this title and may allocate the board’s reasonable expenses for such staff to the applicable hospital or other health care facility. The board, after notice and opportunity for hearing, may reduce such allocation upon a proper showing by the hospital or health care facility that such expenses were excessive or unnecessary.
Sec. 8. 18 V.S.A. § 9434(c)(5) is added to read:
(5) The offering of any health service that is located outside the municipality where the hospital is located and that is anticipated to serve an annual average of 25 or more patients per day. This subdivision shall apply to hospitals as well as organizations affiliated with a hospital.
Sec. 9. 18 V.S.A. § 9434a is added to read:
§ 9434a. DISCONTINUANCE OF SERVICES; PUBLIC HEARING
(a) A hospital shall not discontinue a health service provided by or through the hospital if the health care service would require a certificate of need under subsection 9434(c) of this title, unless the hospital has conducted a public hearing concerning the proposed discontinuance and provided an opportunity for the community served by the hospital to comment on the proposed discontinuance.
(b) The commissioner or any resident of the community served by the hospital may file an action in superior court to enjoin a violation of the provisions of this section. A prevailing party in an action under this section shall be awarded costs and reasonable attorney’s fees.
(c) The provisions of this section shall apply to services offered or provided before and after the effective date of this section.
Sec. 10. 18 V.S.A. § 9454(c) is added to read:
(c) Whenever variations in expenditures or net patient revenues greater than three percent occur or are projected to occur for the current fiscal year of a hospital, the hospital shall:
(1) notify the Vermont health care plan board, in accordance with rules adopted by the board; and
(2) file either a revised budget that complies with the annual budget established by the Vermont health care plan board under subsection 9456(d) of this title or a petition to adjust the budget under subsection 9456(f).
Sec. 11. 18 V.S.A. § 9456(a) is amended to read:
commissioner Vermont health care board shall conduct reviews
of each hospital’s proposed budget based on the information provided pursuant
to this subchapter, the global hospital budget established under subdivision
9406(a)(1)(A) of this title, and in accordance with a schedule established
by the commissioner.
Sec. 12. 18 V.S.A. § 9456(b) and (c) are amended to read:
(b) In conjunction with budget reviews,
commissioner Vermont health care plan board shall:
(1) review utilization information;
(2) consider the goals and recommendations
of the health resource
management allocation plan or and
the state health plan , whichever applies;
(3) consider the expenditure analysis for
the previous year
and, the proposed expenditure analysis for the
year under review, and the annual unified health care budget for the year
under review, including the annual state health care facility capital
expenditure budget established under subdivision 9406(c)(1) of this title and
the annual aggregate hospital sector budget established under subdivision
(4) ensure that the total of all individual hospital budgets does not exceed the hospital sector portion of the unified health care budget;
consider any reports from professional review organizations; (5)(6)
solicit public comment on all aspects of hospital costs and use and on the
budgets proposed by individual hospitals; (6)(7)
meet with hospitals to review and discuss hospital budgets for the forthcoming
fiscal year; (7)(8)
give public notice of the meetings with hospitals, and invite the public to
attend and to comment on the proposed budgets; (8)(9)
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)(10)
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; and
(11) consider the hospital’s record of performance in connection with representations made during certificate of need application reviews under subchapter 5 of this chapter and the hospital’s record of performance in operating within the budget established under this subchapter for the current and prior fiscal years.
(c) Individual hospital budgets established under this section shall:
(1) be consistent with the health resource allocation plan and the state health 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. A hospital which has failed to operate within its prior year budget
shall be subject to such budget adjustments, utilization controls, or other
measures as the Vermont health care plan board may order after notice and
(5) include a finding that the analysis
provided in subdivision
(b)(9)(b)(10) of this section is a
reasonable methodology for reflecting a reduction in net revenues for
non-Medicaid payers; and
(6) when aggregated with all other hospital budgets reviewed under this subchapter, not exceed the hospital sector budget of the unified health care plan for the fiscal year under review.
Sec. 13. 18 V.S.A. § 9456(f) is amended to read:
health care plan board may , upon application, adjust a budget
established under this section upon a showing of need based upon exceptional
or unforeseen circumstances in accordance with the criteria and processes
established under section 9405 of this title, if:
(1) the hospital demonstrates that the adjustment is necessary to prevent financial harm threatening the financial solvency of the hospital resulting from circumstances beyond the control of the hospital;
(2) the hospital demonstrates that the adjustment is necessary to protect the safety of patients;
(3) the hospital demonstrates that the adjustment is necessary because of unanticipated and increased revenue, provided that the hospital also demonstrates that it has used its best efforts to implement a utilization plan that complies with rules adopted by the Vermont health care plan board, and it has used its best efforts to implement other performance and productivity measures designed to enable the hospital to operate within its budget established under this section; or
(4) the Vermont health care plan board, on its own initiative, determines that an adjustment is necessary to:
(A) ensure that the hospital complies with the hospital’s budget established under this section; or
(B) further the policies and purposes of this chapter.
Sec. 14. STATUTORY REVISION
The words “commissioner,” “commissioner of banking, insurance, securities, and health care administration,” and “department” shall be amended to read “Vermont health care plan board” and “board,” as appropriate, wherever such words appear in 18 V.S.A. chapter 221.
The Vermont General Assembly
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