Download this document in MS Word format


AutoFill Template

H.524

AN ACT RELATING TO UNIVERSAL ACCESS TO HEALTH CARE IN VERMONT

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

Sec. 1.  FINDINGS

The general assembly hereby finds that:

(1)  Costs.  Health care costs are rising at an unsustainable rate, causing hardships to individuals, families, businesses, taxpayers, and public institutions and making the need for comprehensive health care reform urgent.

(A)  Health care costs have risen an average of 9-10 percent per year over the past 30-40 years, with the rate rising to 10-11 percent in more recent years.  These figures are well above the Consumer Price Index and, moreover, exceed by far the state’s capacity to pay for health care costs as measured against our gross state product and personal income.  For example, between 1996 and 2002, health care spending in Vermont rose 63 percent, while personal income rose 41 percent and the gross state product rose 35 percent.

(B)  In 2006, it is projected that Vermont will spend $3.8 billion on health care.  That amount has doubled since 1998.  If the trend continues, health care spending will double again in eight years.  In other words, for every year Vermont fails to address the health care crisis, health care costs will rise by at least another $350 million.

(C)  Over one-half of bankruptcies nationally are associated with high medical expenses.  In approximately three-quarters of health-related bankruptcies, the patient had insurance.

(D)  In 2005, the state of Vermont will spend an estimated $5,700.00 per capita on health care, more than any nation -- except the United States itself -- when measured as a proportion of gross domestic product. 

(E)  Vermont’s health care spending was 14.7 percent of the gross state product in 2003.

(F)  The cost of health care has a strong and negative impact on the ability of Vermont businesses and employers to compete in national and international markets.

(2)  Access.  There is a large and increasing number of people who have no health insurance or who are underinsured.  For this growing population, health care is unaffordable and, as a result, often not received in the most timely and effective manner.  The existing disparities in coverage result in an irrational rationing of available health care services.

(A)  Over 60,000 Vermonters have no health insurance.  Lack of insurance is associated with an increased rate of illness and a shorter life expectancy.

(B)  Premium cost increases have contributed to the growing rate of underinsurance, with more and more Vermonters purchasing high‑deductible and less comprehensive plans.

(C)  The costs of health services provided to individuals who are unable to pay are shifted to others.  Of the $2.1 billion charged by hospitals in 2005, $88 million was not collected as follows:  $37 million in charity care and $51 million in bad debt.  Those who bear the burden of this cost shift have an increasingly difficult time affording their own health care costs, including premiums.

(3)  Inequity in financing.  The current financing of health care is complex, fragmented, and inequitable, resulting in inefficiencies and placing administrative burdens on health care professionals, in particular. 

(A)  The financing is accomplished through a patchwork of public programs, private sector employer-sponsored self-insurance, commercial insurance, and individual payers. 

(B)  There are two fundamental inequities in the insurance-based financing system:  (i)  premiums are not based on ability to pay, and (ii) deductibles and coinsurance place a financial burden on those with serious illness.

(C)  In general, costs fall disproportionately on those with serious health conditions and those with moderate and lower incomes.

(D)  At any particular point in time, approximately 10 percent of the Vermont population generates approximately 70 percent of all health care spending.

(4)  Quality.  Although the quality of health care services in Vermont is generally very good, there is a need to improve quality, efficiency, and safety.  Improvements in health care quality will result in improved health and reduced costs.  The existing payment system, because it is based on the amount of care provided, does not tie reimbursement to improved health.

(A)  There are an unacceptable number of adverse events attributable to medical errors.  According to the Institute of Medicine report entitled “To Err is Human:  Building a Safer Health System,” nationwide, the right care is given to the right person at the right time only about half the time.

(B)  In addition, our health care infrastructure and services tend to be “disease‑focused” rather than “health-focused,” resulting in missed opportunities for less costly and more effective forms of care.

(5)  Vermont currently does not have a clearly defined, integrated health care “system.”  Fragmentation and disorganization at both the regional and statewide levels lead in some instances to excessive care or inadequate care and create barriers to coordination and accountability among health care professionals, payers, and patients.  In addition, the ability of the system to respond to rapid changes in technology and medical advances and to provide the highest quality of care to the greatest number of people is compromised.

(6)  Federal laws and programs, such as Medicaid, Medicare, and the Employee Retirement Income Security Act of 1974 (ERISA) constrain Vermont’s ability to establish immediately an integrated health care system.  Presently, there are 130,000 Vermonters enrolled in Medicaid, 90,000 in Medicare, and 150,000 in private sector employer-sponsored self-insured plans.  Combined, it is projected that these individuals will account for nearly $2.3 billion of the $3.8 billion Vermont will spend on health care in 2006.

(7)  The largest costs of a medical facility are apportioned between fixed costs, such as buildings and equipment (32 percent), and fairly inflexible costs, such as skilled professional staff (52 percent).  Together, these account for 84 percent of a facility’s costs.

Sec. 2.  GUIDELINES FOR HEALTH CARE REFORM

The general assembly adopts the following guidelines, modeled after the Coalition 21 principles, as a framework for reforming health care in Vermont:

(1)  It is the policy of the state of Vermont to ensure universal access to and coverage for essential health care services for all Vermonters. 

(2)  Health care coverage needs to be comprehensive and continuous. 

(3)  Vermont’s health delivery system must model continuous improvement of health care quality and safety. 

(4)  The financing of health care in Vermont must be sufficient, equitable, fair, and sustainable. 

(5)  Built-in accountability for quality, for cost, for access and for participation must be the hallmark of Vermont’s health care system.

(6)  Vermonters must be engaged, to the best of their ability, to pursue healthy lifestyles, to focus on preventive care and wellness efforts, and to make informed use of all health care services throughout their lives.

Sec. 3.  GOALS OF HEALTH CARE REFORM

Consistent with the adopted guidelines for reforming health care in Vermont, the general assembly adopts the following goals:

(1)  Universal Access.  Vermont policy will reflect that universal access to health care is a public good. By 2009, Vermont shall have an integrated health care system that provides all Vermonters, regardless of their age, employment, economic status, or their town of residency, with access to affordable, high quality health care that is financed in a fair and equitable manner.

(A)  In order to reach this goal, the state shall begin by offering limited benefits and shall expand benefits over time after meeting specified benchmarks. A process will be developed to define the benefits, taking into consideration scientific evidence, available funds, and the values and priorities of Vermonters. 

(B)  The benchmarks shall measure the appropriateness and feasibility of a proposed expansion based on its ability to promote the following:

long-term cost savings, increased access, improved quality and delivery, administrative simplification, fair and equitable financing, financial sustainability, and continuity of coverage.

(2)  Cost Control.  It is imperative that health care costs are brought under control.  Likewise, it is essential that cost containment initiatives address both the financing of health care and also the delivery and quality of health services offered in VermontTo ensure financial sustainability of Green Mountain Health, the state is committed to slowing the rate of growth of health care costs to seven percent or less by the year 2010. Strategies for containing costs shall include:

(A)  global budgeting of and global payment to hospitals;

(B)  tort reform;

(C)  increased consumer access to health care price and quality information;

(D)  promotion of self-care and healthy lifestyles;

(E)  enhanced prescription drug initiatives;

(F)  funding of the chronic care initiative;

(G)  investments in health information technology;

(H)  alignment of health care professional reimbursement with best practices and outcomes rather than utilization; and

(I)  development of a long-term strategy for integrating the health care delivery system as well as a strategy for integrating health care policy, planning, and regulation within government.

(3)  High Quality.  Vermont’s health delivery system must model continuous improvement of health care quality and safety.  Vermonters must have the tools and resources necessary to make informed use of all health care services.  Health care professionals and facilities should have incentives to provide the best and most appropriate care to Vermonters.  The state should also do its part to improve quality and safety by coordinating health care policy, planning and regulation.

(4)  Equitable Financing.  The health care system in Vermont should be financed in a fair and equitable manner.  All Vermonters should have access to health care; all Vermonters should contribute to its cost.

* * * Process for Attaining Goals * * *

Sec. 4.  PROCESS FOR ATTAINING HEALTH CARE GOALS;

             COMMISSION ON HEALTH CARE REFORM

(a)  There is established a commission on health care reform.  The commission, under the direction of co-chairs who shall be appointed by the speaker of the house and president pro tem of the senate, shall monitor health care reform and recommend to the general assembly actions needed to attain the health care goals established by this act.

(b)  Members of the commission shall include four representatives appointed by the speaker of the house, four senators appointed by the committee on committees, and two nonvoting members appointed by the governor. 

(c)  Beginning in the interim of the 2005 legislative session through July 1, 2009, the commission shall:

(1)  oversee and monitor Green Mountain Health, propose to the general assembly as described in section 2022 of Title 33 a package of benefits to be covered under that program and, based on an assessment of whether specified benchmarks have been met, make recommendations to the general assembly on expansions to the program;

(2)  develop administrative and operational recommendations for expansions to Green Mountain Health, including residency requirements; treatment of preexisting conditions; the interrelationship between Green Mountain Health, Medicare, Medicaid and any Medicaid waiver programs; the establishment of a global payment for hospital services covered by Green Mountain Health; and payment mechanisms for out-of-state hospital coverage by Green Mountain Health;

(3)  identify and report emerging trends and behaviors among various participants in the health care system;

(4)  assess the effectiveness of cost-containment and quality of care initiatives;

(5)  establish demonstration or pilot projects designed to contain health care costs and improve the delivery and quality of health care;

(6)  direct the studies established under Sec. 27 of this act;

(7)  assess the feasibility of:

(A)  a publicly financed stop-loss insurance policy for all health plans doing business in Vermont;

(B)  organizational structures that integrate the delivery of care and improve the quality of care at both the regional and state level, including developing a plan for creating an integrated, regional delivery system and developing integrated systems of care as described in Sec. 28 of this act;

(C)  a public health care program that incorporates the health benefits covered under workers’ compensation policies; and

(D)  tort reform consistent with the findings and recommendations of the medical malpractice study authorized under Sec. 292 of No. 122 of the Acts of the 2003 Adj. Sess (2004);

(8)  recommend alternative reimbursement mechanisms for health services that encourage cost effectiveness, improve the quality of care,  increase efficiency, reward primary care practices that prevent chronic illnesses, avoid preventable hospitalizations, and reduce long-term costs to the system, including a global hospital payment to each hospital.  For the purposes of this section, “global hospital payment” means an amount to be paid to a hospital by each health insurer, employer or the state for services received at that hospital by all individuals covered by a health benefit plan offered by or through that insurer, employer or the state.  A global hospital payment may be accomplished through the use of the purchasing pool established in subchapter 7 of chapter 19 of Title 33 by requiring all public and private health insurers to pay for hospital services using this method to the extent permitted under federal law, or by another mechanism; and

(9)  receive input and make recommendations, generally, to the house committees on health care and ways and means, the senate committees on health and welfare and finance and the general assembly regarding the long‑term development of policies and programs designed to ensure that, by 2009, Vermont has an integrated system of care that provides all Vermonters access to affordable, high quality health care that is financed in a fair and equitable manner.

(d)  The commission shall select, subject to final approval by the speaker of the house and the president pro tempore of the senate, the services of one full‑time director and such other staff as is needed, and shall receive administrative, fiscal, and legal support from the joint fiscal office and the legislative council.  The director shall have expertise in finance, planning, systems analysis, and processes involving weighing competing interests among parties.  In addition, with the approval of the speaker of the house and the president pro tempore of the senate, the commission may retain the services of one or more consultants or experts knowledgeable in health care systems, financing, or delivery to assist in its work and may request funding from the legislative budget.

(e)  The commission may request analysis from the office of Vermont health access, the department of banking, insurance, securities, and health care administration, and other appropriate agencies.  The agencies shall report to the commission at such times and with such information as the commission determines is necessary to fulfill its oversight responsibilities.

(f)  The commission may meet as needed and members shall be entitled to compensation and expenses as provided in 2 V.S.A. § 406.

(g)  The department of buildings and general services shall provide the commission with office space near the state capitol building in Montpelier for three individuals.

Sec. 5.  SCHEDULE AND BENCHMARKS FOR ATTAINING HEALTH CARE GOALS

(a)  On or before January 1, 2006, based on a proposal made by the office of Vermont health access under section 2022 of Title 33, the commission on health care reform shall recommend to the general assembly a package of primary and preventive care health services to be covered under Green Mountain Health beginning July 1, 2006.

(b)  Prior to making recommendations for expansions to Green Mountain Health as described in subsections (c)-(e) of this section, the commission, based on projections in constant dollars, shall find that:

(1)  financing necessary to support the recommendations is cost-neutral or less expensive with respect to the health care system and will not require more money than is projected to be spent in the existing system by Vermont employers and individuals through taxes, premiums, and out-of-pocket expenses;

(2)  administrative bureaucracy and costs will decrease as a percentage of total health care spending;

(3)  quality of care will be improved; and

(4)  the future costs of health care will be less than projected based on progress in implementing the following cost containment measures:

(A)  global budgeting of and global payment to hospitals;

(B)  tort reform;

(C)  increased consumer access to health care price and quality information;

(D)  promotion of self-care and healthy lifestyles;

(E)  enhanced prescription drug initiatives;

(F)  funding of the chronic care initiative;

(G)  investments in health information technology;

(H)  alignment of health care professional reimbursement with best practices and outcomes rather than utilization; and

(I)  additional federally qualified health centers (FQHC) or FQHC look-alikes.

(c)  On or before January 1, 2007, provided the commission determines that the conditions and benchmarks established under this section are met, the commission shall recommend to the general assembly a plan to make primary and preventive care, or select primary or preventive care health services available to all Vermonters under Green Mountain Health beginning July 1, 2007.

(d)  On or before January 1, 2008, provided the commission determines that the conditions and benchmarks established under this section are met, the commission shall recommend to the general assembly a plan to make hospital care available to all Vermonters under Green Mountain Health beginning October 1, 2008.

(e)  On or before January 1, 2009, provided the commission determines that the conditions and benchmarks established under this section are met, the commission shall recommend to the general assembly a plan to make a minimum common benefit available to all Vermonters under Green Mountain Health beginning July 1, 2009.

(f)  Recommendations by the commission shall be based on data received or proposals made by the office of Vermont health access and the department of banking, insurance, securities, and health care administration as well as on any other relevant public input received by the commission, including all studies established under this act.

(g)  Recommendations by the commission to the general assembly shall be assessed in terms of cost savings; increased access; improvements in quality and delivery; administrative simplification; fairness and equity in financing; continuity of coverage; and financial sustainability.

Sec. 5a.  PUBLIC ENGAGEMENT PROCESS

(a)  In recognition of the importance of public engagement, the house committee on health care and the senate committee on health and welfare shall have six public hearings during the interim of the 2005 legislative session to solicit input from citizens, employers, hospitals, health care professionals, insurers, other stakeholders, and interested parties about health care.

(b)  Throughout the interim, the commission on health care reform at the request of the chairs of the committees shall brief the committees on the commission’s activities and recommendations to date.

(c)  For attendance at meetings, committee members shall be entitled to compensation and expenses as provided in 2 V.S.A. § 406.

* * * Global Hospital Budgets * * *

Sec. 6.  18 V.S.A. § 9456 is amended to read:

§ 9456.  BUDGET REVIEW

(a)  The commissioner shall conduct reviews of each hospital’s proposed budget based on the information provided pursuant to this subchapter, and in accordance with a schedule established by the commissioner.

(b)  In conjunction with budget reviews, the commissioner shall:

(1)  review utilization information;

(2)  consider the goals and recommendations of the health resource allocation plan;

(3)  consider the expenditure analysis for the previous year and the proposed expenditure analysis for the year under review;

(4)  consider any reports from professional review organizations;

(5)  solicit public comment on all aspects of hospital costs and use and on the budgets proposed by individual hospitals;

(6)  meet with hospitals to review and discuss hospital budgets for the forthcoming fiscal year;

(7)  give public notice of the meetings with hospitals, and invite the public to attend and to comment on the proposed budgets;

(8)  consider the extent to which costs incurred by the hospital in connection with services provided to Medicaid beneficiaries are being charged to non-Medicaid health benefit plans and other non-Medicaid payers;

(9)  require each hospital to file an analysis that reflects a reduction in net revenue needs from non-Medicaid payers equal to any anticipated increase in Medicaid reimbursements resulting from appropriations designed to reduce the Medicaid cost shift.

(c)  Individual hospital budgets established under this section shall:

(1)  be consistent with the health resource allocation plan;

(2)  take into consideration national, regional, or instate peer group norms, according to indicators, ratios, and statistics established by the commissioner;

(3)  promote efficient and economic operation of the hospital;

(4)  reflect budget performances for prior years;

(5)  include a finding that the analysis provided in subdivision (b)(10) of this section is a reasonable methodology for reflecting a reduction in net revenues for non-Medicaid payers;

(6)  consider the unified health care budget under section 9406 of this title applicable to hospitals;

(7)  include any physician’s practices owned or operated by the hospital;

(8)  include all revenue received by hospitals; and

(9)  include any charity care plan offered by the hospital.

(d)  For hospital fiscal year 2007 and thereafter, each hospital’s budget shall serve as a spending cap within which hospital costs are controlled, resources directed, and quality and access assured.  The commissioner shall establish the annual rate of growth of each hospital’s costs, taking into consideration utilization rates and any other relevant information.  The rate of growth established for each hospital shall ensure that the total annual rate of growth for statewide hospital costs is not greater than the Consumer Price Index plus the rate of growth of the gross state product.

(d)(e)  Annually, the commissioner shall establish a budget for each hospital by September 15 followed by a written decision by October 1.  Each hospital shall operate within the budget established under this section.

(e)(f)  The commissioner may establish, by rule, a process to define, on an annual basis, criteria for hospitals to meet, such as utilization and inflation benchmarks.  The rule shall permit the commissioner to waive one or more of the review processes listed in subsection (b) of this section, but not for more than two years consecutively.  Tertiary teaching hospitals shall not be eligible for a waiver.

(f)(g)  The commissioner may, upon application, adjust a budget or spending cap established under this section upon a showing of need based upon a significant unbudgeted increase in volume, or exceptional or unforeseen circumstances in accordance with the criteria and processes established under section 9405 of this title.  The department may adopt rules for the development of a voluntary three-year hospital budget process to facilitate long-term planning and to moderate variation in utilization.  The rules shall include a process for annual budget adjustment within the three-year period.

(g)(h)  The commissioner may request, and a hospital shall provide, information determined by the commissioner to be necessary to determine whether the hospital is operating within a budget established under this section.

(h)(i)(1)  If a hospital violates a provision of this section, the commissioner may maintain an action in the superior court of the county in which the hospital is located to enjoin, restrain or prevent such violation.

(2)  After notice and an opportunity for hearing, the commissioner may shall impose on a person who knowingly violates a provision of this subchapter, or a rule adopted pursuant to this subchapter, a civil administrative penalty of no more than $40,000.00, or in the case of a continuing violation, a civil administrative penalty of no more than $100,000.00 or one-tenth of one percent of the gross annual revenues of the hospital, whichever is greater.  This subdivision shall not apply to violations of subsection (d) of this section caused by exceptional or unforeseen circumstances.

(3)(A)  The commissioner shall require the officers and directors of a hospital to file under oath, on a form and in a manner prescribed by the commissioner, any information designated by the commissioner and required pursuant to this subchapter.  The authority granted to the commissioner under this subsection is in addition to any other authority granted to the commissioner under law.

(B)  A person who knowingly makes a false statement under oath or who knowingly submits false information under oath to the commissioner or to the public oversight commission or to a hearing officer appointed by the commissioner or who knowingly testifies falsely in any proceeding before the commissioner or the public oversight commission or a hearing officer appointed by the commissioner shall be guilty of perjury and punished as provided in section 2901 of Title 13.

Sec. 7.  FEDERAL WAIVERS

The agency of human services shall request a waiver of any necessary federal requirements from the Centers for Medicaid and Medicare Services to allow the state to negotiate a global, unified payment to each Vermont hospital for all health care services received in a hospital by individuals covered by Medicaid and Medicare. 

* * * Green Mountain Health * * *

Sec. 8.  33 V.S.A. chapter 19, subchapter 6 is added to read:

Subchapter 6.  Green Mountain Health

§ 2020.  POLICY AND PURPOSE

In order to ensure all Vermont residents have access to key health services and all contribute to the financial sustainability of Vermont’s health care system, Green Mountain Health is established to provide uninsured Vermont residents a defined benefit package of primary and preventive care.  Expansions to the program shall be consistent with recommendations by the commission on health care reform approved by the general assembly.

§ 2021.  DEFINITIONS

As used in this subchapter:

(1)  “Benefits” means primary and preventive care health services.

(2)  “Green Mountain Health” means the plan established under this subchapter.

(3)  “Health care professional” means an individual licensed, registered, or certified in the state of Vermont to provide health services.

(4)  “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.

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

(6)  “Preventive care” means health services that include screening, counseling, treatment, or medication determined by scientific evidence to be effective in preventing or detecting disease and shall include immunizations.

(7)  “Primary care” means health services provided by health care professionals specifically trained for and skilled in first-contact and continuing care for individuals with signs, symptoms, or health concerns, not limited by problem origin (biological, behavioral, or social), organ system, or diagnosis and shall include prenatal care.  Primary care services include health promotion, preventive care, health maintenance, counseling, patient education, case management, and the diagnosis and treatment of acute and chronic illnesses in a variety of health care settings.

(8)  “Uninsured” means not having health insurance coverage under either a private or public plan, including Medicaid.

(9)  “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 director of the office of Vermont health access shall establish specific criteria to demonstrate residency.

§ 2022.  BENEFITS DEVELOPED; PRIMARY; PREVENTIVE

(a)  Not later than October 1, 2005, the office of Vermont health access shall propose to the commission on health care reform a package of benefits to be provided uninsured Vermont residents under Green Mountain Health, beginning July 1, 2006.  The commission on health care reform shall recommend for approval benefits to the general assembly by January 1, 2006.

(b)  The office shall ensure that a package of primary and preventive care will provide a choice of services and health care professionals, contain costs over time, and improve quality of care and health outcomes.  In developing the package of health services under this section, the office shall:

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

(2)  consider the current range of health services received by Vermonters through public and private benefit packages;

(3)  consider credible, evidence-based, scientific research and comment by health care professionals both nationally and internationally concerning clinical efficacy and risk;

(4)  consider health care ethics;

(5)  consider the cost-effectiveness of health services and technology;

(6)  consider revenues anticipated to be available to finance Green Mountain Health;

(7)  consider the state health plan and the health resource allocation plan established under section 9405 of Title 18; and

(8)  consider any Vermont-specific initiatives that would inform the committee.

§ 2023.  BUDGET FOR PACKAGE OF HEALTH SERVICES

(a)  Beginning January 15, 2006, and annually thereafter, the office shall propose to the general assembly a budget for the benefits covered under Green Mountain Health.  The budget shall include recommended expenditures during the next succeeding state fiscal year broken down by health care sector and region and anticipated revenues available to support such expenditures.

(b)  In developing the proposed budget, the office shall consider the payment methods under section 2024 of this title, the negotiated payment amounts under section 2025 of this title, and cost sharing developed under section 2027 of this title.

§ 2024.  PAYMENT METHODOLOGIES FOR HEALTH CARE

             PROFESSIONALS

(a)  By February 1, 2006, the office shall determine by rule pursuant to chapter 25 of Title 3 the type of payment method to be used for each health care sector which provides health services under Green Mountain Health.  The payment methods shall be in alignment with the goals of this chapter and shall encourage cost‑containment, provision of high quality, evidence-based health services in an integrated setting, patient self‑management, and healthy lifestyles.  In developing the payment methods, the department shall consult with health care professionals prior to filing the draft rules for comment.

(b)  The office shall consider the following payment methods:

(1)  capitated payments;

(2)  incentive payments to the health care professionals based on performance standards, which may include evidence-based standard physiological measures, or if the health condition cannot be measured in that manner, a process measure, such as the appropriate frequency of testing or appropriate prescribing of medications;

(3)  fee supplements if necessary to encourage specialized health care professionals to offer a specific, necessary health service which is not available in a specific geographic region;

(4)  fixed annual payments to health care facilities; and

(5)  fee for service.

§ 2025.  PAYMENT AMOUNTS

(a)  The intent of this section is to ensure reasonable payments to health care professionals and not contribute to the shift of costs between the payers of health services by ensuring that the amount paid to health care professionals under Green Mountain Health is not equivalent to the Medicaid rate if that rate is insufficient payment for the health service provided.  The payment amounts should reflect fair reimbursement for the health services provided under Green Mountain Health.

(b)  The office shall negotiate with hospitals, health care professionals, and groups of health care professionals to establish a payment amount for the health services provided by Green Mountain Health.  The amount shall be sufficient to provide reasonable access to health services, provide sufficient payment to health care professionals, and encourage the financial stability of health care professionals.  In determining the payment amount, the office shall consider:

(1)  the actual cost of the health service;

(2)  expected revenues;

(3)  cost containment targets;

(4)  shared costs between affiliated health care professionals.

§ 2026.  ADMINISTRATION

(a)  Green Mountain Health shall be administered by the office or the administrator contracted with under section 903 of Title 22, or, under an open bidding process, the office shall solicit and receive bids from insurance carriers or third party administrators for administration.  The office may consider bids from out‑of‑state entities as well as Vermont entities to administer Green Mountain Health, but may require that the administrative work for Green Mountain Health occur in a location and facility within Vermont.

(b)  Nothing in this subchapter shall require an individual already covered by health insurance to terminate that insurance, enroll in Green Mountain Health, or contribute to the financing of Green Mountain Health.

(c)  Vermonters shall not be billed any additional amount for health services covered by Green Mountain Health, except as provided for as cost sharing in section 2027 of this title.

(d)  The office or plan administrator shall make available the necessary information, forms, and billing procedures to health care professionals to ensure payment for health services covered under Green Mountain Health.  The office or plan administrator shall use a single, uniform, simplified form to determine eligibility for Medicaid, any Medicaid waiver program, any state‑funded pharmacy program, and Green Mountain Health to ensure that any individual eligible for these programs has the opportunity to enroll.  The office shall provide coverage for health services up to three months prior to the date of application for Medicaid, any Medicaid waiver program, or the state pharmacy programs.

(e)  An individual aggrieved by an adverse decision of the office or plan administrator may appeal to the human services board established under section 3090 of Title 3.

§ 2027.  COST SHARING; WELLNESS DISCOUNT

(a)  As part of the office’s budget, the office shall propose to the general assembly reasonable sliding‑scale deductibles, co-payments, or other cost‑sharing amounts applicable to Green Mountain Health.  The cost-sharing amounts shall not apply to preventive health services covered by Green Mountain Health.

(b)  The office may include also financial or other incentives applicable to Green Mountain Health to encourage healthy lifestyles and patient self‑management.  In particular, the office may establish discounts, rebates, or modifications of applicable cost-sharing amounts in return for an individual’s adherence to programs of health promotion and disease prevention consistent with federal regulations relating to wellness.  If such incentives are included, the office shall adopt by rule standards consistent with the standards and rules adopted under subdivisions 4080a(h)(2)(B) and (C) of Title 8.

* * * Green Mountain Health Financing * * *

Sec. 8a.  32 V.S.A. chapter 151, subchapter 4A is added to read:

Subchapter 4A.  Green Mountain Health Effort Tax

§ 5848.  EMPLOYER HEALTH EFFORT TAX

(a)  There is imposed an employer health effort tax on employers.  The tax shall be equal to:

(1)  a percentage of the employer’s qualified wages as follows:

(A)  1.0 percent of the employer’s total qualified wages up to $50,000.00; plus

(B)  3.0 percent of the employer’s total qualified wages in excess of $50,000.00;

(2)  reduced by the employer’s health insurance costs, but not reduced below $0.00. 

(b)  For the purposes of this section:

(1)  “Employee” means a person employed full-time or part-time by an employer to perform services in this state.

(2)  “Employer” means a person who is required under subchapter 4 of this chapter to withhold income taxes from payments of income with respect to services; but shall not include the government of the United States or self‑employed persons.

(3)  “Health insurance costs” means the amount paid by the employer in the taxable year to provide health care or health insurance or health self‑insurance to its employees in this state and their eligible family members to the extent deductible by the employer under federal tax law, and includes payments for medical care, prescription drugs, vision care, medical savings accounts, and any other costs to provide health benefits as defined in section 213(d) of the Internal Revenue Code.

(4)  “Qualified wages” means the Medicare Part A wages paid to all employees of the employer during the taxable year.

(5)  “Self-employed person” means the sole proprietor of a business with no employee other than the owner.

(c)  The tax under this section shall be paid in the same manner as the income tax under this chapter and shall be subject to administrative and enforcement provisions of this chapter. 

(d)  Revenues from this tax shall be deposited into the Green Mountain Health trust fund established under 33 V.S.A. § 2028 for the purpose of financing health care coverage under Green Mountain Health, as provided under subchapter 6 of chapter 19 of Title 33.

Sec. 8b.  32 V.S.A. § 5822a is added to read:

§ 5822a.  INDIVIDUAL HEALTH EFFORT TAX

(a)  An individual health effort tax is imposed upon every resident who is subject to income tax under section 5822 of this title.

(b)  The tax shall be in the amount of 1.0 percent of the taxpayer’s federal adjusted gross income for the taxable year, excluding interest on United States government obligations.

(c)  An individual shall be exempt from taxation under this section if the taxpayer and taxpayer’s spouse and eligible dependents were covered by health insurance or government health coverage, other than Green Mountain Health, for at least 274 days in the taxable year.

(d)  The tax shall be paid in the same manner as the personal income tax under this chapter and shall be withheld from the individual’s wages in the same manner as income tax under this chapter, and paid from self-employment income in the same manner as quarterly income tax payments under this chapter; and shall be subject to administrative and enforcement provisions of this chapter.

(e)  Revenues from this tax shall be deposited into the Green Mountain Health trust fund established under 33 V.S.A. § 2028 for the purpose of financing health care coverage under Green Mountain Health, as provided under subchapter 6 of chapter 19 of Title 33. 

Sec. 8c.  IMPLEMENTATION, EFFECTIVE DATE AND REPORT

(a)  The commissioner of banking, insurance, securities, and health care administration and the commissioner of taxes are authorized to adopt rules and regulations necessary to implement the provisions of this act.

(b)  The health care taxes imposed by Secs. 8a and 8b of this act shall apply to taxable years beginning on or after January 1, 2006.

(c)  The commissioner of banking, insurance, securities, and health care administration shall monitor whether persons who enroll in the Green Mountain Health insurance program were formerly covered by health insurance, and whether former insurance was self-paid or paid by an in-state or out-of-state employer.  The commissioner of taxes shall determine whether technical amendments are necessary for implementation of this act and compliance with the Employee Retirement Income Security Act as determined by the commission on health care reform.  The commissioner of taxes shall report his or her findings to the commission on health care reform by November 15, 2005, and the commissioner of banking, insurance, securities, and health care administration shall report his or her findings to the commission on health care reform by January 15, 2007.

* * * Green Mountain Health Trust Fund * * *

Sec. 8d.  33 V.S.A. § 2028 is added to read:

§ 2028.  GREEN MOUNTAIN HEALTH TRUST FUND

(a)  The green mountain health 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 green mountain health as established under this subchapter.

(b)  Into the fund shall be deposited:

(1)  revenue from the employer health effort tax imposed by section 5848 of Title 32 and the individual health effort tax imposed by section 5822a of Title 32; and

(2)  transfers or appropriations from the general fund, authorized by the general assembly; and

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

(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 office of Vermont health access 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 the green mountain health program administered by the office of Vermont health access under this subchapter.

(e)  To the extent permitted under federal law and any Medicaid waiver, including the global commitment Medicaid waiver, the monies received by or generated to the fund shall be matched by federal funds.

* * * Vermont Health Access Trust Fund * * *

Sec. 9.  33 V.S.A. § 1972(d) is amended to read:

(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 office of Vermont 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.  To the extent permitted under federal law and any Medicaid waiver, including the global commitment Medicaid waiver, the monies received by or generated to the fund shall be matched by federal funds.

* * * Federally Qualified Health Centers * * *

Sec. 10.  FEDERALLY QUALIFIED HEALTH CENTER (FQHC)

               LOOK-ALIKES; CAPITALIZATION GRANTS; CASE

               MANAGEMENT

Funds appropriated by Sec. XX of No. XX of the Acts of 2005 (H.516) to the department of health shall be expended for the purpose of providing to federally qualified health center (FQHC) look-alikes funds for initial capitalization and to establish an income‑sensitized sliding scale fee schedule for patients of these organizations.  In distributing the grants, the department shall consider ensuring the geographic distribution of health centers around the state as well as criteria under federal law.  Initial priority shall be given to health centers in Lamoille, Washington, and Windsor/Windham counties, and other counties that demonstrate readiness to achieve look-alike status.  The goal shall be to ensure there are FQHC look-alikes in each county in Vermont.

* * * Captive Medical Liability Insurer * * *

Sec. 11.  MEDICAL LIABILITY CAPTIVE INSURER REQUEST FOR

               PROPOSALS

The secretary of administration or the secretary’s designee shall invite the Vermont Medical Society to discuss with any captive insurance company licensed to insure medical malpractice risk the possibility of offering such coverage in Vermont.  If after such discussions the secretary determines that such an approach is not possible, the secretary shall prepare and publish a request for proposals to prepare a plan, including a feasibility study, for establishing either a captive insurer, a cell captive, or a risk retention group based in Vermont to provide Vermont health professionals with medical malpractice insurance at the lowest possible cost.  The plan shall include recommendations for state participation in order to reduce the cost of the initial capitalization and facilitate the creation of the insurer.  The plan shall be submitted to the general assembly, the House committees on health care and commerce and the Senate committees on health and welfare and finance on or before January 15, 2006.

* * * Apology by Health Care Provider * * *

Sec. 12.  12 V.S.A. § 1912 is added to read:

§ 1912.  EXPRESSION OF REGRET OR APOLOGY BY HEALTH

              CARE PROVIDER INADMISSIBLE

(a)  An expression of regret or apology or an explanation of how a potential adverse outcome occurred made by or on behalf of a health care provider, including one that is made in writing, orally, or by conduct, that is provided within 14 days of when the provider knew or should have known of the consequences of the potential adverse outcome, does not constitute a legal admission of liability for any purpose and shall be inadmissible in any civil or administrative proceeding against the health care provider, including any arbitration or mediation proceeding.

(b)  In any civil or administrative proceeding against a health care provider, including any arbitration or mediation proceeding, the health care provider or any other person who makes an expression of regret, apology, or explanation on behalf of the health care provider, including one that is made in writing, orally, or by conduct, that is provided within 14 days of when the provider knew or should have known of the consequences of the potential adverse outcome, may not be examined by deposition or otherwise with respect to the expression of regret, apology, or explanation.

(c)  As used in this section, “health care provider” means a medical doctor licensed to practice under chapter 23 of Title 26, an osteopathic physician licensed pursuant to subdivision 1750(9) of Title 26, an advance practice registered nurse licensed pursuant to subdivision 1572(4) of Title 26, or a physician’s assistant certified pursuant to section 1733 of Title 26 acting within the scope of the license under which the health care provider is practicing.

Sec. 13.  [Deleted]

* * * Consumer Health Care Price and Quality Information * * *

Sec. 14.  18 V.S.A. § 9410(a) and (c) are amended to read:

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

(1)  Determining the capacity and distribution of existing resources.

(2)  Identifying health care needs and informing health care policy.

(3)  Evaluating the effectiveness of intervention programs on improving patient outcomes.

(4)  Comparing costs between various treatment settings and approaches.

(5)  Providing information to consumers and purchasers of health care.

(A)  The program authorized by this section shall include a consumer health care price and quality information system to make available to consumers transparent health care price information, quality information, and such other information as the commissioner determines is necessary to empower individuals to make economically sound and medically appropriate decisions.

(B)  The commissioner shall convene a working group composed of the commissioner of health, health care consumers, health care providers and facilities, the Vermont program for quality in health care, health insurers, and any other individual or group appointed by the commissioner to advise the commissioner on the development and implementation of the consumer health care price and quality information system.

(C)  The commissioner may require a health insurer covering at least 15,000 lives in this state to file with the commissioner a consumer health care price and quality information plan, in accordance with rules adopted by the commissioner.  Approved plans may include the internet publication of the charges established by health care facilities and health care providers and other providers of health care services and products, including but not limited to providers of pharmaceutical products and medical equipment, and the reimbursable amounts negotiated with health insurers and payable by the individual in connection with the individual’s deductible or other cost‑sharing obligations.

(D)  The commissioner shall adopt such rules as are necessary to carry out the purposes of this subdivision and ensure for the confidentiality of proprietary information.  The commissioner’s rules may permit the gradual implementation of the consumer health care price and quality information system over time, beginning with health care price and quality information which the commissioner determines is most needed by consumers or which the commissioner determines can be most practicably provided to the consumer in an understandable manner.

(c)  Health insurers, health care providers, health care facilities, and other providers of health care services or products, including but not limited to providers of pharmaceutical products and medical equipment, and governmental agencies shall file reports, data, schedules, statistics, or other information determined by the commissioner to be necessary to carry out the purposes of this section.  Such information may include:

(1)  health insurance claims and enrollment information used by health insurers;

(2)  information relating to hospitals filed under subchapter 7 of this chapter (hospital budget reviews); and

(3)  any other information relating to health care costs, prices, quality, utilization, or resources required to be filed by the commissioner.

* * * Healthy Lifestyles Insurance Discount * * *

Sec. 15.  8 V.S.A. § 4080a(h) is amended to read:

(h)(1)  A registered small group carrier shall use a community rating method acceptable to the commissioner for determining premiums for small group plans.  Except as provided in subdivision (2) of this subsection, the following risk classification factors are prohibited from use in rating small groups, employees, or members of such groups, and dependents of such employees or members:

(A)  demographic rating, including age and gender rating;

(B)  geographic area rating;

(C)  industry rating;

(D)  medical underwriting and screening;

(E)  experience rating;

(F)  tier rating; or

(G)  durational rating.

(2)(A)  The commissioner shall, by rule, adopt standards and a process for permitting registered small group carriers to use one or more risk classifications in their community rating method, provided that the premium charged shall not deviate above or below the community rate filed by the carrier by more than 20 percent (20%), and provided further that the commissioner’s rules may not permit any medical underwriting and screening.

(B)  The commissioner’s rules shall permit a carrier, including a hospital or medical service corporation, to establish premium discounts or rebates or otherwise modify applicable co-payments or deductibles in return for adherence to programs of health promotion and disease prevention, in accordance with federal regulations relating to bona fide wellness programs.  Under the federal regulations, permissible bona fide wellness programs shall:

(i)  limit any discount, rebate, or waiver of cost sharing to not more than 15 percent of the cost of employee-only coverage, provided that the sum of any rate deviation under subdivision (h)(2)(A) of this section plus any premium discount authorized under this subdivision (h)(2)(B) does not exceed 30 percent of the premium;

(ii)  be designed reasonably to promote good health or prevent disease for individuals in the program, and not be used as a subterfuge for imposing higher costs on an individual based on a health factor; and

(iii)  provide that the reward under the program is available to all similarly situated individuals.

(C)  The commissioner, in consultation with the commissioner of health, shall adopt by rule:

(i)  standards for approved health promotion and disease prevention programs, based on the best scientific, evidence-based medical practices; and

(ii)  standards and procedures for evaluating an individual’s adherence to programs of health promotion and disease prevention.

(3)  The commissioner may exempt from the requirements of this section an association as defined in section subdivision 4079(2) of this title which:

(A)  offers a small group plan to a member small employer which is community rated in accordance with the provisions of subdivisions (1) and (2) of this subsection.  The plan may include risk classifications in accordance with subdivision (2) of this subsection;

(B)  offers a small group plan that guarantees acceptance of all persons within the association and their dependents; and

(C)  offers one or more of the common health care plans approved by the commissioner under subsection (e) of this section.

(4)  The commissioner may revoke or deny the exemption set forth in subdivision (3) of this subsection if the commissioner determines that:

(A)  because of the nature, size or other characteristics of the association and its members, the employees or members are in need of the protections provided by this section; or

(B)  the association exemption has or would have a substantial adverse effect on the small group market.

Sec. 16.  8 V.S.A. § 4080b(h) is amended to read:

(h)(1)  A registered nongroup carrier shall use a community rating method acceptable to the commissioner for determining premiums for nongroup plans.  Except as provided in subdivision (2) of this subsection, the following risk classification factors are prohibited from use in rating individuals and their dependents:

(A)  demographic rating, including age and gender rating;

(B)  geographic area rating;

(C)  industry rating;

(D)  medical underwriting and screening;

(E)  experience rating;

(F)  tier rating; or

(G)  durational rating.

(2)(A)  The commissioner shall, by rule, adopt standards and a process for permitting registered nongroup carriers to use one or more risk classifications in their community rating method.  After July 1, 1993, provided that the premium charged shall not deviate above or below the community rate filed by the carrier by more than 40 percent (40%) for two years, and thereafter 20 percent (20%).  Such rules may not permit, and provided further that the commissioner’s rules may not permit any medical underwriting and screening and shall give due consideration to the need for affordability and accessibility of health insurance.

(B)  The commissioner’s rules shall permit a carrier, including a hospital or medical service corporation, to establish premium discounts or rebates or otherwise modify applicable co-payments or deductibles in return for adherence to programs of health promotion and disease prevention, in accordance with federal regulations relating to bona fide wellness programs.  Under the federal regulations, permissible bona fide wellness programs shall:

(i)  limit any discount, rebate, or waiver of cost sharing to not more than 15 percent of the cost of employee-only coverage, provided that the sum of any rate deviation under subdivision (h)(2)(A) of this section plus any premium discount authorized under this subdivision (h)(2)(B) does not exceed 30 percent of the premium;

(ii)  be designed reasonably to promote good health or prevent disease for individuals in the program, and not be used as a subterfuge for imposing higher costs on an individual based on a health factor; and

(iii)  provide that the reward under the program is available to all similarly situated individuals.

(C)  The commissioner, in consultation with the commissioner of health, shall adopt by rule:

(i)  standards for approved health promotion and disease prevention programs, based on the best scientific, evidence-based medical practices; and

(ii)  standards and procedures for evaluating an individual’s adherence to programs of health promotion and disease prevention.

Sec. 17.  8 V.S.A. § 4516 is amended to read:

§ 4516.  ANNUAL REPORT TO COMMISSIONER

Annually, on or before the fifteenth day of March, a hospital service corporation shall file with the commissioner of banking, insurance, securities, and health care administration a statement sworn to by the president and treasurer of the corporation showing its condition on the thirty-first day of December.  The statement shall be in such form and contain such matters as the commissioner shall prescribe.  To qualify for the tax exemption set forth in section 4518 of this title, the statement shall include a certification that the hospital service corporation operates on a nonprofit basis for the purpose of providing an adequate hospital service plan to individuals of the state, both groups and nongroups, without discrimination based on age, gender, geographic area, industry, and medical history, except as allowed by subdivisions 4080a(h)(2)(B) and 4080b(h)(2)(B) of this title.

Sec. 18.  8 V.S.A. § 4588 is amended to read:

§ 4588.  ANNUAL REPORT TO COMMISSIONER

Annually, on or before March 15, a medical service corporation shall file with the commissioner of banking, insurance, securities, and health care administration a statement sworn to by the president and treasurer of the corporation showing its condition on December 31, which shall be in such form and contain such matters as the commissioner shall prescribe.  To qualify for the tax exemption set forth in section 4590 of this title, the statement shall include a certification that the medical service corporation operates on a nonprofit basis for the purpose of providing an adequate medical service plan to individuals of the state, both groups and nongroups, without discrimination based on age, gender, geographic area, industry, and medical history, except as allowed by subdivisions 4080a(h)(2)(B) and 4080b(h)(2)(B) of this title.

Sec. 19.  [Deleted]

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

Sec. 20.  33 V.S.A. § 1998(a) is amended to read:

§ 1998.  PHARMACY BEST PRACTICES AND COST CONTROL

              PROGRAM ESTABLISHED

(a)  The commissioner of prevention, assistance, transition, and health access director of the office of Vermont health access 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 a 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.  The director of the office of Vermont health access shall encourage all health benefit plans in the state to participate in the 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 drug utilization review board, and by inviting such plans to use the preferred drug list in connection with the plans’ prescription drug coverage.

(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 on behalf of individuals under the supervision of the department of corrections, the division of mental health, or the department for children and families, individuals receiving coverage for prescription drugs through Medicaid, the 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, employer, or group covered by a collective bargaining agreement, such as teachers or state employees, who elects to participate, 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;.  The program shall be implemented no later than July 1, 2005.

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

(6)  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;.

(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)  Negotiating a contract with the pharmacy benefit manager that would most further the goals of prescription drug price transparency, safety, quality, and cost-effectiveness.  The office shall consider both proprietary and nonprofit pharmacy benefit managers, as well as the feasibility of  a state-run pharmacy benefit manager.

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

(10)  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.

(11)  Any other cost containment activity adopted, by rule, by the commissioner director of the office of Vermont health access that is designed to reduce the cost of providing prescription drugs while maintaining high quality in prescription drug therapies.

* * * PBM Regulation * * *

Sec. 21.  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.  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 remedy available to the commissioner under this title and any other remedy provided by law, a violation of this subchapter shall be considered a violation of the Vermont Consumer Fraud Act in subchapter 1 of chapter 63 of Title 1.  All rights, authority, and remedies available to the attorney general and private parties to enforce the Vermont Consumer Fraud Act shall be available to enforce the provisions of this subchapter.

(b)  In connection with any action for violation of the Vermont Consumer Fraud Act, the commissioner’s determinations concerning the interpretation and administration of the provisions of this subchapter and any rules adopted hereunder shall carry a presumption of validity.  The attorney general and the commissioner shall consult with each other prior to the commencement of any investigation or enforcement action with respect to any pharmacy benefit manager.  The commissioner may enforce a violation of this subchapter by a pharmacy benefit manager under section 9412 of this title.  Notwithstanding the foregoing, the commissioner and the attorney general may bring a joint enforcement action against any person or entity for a violation of this subchapter.

Sec. 22.  APPLICATION

Sec. 21 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. 23.  33 V.S.A. § 2005(a)(4) is amended and (d) is added 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.

* * *

(d)  Disclosures of unrestricted grants for continuing medical education programs shall be limited to the value, nature, and purpose of the grant and the name of the grantee.  It shall not include disclosure of the individual participants in such a program.

* * * Pharmacy Discount Plans * * *

Sec. 24.  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.

* * *

(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. 25.  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 manufacturer price as defined in 42 U.S.C. § 1396r‑8(k); and

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

(b)  The pricing information required under this section is for drugs defined under the Medicaid drug rebate program and must be submitted to the director following its submission to the federal government in accordance with 42 U.S.C. § 1396r‑8(b)(3).

(c)  When a manufacturer of prescription drugs dispensed in this state reports the average manufacturer price or best price, the president or chief executive officer of the manufacturer shall certify to the office, on a form provided by the director of the office of Vermont health access, that the reported prices are the same as those reported to the federal government as required by 42 U.S.C. § 1396r‑8(b)(3) for the applicable rebate period.

(d)  Notwithstanding any provision of law to the contrary, information submitted to the office under this section is confidential and is not a public record as defined in subsection 317(b) of Title 1.  Disclosure may be made by the office to an entity providing services to the office under this section; however, that disclosure does not change the confidential status of the information.  The information may be used by the entity only for the purpose specified by the office in its contract with the entity.  Data compiled in aggregate form by the office for the purposes of reporting required by this section are public records as defined in subsection 317(b) of Title 1, provided they do not reveal trade information protected by state or federal law.

(e)  The attorney general shall enforce the provisions of this section under the Vermont Consumer Fraud Act in subchapter 1 of chapter 63 of Title 1.  The attorney general has the same authority to make rules, conduct civil investigations, and bring civil actions with respect to acts and practices governed by this section as is provided under the Vermont Consumer Fraud Act.

* * *  Health Care Purchasing Pool  * * *

Sec. 26.  33 V.S.A. chapter 19, subchapter 7 is added to read:

Subchapter 7.  Health Care Purchasing Pool

§ 2050.  VERMONT HEALTH CARE PURCHASING POOL

(a)  The office of Vermont health access shall establish a Vermont health care purchasing pool for the purpose of coordinating and enhancing the purchasing power of health care benefit plans for groups and individuals who choose to participate.  It is not the intent of the general assembly to exacerbate cost shifting or adverse selection in the Vermont health care system through the creation of the health care purchasing pool.  In offering and administering the purchasing pool, the director of the office of Vermont health access shall not discriminate against individuals or groups based on age, gender, geographic area, industry, or medical history.  The director shall not administer the purchasing pool under this subsection in a manner that pools the risks of participants.  The provisions of this section shall not affect the rights of any party to a collective bargaining agreement and shall not require that participating health insurance plans have a common benefit plan.

(b)  In administering the purchasing pool, the director may:

(1)  Contract on behalf of participants in the pool with health care providers, health care facilities, and health insurers for the delivery of health care services, including agreements securing discounts for regular bulk payments to providers, global payments to hospitals, and agreements establishing uniform provider reimbursement;

(2)  Consolidate administrative functions through a common contract on behalf of participants in the pool, including claims processing, utilization review, management reporting, benefit management, and bulk purchasing;

(3)  Create a health care cost and utilization database for participants in the pool and evaluate potential cost savings; and

(4)  Establish incentive programs to encourage pool participants to use health care services judiciously and to improve their health status.

(c)  On a voluntary basis, the director may include in the purchasing pool individuals who have health insurance through a nongroup plan and any employer group, association, or trust that chooses to participate in the pool on behalf of the employees or members of the group, association, or trust.  The director may require such portions of the Medicaid caseload, Green Mountain Health, or any other public health care program as the secretary deems proper to participate in the purchasing pool.  Access to medical care or benefit levels for Medicaid recipients shall not diminish as a result of participation or nonparticipation in the pool.

(d)  For the purposes of this section, “global payments to hospitals” means a negotiated amount to be paid to a hospital by the office of Vermont health access for services received at that hospital by all individuals covered by participants in the purchasing pool.  The contract for a global hospital payment shall specify the scope of services covered by the payment, and may include a payment adjustment based on performance criteria.

Sec. 27.  ECONOMIC, FINANCING, AND ADMINISTRATIVE STUDIES

(a)  In order to assess more fully the benefits and costs and to prepare and plan for the implementation of full and universal access to health care in Vermont, the commission on health care reform, in consultation with the department of banking, insurance, securities, and health care administration, directs that the following economic impact, financing, and governance studies be undertaken during the interim of the 2005 legislative session.  The commission shall direct its staff or contract for one or more consultants to undertake the economic impact and financing studies authorized by this section.

(1)  Economic impact study.  The economic impact study shall examine the impact of implementing a system of universal access to health care for Vermonters versus the effects of sustaining the current system impact on business and the labor force, the future growth of the economy and the economic competitiveness of Vermont, and the effects on residents and population groups and on current and potential insurers and providers of health care.

(2)  Financing options.  The financing study shall examine the financing options that most effectively achieve the goal of universal access to health care and maintaining its affordability.  The study shall include examination of all financing options and their implications, including the income tax, a payroll tax, premiums or cost-sharing measures, consumption taxes, specific more limited taxes to support parts of the health care system’s financial needs, and other revenue sources including insurance risk pools and insurance assistance and incentives.

(A)  The study shall reference the fact and supporting empirical evidence that many countries that have achieved universal access and more affordable health care utilize public financing as a tool to achieve this goal. The study shall consider the strengths and weaknesses of such public financing systems with respect to fairness and adequacy of funding, access to and quality of services.

(B)  The study shall examine how implementation of any public financing options will be offset in corresponding reductions in premiums, other taxes, and individual cost-sharing contributions.

(C)  The study shall examine how any proposed changes in financing or delivery of health care could affect benefits Vermonters currently receive through Vermont employers.

(D)  The study shall address issues involved with federal law and taxation, including ERISA and other areas of preemption; technical proposals to exempt non-resident employees of Vermont businesses; a provision to ensure a soft landing for affected businesses and a recommendation as to the appropriate amount needed in a soft landing provision to mitigate negative effects on business; recommendations on the best method for unemployed individuals to contribute to the financing; a simplified structure based on employee numbers, employer payroll, or a combination for ease of administration and clarity; and the recommendations of the tax department. 

(E)  The study shall analyze methods for recapturing insurance premiums as a result of any reductions in uncompensated care, such as the Dirigo model enacted in the state of Maine, any reductions in insurance premiums resulting from public financing, and for ensuring that all Vermonters contribute to the financing of health care’s fixed costs.

(3)  Governance and administrative study.  The secretary of administration, in consultation with the office of Vermont health access, the department of banking, insurance, securities, and health care administration, and the agency of human services, shall examine and develop a plan for reorganizing their respective offices and functions consistent with the purposes of this act, including recommendations relating to personnel, operations, and budgetary requirements.  The recommendations shall consider the most appropriate and efficient approach to integrating health care policy, planning, delivery, regulation, and defining clear lines of accountability within the health care system.  The study shall include also an examination of means to coordinate or integrate Green Mountain Health with the current workers’ compensation system and the feasibility and merits of authorizing the state to act as an insurer in pooling risk and providing benefits, including a common benefits plan, to participants of the health care purchasing pool.

(b)  Reports, including findings and recommendations, from each study required by this section shall be submitted to the general assembly not later than January 15, 2006.

* * * Integrated Systems of Care * * *

Sec. 28.  INTEGRATED SYSTEMS OF CARE; GRANTS

(a)  The commission on health care reform shall encourage and support integrated systems of care that:  (1) reorganize the health care delivery system to improve coordination, reduce medical errors, and reduce redundant or unnecessary care, (2) improve the quality of care in terms of process and outcomes, and (3) encourage alternative reimbursement mechanisms based on outcome-based payments to change the incentives for health care professionals and to control health care costs. 

(b)  Beginning in fiscal year 2007, as an initial step towards achieving integrated systems of care, the commission on health care reform shall prepare and publish a request for proposals from regional providers for the planning and development of pilot projects.  Proposals may include pilot projects that promote:  community-based evaluation and planning, improved financial management, information technology systems that advance the management and coordination of health care, governance models at the community level, and patient responsibility for and participation in health care decision making.  Pilot projects approved by the commission shall be awarded matching grants by the commission.

(c)  In addition, the commission on health care reform shall direct long-term investments in health care systems, technology, and infrastructure in a manner that promotes the establishment of integrated systems of care.  Investments under this subsection shall be made in the form of matching grants, pursuant to standards and criteria developed by the commission.

(d)  For the purpose of carrying out the goals of this section, it is the intent of the general assembly to invest $20,000,000.00 annually over five years beginning in fiscal year 2007.  To the extent permitted under federal law, funding shall come from the global commitment secured under the Medicaid program.  In addition, the commission may seek grants or other sources of revenue from public or private entities for the purpose of carrying out the provisions of this section.

(e)  The commission on health care reform shall develop measurements for evaluating all projects funded under this section.

* * * Hospital Discount Programs * * *

Sec. 29.  18  V.S.A. § 1905 is amended to read:

§ 1905.  LICENSE REQUIREMENTS

Upon receipt of an application for license and the license fee, the licensing agency shall issue a license when it determines that the applicant and hospital facilities meet the following minimum standards:

* * *

(19)  All hospitals shall submit to the licensing agency a report indicating compliance with the hospital discount program established under section 9420 of Title 18.

Sec. 30.  18 V.S.A. § 9405b is amended to read:

§ 9405b.  HOSPITAL COMMUNITY REPORTS

(a)  The commissioner, in consultation with representatives from the public oversight commission, hospitals, and other groups of health care professionals shall adopt rules establishing a standard format for community reports, as well as the contents, which shall include:

* * *

(11)  information on the hospital’s discount program as described in section 9420 of this title. 

* * *

Sec. 31.  18 V.S.A. § 9420 is added to read:

§ 9420.  HOSPITAL DISCOUNT PROGRAM

(a)  The department recognizes that Vermont hospitals deliver extensive free care to Vermonters who are unable to afford hospital services.  For example, in hospital fiscal year 2003, Vermont hospitals provided $22.6 million in charity (free) care.

(b)  As a transitional provision until there is greater access to hospital services, the commissioner shall establish by rule standards and procedures for a hospital discount program for the uninsured, which shall ensure that patients least able to afford hospital services are not charged the highest rates. 

(c)  The rules shall require all licensed hospitals to provide discounts to patients with no insurance.  The hospital charges under the discount policy shall be a rate equivalent to the average discounted rate accepted from third party payers contracting with that hospital.  The discounted net amount due under the discount policy shall be accepted as payment in full.

 

 



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us