Good afternoon, everyone, and welcome to the Green Mountain Care Board meeting. My name is Kevin Mullin, Chair of the Board, and the first item on today's agenda will be the Executive Director's Report, Susan Barrett. Thank you, Mr. Chair. Welcome, everybody. I have a few announcements. First, I want to remind folks about the rest of the month of May and our schedule. We have on May 20th, we'll be meeting at our regular time for board meeting at 1 o'clock on Wednesday to hear the updated hospital budget guidance discussion and a potential vote as a follow-up from today's discussion. And then next Wednesday evening, we have scheduled a primary care advisory group meeting starting at 5 o'clock in the evening, and the dial-in information is located on our press release on our website. I also wanted to announce that the board received the 2021 QHB rates from the insurers, MVP and Blue Cross Blue Shield. I direct the public to our website to look at our press release, which is on what's new and also under our rate review section of our website to look for the details on those rate requests. The last item, which you'll hear more about as we hear from our hospital budget team today, is that yesterday we posted the revised hospital budget guidance that is on our website under public comment. We have a special public comment period that started yesterday, and we'll go through next Tuesday at 10 a.m., so I'd encourage folks to review that revised guidance and provide any public comments on that guidance. And I think that's all I have to report today. Thank you, Mr. Chair. Thank you, Susan. The next item are the minutes of the 429 and the 5-4 meetings. Is there a motion? Go move. Second. It's been moved to approve the minutes of both April 29th and May 4th without any additions, deletions, or corrections. Is there any discussion? Hearing none, all those in favor signify by saying aye. Aye. Any opposed? Okay, thank you. At this time, I'm going to call the attendant so we can keep a proper record. Those names who do not show up in my category, I'm just going to call off the last four digits of their phone number, and if they could let us know who they are, that would be greatly appreciated. 5,001. It's Julia Shaw with the healthcare advocate. Thank you, Julia. 69, 59. Thank you. 86, 9. Toby Howe, NMR. Thank you, Toby. 0341. 0341. Steve Gordon and Brattleboro. Thank you, Steve. I was going to say it's a Brattleboro number. The main number, I was looking for my office number. Sorry. Glad to have you on board, Steve. 4191. Devon Greenbuzz. Thank you, Devon. 4534. Walter. Thank you, Walter. 9686. That's Sarah from Blue Cross. Thank you, Sarah. 2505. Jennifer Collis, UVM Medical Center. Thank you, Jennifer. 6376. Mort Wasserman. Thank you, Mort. 7438. Ham Davis. Thank you, Ham. 3082. Parment Austin, UVM Health Network. Thank you. 8461. John Olson, Department of Health. Thank you, John. 1042. Robin Alvis, NMC. Thank you, Robin. 9000. This is Nancy Hogue with Diva. Thank you, Nancy. 8629. Hi, this is Lisa Herto with Diva. Thank you, Lisa. 7520. Bob Hersey for NVH. Thank you, Bob. Welcome. 7111. Judy Fox from Rutland. Thank you, Judy. 6335. 6335. Thank you. 3212. Hi, that's Kathy Mahoney from the Advisory Committee. Thank you, Kathy. 7632. Jeff Thiemann with the Hospital Association. Thank you, Jeff. 1232. Thank you. 8888. That's the Morris, but it might be a Copley number, Kevin. It's a unique number. Yeah, I apologize, and that would be me, Kevin. Jeff Hebert with Copley. It's such a unique number, yeah. 9806. Mike Fisher, healthcare advocate. Thank you, Mike. 4824. 4824. Okay, 7081. 7081. Area code 916. Yeah, that's me, Kevin. It's Eric Soltay from the HAA. I'm sorry. I forgot my phone number all of a sudden. I know you were trying to be anonymous. Okay, I'm also seeing Susan Aronoff and Lucy Garan calling in. Orca, Mark Stanislaus, Carol Stone, and I believe Abigail, everyone else's name you'll have under the presentation list. Did I miss anyone? Yeah, Kevin, this is Susan Grickowski, MVP. I'm on 5058. Thank you. Do you want me to? Okay, and who was it that said, do you want me to? I wasn't sure. I just called in. You're grilling off the numbers. This is Dale Hackett and I'm 7936335. Thank you very much, Dale. Glad that you could make it. Anyone else? This is Joe Winn from Copley here. Hi, Joe. Kevin, Dan, and I from Difford. Hi, Dan. Sean Tester from NVH. Thank you, Sean. Mark Hage from Vermont NEA. Thank you, Mark. Well, we have a good size meeting today. So with that, I'm going to turn it over to Sarah Kensler to introduce our first presenter. Sarah. Thank you so much, Mr. Chair. I would like to extend a warm welcome to Michael Baylett of Baylett Health to today's meeting. We've invited Michael here today to continue our conversation about affordability and sustainability. He'll be discussing strategies being used by states across the country to tackle these issues. While COVID-19 has presented our healthcare system with yet another layer of challenges, system level affordability continues to be of great concern and sustainability. Already a challenge for rural healthcare systems and others has only been elevated as a necessary focal point of state healthcare policy. Michael should be a familiar name to those of us who work in Vermont healthcare policy and also to many across the country. He has worked with GNCB and a number of other Vermont state agencies, including DFR, Bishka, and Diva since 1997 on issues including health insurance regulation, healthcare delivery transformation, and early all-care model implementation, as well as establishing the ACO oversight program. He's worked with more than 40 states in total, including currently Minnesota, Oregon, and Rhode Island. The team's work focuses on healthcare policy with a particular aim of helping their clients improve cost and quality, and prior to establishing Baylett Health, Michael served as the Assistant Commissioner for Benefit Plans in the Massachusetts Division of Medical Assistance for State Medicaid Agency. So please join me in welcoming Michael Baylett, and thank you very much. Welcome, Michael. Good afternoon, and hello members of the board. It's nice to be with you today. I am going to, as Sarah said, cover what I'm seeing as trends in state affordability and sustainability strategies and pulling out those that I think are most notable and may be of interest to you. As I proceed, I'll identify which slide I'm on for those of you who are unable to follow online. And I also invite any clarifying questions that members of the board may have as I proceed. This is a little bit of information about our firm and our history in Vermont, but I think Sarah covered it. So I'm going to go on and begin the presentation. So I'm going to start by talking about definitions of affordability and sustainability, because I think it's helpful to have some understanding of what we mean by these terms when we use them. And then I'm going to give you a sample of strategies in use by other states to address either affordability or sustainability or both. And I will say that the focus of state efforts pre-COVID-19 really was more on affordability than sustainability, but COVID-19 is certainly changing that dynamic and perhaps balancing it a little bit. And then I'll share both as I go along and at the end, some considerations for you to contemplate for Vermont. So let me begin with what does affordable mean. There are, I think, three different perspectives. The first one is the economist perspective that looks at healthcare spending relative to resources that consumers or the general population has. The second approach is the purchaser view. And this is really looking at spendings in the public sector based on the percentage of tax expenditures that are going to spending or from a public or private employer perspective as a labor cost. And then finally, there's the consumer perspective. And the consumer's perspective of affordability is really does healthcare costs impede access to and use of services? They are distinct views. I would say that in my experience, the view that is commonly adopted in states is the economist view. And I'm going to share with you a few examples on the next few slides of economist perspectives on affordability. So this is one example looking at healthcare expenditures in relation to income from a Journal of the American Medical Association paper from a few years ago. And the data are a little variable, but you can see that this fairly simple index details a doubling of the percentage of income consumed by healthcare costs in this analysis. Another way to look at affordability is looking at what's happening in terms of real wages and real fringe benefits. So this is a way of looking at wages 2014 into the end of 2019 and shows that really for a recent period of the end of 2016 to the third quarter 2019, real wages that is adjusted for inflation were pretty flat in the United States. But when we look at fringe benefits, in fact, the real value of fringe benefits and of course most of fringe benefits is healthcare spending, that real fringe benefits actually declined. And so when you look at total compensation for Americans in this data comes from the Bureau of Labor Statistics, there's actually a decline in total compensation between December of 2016 and September of 2019. And one of the reasons that the real value of fringe benefits declined is that there's been a significant buy down by employers in terms of the value of healthcare benefits. And by that I mean the benefits have become actuarially less rich as deductibles and coinsurance have increased. And then a last view of affordability, whoops, I seem to have lost slide. So anyhow, those are few perspectives on affordability using an economist view. Now, politically, healthcare costs have been a real big deal across the country for governors. You can see that in the 2020 state of the state addresses, half of the addresses included, the governors talk about healthcare costs. So affordability has been a top of mind issue. And of course, again, our world is completely different now since January. But with our nation entering into a pretty severe recession, healthcare costs are unlikely to be less of a concern, I would say, going forward. So let me talk a little bit about sustainability, specifically financial sustainability. This has been an issue in Vermont that precedes the last few months, especially a concern for rural hospitals. But COVID-19 has intensified interest in sustainability, not just in Vermont, but across the country, because service utilization has dramatically plunged, creating sudden and dramatic fiscal hardship for healthcare providers, especially those that have little funds reserved, and were already vulnerable financially before COVID-19. So I think going forward states will be faced with the struggle of trying to ensure both affordable healthcare spending with reduced tax revenues and a recession, and having sustainability so that our healthcare delivery infrastructure doesn't crumble due to the pandemic. Another thing I'll note is COVID-19 has really made clear one of the harmful effects of fee for service payment, and one that frankly hadn't been all that evident amidst all the other ills associated with fee for service payment. That is, if you don't deliver widgets of service volume, then you don't get paid. That's a dynamic that affects all businesses, but I think we would probably all agree that our healthcare delivery system infrastructure needs to be treated a little bit differently than some other businesses. And we certainly want to make sure that our method of making payment for healthcare services doesn't cause us to lose that infrastructure. So I'd like to review some state strategies. I've organized them into these four categories, payment-based approaches, cost growth targets, public option, and then a couple of other strategies that I've put into other and which I'm not highlighting for today's presentation, but we'll briefly make note of. So I'm going to start with payment-based models. And I'm going to start first with growth caps or growth targets, I'm sorry, with growth caps. So the principal example here is from the state of Rhode Island. In 2010, their office of the health insurance commissioner, so they have a separate office just for health insurance regulation, which is separate from other insurance regulation. This office established a set of affordability standards for oversight of health insurers. And the commissioner uses her rate review process to assess whether insurers are in fact taking steps not only to submit acceptable rates, but actually to increase affordability of health insurance for Rhode Islanders, and then may conduct other activities such as market conduct exams to ensure compliance. So there have been a host of actions that Rhode Island's taken through its affordability standards, which I'll note in the next month or so are about to be updated for the third time since the initial release in 2010. But I want to highlight number one, which is an annual price inflation cap on commercial insurer hospital rates, and also a cap on growth in total cost of care ACO budgets. These caps are placed on insurers, not on hospitals and not on ACOs. They are on insurers and limit the amount that insurers can increase their rates or their ACO budgets. I'll also address a little bit later on a new primary care perspective payment requirement that's going in this year. So as you can see, there are some other requirements that have fallen under the affordability standards, but I want to focus on the price inflation caps. The 2019 price caps for Rhode Island were CPIU plus 1%. So CPIU is inflation that removes certain highly dynamic elements of inflation, such as energy. So for example, CPI in the United States just plunged in the last month because of what happened in the oil market. So CPIU removes food and energy because those are highly dynamic factors, and this results in a more stable calculation of inflation. So for Rhode Island, it's CPIU plus 1%. And for the ACO budgets, it's CPIU plus 1.5%. There was a study published in health affairs a little over a year ago that looked at healthcare spending growth in Rhode Island, this is in the commercial insurance market, compared to other New England states. And as you can see here, it does appear that the implementation of the affordability standards resulted in Rhode Island's cost growth, which prior to the affordability standards was growing faster than the other New England states, to grow at a slower pace. And in fact, for the most recent year for that gap to be as wide as it had ever been, the authors of this paper attributed this positive impact for healthcare spending growth in Rhode Island to the hospital growth cap. The second concept I want to share is that of global budgets. And the model stage for global budgets, and here I mean hospital global budgets is Maryland. Maryland implemented hospital budgets in 2014. And they were implemented on an all payer basis. This was facilitated by the fact that Maryland already had an all payer hospital rate model. So it made moving to this global budget a little bit easier. And hospitals are limited to a budget, but they are also protected by having a budget that gives them certainty of revenue. And the state employs simple levers to make sure the hospital comes in its budget. So for example, if volume is higher than budget, then the state will reduce rates to offset the rise in volume and vice versa. So these budgets are set using historical data. And the budgets can be inflation each year for a number of factors as you see listed here. I'll also note parenthetically that Pennsylvania also implemented this model more recently with a group of rural hospitals in Western Pennsylvania, but I'm not going to describe the Pennsylvania model today. RTI International performed a formal evaluation which they published this past fall. And they found that Maryland's model in its initial years did reduce spending for Medicare for overall spending and for hospital spending, but only hospital spending for commercial plan members. Most of the reductions were for outpatient hospital services, and they did this without shifting cost to other parts of the healthcare system. And importantly, hospitals were able to operate under the global budget without having their financial status adversely impacted. Hospital global budgets are attractive from both an affordability and a sustainability perspective, especially if they involve prospective payments because they disentangle volume and payment. And in fact, one care does this already with its hospitals by paying a fixed prospective monthly payment. So I just want to acknowledge that not to the full extent, as in Maryland, but Vermont does have to some degree a hospital global budget that includes some prospective payment just not on an all payer basis as is the case in Maryland today. So this is an example of a strategy that supports both sustainability and affordability, the sustainability because there's guaranteed cash flow and revenue certainty to the hospital and from an affordability perspective because there's some theoretical control over the extent to which the budget grows over time. The third model I want to talk about is prospective payment. Of course, I just touched upon this briefly. Perspective payment is getting a lot of discussion because of COVID-19 and because of the cash flow crises that so many providers had. And you can see a couple of recent blog posts on this topic. And again, prospective payment can address both affordability and sustainability, unlike some other strategies that are good at one or the other. Historically, there have not been a lot of activity among states who advance prospective payment. As I noted a little bit earlier, the new update to Rhode Island's affordability standards is going to do so, but only for primary care. I'm forecasting increased state activity in this area. I wouldn't be surprised if we don't see a lot in the next six months if only to help sustain healthcare providers through COVID-19, which unfortunately isn't going away very quickly and is going to continue to challenge healthcare providers. And again, I noted earlier what One Care has done with some hospitals, but they've also had pilot with some primary care practices with prospective payment. The fourth option that falls under payment models is rate setting. So rate setting is probably self-evident, but this is all payers using one price for a medical procedure. There are big administrative efficiencies gained through having an all-payer approach. If this is implemented in states, I'm going to mean that Medicaid and Medicare prices are going to rise and commercial prices are going to drop. There's actually a long history of this model being used in the United States, typically though just for hospital services. About a dozen states did this in the 70s and 80s, and New Jersey was the forerunner to the Medicare PPS system, but states largely abandoned this in the 1980s with the rise of H-Modes, Maryland being the exception. So Maryland implemented this in 1976 when their hospital admission cost was significantly above the national average, and in less than 20 years, they were notably below the U.S. average. But something else happened in Maryland. Their admission volume grew, and their outpatient volume grew significantly higher than elsewhere. This is the old squeezing the balloon problem. And so overall, while their admission cost dropped, their spending wasn't reduced in parallel because of growth and volume. And this is why Maryland moved to global budgets. So a few takeaways on payment models. First, Rhode Island, they used their regulations to create a policy lever to apply with commercial insurers. They have applied price controls to hospital rate caps and ACO budgets on contracts with commercial insurers. And of course they focused on commercial insurers because that's the part of the market where traditionally there's been the least control. Medicare and Medicaid have great purchasing and regulatory power that has not existed in the commercial market. And given that commercial markets are governed not just in Rhode Island but across the country, with non-competitive dynamics in the delivery system, it's been effective and important in Rhode Island at least to be able to constrain what would have been higher rate increases if not for the state applying this lever. And of course they've promoted increased spending on primary care and now prospective payment for primary care. Prospective payment including global budgets offer predictable revenue and budget control. And I want to note that prospective payment can be applied in a non-global payment environment. This is not limited just to global payment to hospitals or to primary care. There are many potential applications of prospective payment including for specialty providers. And then finally all-payer rate setting. Does whole payers all to a single price? Experience though has shown that it leads to increased utilization and there's also a very high risk of regulatory capture. And most evaluations of what happened would state all-payer rate systems in the 70s and 80s concluded that this is exactly what happened, that there was regulatory capture. In fact, there are some concern that there's regulatory capture in Maryland today. Chairs of opportunities for Vermont, I think movement towards adoption of prospective payment would certainly support both sustainability and affordability. And again there is some of this already happening but there's opportunity for more of it. And while commercial medical trend in Vermont has been significantly below national rates, I looked at some calculations and for blue crosses filings for the last half dozen years, the medical trend has been about four and a half percent whereas nationally it was 6.1 percent. So Vermont's done better but certainly you could have greater control and perhaps even further reduce growth if you invoke provider rate regulatory authority along the lines of what Rhode Island has done. So this isn't setting and simply controlling the rate at which they grow. Okay I'd like to turn now to cost growth targets. So this is an area of great current activity across the country and I want to give you both its origins and let you know what a bunch of states are doing. So this began in 2012 and legislation passed in Massachusetts and the goal was to control state healthcare spending. And so the state set a cost growth target and you might think hey we've got that already in Vermont with the all payer ACO model but this is a different type of cost growth target. There was no negotiated agreement with the federal government. And this is simply setting a public objective being very very transparent about it and pushing accountability using what I would say are soft levers. So for the initial years they set it at the state's potential growth state product. This is a forecast of economic growth looking five plus years out and that was 3.6 percent. Maybe in 2018 the state dropped it to 3.1 percent and in 2023 it will default to 3.6 unless the state's health policy commission sets it at something else which I'm guessing it will do. Cost growth here is defined as per capital change in total healthcare spending from public and private sources. It's all healthcare spending for both claims and non-claims based payments. It's patient cost sharing, deductibles, co-pay, co-insurance and it's what's called the net cost of private health insurance which is really insurer administrative cost and any margin. So that's the all in definition. In Massachusetts if an organization exceeds the target it may be required to submit a performance improvement plan and it can be fine if it doesn't submit and implement a plan. So it's a pretty soft lever and I will admit that when this law passed I was skeptical about its impact. If the benchmark strategy or target strategy doesn't work then the state's health policy commission can go back to the legislature and say we need more authority. They have not done that yet for reasons I will now show you. So this is performance against the cost growth target in Massachusetts through 2018. The orange dotted line is the benchmark. You can see a drop down to 3.1% for their most recent period and on average over all those years Massachusetts has come in below its cost. There were a couple of years it was exceeded. One year was the year that Sevaldi came out. Another year was the year the healthcare marketplace collapsed in Massachusetts and they had all sorts of problems. But by and large spending has come in at the total state level. This is not specific to Medicare or Medicaid or the commercial markets but the total state level has come in below the target for these years. Here are a few perspectives. These are from some studies that were done actually a few years ago when the target was still at 3.6%. What I want to call out and what's interesting is the first and second comments here really speak to the fact that once the target was set that insurers and providers began negotiating their contracts around the target and this the target lent itself particularly well for ACO total cost of care contracts where there was a per capita budget already in place so it was easy to translate the target into contracting. But there's a but and the but here is that despite overall cost being lower commercial premiums and out-of-pocket costs have grown above the cost growth target. Additional levers are going to have to be used here and these aren't so easy problems to solve. The out-of-pocket cost problem for example is heavily influenced by decisions that employers make on benefit design. Of course a lot of health insurance coverage is self-funded and hence not subject to state regulation in any form. There are a number of other states that in just the last couple of years have tried to in different ways replicate the cost of a target strategy and you can see three states here. They've taken different approaches Delaware use perspective growth state product as well but they created a glide path to get down to 3%. Rhode Island said there's a 3.2% flat for 2019 through 2022 and Oregon also is taking a stepped approach starting at 3.4% and going to 3%. In addition Washington just passed a law to create a cost growth target. The governor Lamont in Connecticut issued an executive order and they are currently working on one and Colorado and California have draft legislation to pursue the strategy. None of these states are doing this exactly the same way but it's the same general concept but it's a little this strategy is a little bit more than just a target especially in Rhode Island and Oregon thus far. They're developing complementary strategies that involve of public transparency so in Massachusetts there's transparency on how the state is doing and how insurers and large providers are doing against the target but Rhode Island and Oregon are going beyond that they are taking steps to develop and issue public reports that identify the performance of not just insurers and large providers but also the cost and cost growth drivers that are influencing growth and spending and variation in spending at the state level the market level the insurer level and the large provider level and in addition Rhode Island and Oregon they although they have not done this yet are planning on facilitating collaborative multi-stakeholder work to address the cost grot drivers that are impacting their ability to come in below their cost growth target so this is a very important in my mind adjuncts to setting the target and and reporting on performance. In Rhode Island in particular they're leveraging their all-payer claims database to do this so they've had a committee of providers payers and consumers that have been talking about what types of analyses should be run with the hope that ultimately they're going to have standard reports online that will be generated out of their APCD and then in addition they'll have ad hoc analyses to supplement the standard reports. I want to give you a few examples of types of analyses that different states have created to look at drivers of health care spending growth and these are limited examples there are many many more and some that are much more focused. This is a report that comes from the state of Minnesota and it looks at impact of price service mix and volume for five major categories of services now this can be done at the market level at the insurer level at the provider level you're just seeing an all-state analysis here and of course you can do drill downs in any of these categories too so you could figure out prescription drugs it's all about price which prescription drugs or inpatient hospital acute services or something going on in service mix there which services which hospitals this is a very high-level total state total spending view. Second example comes from Oregon and this too is looking at total spending not for the state just for metropolitan Portland and simplifies the breakdown spending by comparing price and utilization to a national median rate and clearly for Portland utilization looks pretty good but price doesn't and then the last example is from Colorado this too breaks down drivers of cost but is doing it by region and so here you can see regional definitions usually around metropolitan areas in the state and so you'll see what's the the PMP and the per capita cost and then what's the variation from the statewide median for those regions so this is this is very high level and again you could do all types of drill down analysis but the idea in Oregon and Rhode Island is to supplement their cost growth target with lots of transparency on cost growth drivers and on variation within the state. So in summary cost growth targets are a mechanism to slow the growth of healthcare spending it's a little bit like what Vermont has but it's as you've seen it's not the same thing it sets a budget it promotes alignment around a common goal and utilizes lots of transparency through public reporting and it can be combined with the data what we call the data use strategy to identify cost drivers and hone in on interventions through collaborative action. For Vermont it seems that there might be an opportunity to use more of a public data use strategy that does drill into cost growth drivers and cost variation and make that available and then to complement it with collaborative work for which there's already an infrastructure in the state to do that work and then to develop measures of cost accountability at the provider level beyond total cost of care so this is something that Oregon in particular is looking at Oregon is not content just to look at total cost of care cost drivers but they actually want to look at price utilization across the state at multiple provider levels including pharmacy there might be an opportunity to do this in Vermont for specialists and perhaps for other services. Okay topic three is public option so this this is a topic that got a lot of attention in 2019 and there's quite a bit of state legislative activity in 2019 early 2020 I think COVID-19 and its impact on state government and frankly on legislative sessions has tempered this but this is an idea that was much talked about when the ACA was being developed as you probably all recall it's a state organized plan that competes with other private health insurance generally states have talked about this have talked about this not as a state operated plan but rather as a state contracted plan so it's it's different than and then saying hey let's take diva and the Medicaid program and make it into an insurance product the states that are pursuing this are thinking about contracting with insurers as the public option this this could be a first step towards a single pair system but it's certainly need not be so Washington is the leader here they pass legislation and the public option plan is supposed to become available next January what characterizes what washington's doing what other states are talking about is the plan is capping provider reimbursement and usually relative to medicare in washington and in other states where it's been talked about in washington they also set some minimum reimbursement so it's really creating boundaries at the bottom and at the top but it's the it's the cap at the top that's that's intended to create the savings and produce a lower cost product it will be of surprise to no one that these are not this is not a popular strategy either with insurers or with providers Colorado had legislation that was being considered until last week their bill died about a week ago they concluded that because of I would say both opposition but also because of the impact the COVID-19 was having on their left side of session that they weren't going to pursue it further but you can see here again they were proposing to cap hospital payments as a means to produce a lower cost commercial health insurance product so public option plans and there are other states by the way that have been talking about them new Mexico Connecticut being too they offer more choices for consumers and provide new competition in a market they are a mechanism to implement price controls without actually regulating prices it's rather done contractually and as I've noted the Washington Colorado designs really are different than the idea of the state operating an insurance plan it's really the state contracting for one instead I'm not sure the public option is a great or a high priority choice for Vermont I understand that it was considered in the past several years ago and dropped but the Green Mountain care board has so many existing regulatory levers that it can apply that it's not clear to me that it needs a public option given the authority it has to do other things and then finally I just want to give notes some other strategies that I'm not delving into there are additional slides at the end of this presentation that go into these strategies further but I'm not going to discuss them greatly now one is market stabilization these are risk pools and other ways to stabilize the commercial market in particular and then there are prescription drug policies and and Vermont's already done quite a bit in both of these areas and so for that reason I'm talking about slides but if you like to consider them later you will find there are some strategies that Vermont has not pursued that you certainly could consider so let me stop there and invite questions and comments that you may have thank you very much Michael we're going to start with board members and I'm going to go in alphabetical order and call on board members if they have questions starting with Jessica Holmes myself okay thank you so much really helpful presentation great to see the landscape in other states as we all grapple with affordability so one is a quicker question going back to Rhode Island I noticed that the hospital growth caps were CPIU plus one percent and the ACO growth caps were CPIU plus 1.5 percent so I'm wondering if you have any background or thoughts justification for why the allowed growth rate would be higher in ACO budget centered hospitals sure the the reason is because there are in simple terms there are two things that drive the ACO's budget changes in price and changes in utilization so I'd say that half a percent is an allowance for changes in utilization is that necessary could someone say no there should be zero for utilization you could but Rhode Island decided to give an additional allowance for changes in utilization okay okay and also note that of course the hospital cap is only for hospital costs whereas the ACO budget cap is for all services not just hospital services so there could be growth that happens in services that are not including price growth that are subject to service then service is not subject to the hospital cap okay great thank you my second question revolves around service line optimization and is worth thinking about sustainability and affordability of health care services I'm wondering what your research has uncovered with respect to how states and hospital systems are looking at service lines you know they may be different in a fee for service world than they would be in a value-based capitated prospective payment world particularly this question is important in a rural state like Vermont where we have population declines which therefore means volume declines and so the fixed costs of mounting the same level of services may become more challenging but we also have the issue of access so I'm wondering you know as we're thinking about financial sustainability of hospitals and improving you know quality while reducing costs how does service line optimization optimization play into that conversation and what have you seen in other states so states used to be a little bit more involved in that type of issue when there was more of a health services planning role within states but states backed away from that quite a while ago and by and large they haven't gone back there and I'm not saying that that's the right strategy but they pretty much left it to the market to decide who offers what services and who stays in business and and who who can't stay in business yeah I don't know that's right and and I also don't know that it's a fit for Vermont but but that's what I've seen in other states well are you seeing that you said you talked about the market so are you seeing as these payment methodologies change from fee for service to fixed payments capitation global budgets are you seeing a natural change in what services are being offered more opera you know more affiliations sharing of services things like that that are naturally evolving as the payment system evolves and what does that look like yeah so that so that happens in big systems right so we've had tremendous growth of big systems where big providers gobble up small providers and once they do that then the system itself decides we want to rationalize our distribution resources so little hospital that we just acquired you're no longer going to offer that service anymore you're going to offer these services but that that that's happening within the structure where the bigger entities trying to figure out how to manage its resources it's not happening at the level of the state where the state saying we need to rationalize our distribution resources got it okay thank you okay robin lunch hi michael thanks for your presentation it was very clear and I actually don't have any questions but it's good to see you nice to see you robin thank you robin tom pelham well like the others thank you very much for this presentation there's a a lot to chew on there and it's you know that's timeliness relative to what we're all experiencing now is is is appreciated a couple questions you mentioned regulatory capture once and I'm just wondering what your sense was of if you could give more definition to that and relative to the payment models um what what payment models are most and least vulnerable to regulatory capture okay so by regulatory capture I mean that the entity that's setting rates in time becomes heavily influenced by those they are regulating such that the the financial discipline of the regulatory structure becomes compromised and and and evaluations of old state rate settings that that's what happened in a number of states that used to set rates um that it's it is very very difficult to maintain independence between the regulator and the regulated providers when the regulator is setting rates in terms of payment models I I know the only experience that we have with regulation of rates is for fee-for-service rates so would it be the same for other payment models if for example what was being regulated was a PMPM budget I would think that the concept would apply there but there's actually no evidence of it because there's never been that type of rate regulation thank you for that my second question would be in terms of these payment models and independent providers which which of the models would you say that are most friendly or well received by independent providers and which less so I think this is changing so I think that particularly for entrepreneurial independent providers fee-for-service payment has been attractive because it provides the opportunity to to innovate and to grow your business and your revenue I think that experience with COVID-19 may lead and I'm speculating here I have no data to support this but it may well lead many independent providers to think a little bit of revenue certainty to keep me from going under and I'm thinking about you know specialists who've seen 75 plus percent of their volume disappear overnight that that might be attractive to them I think we've seen a little bit of that here in Vermont um thank you short thank you Tom Maureen Yusuf and Maureen just like the public I saw your text and I see that you were bumped off the internet but you're participating by phone and when we go to public comment what you're going to have to do Maureen is hit star six so Maureen hi can you hear me we can I'm trying to sign on my internet went out on me um so I think I heard all the questions I might have mischievous at the beginning because I got knocked off um just a question on how do we balance the affordability for the consumers and achieving the sustainability for providers and you know I know you're trying to give some examples on the prospective payments and things like that but at times it can be at odds if we're going to make our whole healthcare system sustainable which is what we want it has involved increasing cost to the consumers and so I'm just wondering you know how you look at balancing the two of those yeah I mean you're fair to call it out Maureen because they they are definitely in conflict with one another at times um and I'll be honest there's no easy answer to that um because I and I'm sure you hear this where a provider says if I don't get more money I can't stay in business and then you've got I can't afford my health insurance um that's um that's a hard problem to solve um and um and it will probably uh involve some painful decisions but they are not they are sometimes not reconcilable and I think we all have to be honest about that okay and then when we're looking at payment-based versus cost growth um do you see many states doing both of those options or you know the kind of the examples you gave were one or the other but do you see areas where they're combining you know both payment-based versus the cost growth yes yeah I mean I got me um for example um Rhode Island falls into both categories um they are not mutually exclusive uh and most states are trying multiple strategies at the same time hopefully having them integrated and reinforcing okay and then just one more which is you know I know one of the models showed I believe that on commercial rate increases were capped or there were you know guidelines for what the commercial rate could could go and how do you see that working with the negotiations then between the providers because if they're capped at a certain percent whatever that might be let's say three percent or five you know five percent and they have to manage utilization as well as price in there um and they're getting providers coming to them with increases higher than that you know how do they manage that there you had I think one too many days there so I lost all the parties can you I'm glad I wasn't the only one Michael well I'm just saying how do you manage the if the commercial payer I believe on one of them there was just a cap for the commercial payer right and so the commercial payer then obviously has to deal with the providers and within that has to deal with utilization and um price increases so if if a commercial payer was given a five percent cap that they have to live within um then they obviously have to be able to push that back down between pharmaceuticals everything else I'm just saying you know how did that work okay so the the cap example was the um the state telling the commercial insurer you can't um um do two things you can increase your hospital rates by more than x percent and when you negotiate an aco contract the budget can't grow more than y percent over what it was the prior year and so that just means that the provider who enters into the agreement assuming the provider's willing to enter into the agreement has to say all right we're going to find some way to constrain um our expense growth to stay within that budget now they may actually then be happy that the insurer is limited on how much more they can pay the hospital especially if they are not a hospital-based aco um right now I know that's not the case you know in Vermont but right okay that's all thank you it's very very helpful presentation thank you marine michael um my questions really uh center around um those states where they have put in place the um minimum reimbursement and the maximum reimbursement um through the through the regulatory process um is there any research that shows what the proper premium is for an academic medical center and and also um i'm curious about how they came with um 101 for critical access hospitals what's the theory behind that particular number uh yeah so there's no theory there's no science to this okay you know states that states that are setting targets or caps they are spending some time thinking about what makes sense but there's no empirical answer to what's right um and and I've spent a lot of time talking with um economists on this as well as with lots of smart stakeholder groups in multiple states um but there there's no empirical answer it's uh it's consensus and judgment about um what seems right and also I will say what seems doable because there's some people for example argue why do you have um why do you have a positive growth cap if we know that we've got 25 percent waste in the healthcare system shouldn't it be negative um so you know part of the way that that people arrive at at caps or targets is based on what seems um both um achievable uh and what seems um in some manner methodologically right okay do you want to touch on the academic medical center question I don't have an answer for you sorry okay is there a spread in the uh Medicare rates that uh these states believe covered that question I've never heard them discuss it I mean the truth is the issue of um what is justifiable variation in provider rates is a is really a question that nobody has ever resolved I I did work several years ago supporting a price variation commission in Massachusetts and that was essentially the question everyone agreed we should pay for justifiable variation but not for non justifiable variation and people could identify what were the factors that might justify variation for example um you want to have um a let's say you want to have a burn unit of a hospital in your state that you can access its standby capacity it doesn't get used a lot but you want to have it there so that's uh that's a cost you want to pay for but but no one's ever gone through the exercise of trying to isolate what are all of the component pieces of justifiable variation and then to see what's left over that shouldn't be paid for now we know that a lot of variation in price um and there's lots of research on this is due to market power but but no one's ever been able to break apart the justifiable part and and build it up to a rate okay so at this point Michael we're going to turn it over for public comment and questions and again if you are on the phone and not uh listed as a Skype presenter if you could hit star six before you speak so is there any member of the public who wishes to offer comment at this time again star six hi this is moored waserman I have a question it might not be a fair one but I thought I'd take a shot go ahead more so uh this was a great presentation and your knowledge of the what the different states are doing is very impressive do you have any knowledge of what other western industrialized democracies are doing especially ones where there's a mix of commercial going to be a reasonable growth but for the consumer you don't have a growth in wages one of the questions that I'm always asking myself is when I get that 3.5 growth or 3.1 3.2 what have you seen as the best way to distribute that growth and cost to the that which is within the economy that can afford it because it's not always going to be the consumer what fraction of the percentage should the consumer cover and if you're on the lower end of the income scale obviously you aren't going to be able to pay that much in increase and how do we redistribute this cost that keeps making it unaffordable what what can you draw from your experience on that so I'll give you a couple of reactions although I don't know that I have an answer for you one is we look at these rates and people think hey it would be great if we can strain cost growth to 3.4 or 3.5 or 3.1 or 3.2 well if wages are not growing or they are growing less than that then even those low increases are harming affordability and I think we always have to keep in mind what's happening in terms of wages and household income because to the extent that that healthcare is growing more than that then essentially consumers are losing every year losing in terms of portion of their income that they can spend on anything aside from healthcare and I know that in our conversations in in Oregon all those other states that I listed we've been we've been working with them and in Oregon there was a small employer who was there who when she heard the group buy and agree on 3.4 percent said yeah but that's that's more than my employees can't afford for an annual increase it's too high and it's why they ultimately came down to 3.0 percent and and you know on your your your real point which is how are people at the lower end of the wage scale supposed to take a 3 percent increase when they can't I don't I have no good answer for that and and I'll note further that that 3 percent or three and a half percent is for the state as a whole for small businesses in most states the rates tend to be higher um so if if you and in Brumasca tons of small businesses but if you are working for a small insured employer group then whatever the increase is across the state the odds are it's going to be higher for you than for everyone else and I don't have a solution to that problem but you're right to raise it thank you other members other members of the public yes hi this is Kathy Mahoney I just have a question first of all a comment thank you very much for the presentation I thought it was very well put together my question is about looking at parallel data or balancing metrics in some of this work you know you mentioned one of the earlier examples was Rhode Island showing some some positive change in their in their growth um what is their quality outcomes look like how does this impact patients or does it and and how do you suggest taking a look at that it's a great question so some states that have taken aggressive approaches on affordability have said we simultaneously need to be tracking what's happening on quality so Delaware for example when they established their Costco target they also set quality targets and and Connecticut is going to be doing the same so I think it's reasonable and appropriate more than reasonable it's appropriate to be treating access quality and and health equity on par but I also think it's necessary to go even one step further as provider organizations and I mean both at the ACO level but also at the individual hospital or practice level as they assume more budgetary responsibility or financial risk there is a risk that there will be some providers probably a very small percentage but some that will take actions that are financially beneficial to them but that are not beneficial to the interests of their patients and I have a physician colleague who recently was with a health plan in California and she had a couple of contracted medical groups that committed outright fraud to take advantage of a financial model which harm their patients so I do think it is incumbent upon states that as they work on pushing on affordability that they also develop some important processes and metrics for being able to protect against and potentially detect undesired adverse consequences and I just think that's a generally responsible thank you great thank you other public comment and again if you're on skype all you have to do is hit the blue microphone button with the line through it to speak and if you're on phone it's star six hello chair this is mark stanislaus hi mark so um I have a comment and um uh and and then you know I just have a question as it pertains to the um well to the state of Vermont um I want to stress what what Maureen said is with the balancing of sustainability at the health system perspective and affordability and um well so first of all Michael thank you for your presentation it was very clear and understandable um in fiscal year 2016 just to give you an understanding of of the hospital landscape and you might already be aware of this the hospitals had a margin of a little under a hundred million or about four percent in 29 in 2018 and 2019 that well that went down to 28 million and 21 million respectively and you know one percent and and you know in 2019 under one percent and I just think the sustainability of of you know the hospital system in the state of Vermont it just can't sustain itself on you know sub one percent rates or on a sub one percent margin so we know that kind of gets to what Maureen was saying so it's obviously a delicate balance the question as I have for the state of Vermont is that I think that we have some unique circumstances here that we have a very small population so when you do these modelings over smaller populations um there are usually higher variations um we have one of the oldest states um in the United States I think we're the second or third oldest state and as you know the older people get the more care that they utilize we have very very little hospital consolidation across our state because I sense that's the way of lot of these other states are you know building efficiencies is you know possibly through consolidation and then you know because we just don't have the population here there are a large amount of specialty services that that our residents need to go outside of our state so you know and when residents go outside of your borders it's much harder well to regulate it so when you attempt to put the cap on it as a whole you know it seems the in-state providers are barren with a larger burden of the change so we know I was just wondering if you could speak to some of those factors and we know if say we know some of them are real or you know some of them are not so real based upon your experience so you raise a number of factors so um yeah it's the the issue of small numbers and small providers um is certainly a big concern in Vermont it's not only in Vermont almost every state there and there are exceptions almost every state has large rural areas and some frontier areas um and so it's not only a Vermont problem but it is certainly is a characteristic Vermont problem and uh and you know you're reiterating Marine's point about the struggle to balance affordability and sustainability it's it's there and and I think um I think everyone needs to be honest and direct about the the trade-offs um when confronting it your point about out-of-state providers um so you know um Vermont is not unusual in that it has people going out of state and when we did work in Delaware they've got tons of people going to Philadelphia to get healthcare because Philadelphia is practically on the Delaware state line um I think you are right that it's important to think about um how to make sure that um that spending and particularly price growth to out-of-state providers um are in some way uh controlled because uh not only is there an equity issue for Vermont providers if that's not the case but uh to the extent that there's significant spending going out of state and there is in Vermont um then you're losing a significant amount of control over spending growth okay other members of the public hearing none again Michael we want to thank you um it's a lot of food for thought and a very well done presentation and thank you very much thank you thanks for the opportunity to dialogue with you so at this point um board we're going to switch over to a discussion on this year's hospital budget guidance and um when you are ready Pat Peroni if you could take it away okay thank you mr chair can you hear me we can excellent all right good afternoon everyone uh we are here as kevin noted to continue our discussion on the hospital budget guidance for fiscal year 2021 and i'll do my best to announce these slides as i move through them and any other documents that we plan to review um before we start i'll just give you a rundown of how i intend to proceed i'm going to start with some a little recall of the logic that we used as we navigated the last seven weeks or so since we postpone this process then i'll move through the um these slides as as is up on the screen for everyone to follow along and i'll just give a brief overview of the financial template that we are recommending um be considered by the board for submission by the hospitals when filing their 2021 budgets and i can navigate once we move to discussion with the board i can navigate the actual um written guidance document for board members to um discuss any particular points within that document that they would like to talk about so with that i'll begin with the logic um in creating this amended process um we built a more skeletal version of the guidance that we feel is flexible and still flexible for the hospitals and still informative for the board regarding the financial template that as we will as you will see is should be very familiar to the hospitals it's it's similar in many aspects to the financial documents they submit every month to the green mountain care board and it should be familiar to the board from the staff analysis that they receive every year prior to hearings which is essentially a boiled down version of what the hospitals submit from a financial perspective a rate perspective payor mix perspective etc so we wanted to use a document that um both sides would understand and can use and is familiar to them we also considered the current situation within our hospitals we know that many have had staff reduced and resources um diverted from um the normal course of operations to provide the essential care and protection for patients within those organizations and we wanted to be consider the fact that they may not have the human resources at their disposal that they normally would um when putting together their fiscal year budgets we considered a few different options around budgets we looked at the potential for um micro budgets breaking it down into three or six months portions but that did not jive with our attempts to ease the burden on hospitals that are operating with reduced resources and staff so we we moved that thought aside um and statutorily we can't go beyond approving a one-year budget so we couldn't put forth a two-year option um so here we are looking at a 12-month option understanding of course the grand assumption this year going into these is that all assumptions will be off most likely and that's going to be very difficult but yet um we still wanted to move forward with something that would allow us as we go through the coming months entering a new fiscal year would allow us to discuss actively with the hospitals this was your assumption at budget time that was it changed according to your actuals and give us something that we can um actively discuss and compare and analyze with the leadership of the hospitals um and as we've seen matters can shift very quickly uh with covid being on our in our in our front yard now and we wanted to make sure that whatever we put forth in the budget um should the hospital gets for example halfway through their budgeting process and all of a sudden reports are coming in that they're exceeding their projections or may be falling short of that they can easily um make amendments to this prior to submission and still meet the time frame so it really is about flexibility on their end and still providing the necessary financial information for the board to make an informed decision and engage with the the hospitals um during the hearings so with that I will begin to move through the slide deck um moving from page one the intro slide to page two how did we get here and some of the background here on march 18th uh board meeting the board waived the 20 march 31st deadline for um making a decision on budget guidance and they did not expect find non-financial reporting on may 1st um they did vote in the 3.5 um growth ceiling for npr uh with the board recognized hospital budget submissions and challenges created from COVID-19 and that these were uncertain and ever-changing times and the board directed us to recommend guidance option or options um they also requested the health care of its office to similarly streamline their questions going into this process and shortly after that EHCA uh signaled their willingness to do so uh the abbreviated guidance staff recommendations um was developed through thoughtful and collaborative initiative with um the hospitals and discussions with laws about how best to move forward with this the submission date as you will see has been moved from um the historical july 1st july 31st to provide the hospitals with another 30 days um to submit their budgets giving them more time and this all goes relates back to their um the staffing and resource challenges that they have the abbreviated excel budget template which we'll get to um will be used for submission this year and later will be entered into adaptive and that that's a discussion that we'll have with um the financial leadership as to whether that will be uh GMCB entering that data or if they would like to do it um we've eliminated part one of the non-financial we we have eliminated part one of the non-financial reporting requirements normally those submissions would be um in or coming in unfortunately I've lost sound did somebody just mute Patrick I guess they did um all right I will back up did you lose sound when I was talking about the abbreviated staff recommendations Kevin no so prior to that after that okay so we've chosen to um eliminate part one of the normal budget process which is the non-financial reporting normally that information would be being submitted now or close to now for consideration for the board and as we've essentially postponed for seven weeks that did not seem an appropriate measure at this time we're also recommending that we limit the questions to those of technical or clarifying nature once we receive the budgets again the timeline has been shrunk and we want to make the best use of that time um in consolidating the information for the board we've also added um a pretty heavy COVID-19 impact um element to the budget so that they can better inform the board on a case by case basis hospital by hospital basis of how COVID has impacted them and what assumptions they expect um will carry them into fiscal year 21 on slide four we we made note of um an inventory here of some of the items that we've added delayed consolidated or removed from consideration and these are high level bullet points so within each one of these there is a large amount of detail um that the hospitals are normally expected to submit to the board so this is a very broad overview of the items that we've taken into consideration through this of course as I just stated the COVID-19 impact adding that to the timeline and considering that um throughout the narrative throughout um the submission process the non-financial reporting has been removed um the data input adaptive has been removed to a later date compared to financial metrics removed a good portion of that there still are some in there such as days cash on hand liquidity ratios etc that will still be extremely important for discussions later on um the NPR and FPP overview and the guidance has been consolidated into one um there will still be specifics that need to be provided on each but we have combined that other operating and non-operating revenue we've eliminated eliminated much of the detail we originally had in there um but it still should be talked about as hospitals will be booking um COVID related revenues um in other operating line items so that will still be a conversation that needs to be had we've reduced the capital investment cycle to a couple of questions around um postponement of capital operations um considering COVID we've pulled out items like the organizational structure service line assessment questions business opportunities questions unique patient questions um ACO we've postponed a reserve and settlement table until fall that we had been working on leading up to this but that was um shelved for the moment uh because of COVID but that's something that we still want to work with the hospitals on to gather that information and engage them the stakeholders and making sure that the information coming back on that is useful to our ACO team and is useful towards understanding more thoroughly the all-payer model and how now that we were a few years in um those reserves and settlements uh are working so that'll be something that everyone should earmark for a later date but it's not going to be included in this budget process for our recommendation uh we've moved some questions around uh challenges employee attribution mental health and social services um the uh Vermont the Vahi information has been removed and several of the appendices where there's a lot of reconciling going on between budget to budget and projection to budget has also been removed there's normally a lot of detail within those appendices that we have pulled out to make this submission more flexible for our hospitals so a few of the items that we've highlighted for for discussion is of course the overall abbreviated guidance um potential discussion around change of charge in guidance that will be a certainly will be a topic um moving into the budgeting session later this summer and early fall including possible amended mid-year change in charge discussions and any other board member specific considerations around that that they might they want to put forth uh the MPR growth target for this year 21 has been left in the guidance document at 3.5 as I stated earlier that was voted in by the board already and the board should consider discussing whether they want to continue with that or alter or remove um the MPR growth rate for this year given all the considerations around um have the suspension of electric procedures has impacted our hospitals kind of dovetailing into all of these would be the enforcement policy and what that might look like could that be um molded to the potential mid-year change in charge discussion um and underneath that reporting and monitoring for all hospitals um it's going to be a very interesting um time moving forward here late 20 late 20 and early 21 and into next year or perhaps the board wants to consider a higher level of monitoring for all hospitals given the financial situation that covid has brought upon them um and then review of the timeline we've altered the timeline and I will toggle over to the actual budget guidance document now to show you um to show you the timeline so what we've done as I stated earlier is we've moved the July 1st submission date to July 31st following that the staffer review analyzed and asked technical and clarifying questions of the hospitals for example glaring mathematical errors to some statement that was previously you're fading in and out Patrick if you could stay close to your mic it would be helpful okay I am hovering um the week of august 17th and 24th we've left the hospital budget hearings uh that have already been scheduled in place and for august 24th and 26th the staff would provide their regular preliminary budget overview and from september 2nd to 15th board deliberations votes to establish budgets in the board meetings and by the 15th the board would issue budget decisions and that all flows through to october 1st which is our normal date for submitting orders and that's important because when the orders are submitted they include the board's directive on matters like changes in charges and for the hospitals to have enough time to negotiate and make changes to their charge masters with their commercial payers they need to have those orders in place so that they can perform all of that work prior to the effective date of january 1st when those go into play so we've cut down quite a bit on the front end of the timeline and left some normalcy there with a schedule moving um from august into october for date of order delivery i'm now going to toggle over to the financial document to show what it is we are recommending be the document of submission for budgets starting off that on the second page of that document because the technical questions and those will be built out if they need to be according to what we receive for hospitals those are some examples here is the income statement at the top underneath the vermont community hospital naming recognition there is a green bar that says gmcb data entry and to the right of that hospital data entry what we are going to do is we are going to populate the actual results submitted by the hospitals for the first and second quarter and the reason we're doing that is one to ease the burden on the hospitals but two moving forward into the third quarter and the fourth quarter is to show the impact of where covid occurred now covid came in about two-thirds of the way through the second quarter but the fact that we have to do this with 14 hospitals um we do have to draw more um general line in the sand and we can't get so minute into the detail of going after specific months or even cutting months in half to show covid's impact we do have to draw a line and we chosen to do that at the end of the second quarter which is march 31st and that is understanding that elective surgeries were postponed um in mid march so there will be some bleed there that may not come through um when the board is looking at this so that should be considered under hospital data entry we won't have all three months of the third quarter so we are going to ask the hospitals to populate that quarter is worth of results they will have information for um the third month of their third quarter before we will so it is important that they populate that and then we'll ask them for fourth quarter projection so it should show from left to right what the hospital has actually had happened with covid without covid and then the um actual third quarter and projected fourth quarter and the overall 20 projection and then of course all the way to the right their 21 budget um with feedback from hospitals we also added under other operating income a specific line for covid stimulus and other grant funding as a result of covid that the hospitals are receiving and that's important to break that out um because there have been several stimulus releases um and there have been Medicare advances and so on that we feel needs to be broken out here for the board to see and understand um those monies coming through other than that it is a very high level look at expenses and the margins are still in existence down here non-operating revenue is still in play moving to the fourth tab is the balance sheet and the balance sheet will probably be more important than ever moving into this year it is the heartbeat of financial health for an organization and we've added a couple items here where they will fill out their budget their projection and we've broken out a couple of items around aco risk reserves for um assets and liabilities and then more specifically um covid related liabilities some of these monies are going to have to be paid back and it is important to understand the short-term and long-term effects of the debts that the hospitals are having to incur related to covid there could potentially be financing that the hospital seeks and and attains um for access to cash we've seen some of that with lines of credit etc being expanded or tamed um and also for the person of our hospital stakeholders adding a day's cash on hand line item to show the impact of the covid monies on days cash on hand um some of the medicare monies the hospitals are holding on to until they absolutely need to use them um because they will have to be paid back if matters turn around more quickly um then they hope not to use those those advanced funds um so we're trying to be high level but also informative for the board to see the impact of some of the financing challenges that have come to the hospitals on page five we've broken out and we are requesting funding sources that have come to the hospitals that will have to be paid back and those that do not have to be paid back again a little more detail for the board members to see what the hospitals have received for covid related funding or advances we've added into this that the hospitals wouldn't normally see on their monthly financial submissions but the board would see in the staff analysis a tab related to um justification for change in charge and net patient revenue increase and this is uh this should be very familiar to uh the board members and we built this out a little bit around the net patient revenue change due to charge requests for commercial medicated medicare with some of our hospital stakeholders to outline that more thoroughly for the board and on the final slide slide seven we've um compacted our normal um payer mix chart for the hospitals to complete there's normally quite a bit more detail built into this from the hospital's perspective and we've stripped that down as best we can um to still provide a certain level of information for the board to make uh their decisions on so with that i'm going to toggle back to the uh slide deck and the next steps we've as susan mentioned at the start and her executive director's report public comment was opened yesterday and will remain open until may 19th at 10 am um we will need to receive the healthcare advocates questions once they've had a chance to review our recommendation moving forward they have a possible board vote next week wednesday may 20th and then um if we do receive a um vote of approval from the board we'll distribute to the hospitals and post to our website the budget guidance materials and with that i will turn it over to the board and as i stated before i am ready to navigate through the actual guidance document to specific sections um that you would like to discuss home thank you patrick um you know in in a traditional year the board is primarily focused on cost containment but this is a year where the primary focus has to be on hospital sustainability and trying to get our healthcare system back on from financial ground and one of the things that i wanted to uh start you off with was on enforcement um as i said at a board meeting last month i'm hopeful that um we can minimize um this process for hospitals and also give them the opportunity to build back up their days cash on hand um to make them financially solvent and in that vein um i had proposed that uh there would be no penalties for obviously 2019 um no penalties for 2020 and that the penalties for 2021 would be um basically um calculated adding both 20 and 21 together to um come up with um a cumulative amount what we know is that um the hospitals have seen a huge decline in services as they could only deal with emergent and covid related care as they ease out of that there's there's going to be some unwillingness from the public to go back in immediately and we don't know what that effects will be but over time there will be some pent up demand that um hospitals are going to have to deal with and that pent up demand is going to be limited in different ways at each hospital because what the capacity is at one hospital will be different from another so the hospital will be limited by um what their staffing is um by what their physical capabilities are as far as procedure rooms and things like that and they will not be identical so uh i didn't notice a change in the guidance when it came to enforcement have you considered that patrick yes we have um but that was one thing that in discussing with board members there were several different views on that and our thought was that we would open that up for a discussion at the beginning of the covid crisis it seems that many people thought that once the doors were back open they would be able to recoup but as the longer this has gone on the less likely it is that um they're going to meet their fiscal year 20 numbers and that that will bleed into um 2021 so they may come in under 20 over in 21 but there's also talk out there now that they may just flat out lose a certain percentage of that too um so we wanted to see what the board members felt about um that regulatory lever with enforcement but also should we get into the change in charge discussion with a mid-year amendment that would also be a lever too um depending on what's happening with each hospital so it's a little more open from our perspective um so we really wanted to leave that up to the board to to find his tweet spot okay so i'm going to start off in alphabetical order again and call on uh dr holmes first okay well i'm definitely i'm interested in hearing what some of our my our colleagues on the board have to say first of all patrick and team thank you so much the work here is much appreciated and in general i am on board with a streamlined approach this year um obviously there's tons of uncertainty and i'm um cognizant of the staffing shortages at the hospitals due to furloughs and other priorities so i'm curious to hear one of the things i'm curious to hear in the public comments um hopefully from hospitals is on the timing issue of submissions and even the hearings in my mind whatever budgets are submitted i think we want to optimize the data revived reliability of course we have a lot of uncertainty but the longer we go on the more information hospitals will have so i want to i don't know what that optimal date is i said you know july 31st is what's been uh proposed um and we also have to meet the october deadline so you know i want to hear from hospitals on that so i i've reserved my opinion there um one of the things that i would like to see added and this is very very small but if hospitals in their budget process um are thinking about changing a service dropping a service or adding a service i would like to have somewhere in there where they just describe that just can be hey we've added this service or we're dropping the service here's why uh because i look at this as an access issue and we should at least be aware if there are services changing um to deal with some of the sustainability issues uh i'm not sure so the 3.5 i'm not comfortable with um so i would like the board to consider doing a vote on that um and i'm going to throw something out there that is i don't know a little bit unique um which is not to have a cap um i've always been a little bit uncomfortable with one size fits all approaches but especially this year it would help us to really understand what hospitals are thinking what is their best attempt at a realistic budget that addresses their own individual projections on utilization changes due to covid that is you know what kind of pent up demand are they expecting um if at all and also what is their own path to returning to sustainability and then we can assess those budgets on an individual basis so i'm going to throw that out there i don't know how others feel about that but you know it would move us away from this budget to budget world that we live in and it would actually get us a budget that's based on actual in a year of a lot of uncertainty and it would move us away from a one size fits all approach so throwing those ideas out there but i really want to hear what other people have to say okay i didn't hear a question in there for patrick so i'm going to move to robin lunge all right took me a minute to unmute i don't i don't have a question but i also did have some uh ideas do you want me to hold that until the discussion kevin or no go ahead okay wasn't sure um so that i wanted to talk about was um the idea of having some sort of supplemental uh change in charge guidance because it seems like this year we all recognize that the the npr targets are it's going to be very difficult to have any sort of realistic sense of what could be happening there um but i think that we similar to what we had seen in uh already this year i think hospitals are going to because of the drop in utilization be looking potentially at change in charge requests as a way to ensure sustainability and as i mentioned um i think it was just last week uh when we were talking about uh northwest request i think there's a way to look at change in charge as as part of the whole uh budget in terms of utilization and charge being two ways to get to uh a budget um and so i but i think that people are going to be and myself included are going to be concerned about baking in changes in charges necessary at a pandemic forever and so i'm not sure the best way to do this and so that's one reason why i wanted to raise it and then get other board members thoughts and public comment as well but i wonder if we should be looking at either some sort of temporary change in charge uh request um or some way of revisiting the change in charge mid-year i don't know what makes the most sense from the perspective of the payer and provider contract so i think we would need to hear back from both hospitals and insurers about what's realistic um in the private world but when you do look at what mariland is doing the way that they've cushioned their hospitals during this time period is they've provided increases in charges to offset the declining utilization now when utilization goes back up mariland will reduce the charges to offset that so that they're still hitting a target so um so i wanted to throw out that idea broadly out there for people to think about because i think um the other component could be that we need as a board to think about what information we need in order to feel like a change in charge request is justified um and be a little clearer about what that might be because i'm not sure that that's not necessarily intuitive to folks so that was one issue i wanted to raise um i had um two other smaller issues one is that on the c o n um capital questions um this is something that i raised to mike and lin to think about but i just wanted to mention it um so in the certificate of need statute there are certain requirements about certain types of capital projects being submitted as part of the budget and also the atrap standards require that so i just wanted them to make sure that we think um either that whatever information we're getting is sufficient to meet those other statutory requirements or that we explicitly make a choice to waive those other statutory requirements which we have temporary authority to do um related to covid um so that's that's really just uh stay tuned because i think legal and the hospital budget team have to work that out um the other i would say another idea that i had that um is a little bit off the usual beaten path for this is whether given the volatility and the uncertainty around utilization should we consider asking the insurers to submit utilization data in conjunction with the hospital budget process that is not something that normally is covered under our hospital budget statute so it would have to be something that we would do using our covid related uh special authority that we got um but i think getting some information similar to what we got at the meeting uh last was that just last week i think so um could be another piece of information that would be helpful in this context that also isn't reliant on the hospital producing it so um i wanted to throw that out as an idea um then in reaction to kevin and jess's suggestion um i'll just go ahead and react now since i have the floor um i think that um on the enforcement piece kevin i think it i i agree with you we need to be flexible in terms of enforcement i kind of like this idea of looking your idea of looking at it over two years but i do think if we were to do that we really i don't know that we can also go with jess's no npr cap um idea because then we don't know what we're kind of striving for and so um i'm not i'm certainly open to more discussion about your suggestion jess about no npr cap i think what makes it a little tough is then um i mean maybe there's just no way this year is going to be comparable anyway and on all of our year over year charts we're just going to have a big disclaimer but i think um there are other ways that i think we can after the fact back out some of the covet related volatility potentially um or acknowledge it so i'm not i have to think about it a little more but i'm not sure where i'm at on that idea um i do think it is important to know if people are our hospitals are thinking they want to add or drop services i don't know if it makes sense to do some sort of threshold or monetary threshold or something like that just so that it's not uh maybe that's not an issue i don't know that's what i had thank you thank you robin tom pellum um one question i had for patrick well first let me say patrick i think you and your team have done a great job here under incredible stress i mean this is this is a lot of money a lot of moving parts and uh you know i think you've been appropriately sensitive to the burdens on uh on hospital staff and have uh you know um part parse this down to something that is is is is recently man so good job on that my one question i have a couple of questions one is on um are are there have you had any discussions at all with the folks at um are you am i breaking up someone's i think you're okay go ahead tom have you had any discussions with the folks at diva i know that making any assumptions is not that reasonable in the current environment but kind of thinking about Medicaid revenues over the 2021 period um i'm sure diva is seeing uh changes in enrollment and uh obviously changes and available of state funds um certainly all of that is in result but um it might be helpful if at least there was some assumption um across the hospital population at diva of of what that might look like um on the commercial side we are already in the rate review process and we'll have certainly nowhere near perfect knowledge but some knowledge as to uh what what those numbers are looking like and so i'm just trying to kind of seeing if whether or not a corral could be uh built for a fairly large corral but a round nonetheless uh around the Medicaid number that so we don't get 14 different assumptions from hospitals about what's going to be happening with Medicaid okay noted okay the the other is um on the on the three and a half percent cap i'm i uh my feeling is that i would be okay with a cap with a very small c um that three and a half percent uh has a history based in the growth of the state state economy um and uh it includes a period of great recession um and certainly not at the level of this current problem but of but um the 2008-2009 recession is buried in that number um and so if it were a small c um because it's still kind of a north star for a lot of what we do um i kind of like to keep it visible but again um you know not in a uh um you know tough regulatory kind of sort of way um the other um thing for me i think and this might fall into the discussion on on charges um i i think i'm just to interrupt you for a second could i ask everyone to put themselves on mute unless they are speaking because we seem to have some interference coming in from tom so if everybody could be on mute and tom go ahead okay um the uh i mean a focus for me is going to be survivability um i i want all of our hospitals to um to to survive this and uh land on a solid footing um as as we exit the covid period and i note that one of the numbers that sticks with me is i'm looking at the numbers that patrick issued for the 2015 to 2019 period and um over that that five-year period there was 329 million dollars total operating margin across all 14 hospitals but 90 percent of it went to one hospital and um and we have other hospitals that are are in negative operating territory not just a few but but more than half our population so for me trying to get uh the arms around of what are the resources that we can reasonably look toward in 2021 and again there's going to be a wide margin of error around that but how do we allocate those so that all hospitals come out of the 2020 21 period um at least uh standing on their feet so those are my observations at this point thank you tom next we're going to go to maureen maureen usford um yeah and i'm i'm back back on the internet here first i really want to thank uh the hospital budget team for all the work that they've put behind this um and you know i think it really was a thorough process and they did include you know several of the cfo's um from the hospitals to get their feedback on the timing and the submissions and if anything the the cfo's um added things to this um deck so i was really um happy for that participation um and i helped with this too and and one thing i think i i overlooked and i would like to talk about maybe adding back in i don't think it's going to be huge and i think most of the hospitals would do it anyway but the risk and opportunities um piece i think um you know that will probably be brought out obviously with the whole covet piece but i think just making sure we still incorporate whatever risk and opportunities because what i do see for this whole process this time is that it really is going to be much more of discussions with the hospitals we're going to have you know less information that they're going to be providing and so we really want to understand you know for each hospital what's going on and what the impacts of everything that's been happening will be and so i think um i would like to throw that out to the group for discussion about you know re-including the risk and opportunities piece and i and i'd also say you know for the um i know most most of the work and some of these slides are done by the cfo's and if they still want to provide any of the bridges or anything like that when they submit they they can or when they do their presentations we're just trying to make it much streamlined for them but you know to whatever to whatever extent they they want to include some of that that's fine um when we talk about um the uh i guess first i'll say with the timing you know yeah i understand that the later we wait the more information that that everyone will have but what we tried to do was move it out a month um get keep the presentations in august and really have that again be a lot more of discussion between the board and the hospitals and knowing that in order to have great discussions with the insurance companies that typically needs to be done with a 60 day plus window you know they're going to need to understand that you know by within october so so i think um you know i've always said budgets are obsolete from day one and and this certainly will be but you know we'll just have to keep prized of what's going on when we talk about the um three and a half percent cap i've also been one to say i don't think one size fits all and um you know i think particularly this year with so much going on and the impact of covid is different on each of the hospitals that that's even more um more the case um i think i can kind of combine between enforcement and and and whether we do a no cap or a modified cap you know i i do see and i'll try to give a simple example um if a hospital was a hundred million dollar target for this year and half their year went went along okay you know september october through march knowing march we did have some impact and the rest of the year they were impacted and were down possibly 50 percent that hospital could be showing 75 million dollars for this year um next year if we assumed the base would have been a hundred and and i know that assumption is very difficult because we don't know what's going to happen with covid but if we assumed a normal year they would have been around that hundred hundred and three but now they need to the three was the three percent increase now they need to get back the some of this lost um electives that didn't happen you know they could have been as high as 125 um we know we're going to lose some of this elective surgeries and things may not come back but it's significantly higher than the three and a half percent cap would be the that example um so i i think to try to to say you're going to be at three and a half percent um is a challenge and so i i agree with being much more flexible there whether we do it as a no npr cap or in that example i would give it's almost like a combined of what did you miss in in 2020 the max you could be would be adding that back to 21 and we're hearing that probably would still be excessive because people probably aren't going to be coming back into the hospital and some of these electives will be lost forever so you know something along that line might be something we could talk about um when we do talk about enforcement i do want to be careful about i i guess you know we want to talk about when when is the when do we have to make that decision on what we'll do with enforcement and just being careful about agreeing on something now when we don't know a lot of what might happen and if i the example there would be um if if there are very high um insurance rates that go into the submissions and and are approved and then we actually don't have a huge impact with COVID the electives do come back and we settle out all the money that they were receiving federally and it's more than we thought now i'm being very optimistic there i i understand that but at the end of the day then if hospitals were actually able to to turn around and do better than expected on on a bottom line as well as a top line you know i would want to make sure we still have some leeway there and that is probably not unfortunately going to be the case that that happens but there's just so much unknown about what is going to happen in the future um and when we talk about the guidance on rates that that's interesting and uh i'm not really sure where i stand on that as far as giving explicit guidance um because i think each hospital is going to be different so i i guess i'd like to discuss that a little bit more with the board about and and hear a little bit more about Robin's idea about that um only because i don't know where we would start so is that going to be 10% is it going to be 5% is it 15% is it a set number is it a mix so i think um i think that's a tough one to just be able to throw out now um what what we would give on rates um and then just you know really kind of just saying that i really do believe that you know it is going to be much more of hospital specific reviews about how each hospital has been impacted differently by covid and what that was going to mean across all of these areas what npr would be what what rate increases would be um and you know having much more of discussions when the hospitals come in and and as patrick brought out maybe maybe next year it's going to be more frequently that we're able to meet with the hospitals because things may change or they're going to be mid-year adjustments and things like that so um but i i do just want to reinforce that you know i think it is important to continue with this process and and knowing that there is so much uncertainty but the hospitals are all still they still need to be planning for what they believe is going to happen next year for utilization for their staffing for everything else and so you know they they're going to be producing budgets um for their banks and other things like that so i i think this fits in with that process and that's all i have kevin you're muted can you hear me now can you hear me thank you yes we can so the the good news is i think what i'm hearing from my colleagues on the board is um the primary goal is the the fiscal sustainability of our health care system in the state of vermont and um just to touch back on a few points that people have made um uh i agreed with tom that i think that there does need to be a number um for npr for the budget but again that would depend if if people are going to enforce against that number um and not taken to effect um this year's drop in volume then um i would not be able to support that so it's it's all part of how that discussion focuses in and as we all know um it's not just price that determines um the growth that our health care spending in the state its utilization as well and so we really need to be looking at price and utilization and the the last thing um on that issue that i would say is that i would be very worried if we did not have any number because i think that would be a race for increasing utilization in order to set a new base and i think that that would concern me if we were to go down that path um robin i agree complete with with you on um we need to have a discussion about um change in charges um because i do think that we're going to have to have a bifurcated change in charge rate and by that i mean that there'll be one component that relates um to um what i would call a permanent change in charge and one component that would be temporary in the temporary nature of that goes back to the equation of price and utilization because we want to give all our hospitals a chance to get back on proper financial ground and so um i think it would be reckless if we just threw out a permanent huge change in charge increase but if we gave them time and again i'm not even sure if if hospitals will be able to get back on firm financial ground in 21 it may be 22 and it might even be 23 because we just don't know at this point whether or not there will be multiple waves we don't know if there will be stronger therapeutics we don't know when a vaccine will be developed so there are so many variables and we just we can't accurately measure the fear that people have in going to medical settings right now i think we'll have a better handle on that by the end of this summer but it won't be a firm handle we're we're still going to be um staring into making um best projections and at best that's what we're going to be able to do so um that's kind of my thoughts on that and with that i'll open it up to the public for a public comment and again if you're on the phone please hit star six and if you're on skype please just unmute your mic button mr chairman this is just a question okay jeff go ahead um first i want to thank you and the board um and your staff who've been so supportive and and helpful over the past several weeks and and really acknowledging the the contributions and challenges that hospitals have faced um and and being our partners in this so i appreciate that uh regarding today's conversation uh we certainly appreciate this directional move to a to a much more streamlined and simplified budget framework um and as the board members i think have have pointed out this afternoon projections on volume and revenue are are going to be really difficult and volatile right now for obvious reasons um so clearly with the process that's been kind of laid out here there's been there are specific still to be worked out um but i appreciate that the board is clearly acknowledging the challenge of budgeting and forecasting right now um and and recognizing that the hospitals through no fault of their own just may not be able to make those predictions with any real degree of accuracy um so i i i think i hear this but i hope the board will continue to be open to working with individual hospitals that for various reasons may need deadline extensions or other accommodations to manage um within the timeline that that would within whatever timeline is adopted um and and on the timing issue um i agree with um board member holmes that waiting longer could potentially provide more data to the board to consider um and want to point out um that act 91 actually releases the board from meeting the october deadline um so with that i'll thank you again for the opportunity to comment um and um thanks thank you jeff we look forward to working with you and each of the hospitals as we uh move forward through this and really it's going to be a collaborative approach to put our healthcare system back on firm footing so thank you uh other members of the public question go ahead so i'm going to use more of a consumer approach and listen to all of this and and kevin the way you summed it up i think is excellent for what the consumer is really going to be looking at and i've been listening to the legislative testimony and this does trend out to 2023 even if there was some startling new um something comes out of medicine that there's a vaccine actually by this fall whatever that's not going to stop the economic effects it's not there's something in here that will trend out to 2023 either it's increase in property taxes schools trying to get themselves back together and healthcare is going to show up everywhere it's going to show up in the schools it's going to show up in many different places but here's my point that's public health we're talking about public health is really the crisis right now hospitals are in crisis but it's the public health ability to get on top of the pandemic that is the crisis in that crisis you have a crisis for the schools a crisis for the economy in general um you may even have if you don't have a second wave of covid due to the fear factor you may have an unexpected wave of flu next winter because people wouldn't go get their flu shots you might even get a measles outbreak because people wouldn't take their kids in for an MMR shot there are many things that we are it's tough to wrap your mind around what could happen going forward so on things like the charge could you do something like if you increase it robin mentioned temporary well could you call it a covid charge where it's parsed out as separate and as the pandemic and its effects mitigate that separate charge goes away and that's assuming that some of the revenues will come back and it's also true that there is some electives that that revenue will never come back but it's also true that there are things called electives that over time it moves from elective to and no longer is an elective and it needs to be done and I was just reading an article the other day how much of this so-called elective is going to come back as emergencies or things like that I'm also therefore concerned about in general as we work through this to keep the hospitals afloat you got to keep the consumer afloat but the consumer can't come back to the hospital it's really complicated and I will just note that what the state is looking at is a skinny budget I heard a call that today it's a three month budget because a natural cash you're working with you aren't going to look at three years that you don't have a projection for three years of revenues it's much smaller but in terms of understanding something that makes any sense I think it is it's a two-year look or a three-year look in terms of the length of time of the pandemic and the associated many waves of other effects has to be considered hope that wasn't too jumbled and complicated to try to say but those are my thoughts thank you no they were great thoughts Dale and you really summarize the the bigger picture and that's really what we were talking about with a bifurcated rate is to have a portion you could call it a covid related portion of a change in charge you could call it a recognition for a drop in utilization rate that's temporary you could call it a number of different things you could call it a return to sustainability portion of the charge but recognizing that it's temporary and that would be one component of the rate so I think what you've brought out is so true and I would say that each and every hospital in their own way has gone to a skinny budget at least for the remainder of this year and you can see that hospitals have done a number of things including taking pay reductions and furloughs and everything else to try to mitigate some of the severe revenue shortfalls that they have had and so I think that all is going to factor into the rest of the 2020 budget year which will end on 9 30 and will carry over into 21 depending on how the experience continues as we go through the summer and into the fall so great points thank you Dale other members of the public and again star six if you're on the phone or or unmute your microphone if you're on skype hi chair this is mark stanislawson with a question or you know just a couple thoughts I was getting worried mark that we weren't going to hear from a cfo so thank you okay so I I mean first of all too we'll like everyone else I would like to extend um we know a gratitude of thanks to the green mountain care board um and the staff I mean because they certainly listened and you know I don't know how you can peel back the data request any further well then you know then what has been offered and we you know still go through a budget process so we thank you very much there are a couple things I mean I think I think we're trying to walk the line between enforcement and you know revenue cap and you know in my mind I think it's difficult to do both right now I mean where you either need to fall down on one side of the line or the other as it comes well to rates but I would just kind of like to share something we know with you and and and and so I mean I think for the most part and and this probably varies a little bit by each hospital but hospitals for a two month period have lost 50 percent of their revenues okay and if you just do the pure math you know that's eight percent of their total revenue um and and and that assumes and that assumes the population is going to come back um and we know start to utilize the services at the same rate by year end and so you know I'm just speaking openly that I mean I think hospitals um are going to end the year eight to say 15 percent of their revenue down maybe more and and and a significant of that portion even if people don't come back to the same utilization is going to carry over to FY 21 so you know if you just do simple math and say you know let's just say that's eight to 16 percent you know let's just say half of that carries over and if and and then you know if on top of that the normalized we know trend was three and a half percent you're looking at an 11 to 12 percent increase in NPR from a budget perspective in FY 21 so you know I think it's going to be difficult to I mean I mean I just don't know I mean well for somebody that usually has a good idea on how to come up with something I just don't know how you combat that into a meaningful number so you know the change is going to be significant because a lot of that volume is going to carry over to next year it's um I think maybe it's understanding how much of of that is in the budget for next year I mean I think our focus as far as the end game needs to be more what is our approach going to be in FY 22 and how can we build flexibility we know for that but I really think in FY 21 you know I mean all bets are off for many many different we know reasons we know reasons and this is about engaging in more of a conversation throughout the continuum of the year more than anything else and and and then the other thought I would throw out there more or you know there's two other thoughts that I would throw out there I mean well the first one is we know we don't know what kind of payer mix we know shift there is going to be you know so most of these budgets are probably going to be on what the payer mix you know was or used to be or you know mostly you know used to be so so you know there's a huge unknown in that category also so you know this is why I would kind of say you know the continuum of this conversation is going to be more important than what we decide in the budget process so I just kind of throw that thought out there um I mean the continuum of the conversation is going to be very very important and and then the other thought that I would throw out there well this is possible and it has been done before it is very complicated and it's very confusing to to calculate the exact impact of doing a mid-year rate change so you know whatever we think about of of we know if there's a portion of the relay of the rate we know related with COVID or not I would say the best thing is what to do is to revisit that in next year cycle because it's complicated on on doing a mid-year adjustment so you know those are the thoughts that I have to share and we know um I thank you for this opportunity we know to share the thoughts good luck thank you very much mark other members of the public hearing none um we'll come back to this issue at next week's board meeting I think each of the board members has a lot to think about over the next week and we'll have to debate through the different topics that have been brought up and try to come to a conclusion um so with that I am going to can I ask a process question before you certainly go ahead robin um so if it would make sense um to try and I this does not have to be me but to have staff work with somebody on what a sort of a little more fleshed out charge guidance would look like and to Maureen's earlier point I I wasn't myself thinking that it would be a target number it would be more qualitative in terms of potential considerations or like your idea of the bifurcated just so that um we could get a document out for people to look at because I think if we talk about it next week then we'd have to rewrite and then vote so I just didn't know process wise if you I don't even know if we will get to a vote next week robin but okay I had planned on asking Patrick's team to create some guidance on charge and with some different options and to post that so that we could get public comment um the the reality is there a number of issues and I'm just not sure all the issues will be resolved by next Wednesday but if we could begin to go through those um it may require that we throw a board meeting on a different date other than a Wednesday in addition so that uh we get through these all in a timely enough manner so that hospitals can do this by the end of July so um is that okay with you robin that sounds great I just wasn't sure um what you were thinking and thought it might be helpful just to understand kind of the plan thank you okay so Patrick consider that request in done okay so with that I'm going to transfer over to Christina McLaughlin who is going to lead us on a discussion of a request that we had to consider forming a temper a technical advisory group concerning prescription drugs so Christina whenever you you can take the screen thank you and I will start sharing my screen now these um slides this is Susan these slides are also on our website so for those who do not have access to the screen thank you Susan um so hi everyone um I'm here to just um briefly kind of give some background and go over the language um that we propose back in March to the Legislature for a prescription drug technical advisory group um and after I speak I will pass the baton to Jeff Hochberg president of the Vermont Regional August so with that um like I said the board had proposed um the language for the prescription drug technical advisory group to the house health care committee on March 12th 2020 the health care committee had asked the board to put together some language for prescription drug transparency um and we had we meaning me and Jeff Hochberg testified on March 12th with the proposed language and answered some of the committee's questions that day and if most of you should well know that and remember well that Friday the 13th it seemed like our world was turned upside down that is when the Vermont Legislature and everyone else was shiftly or quickly shifting their focus sorry to COVID-19 related issues so we had proposed this language and the next day it was very apparent that perhaps this language wouldn't be able to make it very far just because of course in light of the pandemic there are very much more pressing issues that the legislature and other entities needed to take on right away so really given the fact we fast forward to now given the fact the board has this authority already to establish additional advisory groups as needed to carry out its duties under statute the board felt like they could discuss establishing this group at today's public meeting um and so with that I want to just go over the proposed language um this um and I'll just read it through very briefly so we propose that the Green Mountain Care Board shall establish a prescription drug technical advisory group pursuant to 18 VSA section 9374 E2 to provide input and recommendations on the topics described in subsection B the board through January 15th 2020 the board shall point interested stakeholders with applicable subject matter expertise as appropriate the prescription drug technique technical advisory group may provide recommendations to the board on one or more of the following topics number one models that enhance the board's ability to analyze monitor or report the pricing of prescription drug products or the relationship between prescription drug pricing and consumer prescription drug costs to the effectiveness of prescription drug initiatives on prescription drug costs or three other mechanisms for increasing prescription drug price transparency at one or more levels of the prescription drug supply chain and finally we propose that the board shall provide a report to the general assembly on or before January 15th 2022 based on recommendations from the prescription drug technical advisory group um and thinking back to when we propose this language um in March we created this timeline of a couple years just so that we wouldn't have to request additional funding um we felt at the time and things may have changed since that we could do this work in-house as is without requesting more money so that is why we had that longer timeline um as part of the language so again I wanted to keep this brief if there's no questions from the board I'll like to pass it over to Jeff Hochberg um you share a couple slides thanks Christina um thank you for the opportunity to speak for the record my name is Jeff Hochberg president of the Vermont retail druggist um to echo some of the comments that Christina made um the need to better understand an account for the financial role that pharmaceuticals play in the overall health care cost has never been more important uh nor unanimously agreed upon built into that is a need to better understand the individual inflationary points along the entire spectrum of the pharmaceutical distribution change you know starting from the manufacturer or working all your way down to the consumer level stepping back a bit the greater goal is to investigate ways that we could potentially better manage and hopefully reform the pharmaceutical delivery model so that we can control health care costs uh and improve access to all of our monitors that's something that is readily clear for some time even then senator mullen actively pursued with some legislation but before we can even begin to contemplate any reformatory program we need to identify variables and the mechanics involved I'd like to just take for example the importation model that was pushed and now we're certainly not going to see that come to any fruition anytime soon um we need to know all the the inner workings um we need to fully digest all the data that we currently have and we need to look for ways that we can supplement that data uh in any way shape or form uh we can't rely upon broad statements that prescription drug prices are going up so public rates must therefore go up and concert um and what we really want to try to do is gain gain that understanding so that the state can truly act as a health hub so that for months in a position to understand um all the different programs that are out there whether they're importation 340b we're talking single payer formulary changes um anything we know exactly what price points are going to change and how it's going to impact overall health care costs um so that's that's where we are um I think um you know the data that we do have we need to you know it can be there's enough there that we can begin the process we can analyze it to provide missing information um from what the insurers and the pvms are reporting to the b-cures dataset we could have the ability to incorporate more prescription information into emr records which enhances the decision-making abilities of providers um understanding utilizing the data better can expand the functionality of the vpms monitoring system um you can begin to evaluate 340b revenue to hospitals and how that impacts their budgets we can better evaluate drug formularies across payers that's something that's actually going to be crucial in the coming period of time here as we move through this pandemic um I I promise that within three months we're going to be seeing much more drug shortages along the supply chains as the global markets continually move um the data there's a lot of power in data so we want to understand that data so that we can turn around and better negotiate with drug manufacturers for better rebates um and you know potentially even create a continual revenue stream for the state itself that data holds value monetarily so there's a lot there um and I really don't want to take up too much time but but really just focusing on that we need to understand all the different mechanics and the financial impacts of each step within the distribution chain and that's what we were seeking with the legislation that we proposed earlier this spring so with that I'll turn it over to any questions so thank you jeff and christina and I just want to follow up with a couple of points christina had said that we approached the legislature they actually asked us for a proposal in language and the reason why this is on the agenda this afternoon to my fellow board members is I wanted to have a discussion with you about your thoughts on this technical advisory group and just to say that um it's something that I'm very very interested in doing but um I would not uh seek to have it as a vote I'd rather have it just done um by a decision by myself at some point and the reason why I say that is we have three open positions um we are currently um uh working to try to hire for one of those positions but we have not been given the green light yet um we recently received additional budget guidance that um questioned some of the uh general fund dollars that we will have to deal with as an organization and I don't want to place us in the position where we promise too much and deliver too little I'd much rather be in the position that we don't over promise but we over deliver and I would say that this is an area um that was just reinforced by the filings that we received on Friday for the qhp filings when you take a look at um the blue cross blue shield filing again like last year uh prescription drugs and especially specialty drugs um are a major driving component where it's a 3.7 percent um uh increase just due to prescription drugs in that filing and so the state of Vermont has to try to do whatever it can to create better transparency and one of the ways that um pharma has been so successful is to create a system where it's next to impossible for states to figure out um what the true net cost of a drug is after rebates and marketing allowances and such and so the thought here would be to try to get some of the best minds in the state together on a technical advisory group similar to the primary care advisory group and um try to start brainstorming on what would be possible to see you know so often people say well states don't have any ability to do anything on this this area that it's a national problem it is a national problem and yes it would be a lot easier if it was dealt with on a national basis but we've heard false promises on a national basis for the last two decades and so it crosses over um different political parties and everything else and this issue continues to um be a stressing driver to our healthcare system so with that I'll open it up to other board members for either questions for Christina or Jeff or your thoughts and again if we can go in that same alphabetical order starting with Dr. Holmes. Hi okay well thank you I I don't have any specific questions I would support the initiative given you know however our resource constraints allow but I certainly think you know in all my time at the board prescription drug prices have been one of the biggest cost drivers and to the extent that we can find you know other ways to reduce those costs and I agree with Jeff's point more data the better we can do that so generally just supportive and leave it up to you to take it from there. Thank you Jess member Lange. Uh thanks yeah I think um a tag on prescription drugs would be interesting and worthwhile um I would say to your point Kevin about not over promising I feel like even though it was language that we proposed that some of that language is ambitious and difficult to do without either the data our data team rejiggering their analytics like they have a plan of their work for the next two years um I think you'd have to reallocate that work potentially or have a contractor because I think otherwise some of the data analytics is going to be tough particularly when I I think the challenge the first challenge of the tag will be trying to figure out some of the confidentiality issues because um I don't know that you could have your tag members necessarily doing the data analytics if they are also in a proprietary relationship so that's just all to say I think there are some challenges but that doesn't mean we shouldn't move forward and sort out what those challenges are and what's reasonable to do. Thank you Robin. Member Pelham. You know this is an area that I don't have you know any great familiarity with but it seems on the top have been on the board that a lot of people have poked their finger at this issue and um you have you know the I've seen the work that Christina has done on this before um the information with the uh and kind of enforcement reporting requirements of the attorney general um and different legislative studies and talks about you know buying drugs from Canada etc etc but it always seems to kind of hit a roadblock somewhere so um I would be I would support this especially if the focus was to find the strategic points of leverage or we can actually do something that not be a data you know analysis we've had people come in and present across Lucille I think about you know the pharmacy benefit management system etc etc so we know all that stuff um it's just where are the specific points of leverage that we can actually do something to um to have an effect uh that benefits the cost structure here in Vermont. Good points Tom. Member Usoper. Um yeah I don't have any um questions I'm supportive of it and um I guess one thing would be interested in to understand who would be on the the task force because there's uh it could be interesting to see who to see the different members of who the task force might be but I am supportive of doing this I think the pharmaceutical increases have been a key driver in insurance rates and um you know costs to consumers so I think it's definitely we're allowed to do. So to answer your question Maureen if we were to go down this path I think we would probably um throw it open similar to what we've done on the general advisory board and that is to invite people with expertise in the field to seek out membership and and depending on the numbers that would be interested in helping the state of Vermont try to get to the bottom line we might have to um we know that uh lists down significantly and on the flip side if we don't get um many people stepping forward we may have to go out and and really try to target some key people that would have expertise and try to get them to be willing to serve on that. Okay thanks. So with that I'll open it up to members of the public for any public comment and again um star six if you are on the phone and if you are on Skype just hit the new bar on your microphone button. All right this is Mort Wasserman quick question that Diva already has something called the drug utilization review board and I wondered how the this proposed group or whether or how this proposed group would interact with that group. Well I think uh one of the big things that we would be looking is to try to get participation from Diva. I know that Nancy Hogue was on the phone earlier and I hate to put her on the spot but if you're still on the phone Nancy what are your thoughts? Are you ready to hear me? Yes go ahead. Sorry I had to figure out the star six thing. So yes I think I would answer that question by saying that the Diva DUR board is similar to or analogous perhaps to the commercial payers P&T committees. So every insurer or PBM that supports an insurer like Express Scripts for example in CVS Health they have their own P&T committees and and so we have our DUR board that advises us on drug coverage decisions whether that's um you know that's in consideration of both clinical and cost information so looking for clinical appropriateness and safety and efficacy as well as what is the lowest net cost to the state and that's what those other P&T committees do as well. So I don't really see them overlapping uh in in roll or scope particularly I think that the board would continue to function as it has but of course I would hope to see Diva representation on any tag that might be formed because I think we could certainly bring forward um insight and data so yeah we would definitely look for your participation that'd be awesome okay other members of the public this is Kathy Mahoney Kevin um I I have a lot of experience in the past of working on similar issues like this with our pharmacy and therapeutics committee and I think that these are all great points to take a look at I think it's wonderful um I think that there's probably an enormous ROI on this compared t