SmartTranscript of House Healthcare - 2025-01-30 - 9:00 AM

[Chair Alyssa Black ]: Stay. And today, we have in all morning Green Mountain Care Board, and I really did ask the Green Mountain Care Board to come in for a length of time. You really wanna get a really detailed overview of, you know, what they do, what they don't do. I think there's a lot of misperceptions around a lot of the activities and the things that we have tasked them with. And so I anticipate that this is gonna be pretty weighty. I hope it's a pretty weighty discussion this morning, and we're gonna start with, chair Owen Foster. Morning, [Owen Foster ]: and thank you, chair Black, for having us in and to the committee for giving us so much time this morning. It's really generous of you to block off this amount of time. There's a lot going on in health care, and we'll try and dive into that. We've organized the slides and our some of our teammates are here, colleagues from the care board staff. We're gonna give a pretty deep dive overview on the state of Vermont's health care because I think it's really critical that everyone's very clear on what is going on in Vermont right now in health care. And then second, we have some more technical and granular perspective on exactly what we do and how we do it, including on CON, hospital budget review, insurance rate review, and our data and analytics work. And so I'll start, and then we'll have some colleagues present some of the other detail. K. Is that working? [Chair Alyssa Black ]: Yeah. [17 seconds of silence] [Owen Foster ]: And so, I'll start real quickly with, background of how we are set up and who we are. First, we're five board members and a staff of about twenty five, twenty seven depending on vacancies and whatnot. We're established in twenty eleven. The five board members all go through the same process to be hired. First, there's a nominating committee that is an independent organization. They take applications, they do interviews, and then they select names to pass to the governor. And then the governor selects from the names that are passed from the nominating committee. It's their staggered six year terms. What that means is that, ordinarily, you would have different governors making appointments. Governor Scott obviously has been in office long enough now that he has appointed everyone on the board. And sadly, he'll be making one more appointment fairly soon as member lunch is leaving state government in April, which would be big shoes to fill as everyone knows. We are an independent agency. We're part of state government, but we are not we do not work for the governor. We're independent of the governor. And we're quasi judicial. What that means is many of our processes are handled almost like a court like fashion in which we receive evidence, we take testimony, we ask questions, and then we issue, opinions and orders, that the regulated entities must abide by. I'll give you a real quick brief overview on who who we actually are as as people. First, Tom Walsh is a health policy professor. He teaches at Dartmouth. He's also a physical therapist, and he's been on the board for about three years. David Mermin is an emergency room doctor. He practices at CBMC and formerly practice at UVM, and his wife is an ED doctor as well, also works at UVM. Member Lunge has been on the board, I think, about eight years now, and she's a health policy expert. She's led a lot of Vermont's health policy work in the state for twenty years, maybe even longer. Member Holmes is the longest tenured board member. She's a professor, an economics professor at Middlebury, and she just started Middlebury's new health policy and health economics program. She's a very distinguished professor in in that field and a wonderful board member. And I've been on the board since October of twenty twenty two. I'm originally from Middlebury, and, I was previously a lawyer at a large law firm and then at the Department of Justice here in Vermont, the US attorney's office. I defended doctors in medical malpractice cases at NQHCs, and I prosecuted pharmaceutical companies and electronic medical record companies. I also did some drug and gun work here and there. The role of the GMCB, I think as the chair alluded to, is often sometimes confused. I get a lot of requests for why aren't we increasing Medicaid rates, and we have no authority over that. Why does Medicare pay so poorly? Again, we have no authority over that as well. What we do regulate, and we'll get into this, our insurers, and only part of insurers, and only one type of plan. So what we actually regulate is the amount of charges, the rate increase, the premium increase that they can charge to their members, but that's only on the qualified health plan. It's about sixty thou about sixty thousand lives. So if you think of health insurance, it's over two hundred thousand lives in Vermont. We only do one small segment of that. And as to that, we only do one small portion. DFR has other responsibilities as to insurers that we don't have. Hospital budget review, that's probably our biggest bulk of work. And what we do there is we receive hospital requests for really two things, essentially, how much more revenue they can charge and how much more they can charge commercial insurance. We call that the rate. So if the service cost a hundred dollars in year one and then they wanted a ten percent increase, they'd ask for a rate increase of ten percent, and now the service costs a hundred and ten rather than a hundred. And then they'll adjust their revenue and say, hey. We had a thousand dollars in revenue, but we want ten percent more revenue this year. It's a hundred and ten. Revenue is really important to understand, and sometimes I think it gets a little bit confused. Revenue is pretty simple. Price times volume. It's not just volume. It's not just patient care. It's also the price. And so that's something that we look at in our hospital budget process. ACOs, we review OneCare and their budget request through administrative costs and where they're spending and how they're using their money. And then also certificates of need, and that's really just a request to build a new facility, to replace equipment, whatever it might be. What we don't do though is very important. We do not regulate FQHCs. We do not regulate independent providers. We do not regulate ambulatory surgical centers other than through this CON process. Mental health, long term care, DAs, out of state providers, we have no regulatory authorities open those unless it's through a CON or it's part of a hospital. So if it's not part of a hospital, that's not in our bailiwick. And then on payers, we don't regulate Medicare and Medicaid. We do not regulate Medicare Advantage plans or self insured plans. So, like, the teachers union has a self insured plan. State of Vermont, we don't regulate those. [Leslie Goldman ]: Leslie? Well, I just noticed total total cost cap, which you had was on the slide. And I'm just if you could just explain that sort of from a high level. [Owen Foster ]: Sure. We'll get into it a little bit more later, but the state has been in what's called the all pair model for, like, it's eight years now. And as part of the all pair model, state has total cost of care benchmarks. That's part of the state agreement with the federal government, and we set the the total cost of care benchmark for in Medicare. We step in and say, here's how much well, this is the benchmark that we're at. For each hospital or statewide? Statewide. The the hospital don't have a Medicare total cost of care benchmark. [Leslie Goldman ]: How do you figure that out? [Owen Foster ]: Well well [Leslie Goldman ]: I mean, I know that there are a lot of people in the world doing in your world doing that, but I've always seen it, and it's sort of a mystery. [Woodman Page ]: So there's a couple components [Owen Foster ]: to it. But, really, what we're looking at, we're trying to come up with a way to get as much federal money as we possibly can and draw them. So we wanna set the benchmark rate at a level that gives us the maximum opportunity to draw down the federal funds through savings. So it's a annual decision that we make as to what the rate would be, and there's a range in every the year I think every year we pick the maximum. Yeah. Every year we pick the maximum rate, that we can to optimize our chance to draw down federal funds. [Leslie Goldman ]: Someone said soft and raised. That's correct. So [Chair Alyssa Black ]: Thank you for asking that question. If I can elaborate, just to clarify it in my mind. You set the total cost of care that Medicare they agree to that. And then if we don't spend that much money or the Medicare does not spend that much money, they give us through the ACO? [Owen Foster ]: Yeah. It's there's a couple steps. It it's a target range of the rate of increase. Right? That's the target that we're setting. And when we do a reconciliation with the federal government, there's a range that we can do. Right? And so we pick the maximum range. And that means if you come under that range, there's what's called savings, right, under that target. We're under the target, there's savings. And the way the ACO model is set up, that savings, we can capture some of that savings. We get to keep some of the savings. So if you set that target lower, you have a harder chance of getting the savings because the savings would be right? The the gap would be smaller. So that's what we do. [Chair Alyssa Black ]: What do we do with the savings? [Owen Foster ]: We don't always have savings. [Chair Alyssa Black ]: Okay. Okay. We do have savings. [Owen Foster ]: It goes through the ACL, and then the ACL pays out to the participants based on, agreements they have with the participating hospitals. [Chair Alyssa Black ]: And if we don't have savings, [Leslie Goldman ]: who pays? Is there a penalty or what is there a penalty? [Owen Foster ]: There can be I don't remember exactly what's happened with that in the last couple of years. It's usually, in Medicare, we do pretty well on the savings. It's on Medicaid and commercial where we haven't done well, and we'll talk about that a little bit. So there's three payers out there. They're Medicaid and commercial. Each one of those has a different target based on their negotiations with Medicaid, Medicare, or commercial payers. Ideally, as a state, what we really wanna do is maximize federal money because that's money we pay, the least for, so to speak. Right? Commercial, we pay really directly. Medicaid, we pay very directly. And in the all payer model, we'll go through some of this. We've seen pretty good savings on Medicare, which means the Medicare spending is flattened, but we have not had that on Medicaid and commercial quite like we wanted. I think we should keep it going because there's a lot. [Leslie Goldman ]: I have another question, and it may be but I know and it's not mentioned here as one of your briefs is HRAP, and there's primary care involved in that, and that's of interest. So if you're gonna get to it, that's great. [Owen Foster ]: Yeah. We can get into that in the data section. I mean, at a high level, the health resource allocation plan is a report It's available. You can go online. You can see various [Leslie Goldman ]: I couldn't find it. I tried last night, and the one I found was, like, twenty twenty, and maybe that's what we've got. So if anyone could help me find it, that would be great. [Owen Foster ]: Yeah. We can send around a link. [Leslie Goldman ]: That'd be great. [Owen Foster ]: But HRAP is really essentially in in the you look at it what resources you have, where, and and how much you have, and where they're located. Right? So you will look at how many primary care providers you have in this area, how many specialists this variety all throughout the state. So it's really an inventory of state resources, statewide. It's not really a plan how you're going to spend those resources or how you're going to spend your health care dollars going forward. [Leslie Goldman ]: So do you have any well, we know we've been losing primary care practices. We know whatever, and different payment models. But since that's part of your brief in HRAP, I was wondering about your involvement with it. And you may wanna answer that later, but that's a question for me. [Owen Foster ]: Yeah. Our involvement with those practices and closures? [Leslie Goldman ]: Probably not directly. I get it. But if you're looking at statewide resources, how do you allocate when you have a desert? And that kind of not something we do. So that's what I'm interested in figuring out since it is in the HRAP as primary care is gonna be responsibilities. [Owen Foster ]: Right. Our responsibility is in the principles of health care reform, which is here. And the way we implement that, though, is a bit of a problem, which I think is what you're getting at is, well, what can you do? [Leslie Goldman ]: Yeah. Enhance primary mental health care [Owen Foster ]: as you know. Right. So how do we do that? Yeah. We have regulatory authorities. We don't have funding authorities other than for hospitals and how much money they can have. So can we say, okay. That practice is going out of business in Memorial or Waitsfield or wherever it is that are going I don't know. Changing. Can we allocate if we send dollars there? The answer is no. We can't. So this is a principle that guides our decision making with our work. It's not actually an authority. So what we do do is when we look at hospital budgets, these are the things some of the things that we're considering and looking at. But an actual authority to send money to a place that we don't regulate is not something we can do. And that's part of we'll talk about this thing a little bit later. Part of the problem, I think, in health care a lot is that you do have some silos of what's doing what. So we know that, you know, the Howard Center has financial problems and certainly mental health is one of our well, what do we do? [Leslie Goldman ]: Well, that's what's my that there's my question. What do you do? Because, like, you know, number four, you go down to four, must be preserved and enhanced so that Vermonters have health care available to be prepared. I love that, except that's not what's happening. [Owen Foster ]: Right. There's a disconnect between the principal and then the authority to do something. Mhmm. And that's part of the gap here that's you can talk about. We have, in the last several years, tried to work more and more within the authorities we do have to address these as far as we can, and I'll get into some of those. But in these examples, the ACL regulation. So we have regulatory authority over the ACL, and we want to enhance primary care and mental health. So what do we do? Well, in the ACO context, we did two well, three main things, and I have slides on those. But one is we said you're not allocating sufficient money from your budget of your total cost of care, all the money you have to primary care, and your administrative costs are too high. Cut your administrative costs and put that into primary care in that two years in a row. Another thing we did with our insurance rate review is we looked at how much money and rate increases hospitals were getting, and we saw a pretty big disconnect. Hospital were getting very large rates of increase in payment from commercial. That's critical because, generally speaking, commercial is where places become solvent and have more money. And we said and we saw the rest of the market getting very low, zero, one, two percent rating increases. And so if you're trying to enhance primary care and mental health, you need to think about that. If you're trying to sustain the system around hospitals, you need to look at that disparity in question. Is that Mhmm. And so one of the orders we did, in our insurance rate review is we said you can't allocate what was happening was the hospitals would have our rate that we would approve, and we viewed it as a cap, and the insurers could negotiate underneath that however they wanted. The private parties can go negotiate under the caps. What was happening was they would take the cap as a guarantee. We get whatever the care board said. So we changed that and said you need to pay your rate increases based on, affordability, access, and quality. The same thing we're all trying to do. There's sometimes gaps and disconnects and incentives between what the state is trying to do and then what's happening outside the states within the regulated entities. So that's one thing we did, and we did see actually a pretty good change where it became much more level as we gave lower rate increases to hospitals, it did bolster up the ability for insurance to pay out money to the broader system, which, you know, when you take money away from a hospital or it's not taking away, it's giving less. And I think we gave a four point one percent system wide rate increase a little bit more than inflation in that particular year. If so, that is directly like, hey. We have less money. That's gonna be hard for us, and it is. But it's also hard for hospitals when they don't have the surrounding supports that help them send patients to where they need to go. We don't want patients backing up in eds. They back up in EDs if you don't have number four, enhanced primary care and mental health. So that's something we've been trying to use the regular authorities we do have to address. [Francis McFaun ]: Okay. I'm I'm a bit confused on what your responsibility is in terms of the insurance companies. Because I heard you just go like this, but we only do a little tiny bit. [Owen Foster ]: But and [Francis McFaun ]: then I'm listening to you now, and it sounds like that's a little bit more than what you're talking about. No. We need to know and and let's just take one. Blue Cross Blue Shield. What responsibility do you have with them? [Owen Foster ]: We have responsibility for reviewing and approving and deciding the rate of increase they can charge their customers on the qualified health plan market. So they have self insured plans and all kinds of other plans beyond that. We have no authorities over those. All we do is decide that one segment of their market, the Qhps. So they have a Medicare Advantage product. We do not review that. We do not get evidence on that. We do not make decisions on that. They have self insured plans. We do not review those nothing. So what we did as to trying to balance it was only in that market with with which we have regulatory authority, that QHP market. So if you look at these large, national providers of insurance products, Cigna, Aetna, United, we do not review them. We do not have authorities over them. [Francis McFaun ]: Not even Cigna? [Owen Foster ]: No. They don't have a QHP plan here. We do not review them. Okay. [Francis McFaun ]: Thank you very much. [Owen Foster ]: Oh, yeah. It's a really good question. Alright. So I'll go through this. I think it's really important, that we are level set as a state as to what is going on our health care system because I do believe it is imperative it gets addressed very, very quickly. So first, Vermont health care spending, has really been outpacing national significantly for about twenty plus years now. This is a per capita spending. That's how much we spend in health care dollars per person, in the state of Vermont. And you can see, Martin used to be pretty close to national average in health care spending. And then we just started really outpacing the rest of the country significantly. There's sometimes actually, very often a lag in health care data. This is only a twenty twenty. I am quite confident that if you go twenty twenty to twenty point five, we will be the gap will increase pretty significantly. Our health care spending has really been growing much, much faster than national in the [Leslie Goldman ]: last five years. Is that because of price? I mean, you gave us that little equation, so I'm just thinking about that. [Owen Foster ]: Price is certainly a big component. [Chair Alyssa Black ]: Mhmm. I'm raising my oh, I'm sorry. I didn't know. That's okay. How do we do a Medicare specific thing since, you know, essentially, Medicare is equal, even though I know it's not equal to chronic trade. But how is our spending in Medicare per capita? How is that aligned with the US spending per capita? [Owen Foster ]: Good question. I guess it depends on perspective. I would call it poor. And what I mean by that is we're not bringing in nothing of it. So from Medicare's perspective, I would they would say, you're doing a great job because our Medicare spending is quite low on an aggregate basis. So the total amount or capital we spend on Medicare is very low compared to national. We're right near the we're in the bottom third for sure and maybe even lower. It's now one of the lower spending Medicare states in the country. Now, why is that? And any answer to why, and any of these things has a multitude of factors. But I believe some of it is that we have difficulty getting in to see providers, and we have difficulty getting access. So if you're not getting we have some of the lowest hospital admissions in the country. So if you have low admissions to expensive care, the spend is going to be low. Okay. We're gonna flip it. Well, if that's the case, why is your commercial so high? And the answer to that is our prices are very high. Things are changing fairly rapidly. This is a very fluid health care market, so utilization is spiking pretty significantly right now across across really, the entire state. So when I say we have low, admissions, that's that's historical. And in the last year or two, that could be changing. It's also what are you spending it on. So, if you're talking about Medicaid, it's a lot of younger folks or births or things like that. If you're talking about commercial, it's really that twenty to sixty five year old bracket that you're talking about. [Chair Alyssa Black ]: Woody. [Woodman Page ]: Costs are going up. But is our health care getting any better? [Owen Foster ]: Again, these are very nuanced questions. I'll I'm answering kind of high level, so this is not a complete answer. But no. No. It's not. In the health outcomes data that you see, we're not seeing improved population health quite like we want and certainly not consistent with the trend in spending. So where we're really losing is our physical health. If If you look at the physical health data, it's been pretty flat. We haven't really seen broad improvements. It's been flat over ten years, generally speaking. And then our mental health and substance abuse has been getting worse. We are worsening quite significantly in mental health and and substance abuse. So, overall, no. I don't think it's getting better. If you look at, life expectancy, we're we're losing ground as compared to the gains that other states are making. But, no, I don't think our health is getting better. But we're also getting older, and therefore, the costs are higher to to treat older individuals. [Woodman Page ]: So how do we how can we fix that? Or or do we start? I'd say this. We're gonna start regulating what we can and cannot divide as far as health care goes. [Owen Foster ]: No. You don't want to do that. You wanna regulate where the health care goes. You want it to be regulated in a way that sends those health care those patients to the right place and not emergency rooms. You want to send those patients to places that are more affordable and available and accessible so they don't have long delays, And you wanna regulate the price appropriately. And you wanna regulate so you have a sustainable system, not one particular entity here or there. And in terms of aging, many other states are aging. They don't have our goals. I think aging is actually, frankly, a little bit of a cop out at times in the state. We can do better even if we're aging. We have a very healthy population, not just age. We're, generally speaking, a very healthy population compared to other states. And aging older folks are on Medicare predominantly. Right? So a lot of those costs should be covered by the feds. That gets into another topic we'll dig into a little bit, which is Medicare cost coverage. How much of the care does Medicare cover? And that's one of the biggest problems I think we have in some of our systems is that we're not running on Medicare. What I mean by that is when we see a Medicare patient, some of our providers are losing significant money, Twenty, thirty percent. Right? So if Medicare is supposed to cover a hundred percent and it only covers seventy percent of your costs, you have a thirty cent gap on every dollar of spending. That's a problem as we age. Because if you have more people in that bucket, you have more people that they're losing money on, and you need to find a way to make sure that Medicare is covering more. And Medicare is designed and intended to cover a hundred percent of costs. Now it doesn't always do that and markets are different. Right? So a hundred percent at a hospital in Kansas or Boston might not be the same as our dynamics in our local markets here. But we're pretty far off as a state from being running efficiently on Medicare. But we're gonna have to because you can't just keep making it up on commercial. That's that's this slide here, which is one plan, the lowest cost silver plan in Vermont. Is this fine, and, this is the United States. And if you map on Maine or New Hampshire, which are equally old age states in Vermont, they're more around here. They're not here. And this is going up, as you can see, from twenty four to twenty five and twenty three to twenty four really, really sharply, and there's really no sign of that abating right now. [Woodman Page ]: And and is it because [Owen Foster ]: the requirements that we place on our insurance companies to provide certain care, is it is it partially the legislature's problem that we've created in trying to help, you know, patients out there? Yes and no. We do provide better benefits on many of our plans, and that is great for consumers. It also does cost more money for consumers. But the spike is not associated with additional or new benefits in our plans. That's that the the benefits and the plans have not changed in any way, shape, or form from twenty twenty and twenty twenty five that counts for this, if maybe you can change it all in those last cut years. So sometimes I think in if you say things, it's like, oh, well, that's why we better but it's not. Those haven't changed in these years. It didn't change from twenty four to twenty five or twenty three to twenty four. It's really the sustainability crisis, I think, that is driving this. As as places have financial trouble and they can't make it on Medicare and Medicaid's not certainly not good enough. They only have one place to go if the expenses don't come down. So it's really to me, we really need to be regulating and thinking about expenses, and and that's what we've been focused on the last couple years. When we award hospital rates, we look at their expense growth, and is it reasonable? And in some instances, some hospitals are doing pretty well. Other instances, some hospitals, I think, actually have a pretty good reason why they can't. Right? And we we think about that. And others, I think, have opportunities significantly better. This just gives you a sense of the cost to Vermont families to buy insurance on the exchange. This is a chart of the premiums for a family of four on Blue Cross Blue Shield, and it's directionally pretty similar for MVP. The green is the platinum plan, and the orange is the silver plan, and you can see the increase. So this is just for the premiums before you even go to the doctor. In twenty twenty five, we're now approaching fifty thousand dollars for a family of four in platinum. That's dumb. It is dumb. Dumb. Yeah. [Francis McFaun ]: Sorry. It's not [Leslie Goldman ]: a word, but [Chair Alyssa Black ]: it's quote of the day. [Leslie Goldman ]: Mhmm. You're not so dumb. It feels like they're [Chair Alyssa Black ]: it's it's not it's it's just gonna get worse because I I just happen to know that a lot of people are not even utilizing it because the deductibles are so astronomical too. So we're not even keeping people healthy while they're still healthy because they they don't utilize their insurance. They have it because they have to. But [Owen Foster ]: Or they'll buy down to really plans with giant deductibles, and then they'll really try to not access health care. Absolutely. I do not see signs on the horizon that this will all of a sudden reverse or even flatten that. This caveat here, which is this is an individual plan and there are subsidies for that. So I think it's twenty five, twenty seven thousand of our thirty thousand Vermonters on QHP plans, on the individual plans, have subsidies currently from the feds. That drives down these costs very, very, very significantly. They are set to sunset at the end of this year, and we could see changes to that. And if those go away, we have a we have a dramatic problem. What will happen for those families is devastating, and they won't be able to have insurance, period. That also has sustainability, implications for the system and that hospital will no longer, and any providers, will no longer receive insurance payments for those patients. They'll get people who are paying out of pocket or who can't afford to pay, and they'll have bad debt and free care they have to give out, which further strains those entities finances. And then you have a rise in medical debt for those families, and they will avoid getting care as they can't afford it at the pocket. In this, the subsidy issue, we don't know where that will land with the federal government. But the small group plans, there's no subsidies. So this increase is similar on the small group plans. If you look at all those other ones that I alluded to, we we don't regulate, those are also directionally exactly the same. Right? So it's not like this is something where we have subsidies and solves a problem. It's not the case. Then over here, you have a out of pocket. So all in, you're looking at fifty five thousand dollars or so regardless of what plan you're on. And I think this goes to your point, representative Critchlow. This is from Kaiser. It's it's interesting. Like, the national news is starting to focus on Vermont for our health for our health care challenges and problems. Quite a bit, the Washington Post, ABC, Kaiser, Financial Times, they've all been calling and asking what is going on in Vermont. And when I first came on the board, a lot of the talk was about, oh, Vermont's so innovative. Everyone's trying to catch up to Vermont. Mhmm. And then we started looking at you know, I started learning about our system from our our team, and I I didn't see that in the results. And so we've been trying really hard to raise awareness as to where things actually are. This is from Kaiser in the fall. They actually came here to Vermont to meet with people and speak with industry and everybody. And the headline is, in Vermont, where almost everyone has insurance, many can't find or afford care. At the bottom, this alludes to about as represent a page, your question about, well, are we getting healthier with the spending? There's a line here that stuck out to me. It says long waits for care have become increasingly common according to state reports and interviews with residents and industry officials. So we're paying about as much as you can in the country, and we're having a difficult time even getting in while we're paying. This also alludes to Vermonters pay the highest prices nationwide for individual health coverage, and state reports show its providers and insurers are in financial trouble. So that's the problem we're in. Like, we usually solve these problems with money, and that's not available. So we spend the most, and everything's going this way. So how do you solve that? You have no money to solve it. So we really need to think quite a bit differently at this time. And this alludes to the the issue with wait times. This is from the twenty twenty two study, that the state of Vermont did. It's a report on how long it takes for people to get in to see specialists. There have been a lot of anecdotal information coming into officials about we can't get care. And, we have to wait a really, really long time, and and this was the one of the results from that study. We can see some of the wait times are really, really long. State average to see a specialist is forty eight days. And some hospitals, Rutland, SVMC, UVM, were on the higher end, and some were on the lower end of wait times. So so forty two days at Copley, forty one at CBMC. That's long. [Francis McFaun ]: That is long. [Owen Foster ]: It's very long. My my wife is a diabetic. She tried to get an endocrinologist appointment recently. It was till July, and she thought maybe November, December. That's really long to see an endocrinologist. I believe there's around there's under ten endocrinologists in the state. [Chair Alyssa Black ]: I'm sorry. How many? Under ten. Under ten. What do you do to I yeah. And Leslie has a question about it. [Woodman Page ]: In all fairness, it's not just Vermont that has long wait time. It's all over. [Leslie Goldman ]: It's all a benchmark that we are compared to? [Owen Foster ]: I'd have to go back and rereview this study to see what they use for benchmarks. Here, I think the best benchmark would probably be Dartmouth, which is in New Hampshire. Mhmm. They had about a they had a forty five day average wait time. Again, this data there's a lot of nuance in it. What are the specialists specialties you're providing? Right? So that can skew the numbers a little bit. So I think anytime you're looking at health care data, it's a collective, a bit of a mosaic to see the picture because it's not like one number tells you the answer. And I think also you need to look for direction and temporal aspects. How is it over time? Yep. [Chair Alyssa Black ]: We have a sense of specialists and the percentage of specialists within the practice within our state that are not affiliated with a hospital. I mean, I'm looking at these things, and I'm I when the word competition is just keeps coming into my head. [Owen Foster ]: I don't know the answer to that. Miss Kil might in terms of what's in the HRAP and the detail on that. We we we can try to answer that, but I don't I don't know off the top of my head. If we segment out how many specialists are in hospitals or out of hospitals k. Certainly the bulk of them are not suites. [Woodman Page ]: K. [Owen Foster ]: But there are some that are not. This slide and the next slide really need to be flagged as huge catastrophic imperative and urgent issues, and this is the solvency of Blue Cross Blue Shield. Blue Cross Blue Shield is by far our predominant insurer in the state, and they're one of the best payers for our payers for our providers, whether it be hospitals or others saying they pay a lot of money for services, and that keeps the system the provider getting the money afloat. Blue Cross is facing severe severe severe financial challenges, and they cannot be overstated. If Blue Cross has a difficulty paying claims, and that's what we're talking about here, that means providers don't get paid. That means you might not be able to get care. That means those providers who have very low days cash on hand and negative margins won't survive. You cannot let Blue Cross go under. Mhmm. [Chair Alyssa Black ]: I was like, so how [Leslie Goldman ]: does that compare to not letting Springfield Hospital go up? You've been rescuing along the way. It's a [Owen Foster ]: question I don't wanna have to answer. [Leslie Goldman ]: Sorry. And you can pass. I mean, but it [Owen Foster ]: I won't pass. Okay. Losing Springfield Hospital would be catastrophic for that area. It's an economic engine. It certainly is. It's also, you know, symbolically incredibly important. But if you were to lose Springfield, it would be devastating, but people can get care in other places that are nearby. It would be very suboptimal. If Blue Cross goes under, I think you see difficulty at many plate Springfield won't be here anyway. If Blue Cross goes under, Springfield goes there. Blue Cross goes under a lot of other places. [Leslie Goldman ]: Other places don't. Yeah. So it's a a broader but I'm just thinking about the rescue idea. When is it good to rescue? When is it maybe not? [Owen Foster ]: Because it's not a good idea to rescue. You have to address the problem. Yeah. Go throw money at it, and you'll burn money. [Leslie Goldman ]: That's right. That's what I'm worried about. [Owen Foster ]: So yeah. No. Me too. Yeah. So if you want a bailout, the bailout will be gone in months. Mhmm. So I'll give you a sense. So Blue Cross, I think there's a lot of numbers in my head, so I think I have them right. I think October, Blue Cross lost thirteen million dollars. When they lose thirteen million dollars, what they're doing is they're looking at, how much they brought in and what they forecast for claims and what claims actually were. So the claims were thirteen million dollars more in one month than they thought. I believe December, they lost around ten million dollars. What that means is they have a reserves. Right? The reserves pay when they're losing money. Well, when those reserves go down to zero, that's when you're in a real real bind. And we'll talk about this a little bit, but the well, actually, this right here. Okay. So here, this is the RBC, three hundred and thirty seven. That's a representation of how much money they have at the bank. You really want that to get far target. I think it's six to yeah. Five hundred ninety to seven hundred and forty five. So as of the date of this, which is August, it was three hundred and thirty seven. K? Way below that range. I think that range is probably a little well, comfortable. We can be a little less comfortable in that range and and be okay. But three hundred and thirty seven right now would be a pipeline dream. They're nowhere near three hundred and thirty seven. And I believe some of the information is confidential, so I wanna speak where I can. But to get to three hundred and thirty seven, I might get my left pinky. It's really a difficult And the issue is the claims are way, way, way above what they thought. It's not just hospitals or Vermont providers. It's pharmaceuticals too. Right? There's a lot of things that go into these claims, and and we don't have control over pharmaceutical costs. We've been we don't regulate that at all. We don't regulate pharmaceuticals at all. We are starting to evaluate how we can, and that was something the legislature allocated money to the care board to do. We'll talk about that later. But until you do that, it's gonna be several years before you can do it. As soon as you do it, you're gonna be getting sued. A couple states have set these up, and they've been sued. And the pharmaceutical industry is, has a lot of skilled litigators. But But we have used You're saying I can go be a litigator. So you throwing money at the problem will solve it. It might buy you a month or two. But you really need to address what's going on with the claims where you can. And to my eye, what is happening is we have extremely high prices at some facilities. And then when utilization goes up at really high prices, what does that mean? Price times revenue equals volume equals what insurers pay and everyone else pays. So each I think there's talk in this building. Hey. Revenue cap is a care cap. Well, someone's gotta pay the revenue. And you also have to look at it as a price appropriate for that revenue or for that service. And that's where we're getting in trouble. Really high price assessment there nationally, and now we're on a huge upslope. And that's causing some of these, financial serious financial erosion. [Chair Alyssa Black ]: Albert, did you have a [Francis McFaun ]: Yes. I had a quick one. The joining with the state of Michigan, is that it does that have an adverse effect on Blue Cross Blue Shield? I mean, are all [Owen Foster ]: of the claims dumped in one bucket? No. They're treated as separate entities for financial purposes. There are some, I guess, I'll call them back office synergies and technologies they're trying to utilize from Michigan and and Vermont. I you look. I haven't studied exactly all the nuances of their arrangements, and that's beyond my scope. But I would not think that it has an adverse impact on that at all. If anything, I would think that it's actually positive because Michigan is providing them significant loans for solvency purposes. They are taking out notes and loans from Michigan that they have to pay back with significant interest. So to represent Goldman's point, backstopping things doesn't work for too long. And Blue Cross's credit rating has been downgraded several times the last couple of years, and now those loans cost more money. So you have to address the problem. That's where we're at. You can do that, and that might be something that you can do to buy time, but we need a we need a plan. And to Blue Cross's credit, they've been they've been outspoken about this recently. They've come out and said, this is where we're at. They sent a letter a couple weeks ago. It was a couple weeks ago. In that letter, they said Vermont's commercial cost of care greatly exceeds that of the rest of the nation. Blue Cross Blue Shield Vermont spend is thirty three point five percent higher than the average for Blue Cross Blue Shield plans in the northeast, and forty two point seven percent higher than the national average. So northeast main very old Rhode Island, very old Connecticut, old New Hampshire, old, and in the northeast blue crosses spend is thirty three percent higher than those other aged States, and forty two percent higher than national That's dramatic. [Chair Alyssa Black ]: Mhmm. [Owen Foster ]: Why charges from Vermont hospitals and health care system account for most of the difference? So it's not the only reason for the system, for the difference, but it is part of it. And that's not to blame hospitals. We're not a place where blaming is gonna help anything, but, it speaks to a couple things. Our structure of our health care system, which act one sixty seven is intended to address. And then what I mean by that also is hospitals have high cost because they do not have the supports around them, and they'll tell you that. I think doctor Leffler at UVM has been very outspoken about that. Patients are backing up in the ED. It's a very expensive place for patients to back up. So if they don't have long term air to discharge, they don't have ED sorry. Primary care or urgent care, it gets expensive real quick. Then there is the expense growth, which is very, very high, and we have to get a handle on. I'm gonna interject with, like, a piece of good news, actually. Yesterday, we had Diva come in and present to the board. We had with one of our hearings, and a year ago or a year and a half ago, the healthcare advocates office started pitching this thing, this technique called silver loading. I'm gonna get into the details of it, but essentially what it does. It's like. Essentially, what it did was allow, people to pay for a silver plan and get the benefits of gold plan without additional dollars. And last year, fifty five hundred Vermonters took advantage of that through some work that a number of people did. So fifty five hundred people in Vermont now have plans with better coverage than they had a year ago. And so that's really a highlight, I think, for our system. We should be pretty proud of that. The other thing I'll say is we haven't lost a hospital, and that's a very positive thing too. Nationwide, you're seeing hospital closures, especially in rural communities all over the country. Hundreds. And we haven't lost one. That's really good, and we should be proud of that. It has come at a cost. It's cost us a lot of money, and it won't work going forward. But to this point, these increases have helped us ensure that we have that care in our communities. Is it sustainable? Absolutely not. Do we need to make changes? A hundred percent. But to this point, that is something that I think is positive. A negative is that we have spent a lot of money to sustain it, and it's not gonna work, and this slide speaks to that. This is we look at days cash on hand as a primary metric of hospital solvency. You really want, I would say, a one hundred and twenty to a one hundred and fifty, a one hundred and sixty five ish days cash on hand is kind of a safe number. Hundred and eighty is really good. And from twenty seventeen to twenty twenty five budget, you can see that the system wide days cash on hand is just going down. And this is as we've given really, really large rate increases to hospitals. Some at ten percent, ten percent to next year, eight percent. They You'd be about a fourteen point seven seven percent in there. I think, Rutland might have had a fifteen plus percent in there somewhere. And system wide, we're just still going the wrong direction. So you you can't pay your way out of this problem. [Chair Alyssa Black ]: Sorry. What do you did did you have your hand, Todd? [Woodman Page ]: Well, I just kinda argue with you, but I was [Chair Alyssa Black ]: scared. Mhmm. [Woodman Page ]: Care a little bit. We haven't lost hospitals, but we've lost specialists. And in many cases, our hospitals can't treat those patients that come in for emergencies. And they also, as you know, they can't transport them to other hospitals like UVM or or Dartmouth. And therefore, in many cases, they're just trying to stabilize those patients until they can transport them elsewhere. And in many cases, it's out of state. It's it's farthest away. From what I understand, Rhode Island in some cases in upstate New York would have. So here's another question for you. When is the hospital not a hospital when you lose your your specialties? [Owen Foster ]: I don't know if any Vermont has but your point is well taken. I won't argue with you because I think you're correct. We have lost specialties. We have lost services, and you're gonna lose more. It's not gonna stop. There's gonna be more that we're losing. That's a reality of where we are. So I think you're right, but a hundred percent we have, and it's going to continue. There's no reality where there's money to not lose it unless we significantly raise taxes or are comfortable continuing to raise commercial insurance fifteen, twenty percent. There's not some silver bullet that we have that doesn't cost money to keep these services. It doesn't exist. So I think the point is well taken, and that's part of the problem. It's making sure we don't lose services that we must have. That's where we're at. Allocating our resources as best we can across the state and prioritizing what we need to prioritize. Will there be things that we want closer? Yes. A hundred percent. But how are we gonna pay for it? I'll give a anecdote. My brother lives in Middlebury, and he was complaining that he couldn't get services at quarter. And I said, great. Do you wanna pay twenty percent more next year? Can we? Do you wanna like, the answer is no. Okay. I'll go to Rutland. You know? So, yeah, we want everything in our backyard, but we don't wanna pay for it. So that's the challenge. And I think right now, as we look at transformation, we have to look at what are we prioritizing? That's what you all do every day, and that's what we have to do as a health care system. [Leslie Goldman ]: Lastly, I think what it's representative Page's question is crucial. And as we try you know, what is what is a hospital in a way? Because, you know, there's the rural emergency, you know, models. There are other models out there. So as we look, when does it not become a hospital anymore or when does it? I think that's really a brilliant question, actually, for us to contemplate, as we go forward. [Chair Alyssa Black ]: It's such a brilliant question that [Owen Foster ]: I wrote down. I wrote down. What is a hospital? [Chair Alyssa Black ]: I said, when is I said, when is a hospital not a hospital? What what really is a hospital? [Owen Foster ]: I don't have the technical definition. Well, it's Right. It's There are different I mean, there's you talk about hospitals sort of in layman's terms or in technical federal designation terms. And representative Goldman's right. There's rural community hospitals. There's Seoul community hospitals, all kinds of different hospitals. Rural you know? So, technically, it's all kind of definitions you can hit to to qualify as, quote, a hospital. But, no, if you lose orthopedics, that doesn't mean you're not a hospital. If you lose birthing, that doesn't mean you're not a hospital. Right? So it's not really the mix of services. It's it's it's it's more than that. It's pretty technical definitions, patient, services, size, all kinds of things go into it. I I wanna make sure [Chair Alyssa Black ]: Oh, Topper, did you [Francis McFaun ]: Sorry. I'm gonna ask you a question. You may not have any answer. Hospital health care is the most expensive part of our health care system. From where you sit, do you feel there's an appetite now in Vermont to change the structure of how hospital health care is delivered and how it's paid for? [Owen Foster ]: I think so. To to a degree, I I think there's nuance in, like, how much. And to represent Paige's point, you're going to be losing services you want. And that's very, very difficult for anybody in any community, in any leader, in any board member, in any representative, in anyone to deal with. So I think we actually have to think about it more in terms of, is it going to happen anyway? And how do we not have that happen? And what do we lose when we don't we focus so much in hospitals. But if you spend the money here at the hospital, are you losing the FQHC? Are you losing the mental health provider? Are you using the long term care? So all these things are interrelated. Do you wanna keep orthopedics at a hospital, which we all do, but is that coming at a cost? Is it coming out of cost to our businesses and a giant giant rate increase? Is it coming out of cost to a long term care provider? That's the challenge. I think we're moving in that direction. So this summer, the care board, had an independent we're gonna do it. Oliver Wyman prepared a report, and there's Yeah. All kinds of hoopla news and some vitriol even, and, that was expected. Right? We're talking about really painful decisions and painful realities, And I expected a lot of bumps, and that's part of the process. And the bumps are positive because you get the feedback, you get the challenge what's in there, you get to really think hard about it. So it's good that there was really great advocacy, you know, for local communities and local hospitals. And I think you get over that, and then you start getting to work. And we're at the stage where we need to get to work, and I think there is appetite for that. [Chair Alyssa Black ]: If if I can just editorialize, and it it goes back to the question of what is a hospital. And I think that, you know, there's the backlash has been because the definition of what we consider our hospital, we're not imagining that that it could be something else. And that doesn't mean those services go away. It just maybe means we provide them in a different place and in a different way to meet the needs of the community. And and that it's not the hospital. So I think it's a reimagining what we need our hospitals to be. [Owen Foster ]: I think that's exactly right. And as we age, we need different things. We need memory care. We need long term care. Right? So if we're not losing orthopedics here, is it does it if we lose orthopedics here, does it give us an opportunity to fill a gap somewhere else? If we lose rheumatology there, does it mean we get to add primary care, which we so desperately need? Right? These are trade offs, and I think sometimes the dialogue is binary. I don't want to lose this. Well, it's not considering the broader things of what you can fill in instead, which is really good for the system or the impact of having to pay to keep everything status quo. Just real briefly, I wanna touch on that. The cost issue is really you saw how dramatically difficult it is here in Vermont as compared to anywhere else in the country. That hurts some of the things we're trying to do in the state. It hurts our demographics. Young families can't wealthy old families, forgetting young families, they can't pay those rate increases. And when they do, they buy down insurance or they go uninsured or they move. It hurts recruitment and retention in in the state, and that's bad for our demographics, which is a giant problem we all know we have. And then second, economic growth. What do you think a twenty percent rate increase does to a local business? Think about I'll think about my my family as a farm. Farmers can't afford it. Milk prices don't go twenty percent every year. Think about food. Go to a restaurant. There there are a lot of them are QHPs. Can they charge twenty percent more for their food every year? No. So you're you're really harming economic growth in our efforts on demographics if our health care costs are going it doesn't no no one wants to move to a state that's doing that. We need to stabilize it, and I will come back at the end of that with some ideas. There's no silver bullet. I think there's a long term issue here, but there's some things we need to do immediately. I do wanna get a little bit into just briefly. I'll go through some of the financial difficulties at non hospitals because we need to think about them as well. This is Little Rivers Healthcare. This is their day's cash on hand. I showed you the hospitals are around a hundred and twenty. Little Rivers is down around ten days cash on hand. Where's that? Little Rivers is down in Wells. And community health centers, same thing. It's dropping precipitously. It's not this low, but it's been on this trajectory. Memorial Health Partners is very, very severely strained and is going to need to make some changes to survive. Right? So these are f q h c's. These are providers giving primary care, incredibly important resource, and they're extremely financially fragile. So we talk about hospitals. Well, what about these guys that we really really need? This is community health centers trajectory. And one of the big drivers of their decline, there's many, but the two big ones are one, and the cruelest of irony is their health care costs. The cost for them to ensure their employees. Roughly speaking, representative, what do you like? [Daisy Berbeco ]: Could you scroll up a little bit? It was [Chair Alyssa Black ]: cut. Yeah. [Owen Foster ]: So little sorry. Community health centers. That's a big Burlington FQHC. They're down one hundred and forty five days cash on hand in March of twenty twenty to sixty two, and they're projected to lose over two million dollars in fiscal year twenty five. When they lose two million dollars, that will be a continual steep steep steep decline for their operations. Their healthcare costs to ensure their employees has gone up. Give me a little bandwidth, but I think around sixty percent in five years. Howard Center in Burlington, their health care costs last five or six years are up over a hundred percent. [Chair Alyssa Black ]: Wow. [Owen Foster ]: Their base cash on hand is single digits. So if their health care costs at Howard Center continue to go up, their financial solvency goes away. And, again, talking about losing services, hospital, what's a hospital, orthopedics, whatever it might be, well, these guys are going under two. And and then you don't have the mental health care you need or the primary care. Two of the most important services to represent Goldman's point, hey. Right. You're supposed to be thinking about this. And that is one of the drivers of why some of the hospital rate increases we've been giving are smaller. If we give the hospitals a ten or twenty percent rate increase, it makes it really hard for Little Rivers and Howard Center to afford their health care increases, and it makes it nearly impossible for them to get a sustainable rate increase. So we are thinking about it, but we're using the authorities we have, which are limited. That's where we're at. So health care costs, I also wanna tell you, where else they go? Sorry. Go ahead. Can I interrupt? [Chair Alyssa Black ]: Just I'm sorry. Do you have the authority to just set the rate for everybody? [Owen Foster ]: I think the answer is technically yes. There are authorities in our statute that would allow us to do that. Practically, it's a whole another reform. Right? It's a whole another effort to come up with a plan and policies and rules and rulemaking and regulation to do it. It would take two years. Yeah. It would take it take a extensive period of time to set it up, and then you need the resources to do it. Right? There are different tools, I think, to accomplish the same thing a little bit more roughly than prescriptively. But, yes, technically, in our statute, we do have rate setting authority. But then there's a whole set of things you have to do to get there. And that's what I wanna talk about later is where are we as a state focusing our efforts? What are we doing? What's the right tool to use at this time? And you can't do them all, and we'll get to that. But there's talk about the the vision of planning in the state of care board or elsewhere. There's talk about reference based pricing, rate setting, ahead, global budgets. You can't do them all. I don't even know if you can do one, but we're gonna have to pick one and do it as best we can. We can't can't do that. State of Vermont health care costs. This was, presented, I believe, this week by the Department of Human Resources. So these health care costs, again, such as QHPs, it's hitting the state of Vermont employees. This is the rate of increase in premiums, seven percent, eleven percent, fourteen, fifteen. What that means is either you raise taxes to cover it or you take money from other things to cover it. And that's what we've been doing lately is we've been taking money from other things and starving other parts of the state to cover these expenses. Despite these expenses going up, they're losing money on the state employee plan. So forty percent or so in the last three years, and last year, it's forty mill forty million dollars in the red. And that's represented by this line, which is the, amount of money they have in the their what law call their their surplus that has gone down, to negative forty million dollars. And this year to cover that, there's a shift from money elsewhere in the state to cover these expenses. Right. So here, June twenty thirty of twenty twenty four, net position of the the fund to cover, health health insurance for employees is negative forty million dollars. [Francis McFaun ]: Nolan? [Owen Foster ]: I just had something to correct, you know, as I was at this call office. In BAA, you'll notice that they're asking for fifty dollars in BAA. They'll probably ask for more money in the budget as well to help sort of shore that up So don't increase the employee premiums even more. [Chair Alyssa Black ]: Mhmm. Did we did not do that. It's in a different area of the budget. [Owen Foster ]: No. It's a different way to labor or [Chair Alyssa Black ]: I think it was asked [Owen Foster ]: if you guys wanted [Francis McFaun ]: to go to go ops. [Leslie Goldman ]: Okay. [Owen Foster ]: Alright. Property taxes education, hot topic. There's another layer you've really gotta think about, which is the health care costs that are driving them. There's a number of things that are driving education property taxes, but one of the biggest drivers is also health care costs. These are the rate of things. This is the rate of increase for, the the VHIE, which is our teachers union and, the health care costs for for those, enrollees. You can see it went up from it's been double digits other than in the those COVID years. It was single digits, but it has continued to rise at a pace of which we can't afford. So when it goes up more than, you know, inflation, they have to charge more to, the schools. The schools have to raise property taxes. Right? So what's driving property taxes? I think there is need for significant education system reform. I liken that education system reform to what we need to do in health care. We need to think about that kind of structural large scale change. So these are okay. I'm sorry. [Leslie Goldman ]: Go ahead, Leslie. Leads that. [Owen Foster ]: Who leads what? [Leslie Goldman ]: The large scale transformation blah blah blah. [Owen Foster ]: Yep. So act one sixty seven was the statute in twenty twenty two that charged the care board with working on preparing a set of recommendations for system wide transformation. That's what everyone calls the the Oliver Wyman report that was delivered in September of this year. And then after that, act fifty one was passed that puts the agency opinion services in the lead role of of health system transformation. We collaborate with them, but they're the lead. I'm working on that. I believe member homes and director Krauss will speak to that in detail. [Leslie Goldman ]: Thank you, Chris. We have [Chair Alyssa Black ]: a long discussion about one sixty seven, and then Jen will give us an overview of that today. [Owen Foster ]: It's a little bit of pressure. So I'll just hit on these pretty quickly because I think I made the point, but the rising health care costs are impacting property taxes. In fiscal year twenty five, the average property tax bill is expected to increase about eighteen point five, and the increase in school spending can be primarily attributed to sixteen plus increase in health care benefits. So if you don't get health care spending under control, you don't get education spending under control, and you do not get property taxes under control. [Speaker 6 ]: Just saying that [Chair Alyssa Black ]: they're sicker, the teachers are sicker is that they're just being utilized. But I don't understand why it drove it up so high. [Owen Foster ]: A combination of things. One, there could be I don't know the teachers market specifically. Are the teachers sicker? That versus the rest of the state. Generally, as a state, the acuity is what we call sicker. The acuity has been going up in parts of the state, the illness. Utilization, how much are they utilizing health care services? Where they're using health care services? And then the cost of those health care services. So if we had the care board approve a ten percent system wide hospital charge increase, that will make the price of all those services higher. And if you're using more and the acuity is worse, those combinations, make it more expensive. [Chair Alyssa Black ]: May I ask a question of ledge council real quickly? Because we're talking about if you don't get teachers' rising health care costs under control, you have no effect. Can you sort of tell us briefly how what authority the legislature has or doesn't have or or how the teacher whose health insurance is set and if we have the actual anything to do with that, I guess. [Speaker 6 ]: Jennifer Carty from the Office of Legislative Council. I yes. But it's there's a lot of complications in the way that one's set up. It teachers are insured through an inter municipal insurance association, which is overseen by the Department of Financial Regulation. And a number of years ago, you know, in the last ten years or so, some of that so bottom line, yes, the state has authority and can take up more authority to do two years over future health care. The legislature set up the commission on school employees' health benefits that regulates some of or determines some of what benefits are and how the premium split is between the teachers and the districts. But some of that is also determined locally with every district and every school budget, reflecting some of the choices that are made there. But, yes, the state can have does have can have authority. There's no federal preemption issue, if that's what you're [Chair Alyssa Black ]: asking. Okay. [Speaker 6 ]: But it's not a standard sort of self funded or just a plan like we talk about the way this the, state employees are. [Chair Alyssa Black ]: Okay. [Speaker 6 ]: But we can regulate those as well. There's a governmental exception. [Francis McFaun ]: Okay. Tucker? Also, you have to I think, you have [Owen Foster ]: to consider the collective [Francis McFaun ]: bargaining process. [Speaker 6 ]: I mean, you should be aware that there is a collective bargaining process, but the state can determine the extent to which that bargaining process takes place. So you could take it out of collective bargaining and set it at the state level. You have you have significant authority there as well. [Owen Foster ]: So real quick, I did wanna talk about some of the some of the drivers of why our health care costs are going up within, providers. And there are significant staff shortages, at hospitals and and everywhere throughout the health system. Recruiting nurses is very difficult. Primary care providers are down across the country. Drug costs, particularly the GLP ones, are really expensive and utilization is going up. [Chair Alyssa Black ]: Can you explain what a GLP [Owen Foster ]: Oh, yeah. It's really a diabetes drug and and used as a weight loss drug as well. They're Ozempic and Wegovy that are came on the market last about a couple years. Extremely expensive and uptick in utilization of those products, which, you know, they have a really great purpose and they did really great things, but they're really expensive as well. And then there are inflationary factors, such as even the cost of linens or laundry for hospitals, surgical equipment. All of those things are going up as well. So when we do our hospital budgets, we we try and look at what are our what's our expense growth at a particular hospital and how does that compare to regional, other Vermont hospitals, or national peers. So easy example, what's Dartmouth's expense growth as compared to UVM? It's pretty light hospital or Albany or humane. We have comparison groups that we think about and look at and trying to decide. K. Is this acceptable? And then you look at, well, where is the money going? And and that's that's part of our regulatory work. I went to the governor's budget address, and I heard him speak about the six percent expected property tax increase. We're nowhere near a six percent health care cost increase, and he was lamenting, I think appropriately so, that that's a large increase for people to bear after all these large years. But to get the six percent in health care, we're a long way from getting the six percent increase in health care premiums, a long, long, long way. And, again, that has all those collateral consequences across so many aspects of our state. Okay. So I'm gonna speak we're gonna go a little more technical now as opposed to high level and get into some of what we actually do and how we do it. So first, I'll speak a little bit about hospital budget review. So we're tasked with establishing hospital budgets that meet the state's objectives described in the statute, the principles of health care reforms. View the budget submissions, they request money, essentially, and they explain why. And then we look at what we're trying to do as a state and try to make decisions that support and further the state's objectives. And those objectives tie back to the need to increase access, improve quality, promote efficient economic operation of hospitals, and balance health care needs with the ability to pay for care. If you if you pay more, you might get better access, but you might lose access in other areas, and you might harm your ability to afford health care. So these things are all really often in conflict. Each year, right around now, actually, the board goes through a process called guidance, and we put together guidance for hospitals as to where we expect them to be and how they should construe their budgets. So we tell them, really, we start communicating with them right around now as to where the board is going, and there's a stakeholder process where we engage with the health care advocate, with our staff, and then the staff with hospitals and the association of hospitals on what the guidance should look like. And and then the and then this form is published in March, and then hospital submit budgets ended June, July one. And they have a sense of we'll put in guidance. Hey. We expect, revenue growth to be around inflation four percent, or we expect your commercial costs to go up three percent, and and and that would be the guidance with which they built their budgets. They submit their budgets, and then we review them. We have hearings. We take all kinds of evidence. I mean, the binders are huge, and there's tons of data that we look at. And then we meet with them in a formalized quasi judicial hearing, and we ask questions about their budgets and their requests, and then we make decisions. I will say our staff works incredibly hard. It's a two and a half month process for fourteen hospital budgets. I think around three point five billion dollars. So very, very, very intense. We have a lot of young families, and it's in the middle of summer in July, August when kids are home, and it's really tough to get through it for the hospitals and for the board, but it's necessary work. And I think it's the process we continue to work on and evolve and improve as we go. So last year, we reviewed fifteen hospital budgets. So the fourteen that you would think of, and then brattleboro retreat. What's a hospital? Brattleboro retreat is a hospital. Mhmm. They don't do a lot of services that UBM does or Newport does or any other hospital. Fiscal year twenty five, we approved a system wide net patient revenue. What is that? Net patient revenue is the amount of revenue you get from providing patient care. There's other types of revenue. Some hospitals will have a pharmacy right in the hospital. That's not net patient revenue. That's they'll go into what we call total revenue. It's a different bucket of money. Or some of these hospitals have a lot of money. I think UVM has about one point three billion dollars of big hospitals, so they need a lot of money for, you know, days cash on hand and to fund their operations. But they'll have revenue from that that money. They'll have investment money. They have a hospital venture arm. They have all kinds of investments that also make money. That investment gain is not that patient rep. So in fiscal year twenty five, we approved three point seven billion dollars in revenue patient revenue. And then four point one percent, increase over fiscal year twenty four. So system wide, we approved the revenue at hospitals going up four percent. [Chair Alyssa Black ]: We adjusted But the NPR includes revenue from other income streams, I guess you would call them, investments, [Owen Foster ]: pharmaceuticals? Yes. That would be in a different not NPR. That would be in total revenue. That would be part of the NPR. So right. So they would make they could be up significantly in other areas. [Chair Alyssa Black ]: And so you do not control their total revenue? [Owen Foster ]: We do review it and consider it in looking at their financial stability and how much money they may or may not need, but our budget decisions focus on this net patient revenue amount and the charge increase. [Chair Alyssa Black ]: Okay. [Owen Foster ]: We did adjust nine hospital budget requests last year to limit the rate increases that impact commercially insured patients. So again, that's how much more can you charge for a service? It's a one hundred dollars in year one and they want a ten percent rate increase. It's a one hundred and ten And this is just a made up example. Not much costs a hundred dollars. But we would give something more like a three point one percent, so now it costs a hundred and three. And the reason for that again is one of those many, but one of the things we look at is how high are your prices already. If you have sky high prices and you're asking for ten percent, you're gonna have a hard time getting it out of the board. We're gonna have a real difficult time saying yes to that. Sometimes there might be reasons to, but it's harder when you're really expensive to start with. And then the other reason is, well, what about mental health and primary care and the rest of the system? If we go to a hundred and ten, that's seven more dollars just on commercial rate increase that's not available for somewhere else. It's not an endless pot of money. So that's a consideration we have. And then the people paying it, can they afford to pay a hundred and ten? Because when they charge a hundred and ten, the insurer has to go to the people and say, now you gotta pay ten percent more. So that that those are big drivers in our thinking. [Leslie Goldman ]: Excellent. So I understand that maybe, it's evolving that in Maryland state like Maryland, they actually, put it in statute of what the increases can be. [Owen Foster ]: Mhmm. [Leslie Goldman ]: That's how does that work? Is that good? Not good? Or something to think about? [Owen Foster ]: I mean, it's good and that it's very clear and everyone kinda knows what it's going to be. It's bad and that it doesn't give you much flexibility for different areas. I think there are different areas where you may need to go higher because of rurality or the population that is in that area. So I think having some flexibility with good guidelines is probably optimal. Mhmm. We have put it in statute in certain ways, and that was, I think, the second slide of the principles. And the principle said the amount of health care spending should be consistent with our ability to pay for it. And we recognize that expensive health care costs hurt access and patient health. So we haven't put it like a hard number, but we have put some guidance around, hey, we need to be able to pay for this, and that the overall health care cost should be contained. The other thing we did in the all payer model is we set target ranges for total cost of care growth, and that was three point five to four point three percent. So when we put out our guidance, these are some of the things we look at. If Vermont had low health care costs on insurers, I could see a universe where we say, okay. And we have sustainability problems at hospitals. You could say, alright. We wanna go higher on rate increases. We can afford to pay more, and the hospitals that we regulate need it. They're in financials constraints, and they're really low priced. Let's go higher. That would be good. Unfortunately, we're in the opposite problem where they're in financial difficulty. They have many have very high prices, and insurance, as we talked about, is extremely expensive here. [Leslie Goldman ]: Do you think that hospitals, if I may, respond to your guidance through your principles? Do do they have impact? [Owen Foster ]: Trying to improve on them. Mhmm. There is a disconnect sometimes between what the state's goals might be in an individual community or an individual hospital's goals might be. If I run a hospital, I want my hospital being incredibly robust services and financially solvent. That's my goal. And I want to be sustainable, and that takes money. But that might conflict with the ability of others in the community to provide care and get appropriate rate increases and the affordability of the businesses to pay the insurance. Right? So we are trying to, work with hospitals and others on thinking about how their mission aligns with the state mission. And I think that gets also to executive compensation. What are we compensated for? Because we have really high prices and really high expense growth, we need to be compensating and rewarding for financial prudence and awareness of the cost impact on the community. And I don't know that I think there's sometimes a misalignment there. [Chair Alyssa Black ]: What oh, Nudie. [Woodman Page ]: And since you brought it up, I [Owen Foster ]: was gonna say the part. [Woodman Page ]: The bonuses that it's recently been in the press regarding UVM. Mhmm. I mean, people see that, and it's it's not a good image for for UVM or or our state health care. [Owen Foster ]: You know, as an individual state resident, I have feelings as a regulator. I need to look at it pursuant to how we evaluate these things. We do have authority to look at executive compensation. We have, in other contexts, and I'll talk about a little bit at the end, of the one care executive bonuses, which we did not permit, and it went to the Supreme Court. They challenged it, and, I think correctly, the Supreme Court saw the way we did that we did have authority to limit executive compensation. The UVM bonuses, I understand that seeing those kinds of bonuses is painful for people. When they can't afford health care, it's really painful. I think to me, it's a question of what are you paying for? Are you paying for really good access? Are you paying for, really good cost containment? Or are you paying for revenue growth and expansion and operating margin? Right? Because those things can be in conflict with what we need as a state. We need solvent hospitals for sure. But is it coming on high prices, or is it coming on lower expenses? And is it coming on providing the services that we need, like mental health or primary care or or else? Right? So we need to make sure those things are aligned. And I know hospitals, boards, and leadership will, explain that there's benchmarking, and we need to pay for talent. But talented at what? And that's what we need to make sure is that we're retaining the talent that does what we want to have happen as a state, which is help us with a system wide sustainability and affordability problem. I think there is opportunity to consider and make sure those things are aligned correctly. Why regulate hospital budgets? I was just looking around last night and stuff, and I saw this from from the beehive, the teachers union on health care costs, and they said they've they've gone from sixteen percent rate increase down to twelve. And they they noted in their fiscal year twenty six communication to their members. For example, on the positive side this year beehives rate setting process. How much more they charge benefited from lower hospital budget orders by the Green Mountain Care Board. Our budget orders allowed them as one of the things that allowed them to have lower cost increases for teachers, which goes to property taxes and education spending. So why regulate hospitals? This is part of it is to make sure that the system is as solvent as it possibly can be inappropriately, but also being mindful of what it's doing elsewhere. And I I didn't know they've done this till late last night, and I appreciate that they recognize that our effort, and frankly, the hospital's efforts to drive down their expenses that allow them to have smaller budgets, benefited our teachers and our teachers and health insurance costs. So if there's no more room to increase health care costs and we do not have room in Vermont to increase health care costs, what do we do? And part of it is an allocation decision. Where and how are we spending our dollars? And is that the optimal allocation? Do we wanna put all of our money into orthopedics? Should that be the biggest part of our money? Should we put it all in mental health? Should we put it all in primary care? What's the mix that's most optimal for our population? And how do we get every efficiency out of how we spend the dollars? And, you know, do we want more hospital leadership and administration to come up with ideas of how to run hospitals. We want more directly in patient care. We want more in nurses like, how are we allocating our dollars as a system? And then within those various providers. And I I just got this slide yesterday, so I can't speak too too in-depth to it. We we're putting this together this week. I wasn't able to do all the prep that I wanted. So we'll we can speak to this more maybe tomorrow or, in the near future. But it's a a look and a lens at how we're allocating some of our health care dollars. So all payer, Medicaid, Medicare, TRICARE, commercial is here, all payer, and then there's private payer. Private payers where everyone makes some money. And here is how we allocated those dollars in two thousand five, physician, prescription drugs, hospital. And then here is how we allocated, private payer, the most important payer, I'll say. Physician, clinical prescription drugs, actually gone down how much we're spending on prescription drugs, which I found odd. But, again, I haven't had a chance to dig deeply into this slide yet. But I think we need to explore this more as we continue these health care discussions, how we're allocating the pie. Because as one goes up, something else is going down or cost are going up. So the last two years is the pendulum has swung on affordability in a pretty dramatic way. The Board has given lower guidance. Actually, I think the guys might be generally consistent. But the amount of approvals for hospital budgets has been tethered more closely to guidance, and that is for a couple of things. One, it gives much more predictability. When we say guidance is x, if we follow through and do what guidance is, or it gives more predictability to the system that guidance means guidance. And that's beneficial to the system and planning how they're gonna run their operations. It also is important just in light of the other problems we have of spending as a state. We can't we can't go up ten percent every year. So this is what the guidance was for the fiscal year is three point six billion dollars believe that was like a three point five or gore ish percent increase in guidance over the, in, total spending over the prior year around inflationary consistent with the state goals and the all payer model goals. This is how much money each of our fourteen hospital fifteen hospitals, had for their guidance number. So you can see there's some pretty small hospitals. Toply is a hundred. Giffords is only sixty six. Grace is only twenty eight million dollar hospital. And then, Southwest, a little bigger, medium size. CVMC and Rutland are pretty pretty large hospitals for us. And UVM is extremely large. The UVM network, I believe, is around sixty three percent of our hospital spend in the state. So a big, big network. [Chair Alyssa Black ]: Do I interject? Do you approve UVM health network budget, or do you approve each individual hospital within the health network? [Owen Foster ]: Yeah. Great question. I think sometimes as a state, we're a little sloppy when we say UVM. UVM was where I went to college. It's also a health network. It's also a UVM medical center. And there's the network which runs six hospitals and a number of other things. Right? It's the network, and that's what's on Shelburne Shelburne up in Burlington. Then there's UVM Medical Center. That's a distinct entity. And then there's CBMC and Porter Hospital. So UVM Health Network within that network has three hospitals in Vermont, and then it has three in New York. One in Plattsburgh called c v Champlain Valley Physicians Hospital, Alice Hyde, and Elizabethtown. What we regulate are hospitals in Vermont. So we regulate and make decisions as to those three UVM hospitals that are within the network, CPMC, Porter, and the UVM Medical Center up in Burlington. We do not make decisions as of three hospitals over in New York. [Chair Alyssa Black ]: I'm I'm just thinking about some recent decisions that the Health Network has made. And maybe this is a question more for them. Would those decisions at each individual hospital that they chose to make those decisions at, were those driven by your guidance at that individual facility? I'm gonna call it for simplicity's sake, I'm gonna call each of them a facility. [Francis McFaun ]: Mhmm. [Chair Alyssa Black ]: Or were those decisions made to to, cut from the network? [Owen Foster ]: Yeah. Really good question, and, I wanna caveat that I'm not an expert in all things and how they the network runs its business. I do know from testimony we've received in prior years that the network has a what they'll call a network wide margin. They'll have a margin for the whole network, which is all six hospitals. And for credit rating purposes, they'll want that margin to be at a certain level. I think it's two to three ish percent. If they go low, they might have, impacts. So if the hospital in New York is doing very poorly and there's a drag on network margin, they'll need to make money somewhere else. Right? And what we don't want is the Vermont hospitals to be paying more to ensure network. We want everyone to be paying their own, especially as we have affordability challenges here. We don't want Vermonters to pay a lot more because of poor performance at a different hospital that we don't regulate or look at. So in terms of the decisions that were made, I think you'd have to ask them about that. [Chair Alyssa Black ]: Yeah. I'm I'm just thinking about, you know, the the closing of the eight inpatient psychiatric beds at Central Vermont Medical Center, wondering whether or not that decision was made based upon your guidance around Central Vermont Medical Center or possibly your guidance around UVM Medical Center. I'm just trying to think of how these decisions because if you have authority over the individual hospitals, but not necessarily the entire health network. [Owen Foster ]: Correct. As to the individual hospitals, we do not the entire health network. Well, let me give one other background. So the network and how is the network funded? The network and this is directionally. There's probably gonna be lots in there that I don't appreciate. But the network is largely funded by the hospitals paying the network's expenses. So the network I won't I think I know the number, but I wanna get it wrong, because, you know, they have many employees. They have all kinds of services and and resources that they use up there at the network, and those are funded by, charging the hospitals to pay for them. So we don't regulate the network, so to speak, at least it hasn't been part of our practice lately, other than through the hospital budgets. So a little bit indirectly. I think we will be taking closer looks at that as we, continue because the network has grown and is very impactful. And then in terms of decisions, are we we don't we didn't have guidance that we recommend closing inpatient site. To the contrary, supporting mental health, Leslie, for example, sorry. There was an overage from UVM in twenty seventeen, and what the board did was say, okay, you're over by twenty one million dollars but we have a mental health crisis in this state. You can keep that twenty one million dollars but it's dedicated to mental health. And then there was a plan to support mental health at CBMC. So the board has taken a number of steps within the authorities we have to do those things. And the mental health example of CBMC was one of them. In terms of the closure, there wasn't guidance from the board that said, hey. We think you should do this. My view, if you read the budget orders and the enforcement orders, we highlighted a number of places where there's opportunity to comply with the board's approvals without going there to different services. And what I mean by that is we highlighted some operational opportunities, some expense growth opportunities, some of the debt that the New York hospitals owed to the Vermont hospitals. We highlighted those as part of our decision to say, here's where we think we can we can live within our budget orders, And they then make their decisions as they see fit with their organization, and they felt that that was the appropriate place to take action. [Chair Alyssa Black ]: I wasn't implying that you made decisions. I was I was more thinking along the lines. Did they make that decision as at an individual hospital level or did they make that decision, at a health network level? So that's really more of a question for them. Yeah. [Owen Foster ]: I don't know the answer to that. [Chair Alyssa Black ]: Thank you. Oh, yes. Just to [Leslie Goldman ]: make sure I understand, just for clarification. You mentioned the eleven million dollars that UVM was going to invest in site I mean, not the one. Sorry. Yeah. Okay. Not the one. Right. Did that happen? [Owen Foster ]: Sorry. Sorted history there. [Leslie Goldman ]: Okay. I just wanted to be I just wanted to be clear that it did not happen from my understanding. It did not happen. And that is a piece of this conversation. [Owen Foster ]: It has now partially happened. So there is a number of years where I wasn't involved in this at the time, but there was a number of years where they're trying to build a larger hospital with a much larger scale of mental health. The price tag on that got extremely high, and it was ultimately deemed not financially feasible, and it wasn't pursued. So that twenty one million that the board had dedicated to mental health remained hanging out there for four or five years. When when I got on the board, I think we took it up in spring of twenty twenty three and said that, hey. What's going on with that twenty one million dollars? There was actually an advocate who came to meet with me. I can picture him. I'm forgetting his name. He recently passed away. Tall, generally, played basketball. I can't remember his name right now. [Leslie Goldman ]: Oh, it's Liebertov? [Owen Foster ]: Yeah. Ken Liebertov. Yep. He asked for a meeting with me, and he highlighted this, and then and then we dug in and had a hearing. And then so as of twenty twenty three, it had not been used. And then we said, you've got used to this. And they came up with a plan, and they have now used some of the money. So some of the money was used to do the urgent care mental health facility in Burlington with the community health centers. That's partially how that money that was funded. So while we don't have direct authorities that we do do what we can where we can, and that's a big, big goal of what we're trying to do. [Leslie Goldman ]: Okay. So my second question for clarification, is there Vermont, taxpayer money going to fund New York through the network? [Chair Alyssa Black ]: That's my question. They're losing money. Are we taking the Are [Leslie Goldman ]: we funding them? Yeah. With our our tax up? [Owen Foster ]: Or I think so money is fungible. And are you funded funding them with Medicaid money, Medicare money, or commercial money, or investment gains, or, you know, you'd have to do an audit to really understand where it's going. [Leslie Goldman ]: Mhmm. [Owen Foster ]: I can speak to a high level, which is I do know that in their audit financials, this was something discussed in the budget order and with the network when we met with them that the New York hospitals had significant debts to the University of Vermont Medical Center. I believe at the time, it was around sixty million dollars was owed from CDPH to the University of Vermont Medical Center. We asked for information more recently on that issue, and I believe it's currently around ninety three million dollars is is owed. And we asked what those monies were being spent on. And there's so many numbers. I apologize. I'm a little bit off. I believe that the sixty million dollars, it might have been thirty million, was for pharmaceuticals, to buy pharmaceuticals that were for New York hospitals. Maybe it's twenty million dollars for physician salaries and then maybe ten million dollars for shared services, which could be back office services provided from the network. What is allocated in the additional sixty, who I think currently ninety three? Ninety three is all three hospitals. So we've asked for information, and they indicated that didn't come out of their budget, And they indicated it didn't come out of, like, rate increases. And I think they said it was a balance sheet item. What I understand that to mean, and you'll have to ask them, but I understand that to mean it it's out of their cash and their reserves. It's out of their their savings account, if you will. Their physician is that it's one network and money can flow around as it needs to. But that is ninety three million dollars that is as of that moment owed to the medical center. [Chair Alyssa Black ]: If I can ask it in a really simple way just so I can understand it. We have three New York hospitals. Do the do those three New York hospitals generate enough revenue to cover all the expenses of those three New York hospitals? [Owen Foster ]: We did ask for information on that, and, I think it depends on what year and which hospital. I'm thinking of CBPH, which is the larger one in Plattsburgh. It's about a four hundred and fifty, five hundred million dollar a year hospital, I think. It's about the size of CBMC, pretty pretty big hospital. That one had deeply negative margins in a couple of the recent years. I think negative seven, negative eight percent margins. So I think the answer to your question on that hospital for those years, the answer would be no. And they also had negative days cash on hand. Right? So we want a hundred and twenty, a hundred and fifty days cash on hand at a hospital. I believe CVPH had negative six days cash on hand one recent year and negative two days cash on hand another. I believe Alice High might have been around eighty ish one year, and in the last five years, it's dropped around thirty, forty ish roughly. And then the list of town is quite solvent and stable. So [Chair Alyssa Black ]: if if there is excess revenue above expenses at a Vermont hospital and it's invested somehow to keep, you know, cash on hand. You want them to have, you know, capital to for cash on hand. And that's earning interest, I'm assuming? [Owen Foster ]: Yes. [Chair Alyssa Black ]: And they're using the interest earned on that for New York hospitals. Theoretically, that's interest income that could be used from Vermont hospitals because the principal on it was generated from Vermont hospitals? [Owen Foster ]: Yes. I mean, I think that there's [Chair Alyssa Black ]: Could keep their rates lower and could keep their Vermont hospitals might keep them from cutting eight psychiatric beds at Central Vermont Medical Center? [Owen Foster ]: There would be a number of options available if there was more money, used in our Cape here. So I'll just use the ninety I think it's ninety three million since the last data I think I saw that may assign it to. You could use that ninety two million to invest in an account to to grow. Right? They do quite well in their investments, so you would have more money. You could invest it in your plant. They have a relatively aging plant, so you can invest in some of your facilities. You could use it to invest in the outpatient surgery center and take less of a loan or put out a bond or whatever it might be. So, yeah, I mean, there'd be a number of opportunities. It would give you more money to withstand losses. So I understand, like, the inpatient psych, it's not a big revenue source, but it loses margin. [Leslie Goldman ]: Mhmm. [Owen Foster ]: And so if you're losing margin, if you have the extra hundred million dollars or so, that can help you withstand those losses. Mhmm. Yeah. There'd be a number of options. I think that's fair. Okay. [Francis McFaun ]: Could also be used to lower your prices. Mhmm. [Owen Foster ]: Yes. Although if it's and it it can, but I don't know if it's as great as you might think because they have to cover it's a one time money as opposed to a rate increase. Right? Think of it as one time versus sustainable. So you take ninety three million and lower your prices for one year. That'll help you lower your prices for that year, which might be very beneficial. But the next year, you're not gonna have that ninety three to pay to buy down. But yes. [Chair Alyssa Black ]: Do you think that it would have any influence, even a minuscule amount, in the in the budget proposals that they put forward to the Green Mountain Care Board, the rate increases that they ask for? [Owen Foster ]: I'll answer that yes without being able to quantify it. So when we make decisions, we do look at how much money a facility has, like the total amount of money. So if you have ninety three million dollars less or two hundred and whatever the amount is, that can impact our decision on how much we grant in approval. Right? So I'll give you a good example. Kapley Hospital had very low days cash on hand. It was, like, thirty seven days cash excuse me, on hand. And they came in midyear and said, we're in a real financial bind. We need more now. And we granted it. We gave them, I think, seven or eight percent increase in the commercial price. One of the main drivers was their financial position in solvency. They were so low in days cash on hand and not on a good trajectory. We didn't wanna lose that resource. It's actually by broad standards, a relatively well priced hospital, and maybe even nationally well priced. So we didn't wanna lose a low priced hospital that provides good services, so we granted it to them. And part of it was because their cash was low. Now if they have three hundred days cash on hand or two hundred days cash on hand, which, that would change the decision or wouldn't change it could very could be very impactful. One caveat, and there's a lot there's some documents that are public on our website. It's hard to capture all the things in a conversation that's fluid, but it's a snapshot in time so that money can it's it's as of the date of the audited financials or when they submitted their information to us. So that can go up or down. Like, tomorrow, they could move money and that number could be smaller. But where is the money moving from? Is it moving from a network, and was it medical center money in the first place, or or is it moving directly from New York? And, that's what you wanna work for. It's where it's at and direction where is it going. Is it going up? It used to be I think it's twenty nine million in twenty twenty two, and now it's over seventy for CVPH. So we definitely wanna make sure our dollars are working here because we don't have enough of it. K. Thank you. Oh, Woody. Just a quick question. [Woodman Page ]: Are there a lot of Vermonters that utilize those New York hospitals? [Owen Foster ]: I would say not a lot. There are certainly some, and there's a fair amount of New York patients that come from New York to Vermont, including at the UBM Medical Center. I believe it's been a relatively static fourteen or fifteen percent number from New York to Vermont over a period of time. Some Vermonters get sick. Sure. But not not a lot. [Woodman Page ]: They get more than we get, basically. They gain more than we forgot to get out of the agreement. [Owen Foster ]: I think you'd really need to do a deep dive in an audit to really say with comfort, but it is something that has been a concern, and then we put in our budget organs recently that's something we're definitely concerned about. And and that is relevant to our hospital budget enforcement process. So what happens if a hospital exceeds that cap, that budget order? We have a process and rules and regulations and guidance in place where we have a process that we go through and evaluate why are they over, what drove it. So if there's a bunch of revenue from sources that wasn't in the budget that came to be, in our view, that means you asked for too much commercial because you had other revenue. If you budget your expenses too high, we can give you more rate because we think your expenses are too high. And so, we look at what the drivers are and and the reasons for it. And then there's some other factors like the the solvency of the hospital that had the problem. Right? Problem. Had the overage. And, so UVM on that one we enforced, full. I think there were over around eighty million dollars for fiscal year twenty three, and we looked at the reasons, and the board made a decision, and we said that they needed to lower their commercial prices by, an equivalent amount of money. So we didn't take the money away. We lowered the commercial prices in proportion to the overage. So the commercial prices decreased by a rate of equivalent to eighty million dollars which was the overage. Three other hospitals were over in fiscal year twenty three, Rutland, Northeastern, and Porter. And on Porter and Northeastern, the board took no action, allowed them to retain a hundred percent of the overage because some of the drivers that we looked at didn't indicate that we should, in our opinion. And then on Rutland, we enforced, half of the overage. And then with both UVM and Rutland, we spread it out over two years to make it, less disruptive, Because when you take out a large amount, you have to deal with it. So we felt that the more appropriate path was to force those two years and only half for Rutland in full for UVM. But in discussing that, an opinion is is public, and you can read it. But one of the things we did look at was the financial solvency of of the organizations. And one of the things we did look at was the total revenue and debts owed and and things of that nature, and also, again, the drivers. [Chair Alyssa Black ]: Okay. So in twenty twenty three, they were over. You did not increase their rates. I mean, you didn't claw back from them. You just didn't increase their rates, to sort of offset that. Correct. But I believe you showed us a slide way at the beginning of the presentation that when you were talking about Blue Cross Blue Shield, the utilization has now spiked? [Owen Foster ]: Yes. Right. So, let me take that in parts. First, for fiscal year twenty three, the medical center had eighty million dollars in net patient revenue above the board's order, and it's hospital's obligation under ninety four to sixty one that they must comply with the budget order. And so a couple of things can happen. Either you can comply with the budget order, or if you're running what what we call running half, which means, like, over budget, if you see that as you're getting your monthly reports, you can come into the board under ninety four fifty six f and come to the board and say, hey. We're going over budget here, and we need to comply with your order. We're going to, make an adjustment and lower our prices so that we don't go too high price times volume. Or you can say, look. We're gonna try and, send a bunch of care to our primary care clinics so it's not an EED or whatever it might be. I mean, the easiest one is to reduce the price. And some hospitals in the past had done that. I believe Rotman did that a number of years ago. They came in midyear and said, we're hot. We wanna comply with our budget. We're gonna lower our price. If that doesn't happen and a hospital ends up over, we then go to this statute, ninety four fifty six h, which, authorizes the board to order a hospital to take corrective measures to remediate the deviation. So it's not a penalty. It's a correction to make sure that the budget order is complied with. And one of the ways we can do that is by lowering that commercial rate increase. So now you don't take away the money. You don't say, hey. Give me eighty million dollars back, and you'll say, hey. Go and do that, guys. Me, you did. But what you do do is you lower the price, and that's what we did. So UVM, I think, in fiscal year twenty five had about a three or three point four ish rate increase. We said you can charge three point four percent more, which was our guidance that year. And then we applied the, reduction due to the overage, which divided by two years end up being minus four point four percent. So all told, for fiscal year twenty five, they had a minus one percent price. So when they go to Blue Cross, they say, hey. We're a hundred dollars and twenty four. We now got our budget order from the board. We're now ninety nine dollars for that service. Right? They had asked for, I think, eight percent increase total. So they wanted to go from a hundred to a hundred and eight. We said, no. You can go from a hundred to a hundred and three fifty. And then we said, you have a minus four point four to get ninety nine because you're too high the year before. That would make sense? [Chair Alyssa Black ]: Mhmm. Makes sense. Actually, back to something that you said before, just because I'm talking about authority. You You were talking about it would take an audit. It would take an audit. Do you have the authority to do an audit? [Owen Foster ]: I'm gonna ask our general counsel. [Francis McFaun ]: So the record, I'll be part [Owen Foster ]: of our general counsel. Not explicit authority. So if we did have it, we'd have to unify authority. And then you'd have to have money to do it. Mhmm. There will be discussion. I think there has been about our our resources. Just to give you a sense, the hospital systems financing is three people. So they're really good, but it's not the deepest of benches given the complexity and difficulty of the problem. I have been loathed to ask for resources. We have not asked for resources since I've been here. But, it's it's it's we can't have our three people during a hospital budget process dig into all these paths in fourteen, fifteen hospitals in two and a half months. So we do the best we can, and we we make the decisions we do. And maybe that's right. Maybe that's the right way to go is do that. But if you if you wanna get deeper, you either have to audit, you have to get a contractor, or you have somebody has to do [Francis McFaun ]: it. So [Chair Alyssa Black ]: I think Daisy had a question that's [Owen Foster ]: My question is, [Daisy Berbeco ]: kind of thirty thousand foot level. But I'm just really baffled how our system wide financial challenges can be so severe and in contrast to the rest or comparison to the rest of the nation. And are our hospitals all meeting certification accreditation standards, like Joint Commission? How how are they still meeting those and it not not showing up in or how is it not showing up in their certification when we're in such a financial disaster? Like, I would expect some of those some of those performance standards to impact their financial operations too, if that makes sense. [Owen Foster ]: I'm not an expert on how the financial component for hospitals would relate to accreditations. And what I can speak to is that we have seen in the last budget cycle some concerns, not concerns, but some issues on some scales with with quality. And we know that at some hospitals in the Allegroenter report, the volume by which they were performing services was below, appropriate thresholds. So if you wanna do a very complex knee procedure, you need to do more than I'm making up a number five a year. Right? If you wanna do births safely, there's a certain number. And so some hospitals and some services were below that. Mhmm. So as a hospital a hospital, well, if you lose this service that you're not providing, frequently enough, that might be a net positive financially and a net positive for patient safety and in the system. Medicare has various programs through which they evaluate hospital quality and safety, And there's a lot of complexity to quality. There's a lot of different lenses you can look at it in reports, and there's a lot of nuance there. One of the ones we looked at this year was, Medicare star reports. It's a general safety grade. It's it's a blunt evaluation, really. But we did see some deterioration on the star ratings for Medicare, and we did see Medicare impose financial penalties and fines on some of our hospitals for for quality. And what I think that speaks to is the system wide problem. [Chair Alyssa Black ]: Mhmm. [Owen Foster ]: They don't necessarily have the resources or the people that they need to ensure that quality and safety is staying exactly where they want, and they all want it as high as they can. Right? They they don't like this either. And there's many, many, many good quality stories in Vermont hospitals. I'm not suggesting we have a quality problem in the state. I'm suggesting that in some areas, we are seeing it not where we had it before. And without additional dollars to to invest in it, that gets more challenging. And I think it does speak to, the ability to discharge patients. So one of the ones we had problems with was, pressure ulcers. Patients are staying in a hospital too long. The length of stay is going too long. We need to treat the patient and and and address their needs and turn them over and allow them to move so that they don't get pressure ulcers. So if they're in the hospital too long and they shouldn't be there, it hurts quality and it hurts patients. So, again, I think that speaks to the system wide problem. [Chair Alyssa Black ]: Let's finish, hospital budget enforcement, and then it looks like a great time to take a break. Mhmm. [Owen Foster ]: Yeah. Great. Okay. I think I kinda spoke to this. This is a charge increase as the amount for the service, a hundred to a hundred and ten dollars I was talking about. This gives you a sense of, the last couple of years. This is the charge increase for fiscal year twenty three. System wide, we allowed a ten point five percent charge increase across all of Vermont hospitals, and you can see how that was allocated amongst their so, yeah, Rutland had seventeen point four percent charge increase. UVM had ten. North Country had twelve point two. COPD had twelve. CWC, ten. Those are very, very large rate increases. UVM in that year did something a little bit different. It was they had two different metrics at a fourteen point seven seven percent commercial effective rate as well, which I don't know if any of the details on. But in any event, then you go to fiscal year twenty four. System wide, there's a request for ten point six percent. Given all the issues we've been speaking about, the board approved a four point one percent. Right? So they asked for ten. We approved four. There's consequences to that for hospitals. There's benefits to others in the system. It's it's that's the thing we're trying to balance. And you can see the amounts approved at each of the hospitals. So here at Copley, we gave ultimately a fifteen percent with the midyear, Northwestern six, North Country four, Northwestern six, UBM three. And then if it's year twenty five, it's a five point seven percent system wide, we approved three point four. And then there's the two enforcements here at the end, that impacted that what we did in total. So that's all I have. [Chair Alyssa Black ]: Hospital budget decisions. Thank you. Let's take a break. Let's be back here at eleven [Leslie Goldman ]: ten.

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