Updates
February 2, 2018

Vermont Legislative Update 02-02-2018

An analysis from DRM's Government & Public Affairs Team

Vermont Legislative Update Quick Links

Bill Would Regulate Credit Card Machine Lease Rates

Right-to-Repair Legislation Scheduled for Consideration

Senate Passes Net Neutrality Bill

Panel Considers Changes to CON Law

Proposal Would Study Unused Prescription Drug Repository Program

Panel Continues Work on Drug Importation Bill

Providers Push Timely Credentialing Process

Senate Judiciary Continues Review of Strict Liability Bill

Mental Health Advocates Praise Legislative Action, Address Next Steps

Appropriations Committee Dives Into Human Services Budgets

Health and Welfare Committee Advances Changes to Harmful Toys Program

Water Quality Measures Under Development

Pilot Would Redirect Energy Efficiency Fees

Economic Development Bills Under Review in House Commerce Committee

Bill Would Regulate Credit Card Machine Lease Rates

The Senate Committee on Economic Development, Housing and General Affairs heard testimony this week on S.206, a bill that would regulate prices and other provisions of lease agreements for credit card terminals.

Assistant Attorney General Charity Clark told the committee that her office regularly receives complaints from business owners about the terms of these leases. They are often written in six point font, are non-cancellable, the costs are excessive, and business owners aren't able to understand them.
 
Rep. Jim Harrison, R-Chittenden, is the House sponsor of the bill and the former president of the Vermont Retail Grocers Association. Harrison said that while he believes in small government and fewer regulations, the bill was nonetheless needed because small business owners are treated unfairly by leasing companies.

The committee heard from two small business owners who argued that the lease agreements are difficult to understand; lease rates are unfair; agreements don’t allow for cancellation; sales people provide false and misleading claims; the relationships between the various parties in the payment processing chain are confusing; and personal information is sold by the leasing company.

Committee members later described the testimony as “heartbreaking,” “enraging,” and “hard to listen to.”

Committee Chair Sen. Michael Sirotkin, D-Chittenden, has designated newly-appointed member Sen. David Soucy, R-Rutland, to draft a bill directing the attorney general’s office to regulate the industry through rulemaking. The issue is scheduled to be taken up again on February 7th.

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Right-to-Repair Legislation Scheduled for Consideration

The Senate Economic Development, Housing and General Affairs Committee has scheduled a hearing next week on legislation, S.180, that would require manufacturers to make available schematic diagrams and other technical information about their products to independent repair providers.

The bill is strongly opposed by a wide range of manufacturers who argue that it would threaten the security of electronic devices and enable access to private personal information. It would also require manufacturers to publicly disclose proprietary information. Although similar legislation has been proposed in several states due to lobbying activity by independent repair companies, it has not been enacted anywhere.

Committee members appear to be divided on the bill, but it has been scheduled for a hearing next Wednesday, February 7th.

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Senate Passes Net Neutrality Bill

The Senate gave its approval on Friday to a bill, S.289, that is intended to reverse the decision by the Federal Communications to repeal its so-called “net neutrality” rule governing broadband Internet service providers. The bill passed by a vote of 23-5.

The bill requires that Internet service providers certify compliance with certain net neutrality standards as a condition of receiving state contracts. A provider would be prohibited from blocking lawful content; impairing or degrading lawful Internet traffic on the basis of content; engaging in paid prioritization of Internet traffic; and engaging in other discriminatory, deceptive or misleading practices.

Internet providers argued that states are preempted from regulating broadband services under federal law. They also argued that the standards imposed by the bill are unclear and will give rise to significant new regulatory burdens.

Several telecommunications providers launched a late effort to derail the bill, but those efforts met with little success given the strong political support for the principal of net neutrality.

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Panel Considers Changes to CON Law

The House Health Care Committee reviewed on Thursday an amended version of H.669, a bill that would revise the certificate of need process for hospitals and other health care facilities. It also would reconstitute the supply-focused Health Resource Allocation Plan with a State Health Improvement Plan – a more nimble assessment of unmet need in the state. The plan would be posted on the Green Mountain Care Board website.

GMCB members Jessica Holmes and Robin Lunge identified five substantive areas of proposed changes for CONs:

  • Exclude routine replacement of non-medical equipment in the CON process and instead review as part of the hospital budget process;
  • Clarify projects presumed to be expedited: repair, renovation, or replacement of building infrastructure and routine replacement of medical equipment;
  • Streamline the process by allowing the health care advocate, competing applicant, or interested party to waive the requirement for a public hearing;
  • Adjust monetary thresholds for inflation: increase diagnostic and therapeutic equipment threshold to $1.5 million from $1 million and increase new health care service or technology annual operating expenses threshold to $1 million from $500,000; and
  • Increase enforcement penalties – increase for a one-time violation to $75,000 and cap continuing violations at $200,000. A “knowingly” standard was removed as too arbitrary.

Related to the HRAP, Holmes and Lunge said the current HRAP describes a static inventory of a specified set of health care goods and services with a focus on supply and does not measure gaps or underlying need. They proposed more general language to help policymakers and regulators with analysis and decision-making in the context of the larger system of unmet need or gaps.

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Proposal Would Study Unused Prescription Drug Repository Program

The Vermont Department of Health provided the Senate Health and Welfare Committee with a new draft of S.164 on Friday that proposes to look at the feasibility of creating an unused prescription drug repository program. The intent would be to allow health care facilities to take unused prescription drugs in blister packs that meet all quality standards and repurpose them for Vermonters at a very low cost.

Vermont Department of Health Senior Policy and Legal Advisor David Englander said the Scott Administration supports exploring the creation of a prescription drug donation and reuse program housed within the Agency of Human Services. Englander proposed that the agency examine the many facets of the program including the cost of administering the program, potential funding sources, and the requirements for facilities to accept and dispense donated prescription drugs and supplies, and report back to the committees of jurisdiction by Dec. 1.

The committee supports the changes and plans to vote on the bill next week.

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Panel Continues Work on Drug Importation Bill

The Senate Health and Welfare Committee took additional testimony this week on a bill that would allow Vermont to import prescription drugs from Canada, create a state bulk purchasing program, and require health insurance companies to provide information to the Green Mountain Care Board about the impact of prescription drug spending on premium rates. A new draft of S.175 was released on Friday. The committee will vote on the bill next Tuesday.

The bill directs the Agency of Human Services to design a wholesale prescription drug importation program. AHS would designate a state agency to become a licensed drug wholesaler or would contract with a licensed drug wholesaler to import prescription drugs to the state.

The current draft includes language that would ensure all covered entities enrolled or eligible for 340 drug pricing would be able to participate in the importation program to the fullest extent possible without jeopardizing their eligibility. The 340B Drug Program requires drug manufacturers to provide outpatient drugs to eligible health care entities at significantly reduced prices.

The bill also requires that contracts between a pharmacy benefit manager (a third-party administrator of prescription drug programs) and a pharmacy not contain provisions that prohibit or penalize a pharmacist for disclosing information to an individual purchasing a prescription regarding the cost of the drug, the availability of any therapeutically equivalent alternative medication, or any alternative method of purchasing the drug (including paying cash) that would be less expensive to the individual. Given the late nature of the PBM language, the committee may remove it and ask the House to give it more consideration.

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Providers Push Timely Credentialing Process

The Senate Health and Welfare Committee held a hearing on Wednesday on S.282, a bill that would require the Department of Vermont Health Access to complete the screening and enrollment for an applicant seeking to be a participating provider in the Medicaid program within 60 days after receiving the application. Since early 2016, providers have experienced significant delays in enrollment into Medicaid. In some cases it has taken many months.

Vermont Medical Society Director Jessa Barnard said the delays in enrollment lead to two challenges:

  1. delays in payment for providers, who can hold claims, but not be reimbursed until final enrollment is completed; and
  2. patient care concerns because patients cannot fill prescriptions or be referred to other services until the ordering provider is enrolled as a participating provider.

Barnard’s presentation can be found here.

DVHA Deputy Commissioner Lori Collins said that DVHA supports the goal of decreasing provider screening and enrollment timeframes. DVHA has determined that a new system module is necessary to remedy the problem. She said amendments to the vendor contract are under review and the goal is to go live by June 2019. DVHA has implemented new processes to mitigate issues until the module is operational and will only enroll providers in Vermont or state border providers, including Dartmouth Hitchcock, unless an out-of-state provider has either rendered services or scheduled a patient. Collins said the goal is to enroll providers that fall into the aforementioned category within 60 days. Collins’ presentation can be found here.

Barnard said VMS believes that S.282 complements and supports DVHA’s existing efforts to reduce the timeline to enroll new providers into the Medicaid program and advocated that the committee move forward with the bill. She said the 60-day requirement is already in law for private insurance carriers and should be achievable given DVHA’s ongoing efforts to address this issue.

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Senate Judiciary Continues Review of Strict Liability Bill


The Senate Judiciary Committee continued to take testimony this week on a bill, S.197, that would impose strict liability on any person who releases a hazardous or toxic substance that causes harm to another person. The bill also would impose joint and several liability, meaning any person causing any amount of harm could be liable for the full amount of damages caused by multiple parties. Finally, the bill would require defendants to pay for medical monitoring where there is the potential for future harm, but where none has yet manifested.

The committee heard testimony that no other state has enacted a similar liability standard, and the bill could deter manufacturers from locating in Vermont. Witnesses also argued that the joint and several liability standard would be unfair to entities that might have made a negligible contribution to an exposure.

The bill’s consumer and environmental advocates argue that it is fair to impose on manufacturers the cost of public harm that results from the discharges. Those costs should be built into the manufacturing process.

The committee is scheduled to consider the bill again on Wednesday, February 7th.

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Mental Health Advocates Praise Legislative Action, Address Next Steps

More than forty mental health awareness groups visited the Statehouse for their annual advocacy day on Wednesday, calling on legislators and testifying in hearing rooms to discuss mental health system needs in Vermont. Much of the discussion focused on the recently released Department of Health report mandated by Act 82 of 2017. The legislation required the Secretary of Human Services, in collaboration with the Commissioner of Mental Health, the Green Mountain Care Board, providers, and individuals affected by current mental health services to submit an analysis and action plan to create an integrated mental health care system and address current gaps in the system. Additionally, the legislature appropriated $8.3 million to increase mental health care worker’s compensation to support job recruitments, satisfaction, and retention.

The report noted many steps that need to be taken to improve the state’s mental health system, including an increase in voluntary data reporting to allow for analysis of mental health needs across the state, reduced psychiatric patient waiting times in emergency departments, and growth in the mental health workforce.

Vermont Care Partners and other advocacy groups praised both the House Committee on Health Care and the Senate Health and Welfare Committee for legislative action last year, including an appropriation that enabled more than 2,000 mental health care staff in Vermont to receive pay raises, with some workers receiving as much as a $5,000 raise. VCP recommended addressing salary compression issues and increasing benefit packages to continue to attract high quality staff. Several stakeholder groups, including Vermont Psychiatric Survivors, joined VCP in reiterating the findings in the report that include these recommendations:

  • Improve mental health care system utilization data collection and analysis;
  • Invest in housing and community placement for long-term stays;
  • Invest in peer-run community centers in roughly each county with attached peer respite;
  • Expand street-outreach programs to reduce emergency department utilization; and
  • Fully address barriers to discharge from mental health treatment centers.

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Appropriations Committee Dives Into Human Services Budgets

The House Appropriations Committee this week began its review of individual department budgets within the Agency of Human Services. On Wednesday, the committee heard from Department of Mental Health Commissioner Melissa Bailey that the DMH budget is $240.5 million, up nearly $8.6 million from the current year. She said a level-funded budget would not work given the state’s mental health crisis.

Her department budget priorities include:

  • A new 12-bed temporary forensic facility to ease pressure on the state’s mental health system.
  • A new street outreach program in four regions of the state aimed at keeping mental health patients out of emergency rooms.
  • A new permanent secure residential program.

On Thursday, the committee heard from DVHA Commissioner Cory Gustafson that his budget has an overall decrease of $22.5 million in programs and administration. The majority of the decrease is due to a more realistic accounting for information technology projects.

His department budget priorities include:

  • Adoption of value-based payments focused on prevention and coordination of care. DVHA continues to test a voluntary pilot program that prioritizes paying for the quality of care for each Vermonter rather than the quantity of services delivered.
  • Management of information technology projects. DVHA will marry business processes with available technical options through a modular approach that provides incremental continuous improvement in functionality. According to Gustafson, this approach is intended to minimize risk, drive immediate and visible business value, and ensure IT systems that are sustainable over time.
  • Improve operational performance. DVHA has established scorecards to track key performance indicators within the department.

The DVHA budget also decreases Disproportionate Share Hospital payments by $6.5 million. The legislature reduced DSH payments to hospitals by $10 million last session. DSH payments are payments to hospitals that serve a large number of Medicaid and uninsured individuals. Gustafson said the federal government is reducing DSH payments and this continued stepdown of payments is intended to align with the overall federal policy direction.

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Health and Welfare Committee Advances Changes to Harmful Toys Program

A Senate committee has voted to accept proposed changes to the Chemicals of High Concern to Children program that will make it easier for potentially harmful substances to be added to a list maintained by the Vermont Department of Health. Listing the chemical will trigger requirements for manufacturers to identify children’s products that contain it, pay a fee and post the name of products that contain it on a website where shoppers can look for harmful products.

The proposed changes have been vigorously opposed by business groups after a compromise was reached with advocates for the program in 2014. The changes strip authority from a working group that was formed to advise the Commissioner of Health on such matters and reduce the standards of proof and probability of harm that would justify the decision to list the products. The new language is contained in S.103, a bill that has passed both the House and Senate. The Senate Health and Welfare Committee this week made minor additional changes in the bill before sending it to the Senate floor. If approved by the full Senate, it will return to the House for likely concurrence.

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Water Quality Measures Under Development

A bill under review in the Senate would create another committee to study how money should be raised to clean up impaired waters, and another bill under construction in the House would provide more time for the Agency of Natural Resources to promulgate rules to control storm water. Both bills currently have provisions of concern to some property owners.

Under H.576, the Agency of Natural Resources would be given additional time to adopt new rules to control storm water runoff from properties with impervious surface totaling three acres or more in the Lake Champlain and Lake Memphremagog basins after it missed a deadline for doing so of Jan. 1 this year. But the bill also would require a permit for new construction or redevelopment of properties with one-half acre or more of impervious surface by July 1, 2022, with some exceptions.

In the Senate, the Natural Resources and Energy Committee is working on S.260, a bill that, as introduced, would have established a Clean Water Authority and a per-parcel fee to fund water quality programs. Legislators had hoped to act on recommendations from a six member study group chaired by Secretary of Natural Resources Julie Moore, but the group returned no specific recommendations for new funding. The latest draft of the bill creates a new committee comprised only of legislators. A provision in the bill would allow private citizens to sue permit holders and state agencies for enforcement of water-related permit conditions when a violation is alleged. Hearings on the bill will continue next week.

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Pilot Would Redirect Energy Efficiency Fees

State agencies charged with looking at the impact of the state’s energy efficiency program on small businesses have recommended a pilot program that would allow up to 20 small businesses in rural areas to keep the money they now pay to Efficiency Vermont and invest it in their own programs. Agency of Commerce and Community Development Deputy Secretary Ted Brady and Department of Public Service Director of Policy and Planning Ed McNamara presented the report on Self Managed Energy Efficiency Programs before the House Energy and Technology Committee on Tuesday. The study was directed by the legislature under Act 77, a 2017 bill that was aimed at stimulating economic development in rural areas.

The energy efficiency charge amounts to eight to 10 percent of a company’s electric bill, McNamara said. The money is paid to Efficiency Vermont to deliver reductions of electrical energy consumption. Under the proposal, up to 20 businesses in rural areas with a combined energy efficiency charge of up to $4 million would be allowed to invest money they would otherwise pay to in electric, thermal or process efficiency and hire experts to give them advice. The three-year program would be tracked by the DPS. Companies would need to achieve specific energy reductions or return unspent money to Efficiency Vermont.

Brady told the committee that similar programs conducted by GlobalFoundries in Essex Junction and OMYA, Inc. in Brandon have been very successful. They said the Act 77 proposal is aimed at duplicating the success of the programs run by the two large manufacturers. In testimony this week, both companies touted the value of the program, but said they have exhausted easy-to-find energy efficiency savings in the power sector and hope to expand the program to other areas such as process fuels and productivity.

The proposal was opposed by Efficiency Vermont, the utility-like company that currently runs the statewide program. Marketing Manager Abby White said the proposed pilot might lack the rigorous verification process conducted by the company, threaten payments received from New England’s forward capacity market and reduce the funding currently available to help other small businesses.

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Economic Development Bills Under Review in House Commerce Committee

Amid an avalanche of new legislation being introduced in the House, the Commerce and Economic Development Committee this week began consideration of a number of bills dealing with economic development. Among them is one making the research and development tax credit partially refundable, one allocating money to recruit and retain young workers, and a bill calling for a marketing plan for state airports.

H.620 would require collaboration between the Agency of Transportation and the Agency of Commerce and Community Development to create a marketing program for the use of state airports. As a result of the ten-year efforts of the Vermont Chamber of Commerce, the state has developed a burgeoning industry in the maintenance and repair of private planes, and a manufacturing sector that supplies parts throughout the industry. The latest draft of the bill would allocate $25,000 to the Vermont Chamber to enhance its efforts.

Other bills under consideration include H.766 dealing with housing rehabilitation, H.767 allocating some $400,000 to assist in business development through flexible spending grants, and H.768, which would raise the level of downtown tax credits from $2.4 million to $2.65 million. H.811 would create a recruitment and retention program for young workers. H.852 would give greater authority to the State Workforce Development Board to coordinate and streamline workforce development programs across state agencies and in conjunction with the private sector, including the Regional Development Corporations, the Vermont Business Roundtable, chambers of commerce and other groups.

A number of other economic development bills have been filed and sent to the committee, but H.841 contains all of the proposals advanced buy the Scott Administration for economic development. That bill contains proposed changes to the Vermont Economic Growth Incentive program.

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