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S.147

Introduced by   Senator Flanagan of Chittenden District, Senator Kittell of Franklin District, Senator Lyons of Chittenden District and Senator White of Windham District

Referred to Committee on

Date:

Subject:  Health; Vermont health care plan; universal access; state self‑insurance

Statement of purpose:  This bill proposes to establish the Vermont health care plan as a universally accessible, comprehensive, publicly administered health benefit plan offering care and treatment to all Vermont residents.

AN ACT RELATING TO THE VERMONT HEALTH CARE PLAN

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

* * * Vermont Health Care Plan * * *

Sec. 1.  33 V.S.A. chapter 19, subchapter 3 is amended to read:

Subchapter 3.  Vermont Health Access Trust Fund

Care Plan Administration

* * *


§ 1972.  VERMONT HEALTH ACCESS TRUST FUND ESTABLISHED

(a)  The Vermont health access trust fund is hereby established as a special fund 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 providing financial support for the Vermont health care plan.

(b)  Into the fund shall be deposited:

(1)  revenue from the cigarette and tobacco products tax established in chapter 205 of Title 32;

(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;

(3)  transfers from the tobacco litigation settlement fund established in section 435a of Title 32, authorized by the general assembly;

(4)  transfers from the general fund, authorized by the general assembly; and

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

(6)  all federal receipts for health care purposes, including all Medicaid and Medicare receipts;

(7)  revenue sources established under sections 5822a and 5848 of Title 32; and

(8)  any other revenue sources established to fund section 1974 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, 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 by or through the department the Vermont health care plan.

* * *

§ 1974.  POLICY

(a)  It is the policy of the state of Vermont to ensure universal access to and coverage for essential health care services for all Vermonters.  Universal access means the absence of barriers to essential health care services.  Access needs to be equitable.  Vermonters will have coverage for essential services that are delivered in the same high quality manner regardless of economic or geographic situations.  It is a critical social policy goal that all Vermonters have health coverage and that all Vermonters actively participate in the health system.

(b)  Health care coverage needs to be comprehensive and continuous.  Coverage for essential health services needs to follow the individual from birth to death, and be responsive and seamless through employment and life changes.  Vermonters will have access to high quality care throughout their lives.

(c)  Vermont’s health delivery system will model continuous improvement of health care quality and safety.  Continuous improvement in health care quality and safety will be integrated into the operation of the health care system, drawing on and promoting evidence-based and best practices, striving for optimal outcomes for the resources expended.  It is essential that wellness and public health initiatives that promote healthy lifestyles and preventive care be the foundation of the health system.  The health care system will promote care that is safe, timely, effective, patient-centered, efficient, and equitable.

(d)  The financing of health care in Vermont will be sufficient, equitable, fair, and sustainable.  Universal access to a continuous and comprehensive package of essential high quality health care is a public good.  The financing mechanism for attaining a workable, affordable, and sustainable health care system needs to be adequately and fairly financed and operated in a manner that ensures both high quality of care and efficient use of resources.

(e)  Built-in accountability for quality, cost, access, and participation will be the hallmark of Vermont’s health care system.  The health system will be accountable to the people it serves in respect to the quality of care and the management of costs.  As participants in this system, Vermonters will be engaged, to the best of their ability, to pursue healthy lifestyles, and to focus on preventive care, wellness efforts, and make informed use of all health care services.

§ 1975.  THE VERMONT HEALTH CARE PLAN

(a)  The Vermont health care plan shall provide coverage for health services for all Vermont residents.  The Vermont health care plan board shall establish a residency requirement that the applicant demonstrate that he or she is domiciled in Vermont as evidenced by an intent to maintain a principal dwelling place in Vermont indefinitely and to return to Vermont if temporarily absent, coupled with an act or acts consistent with that intent.

(b)  The funding for the Vermont health care plan shall be established through a broad-based tax.  The tax shall not be narrowly established on one sector of the population.

(c)  The Vermont health care plan shall offer a standard health benefit.  The standard benefit plan shall provide coverage of medically appropriate and cost‑effective care and treatment, including:

(1)  outpatient primary and specialty care;

(2)  inpatient hospital care;

(3)  prescription drugs;

(4)  durable medical equipment;

(5)  mental health and substance abuse treatment;

(6)  preventive and medically necessary dental care;

(7)  hospice and other palliative care;

(8)  nursing home, community-based, and other long‑term care options;

(9)  preventive health care; and

(10)  any other benefits established by the board.

(d)  The Vermont health care plan shall not prevent health insurers from offering supplemental insurance policies covering treatment or services not included in the plan’s standard health benefit.

§ 1976.  NOMINATING COMMITTEE; APPOINTMENTS

(a)  A nominating committee shall be established for the purpose of selecting the list of nominees to the Vermont health care plan board and the Vermont health care plan steering committee.  The list of nominees shall be presented to the governor, and the governor shall appoint the members of the bodies pursuant to sections 1978 and 1979 of this title.

(b)  The governor shall appoint, with the advice and consent of the senate, five individuals to serve on the nominating committee.  The senate committee on committees and the speaker of the house shall each appoint one member from the general assembly to serve on the nominating committee.  A third member from the general assembly shall be jointly appointed by the senate committee on committees and the speaker of the house.  All appointments under this subdivision shall be completed within 30 days of passage of this section.

(c)  For the purpose of convening the initial nomination meeting, the nominating committee shall notify organizations of which it is aware in each membership category listed in section 1978 of this title and shall, through notices published in the manner prescribed in section 839 of Title 3, invite additional organizations to participate.  The nominating committee shall establish criteria for nominations and a grievance procedure for organizations not chosen to serve on the board.

§ 1977.  STEERING COMMITTEE; DUTIES

(a)  A Vermont health care plan steering committee is established to serve in an advisory role to the Vermont health care plan board.  The steering committee shall consider and make recommendations on health policy.  The steering committee shall consist of 25 members who shall be residents of the state of Vermont and appointed in accordance with section 1978 of this title.

(b)  The steering committee shall elect a chair and vice chair from its membership who shall serve for one year or until their successors are elected.

(c)  A majority of the members of the board shall constitute a quorum, provided that seven of the members present are those appointed under subsections 1976(b) and (c) of this title.  The board shall act only by vote of a majority of its members present and voting at a meeting called upon adequate notice to all its members and at which a quorum is in attendance.

(d)  Members of the board, except for legislative members while the general assembly is in session, shall be entitled to a per diem in the amount provided in section 1010 of Title 32 and their necessary and actual expenses.

§ 1978.  STEERING COMMITTEE MEMBERSHIP

(a)  Within 90 days of passage of this section, members shall be appointed to the steering committee.  Seventeen members shall be appointed by the governor.  Members appointed by the governor, except at‑large members, shall be appointed from a list of three nominees for each membership category listed in this section submitted by the nominating committee.  Prior to making an appointment, the governor, in his or her discretion, may request a new list of nominees for any category.  Nominations by the nominating committee and appointment by the governor shall be made in a manner designed to ensure representation from all geographic areas of the state.

(b)  The governor shall appoint one member from each of the following categories:  physicians, hospitals, nurses, dentists, the allied health professions, providers of mental health services, long-term health care facilities, complimentary and alternative practitioners, and providers of community health services.

(c)  The governor shall appoint one public member from each of the following categories:  low income Vermonters, the elderly, the handicapped, labor, the business community, and third-party payers; and two at-large members.

(d)  Four members shall be members of the general assembly.  Two shall be senators appointed by the committee on committees of the senate and two shall be representatives appointed by the speaker of the house of representatives.

(e)  Of the remaining three members, three shall be the secretary of human services, the dean of the college of medicine at the University of Vermont, and a representative of the department of health, or their designees.

(f)(1)  Members appointed from the general assembly shall serve two‑year terms or until their successors are appointed, beginning February 15 in the first year of each biennium.  The other members shall be appointed for three years or until their successors are appointed, beginning February 15 in the year in which the appointments are made.  No member may serve for more than six years, whether or not consecutive.

(2)  In the event of a vacancy occurring in the membership of the board, the vacancy shall be filled in the same manner as the original appointment with a person whose appointment shall terminate on the date on which the original appointment would have terminated if the vacancy had not occurred.

§ 1979.  VERMONT HEALTH CARE PLAN BOARD; MEMBERSHIP; ADMINISTRATION

(a)  The Vermont health care plan board shall consist of a chairperson and two members.

(b)  Members of the board shall be appointed by the nominating committee established in section 1976 of this title and in accordance with this subsection.  Whenever a vacancy occurs, public announcement of the vacancy shall be made.  The governor shall submit at least five names of potential nominees to the nominating committee for review.  The nominating committee shall review the candidates and shall recommend to the governor those candidates the committee considers qualified.  The governor shall make the appointment from the list of qualified candidates.  The appointment shall be subject to the consent of the senate.

(c)  The term of each member shall be six years.  Any appointment to fill a vacancy shall be for the unexpired portion of the term vacated.  A member wishing to succeed himself or herself in office may seek reappointment under the terms of this section.

(d)  Notwithstanding section 2004 of Title 3 or any other provision of law, members of the board may be removed only for cause.  For such service, he or she shall receive a reasonable compensation to be fixed by the remaining members of the board and necessary expenses while on official business.

(e)  The chairperson shall have general charge of any offices and employees of the board.

(f)  The board shall have the powers of a nonprofit corporation established under Title 11B in carrying out the purposes of this section.

(g)  The board shall have the authority to cancel existing contracts with pharmaceutical benefit managers or other entities, consistent with the contract’s cancellation provisions, to issue a request for proposal for a statewide pharmaceutical benefit manager, or to elect to act as a pharmaceutical benefit manager on behalf of the state.  The board shall consider whether canceling the existing contracts would further the goals of improving quality for consumers, containing costs through increased purchasing power, and providing increased transparency and shall consider how to continue to participate in a multistate pharmaceutical purchasing pool.

(h)  The board with the department of banking, insurance, securities, and health care administration may charge the reasonable expenses of administering the provisions of this chapter in the manner provided for in section 18 of Title 8 to:

(1)  Pharmaceutical manufacturing companies doing business in Vermont.  Such expenses shall be allocated in proportion to the value of economic benefits disclosed by pharmaceutical manufacturing companies under section 2005 of Title 33, as reported annually by such companies; and

(2)  Pharmacy benefit managers doing business in Vermont.  Such expenses shall be allocated in proportion to the lives of Vermonters covered by each pharmacy benefit manager as reported annually to the commissioner of banking, insurance, securities, and health care administration in a manner and form prescribed by the commissioner.

§ 1980.  VERMONT HEALTH CARE PLAN AND BUDGET

              DEVELOPMENT

(a)  On or before January 15, 2007, the Vermont health care plan board shall recommend to the general assembly the Vermont health care plan, a universally accessible, comprehensive health benefit plan offering coverage of high quality care and treatment to all Vermonters, and the budget for the plan.

(b)(1)  The board shall be responsible for the development of the Vermont health care plan. 

(2)  The board shall recommend the specific health care and treatment covered by the Vermont health care plan after consideration of:

(A)  a public process designed to respond to Vermonters’ health care values and priorities;

(B)  credible scientific research and comment by health care professionals concerning clinical efficacy and risk;

(C)  health care ethics;

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

(E)  revenues anticipated to be available to finance the Vermont health care plan.

(c)  The board shall establish a public process for the development of an annual budget to finance the Vermont health care plan.  The budget process shall provide an opportunity for informed debate by consumers, health care providers, and any other individuals or organizations with an interest in the development of the annual budget.  The process shall include local and regional public meetings, as well as other public process, in order to ensure that the health care planning is based on the local needs of each region.  In furtherance of this process, the board shall establish regional planning groups to solicit input from the public, establish regional goals, needs and priorities; and to provide extensive public education on all aspects of the process and health care plan.  The public process shall include a presentation of the proposed budget by the board at town meetings and an advisory vote by the citizens on the proposed budget.

(d)  The board shall include specific, line item information in the annual budget as to the regional allocations proposed by the board.

§ 1981.  BOARD; ADDITIONAL DUTIES

(a)  The board shall also have responsibility for:

(1)  Implementing the pharmacy cost containment provisions in section 1998 of Title 33 consistent with the Vermont health care plan;

(2)  Implementing the prescription drug fair pricing program in section 2004 of Title 33 consistent with the Vermont health care plan;

(3)  Reviewing and making recommendations to the general assembly regarding substantial changes or waivers sought by the agency of human services to ensure that changes to Medicaid or other public health programs shall be consistent and integrated to the extent possible under federal law with the Vermont health care plan and consistent with this subchapter and subchapter 6 of this chapter;

(4)  Applying for federal Medicaid and Medicare waivers, after approval of the terms by the general assembly, to enable the public health programs to be administered as an integrated part of the Vermont health care plan consistent with this subchapter and subchapter 6 of this chapter, including allowing the commingling of federal funds in the health access trust fund;

(5)  Negotiating prescription drug purchasing agreements for state employees and retirees, individuals under the supervision of corrections, the division of mental health, or the department for children and families; individuals receiving coverage for prescription drugs through Medicaid, Vermont Health Access Program (VHAP), Dr. Dynasaur, VHAP Pharmacy, VScript, VScript‑Expanded, Healthy Vermonters, Healthy Vermonters Plus, and workers’ compensation on behalf of the applicable state agency and any other insurer or employer who elects to participate;

(6)  Establishing and maintaining a uniform, statewide list of covered prescription drugs that identifies preferred choices within therapeutic classes for particular diseases and conditions, including generic alternatives and over‑the-counter drugs to be used by the state agencies and programs and any other entity electing to participate under section 1998 of this title;

(7)  Encouraging all health benefit plans in this state to participate in the statewide negotiation and the preferred drug list established in section 1998 of this title;

(8)  With input from physicians, pharmacists, private insurers, hospitals, pharmacy benefit managers, and the drug utilization review board, creating an evidence-based research education program designed to provide information and education on the therapeutic and cost-effective utilization of prescription drugs to physicians, pharmacists, and other health care professionals authorized to prescribe and dispense prescription drugs.  To the extent possible, the program shall inform prescribers about drug marketing that is intended to circumvent competition from generic alternatives or lower priced existing pharmaceuticals;

(9)  Creating a simple, uniform prescription form, designed to implement the preferred drug list, and to enable prescribers and consumers to request an exception to the preferred drug list choice with a minimum of cost and time to prescribers, pharmacists, and consumers;

(10)  Contracting with the pharmacy benefit manager that would most further the goals of prescription drug price transparency, safety, quality, and cost‑effectiveness.  The board shall consider both for-profit and nonprofit pharmacy benefit managers, as well as the feasibility of a state-run pharmacy benefit manager.

(b)  The board also shall investigate other strategies for cost containment, quality enhancement for consumers, and the provision of pharmaceutical drug coverage to uninsured Vermonters or Vermonters with pharmaceutical drug coverage caps, including:

(1)  Negotiating with pharmaceutical manufacturers to lower the cost of prescription drugs for program participants, including further supplemental rebate programs;

(2)  Recommending statutory changes to promote fair prescription drug pricing, transparency in pharmaceutical drug marketing and promotion and any other legislation which would further the goals of this chapter;

(3)  Providing information on programs offered by pharmaceutical manufacturers that provide prescription drugs for free or reduced prices;

(4)  Establishing a plan to encourage the divestiture of the state and other retirement benefits programs from pharmaceutical industry corporations; and

(5)  Creating a plan to encourage Vermonters to use federally qualified health centers (FQHC) and FQHC look-alikes, focusing on participants in the Medicaid and Medicaid waiver pharmacy programs, state employees, individuals under the supervision of corrections and individuals receiving workers’ compensation benefits if applicable, including contracting with one or more FQHCs or FQHC look-alikes to provide case management or record management services.

§ 1982.  LEGISLATIVE OVERSIGHT

(a)  The house committee on health care and the senate committee on health and welfare shall have oversight for the development and implementation of the Vermont health care plan during the legislative session.  The board shall report to the committees annually in January, and upon request of the committees, on the design, planning, and implementation of the Vermont health care plan.

(b)  When the general assembly is not in session, the health access oversight committee shall be responsible for the legislative oversight functions.  The board shall report to the committee at its request on the design, planning, and implementation of the Vermont health care plan.

(c)  The general assembly shall have authority to accept, reject, or modify the Vermont health care plan.  The general assembly delegates to the Vermont health care plan board the specific authority to set line item budget amounts and shall only accept or reject the proposed budget.  The general assembly shall not have the authority to modify line item expenditures in the proposed budget and must act on the budget in its entirety.

(d)  Any agreement, waiver of the federal Medicaid or Medicare law, or commitment negotiated by the state with the federal government under which funding for the Medicaid or Medicare program in Vermont is to be transformed from a system of state‑federal matching grants to any other system of federal participation, such as global funding commitments or block grants, is conditional upon approval by act of the general assembly, or if the general assembly is not in session, by a majority vote of the members of the joint fiscal committee upon recommendation of the health access oversight committee.  For the purposes of this section, “Medicaid program” means any program for which Medicaid funding is currently spent or is anticipated to be spent, including Medicaid, the Vermont Health Access Plan, VHAP Pharmacy, VScript, special education services, home- and community‑based services, mental health services, services provided by the state ombudsman programs, or services for the developmentally disabled.  For the purposes of this section, “funding for the Medicaid program” also means federal allocations or other funding for the state children’s health insurance program (SCHIP) if such funding is to be included in or accounted for in any negotiated system of federal participation, including a determination of budget neutrality.

§ 1983.  VERMONT HEALTH CARE PLAN IMPLEMENTATION

(a)  The board shall implement the universal hospital access component of the Vermont health care plan, as established by subchapter 6 of chapter 19 of this title, and the pharmaceutical drug provisions contained in sections 1981 and 1998 of this title no later than January 1, 2006.

(b)  The board shall implement the Vermont health care plan once it has been approved by the general assembly.  The board shall issue a request for proposals for administration of the Vermont health care plan.  After reviewing the proposals, the board shall contract with a third party administrator or insurer for the administration of the plan.  The board shall periodically review the Vermont health care plan’s benefit package to determine when revisions are necessary.  The board shall use the process established by subdivision 1980(b)(2) of this title when reviewing and considering changes to the benefit package. Any changes not requiring a revision of statute may be established by rule pursuant to chapter 25 of Title 3 after the process established by subdivision 1980(b)(2).

(c)  The board shall propose its budget to the general assembly on or before January 15 of each year, including recommended expenditures during the next succeeding calendar year for each sector of the health care system providing care and treatment under the Vermont health care plan and anticipated revenues available to support such expenditures.  The budget proposal shall also include a five‑year projection of the revenues established to fund the Vermont health care plan and the expenditures of the plan.  The board shall use the public process established under section 1980 of this title when creating the proposed budget.

(d)  After the general assembly’s approval of the Vermont health care plan and budget, the board shall establish by rule pursuant to chapter 25 of Title 3 standards and procedures to provide health care coverage and expenditures that are in financial balance with the approved budget.  Such standards and procedures may include:

(1)  Annual budget allocations for hospitals, health care provider specialties, and other health care sectors;

(2)  Uniform reimbursement mechanisms, including a fee‑for‑service mechanism with volume controls for licensed or certified health care providers.  Reimbursement mechanisms shall adequately compensate for the operating costs of providing health care and treatment efficiently, and may include fee supplements to encourage care and treatment by different specialties or in different geographic regions of the state; and

(3)  A reference‑pricing reimbursement mechanism whereby a consumer may choose to pay additional reimbursement for health care treatment determined by the board to be less effective or more expensive than other comparable health care treatment.

(e)  The board may adopt such rules pursuant to chapter 25 of Title 3 as are necessary or desirable in carrying out the purposes of this section.

* * * Health Care Hearing Board * * *

Sec. 2.  33 V.S.A. chapter 19, subchapter 3A is added to read:

Subchapter 3A.  Health Care Hearing Board

§ 1984.  Health Care Hearing board

(a)  The health care hearing board shall consist of a chairperson and two members.  The chairperson and each member shall not be required to be admitted to the practice of law in this state.

(b)  The chairperson shall be nominated, appointed, and confirmed in the manner of a superior judge.

(c)  Members of the hearing board other than the chairperson shall be appointed in accordance with this subsection.  Whenever a vacancy occurs, public announcement of the vacancy shall be made.  The governor shall submit at least five names of potential nominees to the judicial nominating hearing board for review.  The judicial nominating hearing board shall review the candidates in respect to judicial criteria and standards only and shall recommend to the governor those candidates the hearing board considers qualified.  The governor shall make the appointment from the list of qualified candidates.  The appointment shall be subject to the consent of the senate.

(d)  The term of each member shall be six years.  Any appointment to fill a vacancy shall be for the unexpired portion of the term vacated.  A member wishing to succeed himself or herself in office may seek reappointment under the terms of this section.

(e)  Notwithstanding section 2004 of Title 3 or any other provision of law, members of the hearing board may be removed only for cause.  When a hearing board member, who hears all or a substantial part of a case, retires from office before such case is completed, he or she shall remain a member of the hearing board for the purpose of concluding and deciding such case, and signing the findings, orders, decrees, and judgments therein.  A retiring chairperson shall also remain a member for the purpose of certifying questions of law if appeal is taken.  For such service, he or she shall receive a reasonable compensation to be fixed by the remaining members of the hearing board and necessary expenses while on official business.

(f)  A case shall be deemed completed when the hearing board enters a final order therein even though such order is appealed to the supreme court and the case remanded by that court to the hearing board.  Upon remand, the hearing board then in office may in its discretion consider relevant evidence, including any part of the transcript of testimony in the proceedings prior to appeal.

(g)  The chairperson shall have general charge of the offices and employees of the hearing board.

§ 1985.  QUALIFICATIONS OF MEMBERS AND CLERK

A person in the employ of or holding any official relation to any company subject to the supervision of the hearing board, or engaged in the management of such company, or owning stock, bonds, or other securities thereof, or who is, in any manner, connected with the operation of such company in this state, shall not be a member or clerk of the hearing board; nor shall any person holding the office of member or clerk of the hearing board or personally or in connection with a partner or agent render professional service for or against or make or perform any business contract with any company subject to such supervision, relating to the business of such company; nor shall such person, directly or indirectly, receive from any such company any commission, gift, or reward.

§ 1986.  CLERK; OATH

The hearing board shall appoint a clerk, who shall serve at its pleasure. The hearing board members and clerk shall be sworn to the faithful discharge of the duties of their offices and, before entering upon the same, shall file a certificate of their oaths for record in the office of the secretary of state.

§ 1987.  QUORUM; MEETINGS

Two hearing board members shall constitute a quorum for the transaction of any business.  Meetings of the hearing board may be held at any time or place within the state upon call of the chair or the other two members, after a reasonable notice to the other members, and shall be held at such times and places as in the judgment of the hearing board will best serve the convenience of all parties in interest.

§ 1988.  POWERS OF SINGLE HEARING BOARD MEMBER OR OTHER

              OFFICER OR EMPLOYEE

(a)  One hearing board member or any officer or employee of the hearing board duly appointed by the chairperson of the hearing board may inquire into and examine any matter within the jurisdiction of the hearing board.

(b)  A hearing officer may administer oaths in all cases, so far as the exercise of that power is properly incidental to the performance of his or her duty or that of the hearing board.  A hearing officer may hold any hearing in any matter within the jurisdiction of the hearing board to hear.

(c)  A hearing officer shall report his or her findings of fact in writing to the hearing board in the form of a proposal for decision.  A copy shall be served upon the parties pursuant to section 811 of Title 3.  However, judgment on such findings shall be rendered only by a majority of the hearing board.

(d)  At least 12 days prior to a hearing before the hearing board or a hearing officer, the hearing board shall give written notice of the time and place of the hearing to all parties to the case and shall indicate the name and title of the person designated to conduct the hearing.

(e)  Upon written request to the hearing board at least five days prior to the hearing by all parties to the case, the chairperson shall appoint at least a majority of the hearing board to conduct the hearing.

(f)  Notwithstanding subsection (c) of this section, the chairperson may appoint a hearing officer to hear and finally determine any consumer complaint where the amount in controversy does not exceed $2,000.00.  Upon petition of a party, filed within 30 days of issuance of the hearing officer's decision and order, or on its own motion, the hearing board may determine that the hearing officer's decision and order should be treated as a proposal for decision and order as provided in subsection (c) of this section.  The hearing board may grant such request for good cause, including but not limited to apparent error of fact, or procedural or substantive law, and may conduct additional evidentiary hearings or hear oral argument from the parties.  If such request is not timely made, or is not granted by the hearing board, the decision and order of the hearing officer shall become the final decision and order of the hearing board.

§ 1989.  COURT OF RECORD; SEAL

The hearing board shall have the powers of a court of record in the determination and adjudication of all matters over which it is given jurisdiction.  It may render judgments, make orders and decrees, and enforce the same by any suitable process issuable by courts in this state.  The hearing board shall have an official seal on which shall be the words, "State of Vermont.  Health Care Hearing Board.  Official Seal."

§ 1989a.  FEES, PROCESS, AND ADDITIONAL POWERS

The hearing board shall use the same fees, process, and procedures and have the same procedural powers as the public service board, provided for in sections 10, 11, 17, 18, and 19 of Title 30.

§ 1989b.  REVIEW BY THE SUPREME COURT

The review and powers of the supreme court shall be the same for this subchapter as established for the public service board under sections 12, 14, and 15 of Title 30.

§ 1989c.  JURISDICTION

The hearing board shall have jurisdiction to hear contested cases for aggrieved parties:

(1)  of an adverse decision under chapter 19 of this title and under the Vermont health plan;

(2)  of the regional allocation of the budget established under subchapter 3 of chapter 19 of this title; and

(3)  of the global hospital budget under section 9461 of Title 18.

Sec. 3.  3 V.S.A. § 3091(a) is amended to read:

§ 3091.  HEARINGS

(a)  An applicant for or a recipient of assistance, benefits, or social services from the department of social and rehabilitation services, the department of prevention, assistance, transition, and health access, the office of economic opportunity, the department of aging and disabilities, the office of child support, or an applicant for a license from one of those departments or offices, or a licensee, may file a request for a fair hearing with the human services board, except that appeals regarding health case assistance shall be heard by the health care hearing board established under subchapter 3a of chapter 19 of Title 33.  An opportunity for a fair hearing will be granted to any individual requesting a hearing because his or her claim for assistance, benefits, or services is denied, or is not acted upon with reasonable promptness; or because the individual is aggrieved by any other agency action affecting his or her receipt of assistance, benefits, or services, or license or license application; or because the individual is aggrieved by agency policy as it affects his or her situation.

* * * Universal Hospital Access * * *

Sec. 4.  33 V.S.A. chapter 19, subchapter 6 is added to read:

Subchapter 6.  Universal Hospital Access for Vermont Health Care Plan

§ 2031.  PURPOSE

The purpose of this subchapter is to provide all Vermonters access to and coverage for health services provided in hospitals and is the initial component of the Vermont health care plan established under subchapter 3 of chapter 19 of Title 33.  The general assembly recognizes that the health care system is in crisis, and that Vermonters do not have the financial ability to pay increasing health insurance premiums or the rising costs of health care.  Vermonters need access to hospital care, regardless of ability to pay or insurance coverage.  Additionally, the state must seek financial sustainability of the health care system, including reducing health care spending.

§ 2032.  DEFINITIONS

As used in this subchapter:

(1)  “Health service” means any medically necessary treatment or procedure to maintain, diagnose, or treat an individual’s physical or mental condition, including services provided pursuant to a physician’s order and services to assist in activities of daily living provided in a hospital.

(2)  “Hospital” shall have the same meaning as in section 1902 of Title 18 and may include hospitals located out of state.

(3)  “Vermont resident” means an individual domiciled in Vermont as evidenced by an intent to maintain a principal dwelling place in Vermont indefinitely and to return to Vermont if temporarily absent, coupled with an act or acts consistent with that intent.  The secretary of human services shall establish specific criteria for showing residency.

§ 2033.  UNIVERSAL HOSPITAL ACCESS FOR VERMONT HEALTH

              CARE PLAN

(a)  The board established under section 1979 of this title shall administer the universal hospital access for Vermont health care plan and shall adopt by rule standards and procedures necessary to provide coverage of health services in hospitals.

(b)  The universal hospital access for Vermont health care plan shall provide Vermont residents coverage for health services received in a hospital.

(c)  The board shall establish by rule income-sensitized deductibles, co‑payments, or other cost-sharing amounts applicable to the universal hospital access for Vermont health care plan established by this subchapter.

(d)  A beneficiary aggrieved by an adverse decision of the board may appeal to the health care hearing board as provided for in subchapter 3a of this chapter.

(e)  A health service that may be covered in whole or in part by Title XVIII of the Social Security Act (Medicare) or by any other public health benefit plan, including Medicaid or the Vermont health access plan, shall be funded from those payment sources to the extent required by federal law.  Vermont residents accessing health services at a hospital shall be considered Medicare beneficiaries for purposes of chapter 65 of this title (Medicare balance billing).

(f)  Payment of health services provided pursuant to this subchapter shall be reimbursed as provided for in section 2034 of this title.

§ 2034.  GLOBAL HOSPITAL PAYMENT FOR VERMONT RESIDENTS

The board shall negotiate with hospitals for a global hospital payment for health services provided by the universal hospital access for Vermont health care plan.  The board shall consider the global hospital budget under section 9461 of Title 18 and other information necessary to the determination of the appropriate payment, including all other revenue received from other sources.  The board shall adopt by rule standards and procedures necessary to implement this section.

Sec. 5.  18 V.S.A. § 9461 is added to read:

§ 9461.  GLOBAL HOSPITAL BUDGET

(a)  Annually, the Vermont health care plan board established under section 1979 of Title 33, in consultation with the commissioner of banking, insurance, securities, and health care administration, shall develop a global hospital budget for each hospital located in Vermont.  The commissioner and the board shall consider the portions of the health resource allocation plan under section 9405 of this title, the unified health care budget under section 9406 of this title applicable to hospitals, the hospital budget review under section 9456 of this title, the global hospital payments under section 2035 of Title 33, and all other revenue received by hospitals when developing the global hospital budget.  The global hospital budget shall be reported annually to the general assembly on or before January 15 for the following fiscal year as part of the agency of human services’ budget allocation request and shall not be effective until approved or modified as part of the annual appropriations process.

(b)  The global hospital budget shall serve as a spending cap within which hospital costs are controlled, resources directed, and quality and access assured.  The global hospital budget shall limit the total annual growth of hospital costs to the Consumer Price Index plus three percent.  The commissioner of banking, insurance, securities, and health care administration shall ensure that the review of individual hospital budgets under subchapter 7 of chapter 221 of this title or certificate of need requests under subchapter 5 of chapter 221 of this title are consistent with the global hospital budget.

(c)  The Vermont health plan board and the department of banking, insurance, securities, and health care administration shall adopt by rule standards and procedures necessary to implement this subsection.

(d)  A hospital aggrieved by an adverse decision of the board may appeal to the health care hearing board as provided for in subchapter 3a of this chapter.

(e)  For purposes of this section, “hospital” shall have the same meaning as in section 1902 of this title.

Sec. 6.  32 V.S.A. chapter 151, subchapter 4A is added to read:

Subchapter 4A.  Universal Hospital Access for

Vermont Health Care Plan Tax

§ 5848.  Universal Hospital Access Employers’ Tax

An employer health insurance tax is imposed upon every person who is required under subchapter 4 of this chapter to withhold income taxes from payments of income with respect to services.  The rate of tax of 2.5 percent shall be applied to the total amount of wages subject to withholding in the taxable year.  The tax shall be paid in the same manner as income withholding under subchapter 4 of this chapter and shall be subject to administrative and enforcement provisions of this chapter.  Revenues from this tax shall be deposited into the Vermont health access trust fund.

Sec. 7.  32 V.S.A. § 5822a is added to read:

§ 5822a.  Employee Universal Hospital Access Tax

(a)  An employee universal hospital access tax is imposed upon every person who is subject to income tax under section 5822 of this title.  The tax shall be in the amount of:

(1)  1.5 percent of the taxpayer’s taxable income under section 5822 of this title for the taxable year for taxpayers with an adjusted gross income for the taxable year of less than $300,000.00, or less than $600,000.00 if married filing jointly; or

(2)  2.0 percent of the taxpayer’s taxable income under section 5822 of this title for the taxable year for taxpayers with an adjusted gross income for the taxable year of $300,000.00 or more, or $600,000.00 or more if married filing jointly.

(b)  Revenues from this tax shall be deposited into the Vermont health access trust fund.

Sec. 7a.  UNIVERSAL HOSPITAL ACCESS TAX AMENDMENTS

The House Committees on Health Care and on Ways and Means and the Senate Committees on Finance and on Health and Welfare shall, in the 2005 Adjourned Session, consider whether the Universal Hospital Access Employers’ Tax should be amended to apply graduated tax rates based upon the business’s ability to pay; and shall also consider the necessity and feasibility of expanding the sales tax to snack foods and repealing the deduction for net capital gain income under 32 V.S.A. § 5811(21)(B)(ii), to provide additional funding for the Vermont Health Care Plan.

* * * Study of Funding for Vermont Health Care Plan * * *

Sec. 8.  STUDY OF FUNDING MECHANISM

(a)  A sustainable universal health care special committee is created to determine the appropriate funding mechanisms for the Vermont health care plan and shall consider at a minimum the following funding sources:  an income tax, a payroll tax, premiums or cost-sharing measures, a value-added tax, or other consumption tax. 

(b)  The sustainable universal health care special committee shall consist of the joint fiscal committee, the chair and vice chair of the health access oversight committee, the secretaries of the agency of human services and the agency of administration, and the commissioner of the department of banking, insurance, securities, and health care administration.  The committee may meet for no more than six meetings or public hearings and shall have such powers as are needed to carry out the purposes of this section.  Committee members who are not full-time state employees shall be entitled to per diem and expenses as provided in 32 V.S.A. § 1010.

(c)  The sustainable universal health care special committee shall issue to the general assembly no later than January 15, 2006 a report with a recommendation on funding the Vermont health care plan.

* * * Pharmacy Best Practices and Cost Control Program * * *

Sec. 9.  33 V.S.A. § 1998 is amended to read:

(a)  The commissioner of prevention, assistance, transition, and health access Vermont health care plan board established under section 1979 of this title shall establish and maintain a pharmacy best practices and cost control program designed to reduce the cost of providing prescription drugs, while maintaining high quality in prescription drug therapies.  The program shall include:

(1)  A Use of the statewide preferred list of covered prescription drugs that identifies preferred choices within therapeutic classes for particular diseases and conditions, including generic alternatives and over-the-counter drugs.

(A)  The commissioner and the commissioner of banking, insurance, securities, and health care administration shall implement the preferred drug list as a uniform, statewide preferred drug list by encouraging all health benefit plans in this state to participate in the program.

(B)  The commissioner of human resources shall use the preferred drug list in the state employees health benefit plan only if participation in the program will provide economic and health benefits to the state employees health benefit plan and to beneficiaries of the plan, and only if agreed to through the bargaining process between the state of Vermont and the authorized representatives of the employees of the state of Vermont.  The provisions of this subdivision do not authorize the actuarial pooling of the state employees health benefit plan with any other health benefit plan, unless otherwise agreed to through the bargaining process between the state of Vermont and the authorized representatives of the employees of the state of Vermont.  No later than November 1, 2004, the commissioner of human resources shall report to the health access oversight committee and the senate and house committees on health and welfare on whether use of the preferred drug list in the state employees health benefit plan would, in his or her opinion, provide economic and health benefits to the state employees health benefit plan and to beneficiaries of the plan.

(C)  The commissioner shall encourage all health benefit plans to implement the preferred drug list as a uniform, statewide preferred drug list by inviting the representatives of each health benefit plan providing prescription drug coverage to residents of this state to participate as observers or nonvoting members in the commissioner’s drug utilization review board, and by inviting such plans to use the preferred drug list in connection with the plans’ prescription drug coverage;

(2)  Utilization review procedures, including a prior authorization review process;

(3)  Any strategy designed to negotiate with pharmaceutical manufacturers to lower the cost of prescription drugs for program participants, including a supplemental rebate program;

(4)  With input from physicians, pharmacists, private insurers, hospitals, pharmacy benefit managers, and the drug utilization review board, an evidence-based research education program designed to provide information and education on the therapeutic and cost-effective utilization of prescription drugs to physicians, pharmacists, and other health care professionals authorized to prescribe and dispense prescription drugs.  To the extent possible, the program shall inform prescribers about drug marketing that is intended to circumvent competition from generic alternatives.  Details of the program, including the scope of the program and funding recommendations, shall be contained in a report submitted to the health access oversight committee and the senate and house committees on health and welfare no later than January 1, 2005;

(5)(4)  Alternative pricing mechanisms, including consideration of using maximum allowable cost pricing for generic and other prescription drugs;

(6)(5)  Alternative coverage terms, including consideration of providing coverage of over-the-counter drugs where cost-effective in comparison to prescription drugs, and authorizing coverage of dosages capable of permitting the consumer to split each pill if cost-effective and medically appropriate for the consumer; and

(7)  A simple, uniform prescription form, designed to implement the preferred drug list, and to enable prescribers and consumers to request an exception to the preferred drug list choice with a minimum of cost and time to prescribers, pharmacists and consumers; and

(8)(6)  Any other cost containment activity adopted, by rule, by the commissioner board that is designed to reduce the cost of providing prescription drugs while maintaining high quality in prescription drug therapies.

(b)  The commissioner board shall implement the pharmacy best practices and cost control program for Medicaid and all other state public assistance program health benefit plans to the extent permitted by federal law.

(c)(1)  The commissioner board may implement the pharmacy best practices and cost control program for any other health benefit plan within or outside this state that agrees to participate in the program.

(2)  The commissioner of prevention, assistance, transition, and health access board, and the secretary of administration shall take all steps necessary to enable Vermont’s participation in joint prescription drug purchasing agreements with any other health benefit plan or organization within or outside this state that agrees to participate with Vermont in such joint purchasing agreements.

(3)  The commissioner of human resources shall take all steps necessary to enable the state of Vermont to participate in joint prescription drug purchasing agreements with any other health benefit plan or organization within or outside this state that agrees to participate in such joint purchasing agreements, as may be agreed to through the bargaining process between the state of Vermont and the authorized representatives of the employees of the state of Vermont.

(4)  The actions of the board, the commissioners, and the secretary shall include:

(A)  active collaboration with the Northeast Legislative Association on Prescription Drugs in the Association’s efforts to establish a Prescription Drug Fair Price Coalition;

(B)  active collaboration with the Pharmacy RFP Issuing States initiative organized by the West Virginia Public Employees Insurance Agency;

(C)  the execution of any joint purchasing agreements or other contracts with any participating health benefit plan or organization within or outside the state which the commissioner board determines will lower the cost of prescription drugs for Vermonters while maintaining high quality in prescription drug therapies; and

(D)  with regard to participation by the state employees health benefit plan, the execution of any joint purchasing agreements or other contracts with any health benefit plan or organization within or outside the state which the commissioner of human resources determines will lower the cost of prescription drugs and provide overall quality of integrated health care services to the state employees health benefit plan and the beneficiaries of the plan, and which is negotiated through the bargaining process between the state of Vermont and the authorized representatives of the employees of the state of Vermont.

(5)  The commissioner and the commissioner of human resources board may renegotiate and amend existing contracts to which their departments are parties any state agency is a party if such renegotiation and amendment will be of economic benefit to the health benefit plans subject to such contracts, and to the beneficiaries of such plans.  Any renegotiated or substituted contract shall be designed to improve the overall quality of integrated health care services provided to beneficiaries of such plans.

(6)  The board, the commissioners, and the secretary shall report quarterly to the health access oversight committee and the joint fiscal committee on their progress in securing Vermont’s participation in such joint purchasing agreements.

(7)  The commissioner board, the commissioner of human resources, the commissioner of banking, insurance, securities, and health care administration, and the secretary of human services shall establish a collaborative process with the Vermont Medical Society, pharmacists, health insurers, consumers, employer organizations and other health benefit plan sponsors, the Northeast Legislative Association on Prescription Drug Pricing, pharmaceutical manufacturer organizations, and other interested parties designed to consider and make recommendations to reduce the cost of prescription drugs for all Vermonters.

(d)  A participating health benefit plan other than a state public assistance program may agree with the commissioner board to limit the plan’s participation to one or more program components. The commissioner board shall supervise the implementation and operation of the pharmacy best practices and cost control program, including developing and maintaining the preferred drug list, to carry out the provisions of the this subchapter.  The commissioner board may include such insured or self‑insured health benefit plans as agree to use the preferred drug list or otherwise participate in the provisions of this subchapter.  The purpose of this subchapter is to reduce the cost of providing prescription drugs while maintaining high quality in prescription drug therapies.

(e)  The commissioner of prevention, assistance, transition, and health access director of the office of Vermont health access shall develop procedures for the coordination of state public assistance program health benefit plan benefits with pharmaceutical manufacturer patient assistance programs offering free or low cost prescription drugs, including the development of a proposed single application form for such programs.  The commissioner director may contract with a nongovernmental organization to develop the single application form.

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

(2)  The board shall meet at least quarterly.  The board shall comply with the requirements of subchapter 2 of chapter 5 of Title 1 (open meetings) and subchapter 3 of chapter 5 of Title 1 (open records).

(3)  To the extent feasible, the board shall review all drug classes included in the preferred drug list at least every 12 months, and may recommend that the commissioner board make additions to or deletions from the preferred drug list.

(4)  The program shall establish board procedures for the timely review of prescription drugs newly approved by the federal Food and Drug Administration, including procedures for the review of newly-approved prescription drugs in emergency circumstances.

(5)  Members of the board shall receive per diem compensation and reimbursement of expenses in accordance with section 1010 of Title 32.

* * * Vermont Prescription Drug Fair Pricing Program * * *

Sec. 10.  33 V.S.A. § 2004 is added to read:

§ 2004.  VERMONT PRESCRIPTION DRUG FAIR PRICING PROGRAM

(a)  The general assembly finds that affordability is critical in providing access to prescription drugs for all Vermont residents.  This section is intended as a positive measure to make prescription drugs more affordable for all Vermont residents, thereby increasing the overall health of our families, benefiting employers and employees and the fiscal strength of our society, promoting healthy communities, and protecting the public health and welfare.

(b)  The Vermont health care plan board shall establish maximum prices for prescription drugs sold in Vermont pursuant to this section. 

(c)(1)  The following provisions shall apply to determinations by the board regarding maximum prices for prescription drugs sold in Vermont, and to the procedures for establishing those prices:

(A)  By July 1, 2007, the board shall adopt rules establishing the procedures for the adoption and periodic review of maximum prices, the establishment of maximum prices for new prescription drugs and the review of maximum prices of selected drugs, and the phase-out or termination of maximum prices. 

(B)  By January 5, 2008, the board shall determine whether the cost of prescription drugs provided to qualified residents under the Healthy Vermonters program is reasonably comparable to the lowest cost paid for the same drugs for delivery or dispensation in the state.  In making this determination, the following provisions shall apply:

(i)  The board shall review prescription drug use in the Healthy Vermonters program using data from the most recent six-month period for which data is available.

(ii)  Using the data reviewed in subdivision (i) of this subdivision (B), the board shall determine the 100 drugs for which the most units were provided and the 100 drugs for which the total cost was the highest.

(iii)  For each prescription drug listed in subdivision (ii) of this subdivision (B), the board shall determine the retail cost for each drug for beneficiaries of the Healthy Vermonters program provided those drugs on a certain date.  The average retail cost for each such drug shall be calculated.  The board also shall determine the average manufacturer price for each such drug, taking into account any rebates.

(iv)  For each prescription drug listed in subdivision (ii) of this subdivision (B), the board shall determine the lowest retail cost for each drug paid by any purchaser on the date that is used for subdivision (iii) of this subdivision (B) for delivery or dispensation in the state, taking into consideration the Federal Supply Schedule and prices paid by pharmaceutical benefits managers and by large purchasers, and excluding drugs purchased through the Healthy Vermonters program.  The lowest retail cost and, to the extent possible, the average manufacturer price, for each such drug shall be calculated.

(v)  If the average cost for one or more prescription drugs under the Healthy Vermonters program, as determined in subdivision (iii) of this subdivision (B), is not reasonably comparable to the lowest retail cost and average manufacturer price for the same drug or drugs as determined in subdivision (iv) of this subdivision (B), the board shall establish maximum retail and manufacturer prices for any or all prescription drugs sold in the state, in accordance with the provisions of subdivision (C) of this subdivision (1). 

(vi)  In making a determination under this section, the board may rely on pricing information on a selected number of prescription drugs if that list is representative of the prescription drug needs of the residents of the state, and that list is made public as part of the process of establishing maximum retail prices.

(C)  By July 1, 2008, the board shall put into effect the maximum prescription drug prices established under this subdivision that affect prescription drug transactions that take place in this state.  By that date, the board shall also put into effect maximum prescription drug prices established under this section that affect prescription drug transactions that take place outside of this state unless the board finds that to do so is not permitted by federal law.  The maximum price for any prescription drug sold in Vermont, as determined by the board under this subdivision (1), shall consist of the following components:

(i)  A maximum manufacturer price component for such drug, after consideration of the prices charged for prescription drugs in Canada, the prices listed on the Federal Supply Schedule, and any other information relevant to the purposes of this section.

(ii)  A retail price component for such drug, after consideration of the maximum manufacturer’s price for such drug determined by the board under this subdivision (C), plus any reasonable, customary cost of doing business and profit markup by the wholesaler, plus any reasonable, customary cost of doing business and profit markup by the retailer, as determined by the retailer; provided, however, that such retail price does not constitute an unfair and deceptive act or practice in commerce as determined by the attorney general upon review of a complaint.  The retail price component set by the board may be supplemented with a dispensing fee in an amount determined by the board to offset any loss of revenue to the pharmacist as a result of maximum retail prices.  The dispensing fee shall be included in the amount paid by the purchaser or eligible for reimbursement by a health insurance plan.

(2)  The board, after notice and opportunity for hearing, may grant an exemption from the price for a prescription drug established by the board under subdivision (1) of this subsection for all such drugs sold in this state  upon its own determination, or upon the request of any affected person.  The person making the request for exemption shall have the burden of proof by a preponderance of the evidence in demonstrating the need for an exemption.  In considering the request for exemption, the board may consider:

(A)  changed circumstances since the price was established;

(B)  reasonable costs of production, distribution, marketing, and research;

(C)  the availability of one or more drugs essential to the health of Vermonters or any other reason related to the health and safety of Vermonters; and

(D)  any other information relevant to the purpose of this section.

(3)  The board may take actions that the board determines necessary if there is a severe limitation or shortage of or lack of access to prescription drugs in the state that could threaten or endanger the public health or welfare.

(4)  The board may act in cooperation with agencies in other states to maximize the effectiveness of its prescription drug price regulation activities under this section.

(d)  In carrying out its duties, the board shall have all the powers necessary to carry out the purposes of this section, including the power to collect from any manufacturer, wholesaler, or retailer of prescription drugs sold in Vermont such information as is necessary for the board to carry out its duties under this section.  Pursuant to the power granted under this subdivision:

(1)  Any manufacturer, wholesaler, or retailer of prescription drugs sold in Vermont shall file with the board, on request, such data, statistics, schedules, or information as the board may require to enable it to carry out its duties.

(2)  The board shall have the power to examine books and accounts of any manufacturer, wholesaler, or retailer of prescription drugs sold in Vermont, to subpoena witnesses and documents, to administer oaths to witnesses, and to examine them on all matters over which the board has jurisdiction.

(3)  For the purpose of supporting fair and effective competition and price transparency in the market for prescription drugs, the board, in consultation with the attorney general’s office, shall adopt rules for the designation of information collected by the board under this subdivision (3) and by the secretary under subdivision (f)(2) of this section as public information or as proprietary information that shall not be disclosed to any person other than to the board or to the attorney general for law enforcement purposes.

(e)  With respect to program administration, the agency of human services shall:

(1)  administer implementation of the price regulation of any prescription drug, as determined by the board under subsection (c) of this section;

(2)  distribute information concerning the prices established by the board under subsection (c) of this section to all retail pharmacies in Vermont and post such prices on the agency’s internet website;

(3)  twice each year, conduct and release a survey of representative retail prices for the most commonly used prescription drugs in Vermont as determined by the secretary; and

(4)  in consultation with the attorney general’s office, establish by rule standards of conduct to protect consumers in connection with the prescription drug industry.

(f)  The secretary shall have, in addition to other powers granted by law, all the powers necessary to carry out the purposes of this section, including the power to:

(1)  adopt emergency rules to implement programs in a timely manner; and

(2)  collect from any manufacturer, wholesaler, or retailer of prescription drugs sold in Vermont such information as is necessary for the secretary to carry out his or her duties under this section, subject to the rules of the board relating to proprietary information under subdivision (d)(3) of this section.  Pursuant to the power granted under this subdivision:

(A)  Any manufacturer, wholesaler, or retailer of prescription drugs sold in Vermont shall file with the secretary, on request, such data, statistics, schedules, or information as the secretary may require to enable the secretary to carry out his or her duties.

(B)  The secretary shall have the power to examine books and accounts of any manufacturer, wholesaler, or retailer of prescription drugs sold in Vermont, to subpoena witnesses and documents, to administer oaths to witnesses, and to examine them on all matters over which the secretary has jurisdiction.

(g)  The following shall constitute, and be subject to, the rights, remedies, and other judicial procedures established for an unfair and deceptive act or practice in commerce under section 2453 of Title 9:

(1)  A violation of a provision of this section or a rule adopted pursuant to this section.

(2)  The sale by any person in this state of a prescription drug for a price in excess of the maximum price determined by the board under subsection (c) of this section.

(h)  The board and the secretary shall report to the general assembly on or before January 1 of each year on prescription drug prices in Vermont.  Such report shall include:

(1)  The board’s maximum prescription drug prices for prescription drugs sold in Vermont.

(2)  The secretary’s surveys of retail prices for the most commonly used prescription drugs in Vermont.

(3)  Any other findings and recommendations offered by the board and the secretary.

(i)  An aggrieved party may appeal, to the superior court, on the administrative record, any adverse final decision of the board or secretary under this section pursuant to Rule 74 of the Vermont Rules of Civil Procedure.

* * * PBM Regulation * * *

Sec. 11.  18 V.S.A. chapter 221, subchapter 9 is added to read:

Subchapter 9.  Pharmacy Benefit Managers

§ 9471.  DEFINITIONS

As used in this subchapter:

(1)  “Beneficiary” means an individual enrolled in a health plan in which coverage of prescription drugs is administered by a pharmacy benefit manager and includes his or her dependent or other person provided health coverage through that health plan.

(2)  “Health insurer” is defined by subdivision 9402(9) of this title.  As used in this subchapter, the term includes the state of Vermont and any agent or instrumentality of the state that offers, administers, or provides financial support to state government.  It also includes Medicaid, the Vermont health access plan, the VScript pharmaceutical assistance program, and any other public health care assistance program.

(3)  “Health plan” means a health benefit plan offered, administered, or issued by a health insurer doing business in Vermont.

(4)  “Pharmacy benefit management” means an arrangement for the procurement of prescription drugs at a negotiated rate for dispensation within this state to beneficiaries, the administration or management of prescription drug benefits provided by a health plan for the benefit of beneficiaries, or any of the following services provided with regard to the administration of pharmacy benefits:

(A)  mail service pharmacy;

(B)  claims processing, retail network management, and payment of claims to pharmacies for prescription drugs dispensed to beneficiaries;

(C)  clinical formulary development and management services;

(D)  rebate contracting and administration;

(E)  certain patient compliance, therapeutic intervention, and generic substitution programs; and

(F)  disease management programs.

(5)  “Pharmacy benefit manager” means an entity that performs pharmacy benefit management.  The term includes a person or entity acting for a pharmacy benefit manager in a contractual or employment relationship in the performance of pharmacy benefit management for a health plan.

§ 9472.  PHARMACY BENEFIT MANAGERS; REQUIRED PRACTICES

(a)  A pharmacy benefit manager that provides pharmacy benefit management for a health plan shall:

(1)  Discharge its duties with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent pharmacy benefit manager acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.

(2)  Provide all financial and utilization information requested by a health plan relating to the provision of benefits to beneficiaries through that health plan and all financial and utilization information relating to services to that health plan.  A pharmacy benefit manager providing information under this subsection may designate that material as confidential.  Information designated as confidential by a pharmacy benefit manager and provided to a health plan under this subsection may not be disclosed by the health plan to any person without the consent of the pharmacy benefit manager, except that disclosure may be made in a court filing under the consumer fraud provisions of chapter 63 of Title 9 or when authorized by that chapter or ordered by a court for good cause shown.

(3)  Notify a health plan in writing of any proposed or ongoing activity, policy, or practice of the pharmacy benefit manager that presents, directly or indirectly, any conflict of interest with the requirements of this section.

(4)  Adhere to the following provisions with regard to the dispensation of a substitute prescription drug for a prescribed drug to a beneficiary:

(A)  With regard to substitutions in which the substitute drug costs more than the prescribed drug, disclose to the health plan the cost of both drugs and any benefit or payment directly or indirectly accruing to the pharmacy benefit manager as a result of the substitution.

(B)  Transfer in full to the health plan any benefit or payment received in any form by the pharmacy benefit manager either as a result of a prescription drug substitution under subdivision (A) of this subdivision (4) or as a result of the pharmacy benefit manager’s substituting a lower-priced generic and therapeutically equivalent drug for a higher-priced prescribed drug.

(5)  If the pharmacy benefit manager derives any payment or benefit for the dispensation of prescription drugs within the state based on volume of sales for certain prescription drugs or classes or brands of drugs within the state, pass that payment or benefit on in full to the health plan, unless the contract between the pharmacy benefit manager and the health plan provides otherwise.

(6)  Disclose to the health plan all financial terms and arrangements for remuneration of any kind that apply between the pharmacy benefit manager and any prescription drug manufacturer, including formulary management and drug-switch programs, educational support, claims processing, pharmacy network fees charged from retail pharmacies and data sales fees, and any other information required to be disclosed under section 9420 of this title.  A pharmacy benefit manager providing information under this subsection may designate that material as confidential.  Information designated as confidential by a pharmacy benefit manager and provided to a health plan under this subsection may not be disclosed by the health plan to any person without the consent of the pharmacy benefit manager, except that disclosure may be made in a court filing under the consumer fraud provisions of chapter 63 of Title 9 or when authorized by that chapter or ordered by a court for good cause shown.

(b)  Compliance with the requirements of this section is required in all contracts for pharmacy benefit management entered into in this state by a health plan in this state.

§ 9473.  ENFORCEMENT

(a)  In addition to any other remedy provided by law, a health plan aggrieved by a violation of this subchapter may file an action in superior court for injunctive relief and an award of compensatory and punitive damages.  The superior court may award to the health plan which prevails in an action under this section reasonable costs and attorney’s fees.

(b)  An action by the attorney general under this section is subject to the provisions of this subsection and the consumer fraud provisions of chapter 63 of Title 9.  Each violation of this subchapter constitutes an unfair practice under section 2453 of Title 9 and is a civil violation for which the attorney general may obtain, in addition to other remedies, injunctive relief and a fine in an amount not to exceed $10,000.00 per violation, plus the costs of suit, including necessary and reasonable investigative costs, reasonable expert fees, and reasonable attorney’s fees.

Sec. 12.  APPLICATION

Sec. 11 of this act applies to contracts executed or renewed on or after September 1, 2005.  For purposes of this section, a contract executed pursuant to a memorandum of agreement executed prior to September 1, 2005 is deemed to have been executed prior to September 1, 2005 even if the contract was executed after that date.

* * * Pharmaceutical Marketer Disclosures * * *

Sec. 13.  33 V.S.A. § 2005(a)(4) is amended to read:

(4)  The following shall be exempt from disclosure:

* * *

(D)  scholarship or other support for medical students, residents, and fellows to attend a significant educational, scientific, or policy-making conference of a national, regional, or specialty medical or other professional association if the recipient of the scholarship or other support is selected by the association; and

(E)  unrestricted grants for continuing medical education programs; and

(F)  prescription drug rebates and discounts.

* * * Pharmacy Discount Plans * * *

Sec. 14.  33 V.S.A. § 2003 is amended to read:

§ 2003.  PHARMACY DISCOUNT PLANS

* * *

(b)  The Healthy Vermonters program shall offer beneficiaries an initial discounted cost for covered drugs.  Upon approval by the Centers for Medicare and Medicaid Services of a Section 1115 Medicaid waiver program, and upon subsequent legislative approval, the The Healthy Vermonters program and the Healthy Vermonters Plus program shall offer beneficiaries a secondary discounted cost, which shall reflect a state payment toward the cost of each dispensed drug as well as any rebate amount negotiated by the commissioner Vermont health care plan board.

* * *

(n)  The department shall agency may seek a waiver from the Centers for Medicare and Medicaid Services (CMS) requesting authorization any waivers of federal law, rule, or regulation necessary to implement the provisions of this section, including application of manufacturer and labeler rebates to the pharmacy discount plans. The secondary discounted cost shall not be available to beneficiaries of the pharmacy discount plans until the department receives written notification from CMS that the waiver requested under this section has been approved and until the general assembly subsequently approves all aspects of the pharmacy discount plans, including funding for positions and related operating costs associated with eligibility determinations.

* * * Price Disclosure and Certification * * *

Sec. 15.  33 V.S.A. § 2010 is added to read:

§ 2010.  ACTUAL PRICE DISCLOSURE AND CERTIFICATION

(a)  A manufacturer of prescription drugs dispensed in this state under a health program directed or administered by the state shall, on a quarterly basis, report by National Drug Code the following pharmaceutical pricing criteria to the director of the office of Vermont health access for each of its drugs:

(1)  the average wholesale price;

(2)  the wholesale acquisition cost;

(3)  the average manufacturer price as defined in 42 U.S.C. § 1396r-8(k); and

(4)  the best price as defined in 42 U.S.C. § 1396r‑8(c)(1)(C).

(b)  The calculation of average wholesale price and wholesale acquisition cost must be the net of all volume discounts, prompt payment discounts, charge-backs, short-dated product discounts, cash discounts, free goods, rebates, and all other price concessions or incentives provided to a purchaser that result in a reduction in the ultimate cost to the purchaser.

(c)  When reporting the average wholesale price, wholesale acquisition cost, average manufacturer price and best price, a manufacturer of prescription drugs dispensed in this state shall include also a detailed description of the methods by which the prices were calculated.

(d)  When a manufacturer of prescription drugs dispensed in this state reports the average wholesale price, wholesale acquisition cost, average manufacturer price, or best price, the president or chief executive officer of the manufacturer shall certify to the agency, on a form provided by the director of the office of Vermont health access, that the reported prices are accurate.

(e)  Except as provided in this subsection, all information provided to the director by a manufacturer of prescription drugs under this section is confidential and may not be disclosed by any person or by the office to any person without the consent of the manufacturer.  Disclosure may be made by the office to an entity providing services to the office under this section. Disclosure may be ordered by a court for good cause shown or made in a court filing under seal unless or until otherwise ordered by a court.  Nothing in this subsection limits the attorney general’s use of civil investigative demand authority under the Vermont Unfair Trade Practices Act to investigate violations of this section.

* * * Information Technology * * *

Sec. 16.  18 V.S.A. § 9434(a)(6) is added to read:

(6)  The purchase or lease of new information technology.

Sec. 17.  18 V.S.A. § 9434(c)(5) is added to read:

(5)  the purchase or lease of new information technology.

Sec. 18.  18 V.S.A. § 9435(a) is amended to read:

(a)  Excluded from this subchapter are offices of physicians, dentists, or other practitioners of the healing arts, meaning the physical places which are occupied by such providers on a regular basis in which such providers perform the range of diagnostic and treatment services usually performed by such providers on an outpatient basis unless they are subject to review under subdivision 9434(a)(4) or (6) of this title.

Sec. 19.  18 V.S.A. § 9437(7) is added to read:

(7)  if the application is for the purchase or lease of new health information technology, it conforms with the information technology plan established under section 9440b of this title.

Sec. 20.  18 V.S.A. § 9440b is added to read:

§ 9440b.  INFORMATION TECHNOLOGY; REVIEW PROCEDURES; BOARD; PLAN

(a)  The commissioner shall establish by rule standards and procedures for reviewing applications for the purchase or lease of information technology beginning July 1, 2006.  Such applications shall not be granted unless they are consistent with the information technology plan established by the information technology board under this section.

(b)  By July 15, 2005, an information technology board shall be appointed by the commissioner, in consultation with the commissioner of health.  Members shall include the commissioner for children and families; the director of the office of Vermont health access; a representative from each of the following organizations:  one or more private health insurers, the Vermont Program for Quality in Health Care, health care facilities identified by the Vermont association of hospitals and health systems, and the Vermont Medical Society; and the health care ombudsman.  The term of each member shall be three years.  Any appointment to fill a vacancy shall be for the unexpired portion of the term vacated.  A member wishing to succeed himself or herself in office may seek reappointment by the commissioner.  The board shall design an information technology plan as described in subsection (c) of this section and shall have administrative and staff support from the departments of banking, insurance, securities, and health care administration and of health.

(c)  By January 1, 2006, the health information board shall design a health information technology plan with the goal of developing and implementing a statewide, interactive health care database, as well as related technologies designed to promote patient education, physician best practices, electronic connectivity to health care data and, overall, a more efficient and less costly means of delivering quality health care in Vermont while simultaneously capturing cost overruns.  The plan shall include consideration of:

(1)  patient records;

(2)  methods of referral for patients;

(3)  data standards related to common claims and billing and other financial reporting standards and procedures;

(4)  privacy and security practices;

(5)  consumer access to health information;

(6)  provider access to medical best practices, including diagnostic tools;

(7)  chronic care registries;

(8)  uniform health care information collecting and reporting standards and practices, including common definitions;

(9)  a delivery system accessible at all facilities, including clinics;

(10)  a recommended process that would allow hospitals and health care facilities that invest in health information technology that is compatible with the health information technology plan to have those costs recognized in their budgets when reviewed by the commissioner; and

(11)  an analysis of the cost of the recommendations made.

* * * Appropriation * * *

Sec. 21.  APPROPRIATION

The sum of $500,000.00 is appropriated from the Vermont health access trust fund to the Vermont health care plan board in fiscal year 2006 to carry out the purposes of this act.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us