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Introduced by

H.537

Introduced by   Committee on Appropriations

Date:

Subject:  Appropriations; Medicaid; Office of Vermont Health Access

Statement of purpose:  This bill would appropriate funds for fiscal year 2006 for the Medicaid program, the Vermont Health Access program, and the Office of Vermont Health Access and make adjustments in premiums, rebates, and provider assessments of Medicaid and VHAP programs.

AN ACT RELATING TO APPROPRIATIONS FOR THE MEDICAID PROGRAM AND THE OFFICE OF VERMONT HEALTH ACCESS

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

* * * Appropriations * * *

Sec. 1.  OVHA; Medicaid AND SCHIP; ADMINISTRATION

There is appropriated for fiscal year 2006 to the Office of Vermont Health Access the following amounts for Medicaid and SCHIP program administration:

Personal services                                                   22,820,135

Operating expenses                                                    681,014

Total                                                                23,501,149

Source of funds

Special funds                                                         11,385,633

Federal funds                                                        12,115,516

Total                                                                23,501,149

Sec. 2.  OVHA; MEDICAID AND SCHIP; GRANTS

There is appropriated for fiscal year 2006 to the Office of Vermont Health Access the following amounts for Medicaid and SCHIP program expenditures:

Grants                                                                 594,015,175

Source of funds

Special funds                                                       246,191,079

Federal funds                                                      347,824,096

Total                                                                   594,015,175

(a)  The Office of Vermont Health Access shall implement the following provisions relating to provider payments from the appropriations in this section.

(1)  Hospital reimbursements shall be amended to reduce the projected fiscal year 2006 spending by $8,975,000. 

(2)  Home health agency reimbursements shall be reduced by $1,000,000.

(3)  Dentists reimbursements shall be amended to reduce spending by $243,309.

(4)  The amount of $2,500,000 in reductions shall be made in reimbursement rates to providers who use Current Procedural Technology (CPT) codes, but shall be implemented to minimize impact on primary care services.

(5)  Nursing home costs shall be calculated using an assumed occupancy rate of 93 percent.

Sec. 3.  OTHER MEDICAID APPROPRIATIONS; TRANSFER; REPORT

In addition to the appropriations in this act, all other appropriations of state, federal, and special fund amounts for Medicaid programs and purposes made in the fiscal year 2006 general appropriations act, or any other act appropriating funds in fiscal year 2006, shall be transferred to the Health Access Trust Fund established by section 1972 of Title 33 for use in fiscal year 2006 by the agency of human services for purposes of the trust fund.  The agency shall submit reports on any transfers made in accordance with this section to the Joint Fiscal Committee on July 1, September 1, and November 1 for committee review and consideration at its July, September, and November 2005 committee meetings.

Sec. 4.  FY 05 WATERFALL; PROVIDER TAX POSTPONEMENT;

             CHRONIC CARE INITIATIVE

Sec. 263(a)(3) of H.516 of the 2005 legislative session, as passed by the House, is amended to read:

(3)  Third, 

(A)  up to $3,415,096 shall be appropriated as necessary to the secretary of administration to ensure that said amount is available for fiscal year 2006 general fund pay act obligations.  This appropriation shall make up the difference from the above amount and that amount appropriated under Sec. 264(a)(2) of this act (fiscal year 2006 contingent appropriation).

(B)  $14,346,511 shall be transferred to the health access trust fund to offset postponement of the second disproportionate share payment until fiscal year 2007.

(C)  $2,000,000 shall be appropriated to the office of Vermont health access to fund activities that are part of the “Vermont blueprint for health” chronic care initiative.

Sec. 5.  H. 524; FY 05 WATERFALL REVISIONS

Secs. 17a and 20(b) of H.524 of the 2005 legislative session, as passed by the House, are deleted.  Sec. 263(a) of H.516 of the 2005 legislative session, as passed by the House, is amended by inserting new subdivisions (8) and (9) after subdivision (7) to read as follows and by renumbering the remaining sections to be numerically correct:

(8)  Eighth, $200,000 shall be appropriated to the department of health for use as an additional appropriation for free clinics.

(9)  Ninth, $250,000 shall be appropriated to the office of Vermont health access for the purpose of providing education and outreach to the public on the low income subsidies for the Medicaid prescription drug program provisions of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, P.L. 108-173 and the education and outreach provisions of Sec. 38 of this act.

Sec. 6.  FY 05 WATERFALL; PACE CENTERS; CAPITALIZATION

            GRANTS

(a)  Sec. 263(a) of H.516 of the 2005 legislative session, as amended in H.524 of the 2005 legislative session as passed by the House, is amended by inserting a new subdivision after subdivision (9) to read as follows, and by renumbering the remaining subdivisions to be numerically correct:

(10)  Tenth, $605,000 shall be appropriated to the office of Vermont health access to provide capitalization grants for Vermont‑based PACE centers if the PACE program does not qualify for consideration as an eligible project as defined under 10 V.S.A. § 212(6) as provided in this section.

(b)  In the event that the funds are insufficient to make the appropriation in subsection (a) of this section, the agency of human services is authorized to administer a program for all-inclusive care for the elderly (PACE) pursuant to 42 U.S.C. § 1396u and in accordance with the Vermont Medicaid state plan, and the PACE program shall be considered an “eligible project” as defined under 10 V.S.A. chapter 12 § 212(6).  Notwithstanding the foregoing, the extension of loans or mortgage insurance pursuant to 10 V.S.A. chapter 12 shall be upon such terms and conditions as the authority may prescribe, including those findings required under 10 V.S.A. chapter 12.

Sec. 7.  FY 05 WATERFALL; FQHC LOOK-ALIKES

(a)  Sec. 263(a) of H.516 of the 2005 legislative session, as amended in H.524 of the 2005 legislative session, as passed by the House, is amended by inserting a new subdivision after subdivision (11) to read as follows, and by renumbering the remaining subdivisions to be numerically correct:

(12)  Twelfth, $100,000 is appropriated to the department of health to provide direct grants, up to $25,000.00, to any federally qualified health center (FQHC) or FQHC look-alike that successfully creates a new 340(b) pharmacy service provided directly or under contract with a pharmacy.

Sec. 8.  FY 06 CONTINGENT APPROPRIATIONS AND TRANSFERS

Sec. 264(a)(3) and (4) of H.516 of the 2005 legislative session, as passed by the House, are added to read:

(3)  Third, to the extent the forecast is exceeded, $13,522,000 is appropriated to the health access trust fund and shall be considered a “base appropriation” to fund fiscal year 2006 Medicaid obligations.

(4)  Fourth, the amount of $6,700,148 is appropriated to the health access trust fund and shall be considered a “base appropriation” to fund fiscal year 2006 appropriations.  In the event the revenue upgrade is insufficient to cover this additional funding, the office of Vermont health access is authorized to utilize reserve funds to meet any shortfall due to the lack of state match. 

Sec. 9.  33 V.S.A. § 1974 is added to read:

§ 1974.  PUBLICLY OPERATED MANAGED CARE ORGANIZATION

(a)  In order to enable the state to effectively manage public resources, while preserving and enhancing access to health care services in the state, the office of Vermont health access is authorized to serve as a publicly operated managed care organization (MCO) within the agency of human services, the Medicaid single‑state agency.

(b)  As the publicly operated MCO, the office of Vermont health access shall be responsible for the overall management of the health care delivery system and for reimbursement of all eligible services as may be provided by state or federal law.

(c)  The office of Vermont health access shall be exempt from any health maintenance organization (HMO) or MCO statutes in Vermont law and shall not be considered to be an HMO or MCO for purposes of state regulatory and reporting requirements.

(d)  Upon approval of the global commitment by the federal Centers for Medicare and Medicaid Services and by the Vermont general assembly, the office of Vermont health access shall report to the health access oversight committee and the joint fiscal committee in a manner and at a frequency to be determined by the committees.  Reporting shall, at a minimum, enable the tracking of expenditures by eligibility category, the type of care received, and to the extent possible shall allow historical comparison with expenditures under the previous Medicaid appropriation model (by department and program) and, if appropriate, to the amounts transferred by the department to the office of Vermont health access.  Reporting shall include spending in comparison to any applicable budget neutrality standards.

* * * Premium Adjustments * * *

Sec. 10.  VHAP PREMIUM ADJUSTMENTS

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

(d)  VHAP, premium-based.

* * *

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

(A)  Income greater than 50 percent and less than or equal to 75 percent of FPL:  $10.00 $11.00 per month.

(B)  Income greater than 75 percent and less than or equal to 100 percent of FPL:  $35.00 $38.50 per month.

(C)  Income greater than 100 percent and less than or equal to 150 percent of FPL:  $45.00 $49.50 per month.

(D)  Income greater than 150 percent and less than or equal to 185 percent of FPL:  $65.00 $71.50 per month.

Sec. 11.  DR. DYNASAUR AND SCHIP PREMIUM ADJUSTMENTS 

Sec. 147(f) of No. 66 of the Acts of 2003 is amended to read:

(f)  Dr. Dynasaur and SCHIP premium changes.

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

(A)  for individuals living in households whose incomes are greater than 225 percent of FPL and less than or equal to 300 percent of FPL, and who have no other insurance coverage:  $70.00 $77.00 per household per month.

(B)  for individuals living in households whose incomes are greater than 225 percent of FPL and less than or equal to 300 percent of FPL, and who have other insurance coverage:  $35.00 $39.00 per household per month.

(C)  for individuals living in households whose incomes are greater than 185 percent of FPL and less than or equal to 225 percent of FPL:  $25.00 $27.50 per household per month.

* * *

* * * Provider Assessments * * *

Sec. 12.  33 V.S.A. § 1950(a) and (b) are amended to read:

(a)  The purpose of this subchapter is to establish a revolving fund consisting of assessments from on health care providers, which funds shall be used in the state’s health care program in such a way as to be eligible for federal financial participation.

(b)  The secretary and the commissioner director shall interpret and administer the provisions of this subchapter so as to maximize federal financial participation and avoid disallowances of federal financial participation.

Sec. 13.  33 V.S.A. § 1951 is amended to read:

§ 1951.  DEFINITIONS

As used in this subchapter:

(1)  “Assessment” means a tax levied on a health care provider pursuant to this chapter.

(2)  “Commissioner” means the commissioner of prevention, assistance, transition, and health access, or a designee.

(3)  “Core home health care services” means those medically-necessary skilled nursing, home health aide, therapeutic, and persona1 care attendant services, provided exclusively in the home by home health agencies.  Core home health services do not include private duty nursing, hospice, homemaker or physician services, or services provided under early periodic screening and, diagnostic services diagnosis, and treatment (EPSDT), traumatic brain injury (TBI), high technology programs, or services provided by a home for the terminally ill as defined in subdivision 7102(10) of this title.

(4)(3)  “Department” means the department of prevention, assistance, transition, and health access “Director” means the director of the office of Vermont health access.

(5)(4)  “Fund” means the Vermont health care access trust fund consisting primarily in part of assessments from health care providers under this subchapter.

(6)(5)  “Health care provider” means any hospital, nursing home, intermediate care facility for the mentally retarded, or home health agency, or pharmacy.

(7)(6)  “Home health agency” means an entity that has received a certificate of need from the state to provide home health services or is certified by the state to provide services pursuant to 42 U.S.C. § 1395x(o).

(8)(7)  “Hospital” means a hospital licensed under chapter 43 of Title 18.

(9)(8)  “Intermediate Care Facility for the Mentally Retarded” (“ICF/MR”) means a facility which provides long-term health related care to residents with mental retardation pursuant to section subdivision 1902(a)(31) of the Social Security Act (42 U.S.C. § 1396a(a)(31)).

(10)(9)  “Mental hospital” or “psychiatric facility” means a hospital as defined in 18 V.S.A. § 1902(a)(2) or (8) 18 V.S.A. § 1902(1)(B) or (H), but does not include psychiatric units of general hospitals.

(11)(10)  “Net operating revenues” means a provider’s gross charges less any deductions for bad debts, charity care, contractual allowances, and other payer discounts.

(12)(11)  “Nursing home” means a health care facility licensed under chapter 71 of Title 33 this title.

(12)  “Office” means the office of Vermont health access.

(13)  “Pharmacy” means a Vermont drug outlet licensed by the Vermont state board of pharmacy pursuant to chapter 36 of Title 26 in which prescription drugs are sold at retail.

(14)  “Secretary” means the secretary of human services.

Sec. 14.  33 V.S.A. § 1952(b) is amended to read:

(b)  The department office may use not more than one percent of the assessments received under the provisions of this subchapter for necessary administrative expenses associated with this subchapter.

Sec. 15.  33 V.S.A. § 1953 is amended to read:

§ 1953.  HOSPITAL ASSESSMENT

(a)  Hospitals shall be subject to an annual assessment as follows:

(1)  Beginning July 1, 2004 2005, each hospital’s annual assessment, except for hospitals assessed under subdivision (2) of this subsection, shall be 4.54 6.0 percent of its net patient revenues (less chronic, skilled, and swing bed revenues) for the most recent completed hospital hospital’s fiscal year as determined annually by the commissioner director from the hospital’s financial reports and other data filed with the department of banking, insurance, securities, and health care administration before December 1 of the previous yearThe annual assessment shall be based on data from a hospital’s third most recent full fiscal year.

* * *

(b)  Each hospital shall be notified in writing by the department office of the assessment made pursuant to this section.  If no hospital submits a request for reconsideration under section 1958 of this title, the assessment shall be considered final.

(c)  Each hospital shall submit its assessment to the department office according to a payment schedule adopted by the commissioner director. Variations in payment schedules shall be permitted as deemed necessary by the commissioner director.

(d)  Any hospital that fails to make a payment to the department office on or before the specified schedule, or under any schedule for delayed payments established by the commissioner director, shall be assessed not more than $1,000.00.  The commissioner shall director may waive this late payment assessment provided for in this subsection for good cause shown by the hospital.

Sec. 16.  33 V.S.A. § 1954 is amended to read:

§ 1954.  NURSING HOME ASSESSMENT

(a)  Beginning July 1, 2004 2005, each nursing home’s annual assessment rate shall be $3,787.79 per bed licensed pursuant to section 7105 of this title on June 30 of the immediately preceding fiscal year shall be as follows:

(1)  Until such time as the United States Department of Health and Human Services grants a waiver to the uniform assessment rate, pursuant to 42 C.F.R. § 433.68(e), all licensed nursing home beds shall be assessed at the uniform rate of $3,676.06.

(2)  At such time as the United States Department of Health and Human Services grants a waiver to the uniform assessment, the assessment shall be $4,000.00 per bed for privately-owned nursing homes with more than 30 licensed beds, $1,900.00 per bed for privately-owned nursing homes with 30 beds or fewer, and $100.00 per bed for state-owned or operated nursing homes.  If a waiver is granted, these rates shall be retroactive to the effective date of this subsection and any difference between the assessments under this subdivision and the payments under subdivision (1) of this subsection shall be reconciled by the collection of underpayments and the refund of overpayments.

(3)  The annual assessment for each bed licensed as of the beginning of the fiscal year shall be prorated for the number of days during which the bed was actually licensed and any over payment shall be refunded to the facility.  To receive the refund, a facility shall notify the commissioner in writing of the size of the decrease in the number of its licensed beds and dates on which the beds ceased to be licensed.

(b)  The department office shall provide written notification of the assessment amount to each nursing home.  The assessment amount determined shall be considered final unless the home requests a reconsideration.  Requests for reconsideration shall be subject to the provisions of section 1958 of this title.

(c)  Each nursing home shall submit its assessment to the department office according to a schedule adopted by the commissioner director.  The commissioner director may permit variations in the schedule of payment as deemed necessary.

(d)  Any nursing home that fails to make a payment to the department office on or before the specified schedule, or under any schedule of delayed payments established by the commissioner director, shall be assessed not more than $1,000.00.  The commissioner shall director may waive this late-payment assessment provided for in this subsection for good cause shown by the nursing home.

Sec. 17.  33 V.S.A. § 1955 is amended to read:

§ 1955.  ICF/MR ASSESSMENT

* * *

(b)  The department office shall provide written notification of the assessment amount to each ICF/MR.  The assessment amount determined shall be considered final unless the facility requests a reconsideration.  Requests for reconsideration shall be subject to the provisions of section 1958 of this title.

(c)  Each ICF/MR shall remit its assessment to the department office according to a schedule adopted by the commissioner director.  The commissioner director may permit variations in the schedule of payment as deemed necessary.

(d)  Any ICF/MR that fails to make a payment to the department office on or before the specified schedule, or under any schedule of delayed payments established by the commissioner director, shall be assessed not more than $1,000.00.  The commissioner shall director may waive this late-payment assessment provided for in this subsection for good cause shown by the ICF/MR.

Sec. 18.  33 V.S.A. § 1955a is amended to read:

§ 1955a.  HOME HEALTH AGENCY ASSESSMENT

(a)  Beginning July 1, 2003 2005, each home health agency’s assessment shall be 16.0 18.10 percent of its net operating revenues from core home health care services, excluding revenues for services provided under Title XVIII of the federal Social Security Act.  The amount of the tax shall be determined by the commissioner director based on the home health agency’s most recent audited financial statements at the time of submission, a copy of which shall be provided on or before December 1 of each year to the office of Vermont health accessFor providers who begin operations as a home health agency after January 1, 2005, the tax shall be assessed as follows:

(1)  Until such time as the home health agency submits audited financial

statements for its first full year of operation as a home health agency, the

director, in consultation with the home health agency, shall annually estimate

the amount of tax payable and shall prescribe a schedule for interim payments.

(2)  At such time as the full-year audited financial statement is filed, the final assessment shall be determined, and the home health agency shall pay any underpayment or the office shall refund any overpayment.  The assessment for the state fiscal year in which a provider commences operations as a home health agency shall be prorated for the proportion of the state fiscal year in which the new home health agency was in operation.

(b)  Each home health agency shall be notified in writing by the department office of the assessment made pursuant to this section.  If no home health agency submits a request for reconsideration under section 1958 of this title, the assessment shall be considered final.

(c)  Each home health agency shall submit its assessment to the department office according to a payment schedule adopted by the commissioner director. Variations in payment schedules shall be permitted as deemed necessary by the commissioner director.

(d)  Any home health agency that fails to make a payment to the department office on or before the specified schedule, or under any schedule for delayed payments established by the commissioner director, shall be assessed not more than $1,000.00.  The commissioner shall director may waive this late payment assessment provided for in this subsection for good cause shown by the home health agency.

Sec. 19.  33 V.S.A. § 1955b is added to read:

§ 1955b.  PHARMACY ASSESSMENT

(a)  Beginning July 1, 2005, each pharmacy’s monthly assessment shall be $0.10 for each paid original prescription and prescription refill.

(b)  Each pharmacy shall declare and provide supporting documentation to the director of the total number of paid original and refilled prescriptions issued in the previous month and remit the assessment due for that month.  The declaration and payment shall be due by the end of the following month.

(c)  Each pharmacy shall submit its assessment payment to the office monthly.  Variations in payment timing shall be permitted as deemed necessary by the director.

(d)  Any pharmacy that fails to pay an assessment to the office on or before the due date shall be assessed a late payment penalty of two percent of the assessment amount for each month it remains unpaid; but late payment penalties for any one month shall not exceed $500.00.  The director may waive a penalty under this subsection for good cause shown by the pharmacy, as determined by the director in his or her discretion.

Sec. 20.  REPEAL OF ASSESSMENT SUNSETS

(a)  Sec. 205 of No. 49 of the Acts of 1999, as amended by Sec. 18 of No. 65 of the Acts of 2001 and Sec. 311 of No. 66 of the Acts of 2003 (sunset of home health agency assessment), is repealed.

(b)  Sec. 4 of No. 56 of the Acts of 1993, as amended by Sec. 11 of No. 14 of the Acts of 1995, Sec. 71 of No. 59 of the Acts of 1997, Sec. 198 of No. 49 of the Acts of 1999, Sec. 17 of No. 65 of the Acts of 2001, and Sec. 312 of No. 66 of the Acts of 2003 (sunset of hospital assessment and nursing home assessment), is repealed.

Sec. 21.  33 V.S.A. § 1956 is amended to read:

§ 1956.  HEALTH CARE TRUST FUND PROCEEDS FROM

              ASSESSMENTS

(a)  The health care trust fund is hereby established in the state treasury is abolished.  All remaining assets in the health care trust fund shall be deposited in the Vermont health access trust fund established by section 1972 of this title.   All assessments, including late-payment assessments, from health care providers under this subchapter shall be deposited in the Vermont health access trust fund established in section 1972 of this titleThe proceeds of other taxes designated by law and donations may also be deposited in the fund. Interest earned on the fund and any remaining balance shall be retained in the fund for the purposes of this subchapter.  The department shall maintain records showing the amount of money in the fund at any time.

(b)  All monies received from or generated to the fund shall be used for the state portion of Medicaid expenditures and for administration of provisions of this subchapter under subsection 1952(c) of this title.  Of the net revenues generated by the per bed annual assessment on nursing homes under subsection 1954(a) of this title, the net revenues generated by $200.00 per bed shall be used for home- and community-based Medicaid waiver services and the net revenues generated by $1,768.69 per bed, less the total amount of the state share of the inflation factor adjustments for state fiscal year 2002, as calculated by the division of rate setting pursuant to subsection 905(c) of this title, shall be used solely for Medicaid nursing home reimbursement as follows:

(1)  Beginning on July 1, 1999, until such time as all cost categories have been rebased pursuant to section 905(c) of this title on a base year no earlier than 2002, wage supplements shall be paid on a schedule to be determined by the commissioner.  Such supplements shall be based on the change in expenditures incurred on or after January 1, 1999, as determined by the division of rate setting, for wages, salaries and fringe benefits incurred by nursing homes for direct care staff and for other employee groups in nursing homes, other than owners and administrators (net expenditures).  The division of rate setting shall annually calculate the net expenditures for each nursing home.  Notwithstanding subsection 905(c) of this title or any other provision of law, the change of base year for any component of the nursing home payment rate shall not be made later than January 1, 2005.

(2)  The wage supplement shall not be subject to any payment limitations imposed pursuant to section 907 of this title.  The aggregate amount of the wage supplements paid to all nursing homes during any fiscal year shall not exceed the net revenues from the nursing home assessments set aside for that purpose for that year plus the federal matching funds for those net revenues.  The annual wage supplement payment for a nursing home shall be its proportional share of the net revenues, based on the ratio of its nursing wages, salaries and fringe benefits paid by the nursing home for direct care staff and for other employee groups, other than owners and administrators, to the total for all nursing homes participating in the Vermont Medicaid program in the 1997 cost reports.

(3)  After all cost categories have been rebased, wage supplements shall cease.  To the extent that total net expenditures by a nursing home are less than the total wage supplement payments to that home, the excess shall be deemed an overpayment and shall be recouped from the home on a schedule to be determined by the commissioner and deposited in the health care trust fund.

(4)  No wage supplement payments shall be made until such time as the lawsuit filed by nursing homes against the state of Vermont now pending in Washington superior court is dismissed with prejudice.

(c)  On or before January 1, 2000, the commissioner shall report to the general assembly on the operation of the health care trust fund and wage supplements.

(d)  No provision of this subchapter shall permit the state to reduce the level of state funds expended on the nursing home Medicaid program in any fiscal year below the level expended in fiscal year 1991 from the general fund for the nursing home Medicaid program.

(e)  The general assembly shall appropriate funds from the health care trust fund to the department of prevention, assistance, transition, and health access, the department of aging and disabilities, and the department of developmental and mental health services, and such funds shall be transferred to the departments’ Medicaid and administrative appropriations as requested by the departments to carry out the purposes of this subchapter.

Sec. 22.  33 V.S.A. § 1957 is amended to read:

§ 1957.  AUDITS

The commissioner director may require the submission of audited information as needed from health care providers to determine that amounts received from health care providers were correct.  If an audit identifies amounts received due to errors by the department office, the commissioner director shall make payments to any health care provider which the audit reveals paid amounts it should not have been required to pay.  Payments made under this section shall be made from the fund.

Sec. 23.  33 V.S.A. § 1958 is amended to read:

§ 1958.  APPEALS

(a)  Any health care provider may submit a written request to the department office for reconsideration of the determination of the assessment within 20 days of notice of the determination.  The request shall be accompanied by written materials setting forth the basis for reconsideration.  If requested, the department office shall hold a hearing within 20 days from the date on which the reconsideration request was received.  The department office shall mail written notice of the date, time, and place of the hearing to the health care provider at least 10 days before the date of the hearing.  On the basis of the evidence submitted to the department office or presented at the hearing, the department office shall reconsider and may adjust the assessment.  Within 20 days of the hearing, the department office shall provide notice in writing to the health care provider of the final determination of the amount it is required to pay based on any adjustments made by it.  Proceedings under this section are not subject to the requirements of 3 V.S.A. chapter 25.

(b)  Upon request, the commissioner director shall enter into nonbinding arbitration with any health care provider dissatisfied with the department’s office’s decision regarding the amount it is required to pay.  The arbitrator shall be selected by mutual consent, and compensation shall be provided jointly.

(c)  Any health care provider may appeal the decision of the department office as to the amount it is required to pay either before or after arbitration, to the superior court having jurisdiction over the health care provider.

Sec. 24.  33 V.S.A. § 1971(3) is amended to read:

(3)  “Office of Vermont health access” means the division office of Medicaid within the agency of human services.

Sec. 25.  33 V.S.A. § 1972 is amended to read:

§ 1972.  VERMONT HEALTH ACCESS TRUST FUND ESTABLISHED

(a)  The Vermont health access trust fund is hereby established in the state treasury for the purpose of establishing a special fund to be the single source to finance health care coverage for beneficiaries of all state health care assistance programs administered by the department of prevention, assistance, transition, and health access agency.

(b)  Into the fund shall be deposited:

* * *

(2)  revenue from health care provider assessments collected and deposited into the health care trust fund pursuant to subchapter 2 of chapter 19 of this title;

* * *

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

(d)  All monies received by or generated to the fund shall be used only for the administration and delivery of health care covered through state health care assistance programs administered by the department of prevention, assistance, transition, and health access agency, including the Medicaid program, the Vermont health access plan program, the Vermont health access plan‑pharmacy program, the VScript program, the VScript-Expanded program, the state children’s health insurance program, the General Assistance program, and any other state health care assistance program administered directly or indirectly by or through the department agency.

* * * Medicaid Program Administration and Adjustments * * *

Sec. 26.  MEDICAID PROGRAM ADMINISTRATION

(a)  Twenty-four-hour coverage  The office of Vermont health access shall establish a phone line, staffed by physicians or nurses, which shall be available to beneficiaries at all times, 24 hours each day of the week, to provide appropriate advice to beneficiaries and to improve communications between beneficiaries and caregivers.  The office shall take active steps to ensure that beneficiaries and providers are knowledgeable about the 24/7 phone line. 

(b)  Case management.  The office shall establish a program to assist in improving case management by providing coordination among the multiple providers who treat individuals with serious illnesses.  Goals of the program shall be collaboration and patient involvement in care, while reducing care that does not benefit the patient.

(c)  The office shall establish a program to improve coordination of long‑term and acute care for individuals served by the state’s long‑term care waiver.

(d)  The office shall establish a program to improve planning for posthospital care to be provided during the patient’s hospital stay and to assist in postdischarge care.

Sec. 27.   EMERGENCY AND EXPEDITED RULEMAKING

(a)  Emergency rulemaking for July 1, 2005.  Authority for emergency rulemaking is granted to the agency of human services in order to control expenditures in the Medicaid program in a timely manner, respond to the fiscal crisis in the Medicaid program, and retain Medicaid funds available to support essential programs for truly needy applicants and recipients.  Therefore, notwithstanding any provisions to the contrary in chapter 25 of Title 3, the secretary of human services may adopt emergency rules in order that the changes reflected in Sec. 10 (VHAP premium adjustments), Sec. 11 (Dr. Dynasaur and SCHIP premium adjustments), and Sec. 31 (pharmacy mail order) of this act may be implemented no later than July 1, 2005.  These rules shall be effective upon filing with the secretary of state a certification by the secretary of human services that the rule is required to meet the purposes of this act.  Emergency rules adopted under the authority of this subsection shall have the full force and effect of rules adopted under chapter 25 of Title 3 and may remain in effect for no more than 120 days.  Emergency rules adopted under this section may be superceded, extended, or amended by the secretary of the agency of human services under the expedited rulemaking process established by subsection (b) of this section or by the process for adoption of agency rules in chapter 25 of Title 3.

(b)  Expedited rulemaking.  Notwithstanding the provisions of chapter 25 of Title 3, if specifically authorized by the general assembly by law, the agency of human services may adopt rules pursuant to the following expedited rulemaking process:

(1)  The agency shall file final proposed rules with the secretary of state and the legislative committee on administrative rules under 3 V.S.A. § 841, after publication in three daily newspapers with the highest average circulation in the state of a notice that lists the rules to be adopted pursuant to this process and a seven-day public comment period following publication.

(2)  The agency shall file final proposed rules with the legislative committee on administrative rules 14 days after the public comment period.

(3)  The legislative committee on administrative rules shall review and may approve or object to the final proposed rules under 3 V.S.A. § 842, except that its action shall be completed no later than 14 days after the final proposed rules are filed with the committee.

(4)  The agency may adopt a properly filed final proposed rule after the passage of 14 days from the date of filing final proposed rules with the legislative committee on administrative rules or after receiving notice of approval from the committee, provided the agency:

(A)  has not received a notice of objection from the legislative committee on administrative rules; or

(B)  after having received a notice of objection from the committee, has responded pursuant to 3 V.S.A. § 842.

(5)  Rules adopted under this section shall be effective upon being filed with the secretary of state and shall have the full force and effect of rules adopted pursuant to chapter 25 of Title 3.  Rules filed by an agency  with the secretary of state pursuant to this section shall be deemed to be in full compliance with 3 V.S.A. § 843 and shall be accepted by the secretary of state if filed with a certification by the secretary of human services that the rule is required to meet the purposes of this section.

Sec. 28.  LONG-TERM CARE; FINANCIAL ELIGIBILITY

(a)  The secretary of the agency of human services is directed to amend the Medicaid rules and procedures related to income, resources, and transfers of assets used to determine eligibility of individuals for long‑term care coverage under the expedited rulemaking authority granted in Sec. 27(b) of this act.  The amendments to the Medicaid rules made under this section must be in accord with federal law. The  agency’s authority to utilize the expedited rulemaking process is limited only to adoption of rules to effect the following changes:

(1)  To subject long-term care recipients to post eligibility rules if the recipients qualify for long‑term care as part of the special income group or as medically needy or are in a medical institution; 

(2)  To require medically needy individuals requesting long-term care to spend down to the protected income level in order to be eligible;

(3)  To permit reasonable expenses specified in current rules to apply to the share of income to be applied to the cost of long-term care, except that reasonable expenses shall not include services and care received during periods of ineligibility for long-term care, other than acute care expenses;

(4)  To impose requirements on private contracts for care to limit their use as an excluded resource;

(5)  To count as a resource a life estate held by the applicant or recipient with a reserved power‑to-mortgage (other than the principal place of residence) and value the life estate at the full fair market value of the fee estate, notwithstanding the purported creation of a remainder interest in another party;

(6)  To treat promissory notes and other similar income-producing resources in the same fashion as annuities and excludable only if certain collateral criteria of eligibility are met;

(7)  To implement additional tools to determine life expectancy;

(8)  To penalize post eligibility transfers by a community spouse to the extent permitted by federal law.

(b)  In addition, in order to control expenditures and retain Medicaid funds available to support essential programs for truly needy applicants and recipients, the agency of human services may utilize the expedited rulemaking process set out in Sec. 27(b) of this act to amend rules related to income, resources, and transfers of assets used to determine eligibility of individuals for long‑term care, if required to do so to address ambiguity, omission, or expectations that are providing a way for otherwise ineligible SSI‑related medically needy applicants to avoid such asset and financial eligibility rules.

Sec. 29.  HIV/AIDS HEALTH INSURANCE ASSISTANCE PROGRAM

(a)  The office of Vermont health access, in cooperation with the department of health, shall operate an HIV/AIDS insurance assistance program.

(b)  The program shall pay all or a portion of continuation health insurance premiums for those eligible individuals with HIV/AIDS for whom it can be determined that continuation of private insurance coverage is less costly to the state than other alternatives.

(c)  Eligibility for this program shall be limited to individuals whose household income does not exceed 200 percent of the federal poverty level, after deducting unreimbursed medical expenses and health insurance premiums from gross income, and whose assets, exclusive of the primary residence and certain other exclusions to be defined by the office of Vermont health access do not exceed $10,000.00.

(d)  Expenditures under this program shall not exceed $55,000.00 in fiscal year 2006.

* * * PRESCRIPTION DRUG PROGRAMS * * *

Sec. 30.  Preferred Drug List; Drug Utilization Review

(a)  Preferred drug list (PDL) revisions.

(1)  Prescribers shall be required to comply with any changes in the PDL within reasonable time frames prescribed by the office of Vermont health access.

(2)  The exemption of certain classes of drugs used to treat certain types of severe and persistent mental illness from inclusion in the prior authorization process may end when the rules filed by the agency are finally adopted.  The rules shall be reviewed by the health access oversight committee as provided in Sec. 34 of this act.  The office shall provide the required report of the prior year to the committee not later than September 1 annually.

(b)  Drug utilization review revisions. 

(1)  The members of the drug utilization review board are entitled to compensation for services and reimbursement of expenses as provided to members of state boards under 32 V.S.A. § 1010, and such amounts shall be expended from the appropriations provided in this section.

(2)  The director shall establish an advisory panel of three persons with expertise in pharmacology to advise the drug utilization review board on scientific, technical, and clinical issues relating to the clinical efficacy, safety, and cost‑effectiveness of drugs considered for inclusion on the preferred drug list.  Experts on the panel shall be entitled to compensation for services as provided by contract with the director.

(3)  The office shall establish a policy to increase the appropriate use of generic drugs.  The policy may include education, outreach, and the use of prior authorization whenever a brand is prescribed and a generic drug is available.  The policy shall have a target of 95 percent utilization of generic equivalent drug prescriptions when generic drugs are available and 60 percent when generic alternative drugs are available.

(4)  The office shall identify new therapeutic classes from which savings are possible through the use of a PDL.  In order to assist in making this determination, the office shall be provided with comparative information such as that developed by the drug effectiveness review project.

(5)  In order to ensure that the prior authorization process achieves maximum savings, the office of Vermont health access, in consultation with the drug review board, shall recommend to the health access oversight committee a modification of the prior authorization process, including new criteria and additional information required from prescribers.  After the review and recommendation of the health access oversight committee, the office may adopt interim changes by rule under the expedited rulemaking process set out in Sec. 27(b) of this act. 

(6)  The office shall establish criteria for dispensing 90‑day supplies of prescription drugs, to be adopted by rule under the expedited rulemaking procedures set out in Sec. 27(b) of this act.

(c)  Maintenance drug.  For the purposes of the Medicaid programs, “maintenance drug” means a drug approved by the FDA for continuous use and prescribed to treat a chronic condition for a prolonged period of time of 30 days or longer and includes insulin, an insulin syringe, and an insulin needle.

Sec. 31.  33 V.S.A. § 1998a is added to read:

§ 1998a.  PHARMACY MAIL ORDER

The pharmacy best practices and cost control program shall require consumers to purchase prescription drugs using mail order for selected pharmacy products.

Sec. 32.  33 V.S.A. § 1998(f)(1) is amended to read:

(1)  The drug utilization review board shall make recommendations to the commissioner director for the adoption of the preferred drug list.  The board’s recommendations shall be based upon considerations of clinical efficacy, safety, and cost-effectiveness.

Sec. 33.  33 V.S.A. § 1999(a)(2) is amended to read:

(2)(A)  The program shall authorize coverage under the same terms as coverage for preferred choice drugs if the prescriber determines, after consultation with the pharmacist, or with the participating health benefit plan if required by the terms of the plan, that:

(i)  the preferred choice has not been effective, or with reasonable certainty is not expected to be effective, in treating the patient’s condition; or

(ii)  the preferred choice causes or is reasonably expected to cause adverse or harmful reactions in the patient.

(B)  The prescriber’s determination concerning whether the standards established in this subdivision (2) have been demonstrated shall be final if any documentation required at the direction of the drug utilization board has been provided.

Sec. 34.  MENTAL HEALTH DRUGS; PRIOR AUTHORIZATION

Sec. 5(2) of No. 127 of the Acts of the 2001 Adj. Sess. (2002) as amended by Sec. 128h of No. 122 of the Acts of the 2003 Adj. Sess. (2004) is amended to read:

(2)(A)  Sec. 1, 33 V.S.A. § 1999(d) (prior authorization and drugs used to treat mental illness), shall be repealed on July 1, 2006 amended to read:

(d)  The agency may include prescription drugs prescribed for the treatment of severe and persistent mental illness, including schizophrenia, severe depression, or bipolar disorder, in the prior authorization process by rule after the health access oversight committee has reviewed and advised the agency.  The agency shall submit the proposed rule to the health access oversight committee at the time the agency publishes the proposed rule for public comment under chapter 25 of Title 3.  The health access oversight committee may submit its recommendations to the joint legislative committee on administrative rules for consideration by that committee. 

(B)  The commissioner of prevention, assistance, transition, and health office of Vermont health access shall report to the health access oversight committee concerning the drug utilization review board’s analysis of prescribing patterns, literature, and testimony regarding clinical efficacy and outcomes, expenditure trends, and any proposed revisions to the preferred drug list as it pertains to drugs used to treat mental illness no later than September 1, 2005.  The commissioner’s director’s report shall include also an assessment of the use of medication algorithms and of the behavioral pharmacy project implemented in the state of Missouri.

* * * Premium Assistance Program * * *

Sec. 35.  8 V.S.A. § 4062d is added to read:

§ 4062d.  PREMIUM ASSISTANCE PROGRAM

(a)  Beginning in January 2006, the secretary of human services shall establish the premium assistance program within the office of Vermont health access for the purpose of providing Vermonters eligible for the Vermont health access program, the Dr. Dynasaur program, or the Medicaid caretaker-relative program with financial assistance to enroll in or purchase health care coverage through an employer. 

(b)  Financial assistance shall be in the form of a reduced premium obligation of an eligible individual.  The agency shall establish by rule pursuant to chapter 25 of Title 3 the amounts of the financial assistance.

(c)  The premium assistance program shall be voluntary for eligible individuals.  Individuals also eligible for the Vermont health access plan, the state children’s health insurance program, or any other similar federal or state‑funded program of health care coverage shall be provided with information regarding these programs, including a summary of the benefits offered by the program and the cost-sharing requirements.

(d)  The secretary shall adopt rules for the premium assistance program.  Such rules shall include:

(1)  the form and manner of an individual’s application for assistance authorized by this section;

(2)  standards and procedures for participating health insurers to be compensated for the premium discounts, cost‑sharing assistance, and other approved costs associated with the premium assistance program; and

(3)  any other rules necessary to carry out the purposes of this section.

(e)  As used in this section:

(1)  “Eligible individual” means an individual who:

(A)  is a Vermont resident;

(B)  has applied for assistance on a form and in a manner prescribed by the secretary;

(C)  is enrolled in or eligible for the Vermont health access plan, the state children’s health insurance plan, or the Medicaid caretaker relative program.

(2)  “Secretary” means the secretary of the agency of human services.

(f)  The secretary may adopt the initial rules required or permitted by this section by emergency rule so as to permit the premium assistance program to begin on January 1, 2006.

(g)  The secretary may apply to the federal government to include the program authorized by this section as a Medicaid program or a state children’s health program if the secretary determines that it is cost-effective to do so.

* * * Medicare Part D Prescription Drug Wrap Around Coverage * * *

Sec. 36.  33 V.S.A. chapter 19, subchapter 6 is added to read:

Subchapter 6.  Vermont Pharmaceutical Assistance Programs

§ 2021.  DEFINITIONS

For purposes of this subchapter:

(1)  “Individual with disabilities” means an individual who is under age 65 and is entitled, under the federal Social Security Act, to disability insurance benefits or is eligible for Medicare. 

(2)  “Maintenance drug” means a drug approved by the FDA for continuous use and prescribed to treat a chronic condition for a prolonged period of time of 30 days or longer and includes insulin, an insulin syringe, and an insulin needle

(3)  “Medicare part D” means the prescription drug program established under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, P.L. 108-173, including the prescription drug plans offered pursuant to the act.

(4)  “OVHA” means the office of Vermont health access.

(5)  “Pharmaceutical” means a drug that may not be dispensed unless prescribed by a health care provider as defined by subdivision 9402(8) of Title 18 acting within the scope of the provider’s license.  The term excludes a drug determined less than effective under the federal Food, Drug and Cosmetics Act.

(6)  “Pharmacy” means a retail or institutional drug outlet licensed by the Vermont state board of pharmacy pursuant to chapter 36 of Title 26, or by an equivalent board in another state, in which pharmaceuticals are sold at retail and which has entered into a written agreement with the state to dispense pharmaceuticals in accordance with the provisions of this chapter.

§ 2022.  GENERAL ELIGIBILITY

(a)  An individual shall be eligible for assistance under this subchapter if the individual:

(1)  is a resident of Vermont at the time of application for benefits;

(2)  is at least 65 years of age or is an individual with disabilities as defined in subdivision 2021(1) of this title; and

(3)  has a household income, when calculated in accordance with the rules adopted for the Vermont health access plan under No. 14 of the Acts of 1995, as amended, no greater than 225 percent of the federal poverty level.

(b)  An individual whose pharmaceutical expenses are paid or reimbursable, either in whole or in part, by any plan of assistance or insurance, other than Title XVIII (Medicare) and Title XIX (Medicaid) of the Social Security Act, shall not be eligible for pharmaceutical assistance under this subchapter.  No assistance shall be provided under this subchapter with respect to an individual pharmaceutical purchase that may be covered in whole by Title XVIII.

§ 2023.  V-PHARM ASSISTANCE PROGRAM

(a)  Effective January 1, 2006, the V-Pharm program is established as a state pharmaceutical assistance program to provide supplemental pharmaceutical coverage to Medicare beneficiaries.

(b)  Any individual with income no greater than 225 percent of the federal poverty guidelines participating in Medicare part D, having secured the low income subsidy if the individual is eligible and meeting the general eligibility requirements established in section 2022 of this title shall be eligible for V‑Pharm.

(c)  V-Pharm shall provide supplemental benefits to enrolled individuals by paying or subsidizing:

(1)  the average Medicare part D premium for the standard prescription drug benefit offered by Medicare part D prescription drug programs, except for any late enrollment penalties, provided that OVHA may pay or subsidize a higher premium for a Medicare part D prescription drug plan offering expanded benefits if it is cost-effective to do so; 

(2)  any other cost-sharing required by Medicare part D, except for co‑payments for individuals eligible for Medicaid;

(3)  payment for the following pharmaceuticals if they are not covered by the individual’s Medicare part D prescription drug plan and the individual’s income is less than 225 percent of the federal poverty guideline:  pharmaceuticals or classes of pharmaceuticals, or their medical uses, which may be excluded from coverage or otherwise restricted under Medicaid under Section 1927(d)(2) or (3) of the Social Security Act.

(d)(1)  The secretary of the agency of human services shall develop by rule the manner by which an individual shall contribute the individual’s cost established in subdivision (2) of this section, except that individuals eligible for Medicaid shall only be subject to the cost-sharing requirements established by Medicaid and Medicare.  The rule shall seek to minimize the possibility of inadvertent loss of eligibility for Medicare part D and V‑Pharm benefits.  Prior to filing the rule, the secretary shall submit the proposed rule to the health access oversight committee established in Sec. 13(e) of No. 14 of the Acts of 1995, as amended.  The health access oversight committee shall review and advise on the agency rules and policies developed under this subsection and shall submit for consideration any recommendations to the joint legislative committee on administrative rules.

(2)  An individual shall contribute the following amounts:

(A)  $13.00 per month or $156.00 per year in the case of recipients with income greater than the income eligibility level for Medicaid and no greater than 150 percent of the federal poverty level.

(B)  $17.00 per month or $204.00 per year in the case of recipients whose household income is greater than 150 percent of the federal poverty level and no greater than 175 percent of the federal poverty level.

(C)  $35.00 per month or $420.00 per year in the case of recipients whose household income is greater than 175 percent of the federal poverty level and no greater than 225 percent of the federal poverty level.

(e)  In order to ensure the appropriate payment of claims, OVHA may expand the Medicare advocacy program established under chapter 67 of this title to individuals receiving benefits from the V-Pharm program.

§ 2024.  VERMONT-Rx PROGRAM

(a)  Effective January 1, 2006, Vermont-Rx is established within the office of Vermont health access and shall be the continuation of the state pharmaceutical programs in existence upon passage of this subchapter for those individuals not eligible for Medicare part D.  Vermont-Rx is a pharmaceutical assistance program for individuals age 65 or older who are not eligible for Medicare and for individuals with disabilities who are receiving Social Security benefits or who are not eligible for Medicare.

(1)  The program shall be administered by OVHA which, to the extent funding permits, shall establish application, eligibility, coverage and payment standards.  In addition to the general eligibility requirements established in section 2022 of this title, an individual must not be eligible for Medicare in order to be eligible for benefits under Vermont‑Rx. 

(2)  To the extent necessary under federal law, OVHA shall administer Vermont-Rx in such a manner as to ensure that any permissible federal funding may be received to support the program.  OVHA may establish a division of the Vermont-Rx program to administer federal Medicaid funds separately in accordance with a federal waiver pursuant to Section 1115 of the Social Security Act.

(3)  If permissible under federal law, OVHA shall use the same forms and application process for individuals to enroll in Vermont-Rx, regardless of the funding source for the program.

(b)  Vermont-Rx shall provide:

(1)  the same pharmaceutical coverage as the Medicaid program to elderly individuals and individuals with disabilities no greater than 150 percent of the federal poverty guidelines; and

(2)  maintenance drugs to elderly individuals and individuals with disabilities whose income is greater than 150 percent and no greater than 225 percent of the federal poverty guidelines.

(c)  Benefits under Vermont‑Rx shall be subject to payment of a premium amount by the recipient in accordance with the provisions of this section.

(1)  In the case of recipients with income greater than the income eligibility level for Medicaid and no greater than 150 percent of the federal poverty level, such premium shall be $13.00 per month.

(2)  In the case of recipients whose household income is greater than 150 percent of the federal poverty level and no greater than 175 percent of the federal poverty level, the premium shall be $17.00 per month.

(3)  In the case of recipients whose household income is greater than 175 percent of the federal poverty level and no greater than 225 percent of the federal poverty level, the premium shall be $35.00 per month

(d)  Any manufacturer of pharmaceuticals purchased by individuals receiving assistance from Vermont-Rx established under this section shall pay to OVHA, as a condition of participation in the program, a rebate in an amount at least as favorable as the rebate paid to OVHA in connection with the Medicaid program.

(e)  Under Vermont-Rx, a pharmaceutical may be dispensed to an eligible recipient provided such dispensing is pursuant to and in accordance with any contractual arrangement that OVHA may enter into or approve for the group discount purchase of pharmaceuticals.  When a person or business located in Vermont and employing citizens of this state has submitted a bid for the group discount purchase of pharmaceuticals and has not been selected, the director of OVHA shall record the reason for nonselection.  The director’s report shall be a public record available to any interested person.  All bids or quotations shall be kept on file in the director’s office and open to public inspection.

§ 2025.  ASSISTANCE IN ENROLLING IN MEDICARE PART D

(a)  The agency of human services shall seek cooperation from the Center for Medicare and Medicaid Services to auto-enroll individuals eligible for Medicare part D and V-Pharm in the Medicare part D low income subsidy and the most appropriate Medicare part D plan available, considering the individual’s past pharmaceutical usage and the individual’s expressed choice of a plan.  If federal approval is given, the agency shall evaluate the operational feasibility of auto-enrolling eligible individuals and the financial costs and benefits of an auto-enrollment process.  The agency shall report to the health access oversight committee by September 1, 2005 and November 1, 2005 on the status of the agency’s ability to pursue auto-enrollment.  The agency shall report to the general assembly no later than January 1, 2006 with the results of the agency’s efforts to implement auto-enrollment.

(b)  The agency of human services may act, if permissible under federal law, as an individual’s agent to enroll the individual in a Medicare part D prescription drug plan and a low income subsidy if the individual has not enrolled prior to the application for V‑Pharm.  The agency shall provide applicants for V-Pharm with information on Medicare part D, the low income subsidy if applicable, and on how to obtain assistance in enrolling in Medicare part D or the subsidy.

§ 2026.  OVER‑THE‑COUNTER AND GENERIC MEDICATIONS

(a)  All public pharmaceutical assistance programs shall provide coverage for those over‑the‑counter pharmaceuticals on the preferred drug list developed under section 1998 of this title, provided the pharmaceuticals are authorized as part of the medical treatment of a specific disease or condition, and they are a less costly, medically appropriate substitute for currently covered pharmaceuticals.

(b)  All public pharmaceutical assistance programs shall comply with the provisions regarding generic drugs established in chapter 91 of Title 18.

(c)  OVHA shall seek any waivers of federal law, rule, or regulation necessary to implement the provisions of this section.

§ 2027.  ADMINISTRATION

(a)  The programs established under this subchapter shall be designed to provide maximum access to program participants, to incorporate mechanisms that are easily understood and require minimum effort for applicants and health care providers, and to promote quality, efficiency and effectiveness through cost controls and utilization review.  OVHA may contract with a fiscal agent for the purpose of processing claims and performing related functions required in the administration of the pharmaceutical programs established under this subchapter.

(b)  Upon determining that an applicant is eligible under this subchapter, OVHA shall issue an identification card to the applicant.

(c)  A pharmacy which dispenses a pharmaceutical to an individual eligible for a pharmaceutical program established under this subchapter shall collect payment for the pharmaceutical from OVHA.

§ 2028.  EDUCATION AND OUTREACH

The department of aging and independent living shall conduct ongoing education and outreach to inform elderly Vermonters and Vermonters with disabilities of the benefits they may be entitled to pursuant to this subchapter, make available information concerning pharmaceutical assistance programs, and minimize any confusion and duplication of pharmaceutical coverage resulting from a multiplicity of pharmaceutical programs.

§ 2029.  CONSTRUCTION

The benefits provided by the pharmaceutical assistance programs established under this subchapter constitute medical services for purposes of section 141 of this title.

§ 2030.  VERMONT PRESCRIPTION DRUG PRICING AND CONSUMER

              PROTECTION PROGRAM

The secretary of the agency of human services shall administer this subchapter in conformity with the pharmacy best practices and cost control program established under subchapter 5 of this chapter to enable the citizens of Vermont to purchase necessary prescription pharmaceuticals at the lowest possible price, to ensure access to such pharmaceuticals, and to support Vermont pharmacies, consistent with the time frames, standards, and procedures established by the general assembly.

§ 2031.  RULES AND LEGISLATIVE OVERSIGHT

(a)  The agency of human services shall adopt rules necessary to implement and administer the provisions of this subchapter, including standards and schedules establishing coverage and exclusion of pharmaceuticals, and maximum quantities of pharmaceuticals to be dispensed, and to comply with the requirements of the Medicare Modernization Act.  The agency of human services shall submit the proposed rule to the health access oversight committee established in Sec. 13(e) of No. 14 of the Acts of 1995, as amended. The health access oversight committee shall review and advise on the agency rules and policies developed under this subsection and shall submit for consideration any recommendations to the joint legislative committee on administrative rules.

(b)  OVHA shall report on the status of the pharmaceutical assistance programs established by this subchapter to the health access oversight committee in accordance with Sec. 13(e) of No. 14 of the Acts of 1995, as amended.

Sec. 37.  FEDERAL APPROVAL; V-PHARM PROGRAM

If required by federal law, the agency of human services shall apply to the Center for Medicare and Medicaid Services to establish the V‑Pharm program established in Sec. 39 of this act as a state pharmaceutical assistance program eligible to provide supplemental pharmaceutical benefits to Medicare beneficiaries and shall apply for any necessary Medicaid waiver in order to secure federal contributions.  If allowable under federal law, the agency of human services shall continue to operate all or part of Vermont-Rx under a Medicaid waiver in order to secure federal contributions.

Sec. 38.  TRANSITIONAL PROVISIONS

(a)  The programs established under subchapter 6 of chapter 19 of Title 33 shall be the successor to and continuation of the VHAP-Pharmacy, VScript, and VScript Expanded programs.

(b)  The office of Vermont health access (OVHA) shall develop necessary rules to ensure that individuals do not lose coverage for necessary pharmaceuticals at the beginning of coverage under Medicare part D if the individual has applied for and attempted to enroll in Medicare part D and has not received coverage for the needed pharmaceutical due to an operational problem with Medicare part D.  Coverage will continue until the individual has obtained the needed pharmaceuticals through Medicare part D.

(c)(1)  The commissioner of aging and independent living and the director of the office of Vermont health access shall continue to convene the working group of individuals with disabilities, elderly individuals, advocates, and providers established under Sec. 128j of No. 122 of the Acts of the 2003 Adj. Sess. (2004).  The working group shall meet monthly or more frequently as needed and shall:

(A)  revise as necessary and implement a plan which at a minimum shall include outreach, education, and assistance to Vermont Medicare beneficiaries in order to minimize confusion and duplication of coverage caused by the introduction of the new, federally mandated Medicare part D pharmacy program.  The plan shall focus on those individuals who may also be eligible for another program which provides supplemental pharmacy benefits, including Medicaid, VHAP‑Pharmacy, VScript, VScript Expanded, Healthy Vermonters, or the programs established under this act;

(B)  plan for the implementation of Medicare part D in the state beginning January 1, 2006.  Such planning shall include both monitoring and advocacy on federal policy as it relates to Vermont state pharmaceutical assistance programs with a goal of minimizing any reduction of assistance to these beneficiaries.  The plan shall analyze fully the potential gains and losses to Vermont and to its state pharmaceutical assistance beneficiaries resulting from Medicare part D and the balance of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, P.L. 108-173, and shall provide ongoing cost projections and identify sources of funding for holding these beneficiaries harmless from pharmacy benefit cuts once Medicare part D is implemented; and

(C)  report as requested to the house committee on human services, the senate committee on health and welfare or outside the legislative session and on November 1, 2005 to the health access oversight committee.

(2)  For the purpose of this section of the act, “holding harmless” means the payment of premiums, of cost-sharing, and for pharmaceuticals which are not covered by Medicare part D in an amount sufficient to ensure that Vermonters enrolled in the state’s pharmaceutical programs prior to the implementation of Medicare part D do not have an increased financial burden and have pharmaceutical benefits equivalent to those offered by the state pharmaceutical programs prior to implementation of Medicare part D.

Sec. 39.  MEDICARE PART D; LONG-TERM CARE RULES

The agency of human services shall adjust rates as necessary to ensure that residents in nursing homes have sufficient income each month to cover any cost-sharing required by Medicare part D or a state pharmaceutical program established under subchapter 6 of chapter 19 of Title 33 and are held harmless from the transition to the Medicare part D pharmaceutical program and by the consolidation of the state pharmaceutical programs under this act.  For the purpose of this section, “held harmless” means that the state shall ensure that Vermonters enrolled in the state’s pharmaceutical programs prior to the implementation of Medicare part D do not have an increased financial burden and have pharmaceutical benefits therapeutically comparable to those offered by the state pharmaceutical programs prior to implementation of Medicare part D.

Sec. 40.  MEDICARE; CHANGES TO ASSET AND INCOME RULES

Subject to any required federal approval, the agency of human services shall eliminate the asset requirements and raise the income limits for individuals who qualify as qualified Medicare beneficiaries (QMB), specified low income Medicare beneficiaries (SLMB), and qualifying individuals (QI) in order to maximize the eligibility of these individuals for the low income subsidy program under Medicare part D, provided that the agency finds that the elimination of the asset test, the increase in the income limits, or both for each program will be, at a minimum, cost neutral to the state in that the costs of the resulting increased Medicaid participation would not exceed the benefits from greater participation in the low income subsidy program as it relates to the Medicare part D program and any decrease in the administrative savings from simplifying eligibility.  The agency shall evaluate the cost neutrality of each eligibility requirement for each program separately to determine which changes to which programs meet this standard.

Sec. 41.  MEDICARE PART D EMPLOYER SUBSIDY

(a)  The commissioner of human resources shall investigate and evaluate the costs and benefits of the state’s electing to receive the employer subsidy under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, P.L. 108-173 and, upon expiration of the current collective bargaining agreement, the state’s modifying the state employee and retiree pharmaceutical benefits to wrap around the Medicare part D prescription drug program.  The commissioner shall consider the benefits and costs to state retirees, taxpayers, and beneficiaries of the state pharmaceutical programs.  The commissioner shall report on the investigation and evaluation to the general assembly no later than January 15, 2006.  The report shall include information regarding the current employee and retiree pharmaceutical benefits, the cost-sharing requirements for employees, retirees, and the state, the projected subsidy to be received, and any other information considered by the commissioner in the evaluation.

(b)  The state treasurer shall report to the general assembly no later than January 15, 2006 regarding the amount of any expected employer subsidy to be received by the state under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, P.L. 108-173

(c)  The state treasurer, in consultation with the Vermont state teachers retirement board, shall investigate and evaluate the costs and benefits of  electing the employer subsidy under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, P.L. 108-173 and the modification of the teacher retiree pharmaceutical benefits to wrap around the Medicare part D prescription drug program.  The treasurer shall consider the benefits and costs to teacher retirees, taxpayers, and beneficiaries of the state pharmaceutical programs.  The treasurer shall report on the investigation and evaluation to the general assembly no later than January 15, 2006.  The report shall include information regarding the current teacher retiree pharmaceutical benefits, the cost-sharing requirements for retirees, the subsidy to be received, and any other information considered by the treasurer in the evaluation.  The treasurer shall report to the general assembly no later than January 15, 2006 with the amount of the subsidy to be received under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, P.L. 108-173.

Sec. 42.  STATUTORY REVISION

The legislative council shall make such technical revisions to the Vermont Statutes Annotated to reflect the consolidation of the state pharmaceutical programs and the creation of V-Pharm, including revisions to the names of programs and to statutory citations.  

Sec. 43.  REPEAL

Subchapter 4 of chapter 19 of Title 33 is repealed as of January 1, 2006. Any other provisions in session law enacted prior to this act which established premiums or other cost sharing for state pharmaceutical programs are repealed by the codification of cost sharing in this act.  Sec. 17a(a) of H.524 of the 2005 legislative session, as passed by the House, is repealed and superceded by Sec. 40 (Medicare; changes to asset and income rules) of this act.

Sec. 44.  EFFECTIVE DATE

This act shall take effect upon passage.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us