Vermont Legislative Update 02-07-2020
An analysis from DRM's Government & Public Affairs Team
Vermont Legislative Update Quick Links
Underfunded pension liabilities get needed attention
The topic of Vermont’s overwhelming state employee and teachers’ pension burdens rears its head on occasion, but legislators quickly move on to challenges more easily addressed. State Treasurer Beth Pearce provides a level of comfort, when asked for input, by speaking to a current funding schedule that she says puts the state on a path to meet this shortfall by 2038. Many refute her positive reporting with data that shows this scheme has not performed effectively and has resulted in enormous future state liabilities. In addition, the state’s efforts focus on just the two pension funds. Not addressed are the state employee and teachers’ healthcare funds.
This year, Pearce asked Gov. Phil Scott for an additional $5.9 million to fund the state’s growing pension liabilities, but the Governor chose to put the money into economic development incentives. His administration says a pause button is necessary and lawmakers need to come to the table to discuss long-term, structural solutions to address the rising debt.
Adam Greshin, Commissioner of Budget and Finance, shared a report with the House Appropriations Committee this week and emphasized that 11 years ago, in two of the funds, the state was faced with $1 billion in unfunded liabilities. Since then, the legislature has appropriated hundreds of millions of dollars and now the state is facing $2.3 billion in unfunded liabilities in these same funds.
To counter Greshin’s testimony, Pearce submitted a report to the House and Senate Appropriations committees, A Path Towards Pre-Funding, that she believes presents a responsible way forward. Both of these committees acknowledge they need to better understand this subject, but it is unclear whether the legislature will take any meaningful action this year.
Under pressure, committee adopts hybrid to Act 250 appeals process
The House Committee on Natural Resources, Fish, and Wildlife appears to have reached agreement on a controversial section of a bill to modernize Act 250, paving the way for legislation to be voted out of committee.
For the past year the committee has been considering changes that would increase jurisdiction for Act 250 and provide greater protections for Vermont’s environmental resources. A draft committee bill envisioned a new Vermont Environmental Review Board to hear appeals de novo from district commission decisions. VERB decisions would be appealed to the Vermont Supreme Court.
In contrast to the committee version of Act 250 updates, in January the Scott administration and Vermont environmental groups proposed their own mutually agreed-upon package of changes. Central to these recommendations is the dismantling of the district commissions that currently hear all permit applications. Further, the joint proposal would establish a new Enhanced Natural Resources Board that would hear all major applications. Appeals would go directly to the Vermont Supreme Court, eliminating one step in the appeals process.
After weeks of testimony and discussion, and under pressure to vote the bill out of committee, the legislators appear to have adopted a hybrid of ideas: district commissioners will continue to review and assist district coordinators with jurisdictional opinions and minor applications. District coordinators will decide which applications are major, and those will be sent directly to a new three-member board of professionals. To ensure that the local character of an application is maintained, the new board will be joined by two commissioners from the permit-originating district who will also have full voting authority.
Assuming this framework for the appeals process withstands the next few days, the committee should be in a position to finalize bill language for a vote next week.
Committee approves non-compete restrictions
The House Commerce and Economic Development Committee voted on Thursday to approve a bill, H.1, that imposes limits on the use of non-compete agreements. Under the bill, such agreements could be used only for key employees with incomes above about $75,000. Such agreements must be accompanied by “substantial consideration,” including additional consideration if an agreement is accompanied by a promotion. Employers must provide the employee with a proposed agreement at the time an offer of employment is made, or at least 10 days before employment starts, whichever is earlier. Employers are required to pay for up to two hours of attorney consultation.
The committee spent much time discussing whether to exclude non-qualified deferred compensation plans, which provide financial incentives to employees if they choose not to compete post-employment. Although the plans are entirely voluntary, the committee was unwilling to exempt these plans. They chose instead to allow courts to decide whether a given plan is reasonable.
Flavored tobacco ban nears committee approval
The Senate Health & Welfare reached a tentative consensus on Friday on legislation to ban the sale of all flavored tobacco products, including menthol cigarettes and all flavored e-cigarettes liquids.
Lobbyists for the tobacco industry were highly engaged on the issue this week, and their influence could be seen as senators felt the pressure from industry-generated emails in opposition to the bill.
Several other Senate committees will review the bill before it goes to the floor, with the next stop at the Economic Development, Housing and General Affairs Committee.
Commerce staff promote Governor’s economic development bill
Senior staff members from the Agency of Commerce and Community Development made a compelling case this week before several legislative committees for H.641, a bill that modifies and expands the state’s incentive programs for businesses.
The bill would amend the Vermont Economic Growth Incentive program to allow employers to receive grants in the form of forgivable loans underwritten by the Vermont Economic Development Authority. That change would address a frequent criticism of the VEGI program – that employers now must wait up to nine years to receive grant funds, when they may need the cash up front.
The bill also creates a new incentive program for large manufacturers to invest in Vermont. Eligibility for the program is limited to employers with more than 100 employees and capital investments of more than $20 million.
Biomass power plant seeks extension to standard offer program
The Senate Finance Committee heard testimony this week on Ryegate Power Station’s request to extend its Standard Offer program as provided by S.190. The extension would allow the plant to sell power to utilities at a fixed rate. Jake Marren, staff attorney for the Public Utility Commission, noted that Ryegate is receiving a higher standard offer program rate than other standard offer programs in Vermont. Marren also noted that it is one of two baseload renewable power generators in the state; the other is the McNeil Station in Burlington. Noting the complexity of the topics involved, Sen. Ann Cummings, D-Washington, said that “Renewable Energy Credits 101” will be set up before the committee makes any final decisions.
Representing the twenty employees at the plant, Ryegate Plant Manager Mark Driscoll highlighted the impact of Ryegate on the local economy. He said the facility imports about seventy-five percent of the wood it uses from within the state, resulting in Ryegate putting about $7 million into the local economy. Cummings pointed out that is a significant portion of the town’s property tax revenue.
Ryegate representatives said that if they did not get this proposed request, they would have to go to the open market and would likely not get a fair price for the power. They said Ryegate may be purchased by new owners, depending on the outcome of S.190. Sen. Mark MacDonald, D-Orange, asked whether the plant would compete with other renewable plants without this carveout and Driscoll responded that it would not. The Department of Public Service explained the difference between McNeil and Ryegate. McNeil is subject to price fluctuations which results in cutting operations throughout the year to ease the burden on rate payers.
Public and private prekindergarten groups weigh in on bill
Testimony continued this week in the House Education Committee on proposals to revise Vermont’s universal prekindergarten system. The latest prekindergarten draft bill proposes several changes to Vermont’s current dual regulated and dual administered system of public and private programs. Instead of having joint oversight and rulemaking by two agencies – Education and Human Services -- the new bill proposes separate oversight and joint rulemaking.
A significant change in the bill is a new requirement that private programs employ or contract with a qualified teacher to provide ten hours a week of direct instruction to each student over a three-year period. The recent draft allows private programs to satisfy that qualification with a Montessori-credentialed teacher. The committee has not discussed the cost of the additional teacher requirement to the publicly-funded universal prekindergarten, or the education system as a whole.
Let's Grow Kids Senior Directors Sarah Kenney and Shery Carlson testified that completely bifurcating the public and private systems is a very significant change, diminishing public and private programs’ current access to each agencies unique expertise. They said that quality systems such as the Skills Training and Related Services program are nationally recognized best practice and that parents would benefit from having a tool to compare all prekindergarten options available to them. LGK testified in support of the bill’s renewed focus on teacher qualifications, but they said it can only work if the state allocates significant resources towards helping early educators obtain the necessary credentials. They recommended that the committee request a supply and demand assessment of the current universal prekindergarten system so that lawmakers have a better understanding of the depth of family needs and of the workforce shortage as it pertains to early education.
The Vermont School Boards Association, Principals’ Association, Superintendents Association, and the Council of Special Education Administrators provided joint testimony, generally in support of the bill. They said that access under the current system is limited for children with disabilities. They said nondiscrimination should apply to any school or program in Vermont that is a recipient of public dollars, including community-based pre-kindergarten programs and that nothing is explicitly included in the bill to address this inequity.
The committee will continue deliberations on changes to preK in the coming weeks.
Legislative committees continue review of primary care cost-sharing bill
The House Health Care Committee took up this week a bill to eliminate health insurance co-payments for services. H.786 proposes to eliminate cost-sharing requirements in health insurance plans for primary care services. Bill sponsor Rep. Sarah Copeland Hanzas, D-Bradford, told the committee that the intent of the bill is to expand health care to more people by removing barriers to access.
Copeland Hanzas acknowledged that the bill does not have a definition of primary care, and Rep. Cordes, D-Lincoln, suggested that primary care should have an expansive definition to help people access care. Rep. Annmarie Christensen, D-Weathersfield, reminded the committee that it passed a bill last year requiring the Green Mountain Care Board and the Department of Vermont Health Access to identify which health care providers and services constitute primary care. Chair Bill Lippert, D-Hinesburg, said that his committee will consult the report if they decide to work on the proposed measure.
On the Senate side, the Finance Committee reviewed H.786’s companion bill, S.245, on Thursday. Vermont Medical Society representative Dr. Louis DiNicola endorsed the bill, reiterating previous testimony that reducing barriers to primary care will improve health outcomes and reduce costs. Margaret Laggis, speaking on behalf of America's Health Insurance Plans, reminded the committee that federal metal level requirements, which require insurers to offer plans with certain cost-share ratios between insurers and consumers, would make the proposal difficult to comply with.
Chair Ann Cummings, D-Washington, told her committee that she was concerned about the collective cost shift impact of the six current proposals to cut or eliminate cost-sharing requirements in health insurance plans. In order to meet the federal requirements, insurers would likely have to increase premium costs, impacting consumers and employers.
Emergency service responders ask for wellness support
The Senate Health and Welfare committee heard compelling testimony on Thursday from first responders and law enforcement officers on the need to increase mental health and wellness services for their community. They spoke in support of S. 243, a bill that would establish an Emergency Service Provider Wellness Commission. The large commission, established within the Agency of Human Services, would confidentially report health and wellness data on emergency service providers and recommend policies, training, legislation and services that increase support for the providers to improve health outcomes, job performance and personal well-being.
Margaret Laggis, an EMT with Hardwick Rescue, detailed the difficult situations that she and her colleagues deal with, saying that they share in deaths, respond to calls for their friends, their children’s friends, and get involved in many sad situations. Laggis said, “After many years of this, it becomes too heavy to carry and that’s why we lose members.”
Drew Hazelton, Chief of Operations and Chair of the Emergency Medical Services Advisory Committee for Rescue Inc., told the committee that 25 percent of EMS responders are leaving every year, many due to the mental stress of their positions and inadequate support. The report of the Emergency Services Advisory Committee to the legislature states that “the Emergency Medical Services System in Vermont is in critical condition …and changes in regulation, funding and education are required.” Seventy percent of EMT departments do not have the financial means to provide mental health treatment for providers, and 70 percent cannot fill positions if people take time off for mental health treatment.
Members of the Vermont State Police and the Burlington Fire Departments stressed the success of peer support and behavioral health programs, and the need to ensure that they are available statewide. Vermont League of Cities and Towns Trevor Whipple, retired chief of police in South Burlington and Barre City, told the committee that the proposed Commission could help serve the communities that currently do not have the resources to help emergency service providers.
Senate panel considers cutting insulin co-payment
The Senate Finance Committee continued to take testimony on Thursday on S.296, a bill that proposes to limit the amount of a beneficiary’s out-of-pocket expenses for prescription insulin drugs under a health insurance plan to not more than $100.00 per 30-day supply. Margaret Laggis, speaking on behalf of America's Health Insurance Plans, said that the proposal would initially reduce costs to consumers, but would put pressure on the cost of insurance plans, and drug companies would not be held accountable for high list prices. Laggis asked that if the proposal moves forward, the cap be set at $100 per prescription, rather than $100 per 30-day supply.
Chief Health Care Advocate Mike Fisher presented an alternative proposal to the committee. He suggested requiring hospitals to sell 340B-eligible insulin to their patients at 150 percent of the 340B price plus a reasonable dispensing fee. Fisher explained that the 340B drug program requires drug manufacturers to sell outpatient drugs to eligible entities (mostly hospitals and Federally Qualified Health Centers) at drastically reduced prices for patients. The hospitals then sell the reduced price drugs to patients at their retail cost – using the revenue to expand services offered to patients or provide services to more patients. The proposal would only apply for commercial payers. Although Fisher said that it would not have a “material impact” on hospitals, the retail price cap would cut into needed revenue for potentially financially fragile hospitals.
The committee will take more testimony next week.
Automated vehicle testing update provided to transportation committee
VTrans Policy, Planning, and Research Bureau Director Joe Segale and Principal Assistant Mike Obuchowski appeared before the Senate Transportation Committee on Tuesday to provide an automated vehicle testing update. Segale said Act 60 of 2019 created a framework to allow the testing of automated vehicles on state and local highways if a municipality has pre-approved testing. He said VTrans staff have provided training events, provided presentations to Regional Planning Commissions and Transportation Advisory Committees, and with city officials.
The Act requires that VTrans produce an Automated Vehicle Testing Guidance and permit application. A working draft of the guidance has been reviewed by the Attorney General's Office and the Agency of Administration. The next step is a technical peer review by consultants with expertise in automated vehicle testing, technology, and policy. The draft guidance will be released for comment in March, with the adoption of the guidance in May.
Obuchowski said the challenge for Vermont is its size. He said Vermont will need to work hard to get buy-in from towns in order to get car manufacturers to do this. A strategic plan will be developed to anticipate what the objectives are and where we go from here. It will also include a review of state statute to make sure it lines up with the capability of autonomous vehicles.
Senate Transportation Chair Dick Mazza, D-Grand Isle, questioned what the goal is for the pilot. Segale said automated vehicles and driver assisting technologies have the potential to reduce crashes, prevent injuries, and save lives. He said self-driving cars are safer than human drivers and can react quicker.
Health committee continues work on prescription drugs
The House Health Care Committee heard from Blue Cross Blue Shield of Vermont Director of Pharmacy Brian Murphy and Department of Vermont Health Access Director of Pharmacy Nancy Hogue on Tuesday on the impact of prescription drugs costs on their organizations. Murphy addressed the pressures health insurers are facing due to rising costs in specialty drugs and excessive manufacturer profit margins. Murphy said although the costs of specialty drugs are decreasing, utilization of these drugs are increasing, so costs continue to grow.
Murphy said he has concerns with the current law on prescription drug transparency. He said the formula for creating the list of drugs for review by the Attorney General is flawed. He prefers a process where the AG identifies concerns for follow up with the manufacturers. He highlighted the similar percentage increases in the prices of two specialty drugs as an indication of an area where the AG should investigate further.
Hogue provided testimony on the Medicaid program. She said the program benefits from manufacturer rebates. She stressed that advances in research will result in more high-cost drugs likely coming to market which will have an effect on the state budget.
Rep. Mari Cordes, D-Lincoln, presented an overview of the National Academy of State Health Policy model bill on pharmacy benefit managers and a proposal to create a state purchasing pool. Cordes said while PBMs do not buy drugs directly from manufacturers, they do create drug formularies for their clients and designate which preferred drugs the insurance plans will cover. This puts them in a powerful bargaining position. She said PBMs can insist on discounts or rebates from manufacturers in exchange for placing their drug products in a health plan’s formulary.
Murphy added that Vermont does not experience the issues raised by Cordes since Blue Cross has 70 percent of the market and does an exceptional job at negotiating its contract with its PBM. Murphy said that PBM’s allow insurers to join together to negotiate better deals with drug manufacturers to help contain drug costs. Chair Bill Lippert, D-Hinesburg, asked how PBM’s are licensed or regulated, and Murphy replied that that the contracts with insurers require compliance with Vermont law, but insurers are responsible for ensuring compliance. Lippert said that he’d like to look further into PBM oversight.
Lippert said the committee will continue its discussion on drug-related proposals, including PBMs, as part of its focus on affordability.
Mental health bed analysis presented to committee
Department of Mental Health Commissioner Sarah Squirrell and Deputy Commissioner Mourning Fox appeared before the House Corrections and Institutions to report on its analysis of the mental health bed need in the state. Squirrell said the report provides an analysis of residential settings serving individuals with mental health treatment needs in Vermont and an overview of each type of residential setting. She said the report does not include a discussion of non-residential individual living arrangements such as supportive housing.
Squirrell reported that there are significant needs for secure residential with capacity to do involuntary procedures and long-term intensive recovery residences. She emphasized the need to expand group home capacity. Group homes are at 100 percent occupancy and people are not moving out of those beds. She said barriers for discharge include a lack of community services, an absence of a group home or community care home availability, or a lack of a nursing home placement. She said there are plans to increase capacity in the state. There will be 12 new beds at the Brattleboro Retreat to serve the highest level of acuity patients, 25 beds at the Central Vermont Medical Center that will treat across the continuum, and a 16-bed secure recovery residence.
Overwhelming support demonstrated for expanding telehealth services
On Wednesday, the House Health Care Committee heard from supporters of H.723, a bill to require health insurance reimbursement for expanded telehealth services.
H. 723 would require reimbursement for a category of telehealth services, store-and-forward, which is commonly used for provider-to-provider consultations, also known as eConsults. Although health care systems regularly use eConsult technology for a wide range of specialties, Vermont statutes allow reimbursement only for dermatology and ophthalmology services.
Provider groups urged the committee to support insurance reimbursement for eConsults, an electronic medical record-based tool that allows primary care physicians to deliver specialist-guided care to lower-acuity patients in a timely manner while freeing up specialist visits for more complex patients. Dartmouth Hitchcock Vice President of Population Health Dr. Sally Kraft said that Dartmouth-Hitchcock was selected in 2014 to participate in the Association of American Medical Colleges’ Project CORE as a pilot site. Project CORE improves the referral process between primary care providers and specialists by implementing eConsults. Kraft said this technology saves time for their patient, offers efficient use of specialist time, provides satisfaction for its primary care workforce, and increases continuity of care for patients within a system. Kraft and representatives from the University of Vermont Health Network said they are providing these services within their networks without being reimbursed, which has caused limited expansion of the program.
Bi-State Primary Care Association Director of Vermont Policy Helen Labun said eConsults improve patient care by providing a convenient system for primary care providers to work with specialists offsite to determine which conditions require specialist treatment and which can be treated in the primary care setting. They emphasize the primary care provider relationship and keeping medical treatment close to home with that provider, which is more convenient for patients and less expensive. eConsults are also an easy first step into telehealth and telemedicine because they work on existing electronic medical records systems and the consultation happens outside of the patient visit, leading to high acceptance for patients who might not otherwise want new technology as part of their health care experience. Labun’s presentation can be found here.
Senate committee begins work on health care reform
The Senate Health and Welfare Committee began a review of its omnibus health care reform bill, S.290, on Friday with Legislative Council Jennifer Carbee. Committee Chair Ginny Lyons, D-Chittenden, said “This is a very important bill. And there is something for everyone to hate.”
- Requires additional reporting, certification, and budget requirements for OneCare Vermont, the state’s accountable care organization;
- Directs hospitals to report certain rate increases to the Green Mountain Care Board;
- Requires GMCB approval for contracts between health insurance plans and providers;
- Requires the Agency of Human Services to report on a two-year budget and reporting cycle for OneCare Vermont;
- Provides GMCB oversight of the designated mental health and specialized service agencies;
- Requires that one of the GMCB membership include a health care professional;
- Requires the GMCB to begin exercising its rate-setting authority and establish site-neutral reimbursement; and
- Imposes limits on health insurance rate increases attributable to administrative expenses.
The committee will take testimony on the bill starting next week.
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