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Senate Calendar FRIDAY, MAY 13, 2005 129th DAY OF BIENNIAL SESSION

TABLE OF CONTENTS Page No. ACTION CALENDAR UNFINISHED BUSINESS OF THURSDAY, MAY 12, 2005 Second Reading Favorable H. 508 Amendments to the charter of the Williamstown fire district...... 928 H. 509 Amending the charter of the town of Berlin...... 928 Favorable with Recommendation of Amendment S. 117 State recognition of the Abenaki people...... 928 Ec. Dev., Housing & General Affairs Committee Report.....928 Sen. Sears amendment...... 931 NEW BUSINESS Third Reading S. 98 Voc. Rehabilitation & payment under workers compensation...... 933 Sen. Miller amendment...... 933 Sen. Wilton amendment...... 934 H. 394 Unorganized towns and gores of Essex County...... 934 H. 504 Appraisals and education finance...... 934 H. 506 Taking wild animals during a period of license suspension...... 935 Concurrent Resolutions for Adoption Under Joint Rule 16 (For text of Resolutions, see Addendum to May 12 2005 Calendar) SCR 32 Castleton State College women’s championship rugby club...... 222 SCR 33 In memory of Virginia “Ginny” Cochran...... 224 HCR 129 Honoring Liron Weiss for lifesaving assistance...... 226 HCR 130 Jamie Kingsbury 2005 college skier of the year...... 227 HCR 131 Camels Hump Middle School principal Robert Goudreau...... 228 HCR 132 Vermont Army National Guard Sergeant Gary Jackson...... 230 HCR 133 Rev. James M. MacKellar’s 50th anniversary as minister...... 232 HCR 134 Deacon Richard O’Donnell of Bellows Falls on ordination...... 233 HCR 135 Supervised visitation organizations support...... 234 NOTICE CALENDAR Favorable with Proposal of Amendment H. 524 Universal access to health care in Vermont...... 936 Health & Welfare Committee Report...... 936 Finance Committee Report...... 974 Committee Bill for Notice S. 178 Expanding high school educational opportunities...... 1010 House Proposal of Amendment S. 159 Updating and clarifying education law...... 1010 ORDERED TO LIE S. 157 Relating to rulemaking for Vermont origin...... 1016 H. 510 Amending the charter of the city of Barre...... 1016 ORDERS OF THE DAY

ACTION CALENDAR UNFINISHED BUSINESS OF THURSDAY, MAY 12, 2005 Second Reading Favorable H. 508 An act relating to codification and approval of amendments to the charter of the Williamstown Fire District. Reported favorably by Senator Giard for the Committee on Government Operations. (Committee vote: 6-0-0) (For House amendments, see House Journal for April 29, page 875) H. 509 An act relating to amending th charter of the town of Berlin. Reported favorably by Senator Doyle for the Committee on Government Operations. (Committee vote: 6-0-0) (For House amendments, see House Journal for April 29, 2005, page 876) Favorable with Recommendation of Amendment S. 117 An act relating to state recognition of the Abenaki people. Reported favorably with recommendation of amendment by Senator Illuzzi for the Committee on Economic Development, Housing and General Affairs. The Committee recommends that the bill be amended by striking out all after the enacting clause and inserting in lieu thereof the following: Sec. 1. 1 V. S. A. chapter 23 is added to read: CHAPTER 23. ABENAKI PEOPLE § 851. FINDINGS The general assembly finds that: (1) At least 1,700 Vermonters claim to be direct descendants of the several indigenous Native American peoples, now known as Western Abenaki tribes, who originally inhabited all of Vermont and New Hampshire, parts of western Maine, parts of southern Quebec, and parts of upstate New York for hundreds of years, beginning long before the arrival of Europeans. (2) There is ample archaeological evidence that demonstrates that the Missisquoi Abenaki were indigenous to and farmed the river floodplains of Vermont at least as far back as the 1100s A.D. (3) The Western Abenaki, including the Missisquoi, have a very definite and carefully maintained oral tradition that consistently references the Champlain valley in western Vermont. (4) Many contemporary Abenaki families continue to produce traditional crafts and intend to continue to pass on these indigenous traditions to the younger generations. In order to create and sell Abenaki crafts that may be labeled as Indian- or Native American-produced, the Abenaki must be recognized by the state of Vermont. (5) Federal programs may be available to assist with educational and cultural opportunities for Vermont Abenaki and other Native Americans who reside in Vermont. § 852. VERMONT COMMISSION ON NATIVE AMERICAN AFFAIRS ESTABLISHED; AUTHORITY (a) In order to recognize the historic and cultural contributions of Native Americans to Vermont, to protect and strengthen their heritage, and to address their needs in state policy, programs, and actions, there is hereby established the Vermont commission on Native American affairs (the “commission”). (b) The commission shall be comprised of seven members: three members appointed by the Abenaki Tribal Council, with approval by the governor, for terms of two years; three public members appointed by the governor, for terms of two years; and one member who shall serve a two - year term as chair of the commission appointed by the governor from a list of three or more candidates compiled by the division for historic preservation, after consultation with interested parties. (c) The commission shall have the following authority: (1) To assist Native American tribal councils, organizations, and individuals to secure social services, education, employment opportunities, health care, housing, and census information. (2) To determine qualifications for state recognition and, in compliance with those qualifications, to recognize specific Abenaki and other Native - 160 - American families, bands, and communities as “tribes” only for the following purposes: (A) In order to permit the creation, display, and sale of Native American arts and crafts and legally to label them as Indian or Native American - produced as provided in 18 U.S.C. § 115(c)(3)(B) and 25 U.S.C. § 305e(d)(3)(B). (B) In order to receive assistance and support from the federal Indian Arts and Crafts Board, as provided in 25 U.S.C. §§ 305 et seq. (C) To become eligible for federal assistance with educational, housing, and cultural opportunities. (D) The establishment and continuation of programs offered through the U.S. Department of Indian Education Office on Indian Education pursuant to Title VII of the Elementary and Secondary Education Act established in 1972 to support educational and cultural efforts of tribal entities that have been either state or federally recognized. (d) The commission shall meet at least three times a year and at any other times at the request of the chair. The agency of commerce and community development and the department of education shall provide administrative support to the commission. (e) The commission may seek and receive funding from federal and other sources to assist with its work. § 853. RECOGNITION OF ABENAKI PEOPLE (a) The state of Vermont recognizes all Native American people who reside in Vermont as a minority population. Specific Abenaki and other Native American families, bands, and communities that have met the qualifications set by the commission and are recognized by the commission shall be deemed recognized by the state. (b) Recognition of the Native American or Abenaki people provided in subsection (a) of this section shall be for the sole purposes specified in subdivision 852(c)(2) of this title and shall not be interpreted to provide any Native American or Abenaki person with any special rights or privileges that the state does not confer on or grant to other state residents. Sec. 2. EFFECTIVE DATE; APPOINTMENTS TO COMMISSION (a) This act shall take effect on passage. (b) The governor shall make appointments to the commission no later than September 1, 2005.

- 161 - (Committee vote: 5-0-1 AMENDMENT TO S. 117 TO BE OFFERED BY SENATOR SEARS ON BEHALF OF THE COMMITTEE ON JUDICIARY Senator Sears, on behalf of the Committee on Judiciary, moves to amend the bill by striking out all after the enacting clause and inserting in lieu thereof the following: Sec. 1. 1 V.S.A. chapter 23 is added to read: CHAPTER 23. ABENAKI PEOPLE § 851. FINDINGS The general assembly finds that: (1) At least 1,700 Vermonters claim to be direct descendants of the several indigenous Native American peoples, now known as Western Abenaki tribes, who originally inhabited all of Vermont and New Hampshire, parts of western Maine, parts of southern Quebec, and parts of upstate New York for hundreds of years, beginning long before the arrival of Europeans. (2) There is ample archaeological evidence that demonstrates that the Missisquoi Abenaki were indigenous to and farmed the river floodplains of Vermont at least as far back as the 1100s A.D. (3) The Western Abenaki, including the Missisquoi, have a very definite and carefully maintained oral tradition that consistently references the Champlain valley in western Vermont. (4) Many contemporary Abenaki families continue to produce traditional crafts and intend to continue to pass on these indigenous traditions to the younger generations. In order to create and sell Abenaki crafts that may be labeled as Indian- or Native American-produced, the Abenaki must be recognized by the state of Vermont. (5) Federal programs may be available to assist with educational and cultural opportunities for Vermont Abenaki and other Native Americans who reside in Vermont. § 852. VERMONT COMMISSION ON NATIVE AMERICAN AFFAIRS ESTABLISHED; AUTHORITY (a) In order to recognize the historic and cultural contributions of Native Americans to Vermont, to protect and strengthen their heritage, and to address their needs in state policy, programs, and actions, there is hereby established the Vermont commission on Native American affairs (the “commission”). (b) The commission shall be comprised of the following seven members: - 162 - (1) Three members who shall serve two - year terms appointed by the governor from a list of three or more candidates compiled by the Abenaki Tribal Council. (2) Three members who are Vermont residents of Abenaki descent who are tribally-registered, and who shall serve two-year terms appointed by the governor from a list of three or more candidates compiled by the division for historic preservation, after consultation with interested parties. (3) One member who shall serve a two - year term as chair of the commission appointed by the governor from a list of three or more candidates compiled by the division for historic preservation, after consultation with interested parties. (c) The commission shall have the authority to assist Native American tribal councils, organizations, and individuals to: (1) Secure social services, education, employment opportunities, health care, housing, and census information. (2) Permit the creation, display, and sale of Native American arts and crafts and legally to label them as Indian or Native American - produced as provided in 18 U.S.C. § 115(c)(3)(B) and 25 U.S.C. § 305e(d)(3)(B). (3) Receive assistance and support from the federal Indian Arts and Crafts Board, as provided in 25 U.S.C. §§ 305 et seq. (4) Become eligible for federal assistance with educational, housing, and cultural opportunities. (5) Establish and continue programs offered through the U.S. Department of Indian Education Office on Indian Education pursuant to Title VII of the Elementary and Secondary Education Act established in 1972 to support educational and cultural efforts of tribal entities that have been either state or federally recognized. (d) The commission shall meet at least three times a year and at any other times at the request of the chair. The agency of commerce and community development and the department of education shall provide administrative support to the commission. (e) The commission may seek and receive funding from federal and other sources to assist with its work. § 853. RECOGNITION OF ABENAKI PEOPLE (a) The state of Vermont recognizes all Abenaki and Native American people who reside in Vermont as a minority population.

- 163 - (b) Recognition of the Native American or Abenaki people provided in subsection (a) of this section shall be for the sole purposes specified in subdivision 852(c)(2) of this title and shall not be interpreted to provide any Native American or Abenaki person with any special rights or privileges that the state does not confer on or grant to other state residents. (c) This chapter shall not be construed to confer upon the Abenaki people any claims to Vermont lands or any other rights other than those specifically described herein. Sec. 2. EFFECTIVE DATE; APPOINTMENTS TO COMMISSION (a) This act shall take effect on passage. (b) The governor shall make appointments to the commission no later than 90 days after the effective date of the act. NEW BUSINESS Third Reading S. 98 An act relating to vocational rehabilitation and payment of compensation under workers’ compensation. AMENDMENT TO S. 98 TO BE OFFERED BY SENATOR MILLER BEFORE THIRD READING Senator Miller moves to amend the bill as follows: First: In Sec. 2, 21 V.S.A. §643a, by adding two new sentences at the end of the section, to read follows: If the commissioner’s decision, after a hearing, finds that the employee was not entitled to any or all benefits paid between the notice of discontinuance and the final decision, upon request of the employer, the commissioner may order that the employee repay all benefits to which the employee was not entitled. The employer may enforce such a repayment order in any court of law having jurisdiction of the amount involved. Second: In Sec. 4, 21 V.S.A. §662(b), by adding two new sentences before the sentence that begins “Nothing in this section”, to read as follows: If the commissioner’s decision, after a hearing, finds that the employee was not entitled to any or all benefits paid between the notice of discontinuance and the final decision, upon request of the employer, the commissioner may order that the employee repay all benefits to which the employee was not entitled. The employer may enforce such a repayment order in any court of law having jurisdiction of the amount involved. - 164 - Third: By adding a new Sec. 6, to read as follows: Sec. 6. WORKERS’ COMPENSATION: INTERIM ORDER STUDY (a) The newly created department of labor shall issue a report to the general assembly on or before February 1, 2006, in which the department analyzes and proposes recommendations to improve the timeliness of payments to injured workers in a manner that is fair and efficient for employers and employees. The report will investigate the following: (1) the timeliness and accuracy of benefit payments to workers compensation claimants. The department shall review the number of requests for interim orders received, the reasons for the request, the number of informal conferences conducted, the number of interim orders issued and denied; the number of requests for reconsideration, and the number of interim orders upheld after formal hearing or claim resolution. (2) the timeliness and accuracy of workers compensation insurer claim denials and/or requests to discontinue benefits. The department shall review the number of requests for discontinuance of benefits and the basis for each request, whether evidence or law supported the request, the number of discontinuances disapproved, the number of informal conferences conducted; and the number of discontinuances and denials upheld after formal hearing or claim resolution. (b) As part of its analysis the department of labor shall consult with an advisory committee appointed by the commissioner of labor composed of three representatives of workers compensation insurers and three representatives of workers compensation claimants, during the analysis and report preparation required in subsection (a) of this section. AMENDMENT TO S. 98 TO BE OFFERED BY SENATOR WILTON BEFORE THIRD READING Senator Wilton moves to amend the amendment of Senator Miller by adding a new section to be numbered Sec. 7 to read as follows: Sec. 7. SUNSET Secs. 2 and 4 of this act shall sunset on April 1, 2006. H. 394 An act relating to the board of governors of the unorganized towns and gores of Essex County. H. 504 An act relating to appraisals and education finance. - 165 - H. 506 An act relating to taking wild animals during a period of license suspension. Concurrent Resolutions for Adoption Under Joint Rule 16 The following concurrent resolutions have been introduced for approval by the Senate and House and will be adopted automatically unless a Senator or Representative requests floor consideration before the end of the session of the next legislative day. Requests for floor consideration in either chamber should be communicated to the Secretary’s office and/or the House Clerk’s office, respectively. (For text of Resolutions, see Addendum to May 12, 2005 Calendar) S.C.R. 32. Senate concurrent resolution honoring the Castleton State College Spartans East Coast Women's Collegiate Division III championship rugby club. S.C.R. 33. Senate concurrent resolution in memory of Virginia “Ginny” Cochran. H.C.R. 129. House concurrent resolution honoring Liron Weiss for her lifesaving assistance during the Redstone Apartment carbon monoxide emergency. H.C.R. 130. House concurrent resolution congratulating Jamie Kingsbury of Waitsfield on her designation as Ski Racing Magazine’s 2005 college skier of the year. H.C.R. 131. House concurrent resolution honoring retiring Camels Hump Middle School principal Robert J. Goudreau. H.C.R. 132. House concurrent resolution recognizing the bravery and courage of Vermont Army National Guard Sergeant Gary Jackson. H.C.R. 133. House concurrent resolution honoring the Rev. James M. MacKellar on the 50th anniversary of his ordination as a Presbyterian minister. H.C.R. 134. House concurrent resolution congratulating Deacon Richard O’Donnell of Bellows Falls on his ordination as a Roman Catholic priest.

- 166 - H.C.R. 135. House concurrent resolution honoring supervised visitation organizations for their support of parents and children. NOTICE CALENDAR Favorable with Proposal of Amendment H. 524 An act relating to universal access to health care in Vermont. Reported favorably with recommendation of proposal of amendment by Senator Leddy for the Committee on Health and Welfare. The Committee recommends that the Senate propose to the House to amend the bill by striking out all after the enacting clause and inserting in lieu thereof the following: Sec. 1. FINDINGS The general assembly hereby finds that: (1) In 2006, it is projected that Vermont will spend $3.8 billion on health care. That amount has doubled since 1998. If the trend continues, health care spending will double again in eight years. In other words, for every year Vermont fails to address the health care crisis, health care costs will rise by at least another $350 million. (2) Over 60,000 Vermonters have no health insurance. The costs of health services provided to individuals who are unable to pay are shifted to others. Of the $2.1 billion charged by hospitals in 2005, $88 million was not collected as follows: $37 million in charity care and $51 million in bad debt. (3) There are two fundamental inequities in the insurance-based financing system: (A) premiums are not based on ability to pay, and (B) deductibles and coinsurance place a financial burden on those with serious illness. In addition, health care financing is complex and fragmented, placing administrative burdens on health care professionals, in particular. (4) Improvements in health care quality will result in improved health and reduced costs. The existing payment system, because it is based on the amount of care provided, does not tie reimbursement to improved health. (5) The Vermont health care system is fragmented and disorganized, leading in some instances to excessive care or inadequate care and creating barriers to coordination and accountability among health care professionals, payers, and patients.

- 167 - Sec. 2. GUIDELINES FOR HEALTH CARE REFORM The general assembly adopts the following guidelines, modeled after the Coalition 21 principles, as a framework for reforming health care in Vermont: (1) It is the policy of the state of Vermont to ensure universal access to and coverage for essential health care services for all Vermonters. (2) Health care coverage needs to be comprehensive and continuous. (3) Vermont’s health delivery system must model continuous improvement of health care quality and safety. (4) The financing of health care in Vermont must be sufficient, equitable, fair, and sustainable. (5) Built-in accountability for quality, for cost, for access and for participation must be the hallmark of Vermont’s health care system. (6) Vermonters must be engaged, to the best of their ability, to pursue healthy lifestyles, to focus on preventive care and wellness efforts, and to make informed use of all health care services throughout their lives. Sec. 3. GOALS OF HEALTH CARE REFORM Consistent with the adopted guidelines for reforming health care in Vermont, the general assembly adopts the following goals: (1) By 2009, all Vermonters shall have access to affordable, continuous, quality health care that is financed in a fair and equitable manner. To achieve this ultimate goal, it is imperative that health care costs are brought under control. (2) Cost containment measures shall include global budgeting of hospitals, tort reform, increased consumer access to health care price and quality information, promotion of self-care and healthy lifestyles, enhanced prescription drug initiatives, funding of the chronic care initiative, investments in health information technology, alignment of health care professional reimbursement with best practices and outcomes rather than utilization, and development of a long-term strategy for integrating the health care delivery system as well as a strategy for integrating health care policy, planning, and regulation within government. (3) In addition, as an intermediate step toward reaching the goal of universal access to affordable health care, the state shall offer a benefit of primary and preventive health services to all uninsured Vermonters. (4) Subsequent steps shall include expanded benefits to expanded populations. Expansions shall occur only upon a showing that they will further - 168 - specified benchmarks. The benchmarks shall measure the appropriateness and feasibility of a proposed expansion based on its ability to promote the following: cost savings, increased access, improved quality and delivery, administrative simplification, fair and equitable financing, financial sustainability, and continuity of coverage. * * * Global Hospital Budgets * * * Sec. 4. 18 V.S.A. § 9456 is amended to read: § 9456. BUDGET REVIEW (a) The commissioner shall conduct reviews of each hospital’s proposed budget based on the information provided pursuant to this subchapter, and in accordance with a schedule established by the commissioner. (b) In conjunction with budget reviews, the commissioner shall: (1) review utilization information; (2) consider the goals and recommendations of the health resource allocation plan; (3) consider the expenditure analysis for the previous year and the proposed expenditure analysis for the year under review; (4) consider any reports from professional review organizations; (5) solicit public comment on all aspects of hospital costs and use and on the budgets proposed by individual hospitals; (6) meet with hospitals to review and discuss hospital budgets for the forthcoming fiscal year; (7) give public notice of the meetings with hospitals, and invite the public to attend and to comment on the proposed budgets; (8) consider the extent to which costs incurred by the hospital in connection with services provided to Medicaid beneficiaries are being charged to non-Medicaid health benefit plans and other non-Medicaid payers; (9) require each hospital to file an analysis that reflects a reduction in net revenue needs from non-Medicaid payers equal to any anticipated increase in Medicaid reimbursements resulting from appropriations designed to reduce the Medicaid cost shift. (c) Individual hospital budgets established under this section shall: (1) be consistent with the health resource allocation plan;

- 169 - (2) take into consideration national, regional, or instate peer group norms, according to indicators, ratios, and statistics established by the commissioner; (3) promote efficient and economic operation of the hospital; (4) reflect budget performances for prior years; (5) include a finding that the analysis provided in subdivision (b)(10) of this section is a reasonable methodology for reflecting a reduction in net revenues for non-Medicaid payers; (6) consider the unified health care budget under section 9406 of this title applicable to hospitals; (7) include any physician’s practices owned or operated by the hospital; (8) include all revenue received by hospitals; and (9) include any charity care plan offered by the hospital. (d) For hospital fiscal year 2006 and thereafter, the hospital budget shall serve as a spending cap within which hospital costs are controlled, resources directed, and quality and access assured. The hospital budget shall limit the total annual growth of hospital costs to the Consumer Price Index plus the rate of growth of the gross state product. The commissioner shall ensure that any certificate of need requests under subchapter 5 of chapter 221 of this title are consistent with the hospital budgets. (d)(e) Annually, the commissioner shall establish a budget for each hospital by September 15 followed by a written decision by October 1. Each hospital shall operate within the budget established under this section. (e)(f) The commissioner may establish, by rule, a process to define, on an annual basis, criteria for hospitals to meet, such as utilization and inflation benchmarks. The rule shall permit the commissioner to waive one or more of the review processes listed in subsection (b) of this section, but not for more than two years consecutively. Tertiary teaching hospitals shall not be eligible for a waiver. (f)(g) The commissioner may, upon application, adjust a budget established under this section upon a showing of need based upon exceptional or unforeseen circumstances in accordance with the criteria and processes established under section 9405 of this title. The department may adopt rules for the development of a voluntary three-year hospital budget process to facilitate long-term planning and to moderate variation in utilization. The rules shall include a process for annual budget adjustment within the three-year period. - 170 - (g)(h) The commissioner may request, and a hospital shall provide, information determined by the commissioner to be necessary to determine whether the hospital is operating within a budget established under this section. (h)(i)(1) If a hospital violates a provision of this section, the commissioner may maintain an action in the superior court of the county in which the hospital is located to enjoin, restrain or prevent such violation. (2) After notice and an opportunity for hearing, the commissioner may shall impose on a person who knowingly violates a provision of this subchapter, or a rule adopted pursuant to this subchapter, a civil administrative penalty of no more than $40,000.00, or in the case of a continuing violation, a civil administrative penalty of no more than $100,000.00 or one-tenth of one percent of the gross annual revenues of the hospital, whichever is greater. This subdivision shall not apply to violations of subsection (d) of this section caused by exceptional or unforeseen circumstances. (3)(A) The commissioner shall require the officers and directors of a hospital to file under oath, on a form and in a manner prescribed by the commissioner, any information designated by the commissioner and required pursuant to this subchapter. The authority granted to the commissioner under this subsection is in addition to any other authority granted to the commissioner under law. (B) A person who knowingly makes a false statement under oath or who knowingly submits false information under oath to the commissioner or to the public oversight commission or to a hearing officer appointed by the commissioner or who knowingly testifies falsely in any proceeding before the commissioner or the public oversight commission or a hearing officer appointed by the commissioner shall be guilty of perjury and punished as provided in section 2901 of Title 13. * * * Tort Reform * * * Sec. 5. 12 V.S.A. § 1912 is added to read: § 1912. EXPRESSION OF REGRET OR APOLOGY BY HEALTH CARE PROVIDER INADMISSIBLE (a) An expression of regret or apology, or an explanation of how a medical error occurred, made by or on behalf of a health care provider, including one that is made in writing, orally, or by conduct, does not constitute a legal admission of liability for any purpose and shall be inadmissible in any civil or administrative proceeding against the health care provider, including any arbitration or mediation proceeding.

- 171 - (b) In any civil or administrative proceeding against a health care provider, including any arbitration or mediation proceeding, the health care provider, or any other person who makes an expression of regret, apology, or explanation on behalf of the health care provider, including one that is made in writing, orally, or by conduct, may not be examined by deposition or otherwise with respect to the expression of regret, apology, or explanation. (c) As used in this section, “health care provider” shall have the meaning defined in subdivision 1910(e)(1)(A) of this title. Sec. 6. MEDICAL MALPRACTICE CAPTIVE INSURER REQUEST FOR PROPOSALS The commissioner of banking, insurance, securities, and health care administration shall prepare and publish a request for proposals to prepare a plan for establishing either a captive insurer, a cell captive, or a risk retention group based in Vermont to provide Vermont health professionals with medical malpractice insurance at the lowest possible cost. The plan shall include recommendations for state participation in order to reduce the cost of the initial capitalization and facilitate the creation of the insurer. The plan shall be submitted to the general assembly and the House committees on health care and commerce and the Senate committees on health and welfare and finance on or before January 15, 2006. * * * Consumer Health Care Price and Quality Information * * * Sec. 7. 18 V.S.A. § 9410(a) and (c) are amended to read: (a) The commissioner shall establish and maintain a unified health care data base to enable the commissioner to carry out the duties under this chapter and Title 8, including: (1) Determining the capacity and distribution of existing resources. (2) Identifying health care needs and informing health care policy. (3) Evaluating the effectiveness of intervention programs on improving patient outcomes. (4) Comparing costs between various treatment settings and approaches. (5) Providing information to consumers and purchasers of health care. (A) The program authorized by this section shall include a consumer health care price and quality information system to make available to consumers transparent health care price information, quality information, and such other information as the commissioner determines is necessary to empower individuals to make economically sound and medically appropriate decisions. - 172 - (B) The commissioner shall convene a working group composed of the commissioner of health, health care consumers, health care providers and facilities, the Vermont program for quality in health care, health insurers, and any other individual or group appointed by the commissioner to advise the commissioner on the development and implementation of the consumer health care price and quality information system. (C) The commissioner may require a health insurer covering at least 15,000 lives in this state to file with the commissioner a consumer health care price and quality information plan, in accordance with rules adopted by the commissioner. Approved plans may include the internet publication of the charges established by health care facilities and health care providers and other providers of health care services and products, including but not limited to providers of pharmaceutical products and medical equipment, and the reimbursable amounts negotiated with health insurers and payable by the individual in connection with the individual’s deductible or other cost - sharing obligations. (D) The commissioner shall adopt such rules as are necessary to carry out the purposes of this subdivision and ensure for the confidentiality of proprietary information. The commissioner’s rules may permit the gradual implementation of the consumer health care price and quality information system over time, beginning with health care price and quality information which the commissioner determines is most needed by consumers or which the commissioner determines can be most practicably provided to the consumer in an understandable manner. (c) Health insurers, health care providers, health care facilities, and other providers of health care services or products, including but not limited to providers of pharmaceutical products and medical equipment, and governmental agencies shall file reports, data, schedules, statistics, or other information determined by the commissioner to be necessary to carry out the purposes of this section. Such information may include: (1) health insurance claims and enrollment information used by health insurers; (2) information relating to hospitals filed under subchapter 7 of this chapter (hospital budget reviews); and (3) any other information relating to health care costs, prices, quality, utilization, or resources required to be filed by the commissioner. * * * Healthy Lifestyles Insurance Discount * * * Sec. 8. 8 V.S.A. § 4080a(h) is amended to read:

- 173 - (h)(1) A registered small group carrier shall use a community rating method acceptable to the commissioner for determining premiums for small group plans. Except as provided in subdivision (2) of this subsection, the following risk classification factors are prohibited from use in rating small groups, employees, or members of such groups, and dependents of such employees or members: (A) demographic rating, including age and gender rating; (B) geographic area rating; (C) industry rating; (D) medical underwriting and screening; (E) experience rating; (F) tier rating; or (G) durational rating. (2)(A) The commissioner shall, by rule, adopt standards and a process for permitting registered small group carriers to use one or more risk classifications in their community rating method, provided that the premium charged shall not deviate above or below the community rate filed by the carrier by more than 20 percent (20%), and provided further that the commissioner’s rules may not permit any medical underwriting and screening. (B) The commissioner’s rules shall permit a carrier, including a hospital or medical service corporation, to establish premium discounts or rebates or otherwise modify applicable co-payments or deductibles in return for adherence to programs of health promotion and disease prevention, in accordance with federal regulations relating to bona fide wellness programs. Under the federal regulations, permissible bona fide wellness programs shall: (i) limit any discount, rebate, or waiver of cost sharing to not more than 15 percent of the cost of employee-only coverage; (ii) be designed reasonably to promote good health or prevent disease for individuals in the program, and not be used as a subterfuge for imposing higher costs on an individual based on a health factor; and (iii) provide that the reward under the program is available to all similarly situated individuals. (C) The commissioner, in consultation with the commissioner of health, shall adopt by rule:

- 174 - (i) standards for approved health promotion and disease prevention programs, based on the best scientific, evidence-based medical practices; and (ii) standards and procedures for evaluating an individual’s adherence to programs of health promotion and disease prevention. (3) The commissioner may exempt from the requirements of this section an association as defined in section subdivision 4079(2) of this title which: (A) offers a small group plan to a member small employer which is community rated in accordance with the provisions of subdivisions (1) and (2) of this subsection. The plan may include risk classifications in accordance with subdivision (2) of this subsection; (B) offers a small group plan that guarantees acceptance of all persons within the association and their dependents; and (C) offers one or more of the common health care plans approved by the commissioner under subsection (e) of this section. (4) The commissioner may revoke or deny the exemption set forth in subdivision (3) of this subsection if the commissioner determines that: (A) because of the nature, size or other characteristics of the association and its members, the employees or members are in need of the protections provided by this section; or (B) the association exemption has or would have a substantial adverse effect on the small group market. Sec. 9. 8 V.S.A. § 4080b(h) is amended to read: (h)(1) A registered nongroup carrier shall use a community rating method acceptable to the commissioner for determining premiums for nongroup plans. Except as provided in subdivision (2) of this subsection, the following risk classification factors are prohibited from use in rating individuals and their dependents: (A) demographic rating, including age and gender rating; (B) geographic area rating; (C) industry rating; (D) medical underwriting and screening; (E) experience rating; (F) tier rating; or

- 175 - (G) durational rating. (2)(A) The commissioner shall, by rule, adopt standards and a process for permitting registered nongroup carriers to use one or more risk classifications in their community rating method. After July 1, 1993, provided that the premium charged shall not deviate above or below the community rate filed by the carrier by more than 40 percent (40%) for two years, and thereafter 20 percent (20%). Such rules may not permit, and provided further that the commissioner’s rules may not permit any medical underwriting and screening and shall give due consideration to the need for affordability and accessibility of health insurance. (B) The commissioner’s rules shall permit a carrier, including a hospital or medical service corporation, to establish premium discounts or rebates or otherwise modify applicable co-payments or deductibles in return for adherence to programs of health promotion and disease prevention, in accordance with federal regulations relating to bona fide wellness programs. Under the federal regulations, permissible bona fide wellness programs shall: (i) limit any discount, rebate, or waiver of cost sharing to not more than 15 percent of the cost of employee-only coverage; (ii) be designed reasonably to promote good health or prevent disease for individuals in the program, and not be used as a subterfuge for imposing higher costs on an individual based on a health factor; and (iii) provide that the reward under the program is available to all similarly situated individuals. (C) The commissioner, in consultation with the commissioner of health, shall adopt by rule: (i) standards for approved health promotion and disease prevention programs, based on the best scientific, evidence-based medical practices; and (ii) standards and procedures for evaluating an individual’s adherence to programs of health promotion and disease prevention. Sec. 10. 8 V.S.A. § 4516 is amended to read: § 4516. ANNUAL REPORT TO COMMISSIONER Annually, on or before the fifteenth day of March, a hospital service corporation shall file with the commissioner of banking, insurance, securities, and health care administration a statement sworn to by the president and treasurer of the corporation showing its condition on the thirty-first day of December. The statement shall be in such form and contain such matters as - 176 - the commissioner shall prescribe. To qualify for the tax exemption set forth in section 4518 of this title, the statement shall include a certification that the hospital service corporation operates on a nonprofit basis for the purpose of providing an adequate hospital service plan to individuals of the state, both groups and nongroups, without discrimination based on age, gender, geographic area, industry, and medical history, except as allowed by subdivisions 4080a(h)(2)(B) and 4080b(h)(2)(B) of this title. Sec. 11. 8 V.S.A. § 4588 is amended to read: § 4588. ANNUAL REPORT TO COMMISSIONER Annually, on or before March 15, a medical service corporation shall file with the commissioner of banking, insurance, securities, and health care administration a statement sworn to by the president and treasurer of the corporation showing its condition on December 31, which shall be in such form and contain such matters as the commissioner shall prescribe. To qualify for the tax exemption set forth in section 4590 of this title, the statement shall include a certification that the medical service corporation operates on a nonprofit basis for the purpose of providing an adequate medical service plan to individuals of the state, both groups and nongroups, without discrimination based on age, gender, geographic area, industry, and medical history, except as allowed by subdivisions 4080a(h)(2)(B) and 4080b(h)(2)(B) of this title. * * * Pharmacy Best Practices and Cost Control Program * * * Sec. 12. 33 V.S.A. § 1998(a) is amended to read: § 1998. PHARMACY BEST PRACTICES AND COST CONTROL PROGRAM ESTABLISHED (a) The commissioner of prevention, assistance, transition, and health access director of the office of Vermont health access shall establish and maintain a pharmacy best practices and cost control program designed to reduce the cost of providing prescription drugs, while maintaining high quality in prescription drug therapies. The program shall include: (1) A Use of a statewide preferred list of covered prescription drugs that identifies preferred choices within therapeutic classes for particular diseases and conditions, including generic alternatives and over-the-counter drugs. The director of the office of Vermont health access shall encourage all health benefit plans in the state to participate in the preferred drug list by inviting the representatives of each health benefit plan providing prescription drug coverage to residents of this state to participate as observers or nonvoting members in the drug utilization review board, and by inviting such plans to use the preferred drug list in connection with the plans’ prescription drug coverage.

- 177 - (A) The commissioner and the commissioner of banking, insurance, securities, and health care administration shall implement the preferred drug list as a uniform, statewide preferred drug list by encouraging all health benefit plans in this state to participate in the program. (B) The commissioner of human resources shall use the preferred drug list in the state employees health benefit plan only if participation in the program will provide economic and health benefits to the state employees health benefit plan and to beneficiaries of the plan, and only if agreed to through the bargaining process between the state of Vermont and the authorized representatives of the employees of the state of Vermont. The provisions of this subdivision do not authorize the actuarial pooling of the state employees health benefit plan with any other health benefit plan, unless otherwise agreed to through the bargaining process between the state of Vermont and the authorized representatives of the employees of the state of Vermont. No later than November 1, 2004, the commissioner of human resources shall report to the health access oversight committee and the senate and house committees on health and welfare on whether use of the preferred drug list in the state employees health benefit plan would, in his or her opinion, provide economic and health benefits to the state employees health benefit plan and to beneficiaries of the plan. (C) The commissioner shall encourage all health benefit plans to implement the preferred drug list as a uniform, statewide preferred drug list by inviting the representatives of each health benefit plan providing prescription drug coverage to residents of this state to participate as observers or nonvoting members in the commissioner’s drug utilization review board, and by inviting such plans to use the preferred drug list in connection with the plans’ prescription drug coverage; (2) Utilization review procedures, including a prior authorization review process;. (3) Any strategy designed to negotiate with pharmaceutical manufacturers on behalf of state employees and retirees, individuals under the supervision of the department of corrections, the division of mental health, or the department for children and families, individuals receiving coverage for prescription drugs through Medicaid, the Vermont Health Access Program (VHAP), Dr. Dynasaur, VHAP Pharmacy, VScript, VScript-Expanded, Healthy Vermonters, Healthy Vermonters Plus, and workers’ compensation on behalf of the applicable state agency, and any other insurer or employer who elects to participate, to lower the cost of prescription drugs for program participants, including a supplemental rebate program;.

- 178 - (4) With input from physicians, pharmacists, private insurers, hospitals, pharmacy benefit managers, and the drug utilization review board, an evidence-based research education program designed to provide information and education on the therapeutic and cost-effective utilization of prescription drugs to physicians, pharmacists, and other health care professionals authorized to prescribe and dispense prescription drugs. To the extent possible, the program shall inform prescribers about drug marketing that is intended to circumvent competition from generic alternatives. Details of the program, including the scope of the program and funding recommendations, shall be contained in a report submitted to the health access oversight committee and the senate and house committees on health and welfare no later than January 1, 2005;. The program shall be implemented no later than July 1, 2005. (5) Alternative pricing mechanisms, including consideration of using maximum allowable cost pricing for generic and other prescription drugs;. (6) Alternative coverage terms, including consideration of providing coverage of over-the-counter drugs where cost-effective in comparison to prescription drugs, and authorizing coverage of dosages capable of permitting the consumer to split each pill if cost-effective and medically appropriate for the consumer;. (7) A simple, uniform prescription form, designed to implement the preferred drug list, and to enable prescribers and consumers to request an exception to the preferred drug list choice with a minimum of cost and time to prescribers, pharmacists and consumers; and. (8) Negotiating a contract with the pharmacy benefit manager that would most further the goals of prescription drug price transparency, safety, quality, and cost-effectiveness. The office shall consider both proprietary and nonprofit pharmacy benefit managers, as well as the feasibility of a state-run pharmacy benefit manager. (9) Providing information on programs offered by pharmaceutical manufacturers that provide prescription drugs for free or reduced prices. (10) Creating a plan to encourage Vermonters to use federally qualified health centers (FQHC) and FQHC look-alikes, focusing on participants in the Medicaid and Medicaid waiver pharmacy programs, state employees, individuals under the supervision of corrections, and individuals receiving workers’ compensation benefits if applicable, including contracting with one or more FQHCs or FQHC look-alikes to provide case management or record management services.

- 179 - (11) Any other cost containment activity adopted, by rule, by the commissioner director of the office of Vermont health access that is designed to reduce the cost of providing prescription drugs while maintaining high quality in prescription drug therapies. * * * PBM Regulation * * * Sec. 13. 18 V.S.A. chapter 221, subchapter 9 is added to read: Subchapter 9. Pharmacy Benefit Managers § 9471. DEFINITIONS As used in this subchapter: (1) “Beneficiary” means an individual enrolled in a health plan in which coverage of prescription drugs is administered by a pharmacy benefit manager and includes his or her dependent or other person provided health coverage through that health plan. (2) “Health insurer” is defined by subdivision 9402(9) of this title. As used in this subchapter, the term includes the state of Vermont and any agent or instrumentality of the state that offers, administers, or provides financial support to state government. It also includes Medicaid, the Vermont health access plan, the VScript pharmaceutical assistance program, and any other public health care assistance program. (3) “Health plan” means a health benefit plan offered, administered, or issued by a health insurer doing business in Vermont. (4) “Pharmacy benefit management” means an arrangement for the procurement of prescription drugs at a negotiated rate for dispensation within this state to beneficiaries, the administration or management of prescription drug benefits provided by a health plan for the benefit of beneficiaries, or any of the following services provided with regard to the administration of pharmacy benefits: (A) mail service pharmacy; (B) claims processing, retail network management, and payment of claims to pharmacies for prescription drugs dispensed to beneficiaries; (C) clinical formulary development and management services; (D) rebate contracting and administration; (E) certain patient compliance, therapeutic intervention, and generic substitution programs; and (F) disease management programs.

- 180 - (5) “Pharmacy benefit manager” means an entity that performs pharmacy benefit management. The term includes a person or entity acting for a pharmacy benefit manager in a contractual or employment relationship in the performance of pharmacy benefit management for a health plan. § 9472. PHARMACY BENEFIT MANAGERS; REQUIRED PRACTICES (a) A pharmacy benefit manager that provides pharmacy benefit management for a health plan shall: (1) Discharge its duties with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent pharmacy benefit manager acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. (2) Provide all financial and utilization information requested by a health plan relating to the provision of benefits to beneficiaries through that health plan and all financial and utilization information relating to services to that health plan. A pharmacy benefit manager providing information under this subsection may designate that material as confidential. Information designated as confidential by a pharmacy benefit manager and provided to a health plan under this subsection may not be disclosed by the health plan to any person without the consent of the pharmacy benefit manager, except that disclosure may be made in a court filing under the consumer fraud provisions of chapter 63 of Title 9 or when authorized by that chapter or ordered by a court for good cause shown. (3) Notify a health plan in writing of any proposed or ongoing activity, policy, or practice of the pharmacy benefit manager that presents, directly or indirectly, any conflict of interest with the requirements of this section. (4) Adhere to the following provisions with regard to the dispensation of a substitute prescription drug for a prescribed drug to a beneficiary: (A) With regard to substitutions in which the substitute drug costs more than the prescribed drug, disclose to the health plan the cost of both drugs and any benefit or payment directly or indirectly accruing to the pharmacy benefit manager as a result of the substitution. (B) Transfer in full to the health plan any benefit or payment received in any form by the pharmacy benefit manager either as a result of a prescription drug substitution under subdivision (A) of this subdivision (4) or as a result of the pharmacy benefit manager’s substituting a lower-priced generic and therapeutically equivalent drug for a higher-priced prescribed drug.

- 181 - (5) If the pharmacy benefit manager derives any payment or benefit for the dispensation of prescription drugs within the state based on volume of sales for certain prescription drugs or classes or brands of drugs within the state, pass that payment or benefit on in full to the health plan, unless the contract between the pharmacy benefit manager and the health plan provides otherwise. (6) Disclose to the health plan all financial terms and arrangements for remuneration of any kind that apply between the pharmacy benefit manager and any prescription drug manufacturer, including formulary management and drug-switch programs, educational support, claims processing, pharmacy network fees charged from retail pharmacies and data sales fees, and any other information required to be disclosed under section 9420 of this title. A pharmacy benefit manager providing information under this subsection may designate that material as confidential. Information designated as confidential by a pharmacy benefit manager and provided to a health plan under this subsection may not be disclosed by the health plan to any person without the consent of the pharmacy benefit manager, except that disclosure may be made in a court filing under the consumer fraud provisions of chapter 63 of Title 9 or when authorized by that chapter or ordered by a court for good cause shown. (b) Compliance with the requirements of this section is required in all contracts for pharmacy benefit management entered into in this state by a health plan in this state. § 9473. ENFORCEMENT In addition to any other remedy provided by law, a health plan aggrieved by a violation of this subchapter may file an action in superior court for injunctive relief and an award of compensatory and punitive damages. The superior court may award to the health plan which prevails in an action under this section reasonable costs and attorney’s fees. Sec. 14. APPLICATION Sec. 13 of this act applies to contracts executed or renewed on or after September 1, 2005. For purposes of this section, a contract executed pursuant to a memorandum of agreement executed prior to September 1, 2005 is deemed to have been executed prior to September 1, 2005 even if the contract was executed after that date. * * * Pharmaceutical Marketer Disclosures * * * Sec. 15. 33 V.S.A. § 2005(a)(4) is amended and (d) is added to read: (4) The following shall be exempt from disclosure: * * *

- 182 - (D) scholarship or other support for medical students, residents, and fellows to attend a significant educational, scientific, or policy-making conference of a national, regional, or specialty medical or other professional association if the recipient of the scholarship or other support is selected by the association; and (E) unrestricted grants for continuing medical education programs; and (F) prescription drug rebates and discounts. * * * (d) Disclosures of unrestricted grants for continuing medical education programs shall be limited to the value, nature, and purpose of the grant and the name of the grantee. It shall not include disclosure of the individual participants in such a program. * * * Pharmacy Discount Plans * * * Sec. 16. 33 V.S.A. § 2003 is amended to read: § 2003. PHARMACY DISCOUNT PLANS * * * (b) The Healthy Vermonters program shall offer beneficiaries an initial discounted cost for covered drugs. Upon approval by the Centers for Medicare and Medicaid Services of a Section 1115 Medicaid waiver program, and upon subsequent legislative approval, the The Healthy Vermonters program and the Healthy Vermonters Plus program shall offer beneficiaries a secondary discounted cost, which shall reflect a state payment toward the cost of each dispensed drug as well as any rebate amount negotiated by the commissioner. * * * (n) The department shall agency may seek a waiver from the Centers for Medicare and Medicaid Services (CMS) requesting authorization any waivers of federal law, rule, or regulation necessary to implement the provisions of this section, including application of manufacturer and labeler rebates to the pharmacy discount plans. The secondary discounted cost shall not be available to beneficiaries of the pharmacy discount plans until the department receives written notification from CMS that the waiver requested under this section has been approved and until the general assembly subsequently approves all aspects of the pharmacy discount plans, including funding for positions and related operating costs associated with eligibility determinations. * * * Price Disclosure and Certification * * *

- 183 - Sec. 17. 33 V.S.A. § 2010 is added to read: § 2010. ACTUAL PRICE DISCLOSURE AND CERTIFICATION (a) A manufacturer of prescription drugs dispensed in this state under a health program directed or administered by the state shall, on a quarterly basis, report by National Drug Code the following pharmaceutical pricing criteria to the director of the office of Vermont health access for each of its drugs: (1) the average wholesale price; (2) the wholesale acquisition cost; (3) the average manufacturer price as defined in 42 U.S.C. § 1396r-8(k); and (4) the best price as defined in 42 U.S.C. § 1396r - 8(c)(1)(C). (b) The calculation of average wholesale price and wholesale acquisition cost must be the net of all volume discounts, prompt payment discounts, charge-backs, short-dated product discounts, cash discounts, free goods, rebates, and all other price concessions or incentives provided to a purchaser that result in a reduction in the ultimate cost to the purchaser. (c) When reporting the average wholesale price, wholesale acquisition cost, average manufacturer price and best price, a manufacturer of prescription drugs dispensed in this state shall include also a detailed description of the methods by which the prices were calculated. (d) When a manufacturer of prescription drugs dispensed in this state reports the average wholesale price, wholesale acquisition cost, average manufacturer price, or best price, the president or chief executive officer of the manufacturer shall certify to the agency, on a form provided by the director of the office of Vermont health access, that the reported prices are accurate. (e) Except as provided in this subsection, all information provided to the director by a manufacturer of prescription drugs under this section is confidential and may not be disclosed by any person or by the office to any person without the consent of the manufacturer. Disclosure may be made by the office to an entity providing services to the office under this section. Disclosure may be ordered by a court for good cause shown or made in a court filing under seal unless or until otherwise ordered by a court. Nothing in this subsection limits the attorney general’s use of civil investigative demand authority under the Vermont Unfair Trade Practices Act to investigate violations of this section. * * * Electronic Monitoring of Prescriptions * * * Sec. 18. 33 V.S.A. chapter 48 is added to read: - 184 - CHAPTER 48. ELECTRONIC MONITORING OF PRESCRIPTIONS § 4801. ELECTRONIC DATABASE FOR PRESCRIPTIONS (a) Contingent upon the receipt of funding, the Vermont department of health may establish an electronic system for monitoring Schedules II, III, and IV controlled substances that are dispensed within the state of Vermont by a practitioner or pharmacist or dispensed to an address within the state by a pharmacy licensed by the Vermont board of pharmacy. (b) A practitioner or a pharmacist shall not have to pay a fee or tax specifically dedicated to the operation of the system. (c) Every dispenser within the state of Vermont or who is licensed by the Vermont board of pharmacy shall report to the Vermont department of health the data required by this section in a timely manner as prescribed by the department of health, except that reporting shall not be required for: (1) a drug administered directly to a patient; or (2) a drug dispensed by a practitioner at a facility licensed by the Vermont department of health, provided that the quantity dispensed is limited to an amount adequate to treat the patient for a maximum of 48 hours. (d) Data for each controlled substance that is dispensed shall include, but not be limited to, the following: (1) patient identifier; (2) drug dispensed; (3) date of dispensing; (4) quantity dispensed; (5) prescriber; and (6) dispenser. (e) The data shall be provided in the electronic format specified by the department of health unless a waiver has been granted by the department to an individual dispenser. (f)(1) The data collected pursuant to this chapter shall be confidential and not subject to public records law except as provided in this section. The department of health shall maintain procedures to ensure that the privacy and confidentiality of patients and patient information collected, recorded, transmitted, and maintained is not disclosed to persons except as provided in this section.

- 185 - (2) The department of health shall be authorized to provide data to only the following persons: (A) A designated representative of a board responsible for the licensure, regulation, or discipline of practitioners, pharmacists, or other persons who are authorized to prescribe, administer, or dispense controlled substances and who are involved in a bona fide specific investigation involving a designated person. (B) A practitioner or pharmacist who requests information and certifies that the requested information is for the purpose of providing medical or pharmaceutical treatment to a bona fide current patient. (C) A patient for whom a prescription is written, insofar as the information relates to that patient. (D) Personnel or contractors, as necessary for establishing and maintaining the program's electronic system. (3) A person who receives data or any report of the system from the department of health shall not provide it to any other person or entity except by order of a court of competent jurisdiction. (4) The department shall purge all information that is more than six years old. (g) The failure by a dispenser to transmit data to the department of health as required by subsections (c), (d), or (e) of this section shall be subject to discipline by the board of pharmacy or by the applicable professional licensing entity. (h) Knowing disclosure of transmitted data to a person not authorized by subsection (f) of this section or by other state law, or obtaining information under this section not relating to a bona fide specific investigation, shall be punishable by imprisonment for not more than one year or a fine of not more than $1,000.00, or both. § 4802. DEFINITIONS As used in this chapter, the following definitions shall have the following meanings: (1) “Patient identifier” means a patient’s: (A) Full name; (B) Address, including zip code; (C) Date of birth; and

- 186 - (D) Social Security number or an alternative identification number established pursuant to section 4806 of this title. (2) “Pharmacy Universal Claim Form” means a form that: (A) Is in the format of the “Pharmacy Universal Claim Form” incorporated by reference in section 4807 of this title; and (B) Contains the information specified by section 4801 of this title. (3) “Report” means a compilation of data concerning a patient, a dispenser, a practitioner, or a controlled substance. § 4803. DATA REPORTING (a) A dispenser shall report all controlled substances dispensed after September 1, 2005. (b) A dispenser of a Schedule II, III, or IV controlled substance shall transmit or provide the following data to the department of health or the department of health’s agent: (1) The patient identifier; (2) The national drug code of the drug dispensed; (3) The metric quantity of the drug dispensed; (4) The date of dispensing; (5) The estimated days’ supply dispensed; (6) The Drug Enforcement Administration registration number of the prescriber; (7) The serial number assigned by the dispenser; and (8) The Drug Enforcement Administration registration number of the dispenser. (c)(1) The data shall be transmitted within 16 days of the date of dispensing unless the department of health grants an extension. (2) An extension may be granted if a dispenser suffers a mechanical or electronic failure or cannot meet the deadline established by subdivision (1) of this subsection for other reasons beyond his or her control. A dispenser shall apply, in writing, for an extension. An application for an extension shall state the reason why an extension is required and the period of time for which the extension is required. (3) An extension shall be granted to all dispensers if the department of health or its agent is unable to receive electronic reports. - 187 - (d) Except as provided in subsection (g) of this section, the data shall be transmitted by: (1) An electronic device compatible with the receiving device of the department of health or its agent; (2) A double-sided, high-density micro floppy disk; or (3) A one-half inch nine-track 1600 or 6250 BPI magnetic tape. (e) The data shall be transmitted in the format established by the “ASAP Telecommunications Format for Controlled Substances.” (f) The department of health shall provide a toll-free telephone number for transmitting electronic reports by modem. (g)(1) A dispenser who does not have an automated recordkeeping system capable of producing an electronic report in the format established by “ASAP Telecommunications Format for Controlled Substances” may request a waiver from electronic reporting. The request shall be made in writing to the department of health. (2) A dispenser shall be granted a waiver if he or she agrees in writing to report the data by submitting a completed “Pharmacy Universal Claim Form.” § 4804. COMPLIANCE (a) A dispenser shall be deemed to be the person who is registered with the U.S. Drug Enforcement Administration. (b) A dispenser may presume that the patient identification information provided by the patient or the patient’s agent is correct. § 4805. REQUEST FOR REPORT (a) A written request shall be filed with the department of health prior to the release of a report. (b) A request for a report shall be made on a request form, except for a subpoena issued by a grand jury. § 4806. ALTERNATIVE PATIENT IDENTIFICATION NUMBER (a) If a patient does not have a Social Security number or refuses to provide a Social Security number, the patient’s driver’s license number shall be used. (b) If a patient does not have a Social Security number or a driver’s license number, the patient shall use a number designated by the Vermont department of health. § 4807. RULEMAKING

- 188 - The department may adopt rules as necessary for the implementation of this chapter. * * * Chronic Care Initiative * * * Sec. 19. BLUEPRINT FOR HEALTH; APPROPRIATION There is appropriated from the health access trust fund $3,000,000.00 to the office of Vermont health access to fund the goals of the Vermont Blueprint for Health: The Chronic Care Initiative. The goals of the initiative are to: (1) implement a statewide system of care that enables Vermonters with, and at risk for, chronic disease to lead healthier lives; (2) develop a system of care that is financially sustainable; and (3) forge a public-private partnership to develop and sustain the new system of care. On or before January 1, 2006, and annually thereafter, the director of the office of Vermont health access, in consultation with the commissioner of health, shall file a report with the general assembly detailing progress made in reaching these three goals. * * * Information Technology * * * Sec. 20. 18 V.S.A. § 9417 is added to read: § 9417. HEALTH CARE INFORMATION TECHNOLOGY (a) The commissioner shall facilitate the development of a statewide health information technology plan that includes the implementation of an integrated electronic health information infrastructure for the sharing of electronic health information among health care facilities, health care professionals, public and private payers, and patients. The plan shall include standards and protocols designed to promote patient education, patient privacy, physician best practices, electronic connectivity to health care data, and, overall, a more efficient and less costly means of delivering quality health care in Vermont. (b) The health information technology plan shall: (1) support the effective, efficient, statewide use of electronic health information in patient care, health care policymaking, clinical research, health care financing, and continuous quality improvements, including computerized physician order entry technology, electronic common claims technology, and smart card technology ; (2) educate the general public and health care professionals about the value of an electronic health infrastructure for improving patient care; (3) promote the use of national standards for the development of an interoperable system, which shall include provisions relating to security, privacy, data content, structures and format, vocabulary, and transmission protocols; - 189 - (4) make strategic investments in equipment and other infrastructure elements that will facilitate the ongoing development of a statewide infrastructure; and (5) recommend funding mechanisms for the ongoing development and maintenance costs of a statewide health information system. (c) The commissioner shall contract with the Vermont information technology leaders (VITL), a broad-based health information technology advisory group that includes providers, payers, employers, patients, health care purchasers, information technology vendors, and other business leaders, to develop the health information technology plan, including applicable standards, protocols, and pilot programs. In carrying out their responsibilities under this section, members of VITL shall be subject to conflict of interest policies established by the commissioner in the certificate of need regulations to ensure deliberations and decisions are fair and equitable. (d) The following persons shall be invited to participate in VITL as nonvoting members: (1) the commissioner of information and innovation who shall advise the group on technology best practices and the state’s information technology policies and procedures, including the need for a functionality assessment and feasibility study related to establishing an electronic health information infrastructure under this section; (2) the director of the office of Vermont health access or his or her designee; and (3) the commissioner or his or her designee. (e) On or before July 1, 2006, VITL shall initiate a pilot program involving at least two hospitals using existing sources of electronic health information to establish electronic data sharing for clinical decision support, pursuant to priorities and criteria established in conjunction with the health information technology advisory group. Objectives of the pilot program may include: (1) supporting patient care and improving quality of care; (2) enhancing productivity of health care professionals and reducing administrative costs of health care delivery and financing; (3) determining whether and how best to expand the pilot program on a statewide basis; (4) implementing strategies for future developments in health care technology, policy, management, governance, and finance; and (5) ensuring patient data confidentiality at all times. - 190 - (f) The standards and protocols developed by VITL shall be no less stringent than the “Standards for Privacy of Individually Identifiable Health Information” established under the Health Insurance Portability and Accountability Act of 1996 and contained in 45 C.F.R., Parts 160 and 164, and any subsequent amendments. In addition, the standards and protocols shall ensure that there are clear prohibitions against the out-of-state release of individually identifiable health information for purposes unrelated to treatment, payment, and health care operations, and that such information shall under no circumstances be used for marketing purposes. The standards and protocols shall require that access to individually identifiable health information is secure and traceable by an electronic audit trail. (g) On or before January 1, 2007, VITL shall submit to the commissioner, the commissioner of information and innovation, the director of the office of Vermont health access, and the general assembly a health information technology plan for establishing a statewide, integrated electronic health information infrastructure in Vermont, including specific steps for achieving the goals and objectives of this section. The plan shall include also recommendations for self - sustainable funding for the ongoing development, maintenance, and replacement of the health information technology system. Upon approval by the commissioner, the plan shall serve as the framework within which certificate of need applications for information technology are reviewed under section 9440b of this title by the commissioner. (h) Beginning January 1, 2006, and annually thereafter, VITL shall file a report with the commissioner, the commissioner of information and innovation, the director of the office of Vermont health access, and the general assembly. The report shall include an assessment of progress in implementing the provisions of this section, recommendations for additional funding and legislation required, and an analysis of the costs, benefits, and effectiveness of the pilot program authorized under subsection (e) of this section, including, to the extent these can be measured, reductions in tests needed to determine patient medications, improved patient outcomes, or reductions in administrative or other costs achieved as a result of the pilot. (i) VITL is authorized to seek matching funds to assist with carrying out the purposes of this section. In addition, it may accept any and all donations, gifts, and grants of money, equipment, supplies, materials, and services from the federal or any local government, or any agency thereof, and from any person, firm, or corporation for any of its purposes and functions under this section and may receive and use the same subject to the terms, conditions, and regulations governing such donations, gifts, and grants.

- 191 - (j) The commissioner, in consultation with VITL, may seek any waivers of federal law, rule, or regulation that might assist with implementation of this section. Sec. 21. 18 V.S.A. § 9437(4) and (5) are amended and (6) is added to read: (4) in the case of a proposal for the addition of beds for the provision of skilled nursing or intermediate care, the number of beds to be approved is not inconsistent with the considerations identified under subsection 9439(e) of this title; and (5) The the proposed new health care project is consistent with the certificate of need guidelines published by the department in accordance with its rules, and is within the portion of the unified health care budget applicable to the proposed health care facility; (6) if the application is for the purchase or lease of new health care information technology, it conforms with the health information technology plan established under section 9417 of this title, upon approval of the plan by the commissioner. Sec. 22. 18 V.S.A. § 9440b is added to read: § 9440b. INFORMATION TECHNOLOGY; REVIEW PROCEDURES Notwithstanding the procedures in section 9440 of this title, upon approval by the commissioner of the health information technology plan developed under section 9417 of this title, the commissioner shall establish by rule standards and expedited procedures for reviewing applications for the purchase or lease of health care information technology that otherwise would be subject to review under this subchapter. Such applications may not be granted or approved unless they are consistent with the health information technology plan and the health resource allocation plan. The commissioner’s rules may include a provision requiring that applications be reviewed by the health information advisory group authorized under subsection 9417(c) of this title. The advisory group shall make written findings and a recommendation to the commissioner in favor of or against each application. * * * Health Care Purchasing Pool * * * Sec. 23. 18 V.S.A. § 9413 is added to read: § 9413. VERMONT HEALTH CARE PURCHASING POOL (a) The secretary of administration shall establish a Vermont health care purchasing pool for the purpose of coordinating and enhancing the purchasing power of health care benefit plans of the groups identified in subsection (b) of this section. It is not the intent of the general assembly to exacerbate cost - 192 - shifting or adverse selection in the Vermont health care system through the creation of the health care purchasing pool. In offering and administering the purchasing pool, the secretary shall not discriminate against individuals or groups based on age, gender, geographic area, industry, or medical history. The secretary shall not administer the purchasing pool under this subsection in a manner that pools the risks of participants. The provisions of this section shall not affect the rights of any party to a collective bargaining agreement and shall not require that participating health insurance plans have a common benefit plan. (b)(1) The secretary may include in the purchasing pool all employees, retirees, and dependents covered by the group health insurance plans of the following entities: (A) the state of Vermont; (B) the University of Vermont; (C) Vermont State Colleges; (D) any municipality, including any school district, that chooses to participate in the pool; and (E) such portions of the Medicaid caseload, Green Mountain Health, or any other public health care program as the secretary deems proper, in consultation with the director of the office of Vermont health access. Access to medical care or benefit levels for Medicaid recipients shall not diminish as a result of participation or nonparticipation in the pool. (2) On and after October 1, 2006, the secretary may make the purchasing pool available to any employer group, association, or trust that chooses to participate in the pool on behalf of the employees or members of the group, association, or trust. (c) In administering the purchasing pool, the secretary may: (1) Contract on behalf of participants in the pool with health care providers, health care facilities, and health insurers for the delivery of health care services, including agreements securing discounts for regular bulk payments to providers, and agreements establishing uniform provider reimbursement; (2) Consolidate administrative functions through a common contract on behalf of participants in the pool, including claims processing, utilization review, management reporting, benefit management, and bulk purchasing; (3) Create a health care cost and utilization database for participants in the pool, and evaluate potential cost savings; and - 193 - (4) Establish incentive programs to encourage pool participants to use health care services judiciously and to improve their health status. (d) On or before December 15 of each year, the secretary shall report to the general assembly on the operation of the purchasing pool, including the number and types of groups and group members participating in the pool, the costs of administering the pool, and the savings attributable to participating groups from the operation of the pool. (e) On or before January 15 , 2006, the secretary shall report to the general assembly with his or her recommendations concerning the feasibility and merits of authorizing the secretary to act as an insurer in pooling risk and providing benefits, including a common benefits plan, to participants of the purchasing pool. * * * Green Mountain Health * * * Sec. 24. 33 V.S.A. chapter 19, subchapter 6 is added to read: Subchapter 6. Green Mountain Health § 2020. POLICY AND PURPOSE In order to ensure all Vermont residents have access to key health services and all contribute to the financial sustainability of Vermont’s health care system, Green Mountain Health is established to provide uninsured Vermont residents a defined benefit package of primary and preventive care. Expansions to the program shall be consistent with recommendations approved by the general assembly under Sec. 32 of this act. § 2021. DEFINITIONS As used in this subchapter: (1) “Benefits” means primary and preventive care health services. (2) “Green Mountain Health” means the plan established under this subchapter. (3) “Health care professional” means an individual licensed, registered, or certified in the state of Vermont to provide health services. (4) “Health service” means any medically necessary treatment or procedure to maintain, diagnose, or treat an individual’s physical or mental condition, including services provided pursuant to a physician’s order and services to assist in activities of daily living. (5) “Office” means the office of Vermont health access.

- 194 - (6) “Preventive care” means health services that include screening, counseling, treatment, or medication determined by scientific evidence to be effective in preventing or detecting disease and shall include immunizations. (7) “Primary care” means health services provided by health care professionals specifically trained for and skilled in first-contact and continuing care for individuals with signs, symptoms, or health concerns, not limited by problem origin (biological, behavioral, or social), organ system, or diagnosis and shall include prenatal care. Primary care services include health promotion, preventive care, health maintenance, counseling, patient education, case management, and the diagnosis and treatment of acute and chronic illnesses in a variety of health care settings. (8) “Uninsured” means not having health insurance coverage under either a private or public plan, including Medicaid. (9) “Vermont resident” means an individual domiciled in Vermont as evidenced by an intent to maintain a principal dwelling place in Vermont indefinitely and to return to Vermont if temporarily absent, coupled with an act or acts consistent with that intent. The director of the office of Vermont health access shall establish specific criteria to demonstrate residency. § 2022. BENEFITS DEVELOPED; PRIMARY; PREVENTIVE (a) The office of Vermont health access shall define benefits to be provided uninsured Vermont residents under Green Mountain Health, beginning July 1, 2006. The benefits shall be submitted to the general assembly for approval January 1, 2006. (b) The office shall ensure the benefits provide a choice of services and of health care professionals, contain costs over time, and improve the quality of care and health outcomes. (c) The benefits shall consist of at least the same primary and preventive care health services covered under the Vermont health access plan. In developing the benefits, the office shall: (1) engage in a public process designed to respond to Vermonters’ health care values and priorities; (2) consider the current range of health services received by Vermonters through public and private benefit packages; (3) consider credible evidence-based scientific research and comment by health care professionals both nationally and internationally concerning clinical efficacy and risk; (4) consider health care ethics; - 195 - (5) consider the cost-effectiveness of health services and technology; (6) consider revenues anticipated to be available to finance Green Mountain Health; (7) consider the state health plan and the health resource allocation plan established under section 9405 of Title 18; and (8) consider any Vermont-specific initiatives that would inform the department. § 2023. BUDGET FOR BENEFITS (a) Beginning January 15, 2006, and annually thereafter, the office shall propose to the general assembly a budget for the benefits covered under Green Mountain Health. The budget shall include recommended expenditures during the next succeeding state fiscal year broken down by health care sector and region and anticipated revenues available to support such expenditures. (b) In developing the proposed budget, the office shall consider the payment methods under section 2024 of this title, the negotiated payment amounts under section 2025 of this title, cost sharing developed under section 2027 of this title, and the cost containment targets under subsection (c) of this section. (c) To further the legislative goals of this subchapter, the office shall develop and issue a cost containment target for each health care sector. The cost containment target shall be considered when negotiating payment amounts under section 2025 of this title. § 2024. PAYMENT METHODS (a) By February 1, 2006, the office of Vermont health access shall determine by rule pursuant to chapter 25 of Title 3 the type of payment method to be used for the health services covered under Green Mountain Health. The payment methods shall be in alignment with the goals of this subchapter and shall encourage cost - containment, provision of high quality, evidence-based health services in an integrated setting, patient self - management, and healthy lifestyles. In developing the payment methods, the department shall consult with health care professionals prior to filing the draft rules for comment. (b) The office shall consider the following payment methods: (1) capitated payments; (2) incentive payments to the health care professionals based on performance standards, which may include evidence-based standard physiological measures, or if the health condition cannot be measured in that

- 196 - manner, a process measure, such as the appropriate frequency of testing or appropriate prescribing of medications; (3) fixed annual payments to health care facilities; and (4) fee for service. (c) The office shall modify the payment methods by rule as it deems appropriate. § 2025. PAYMENT AMOUNTS (a) The intent of this section is to ensure reasonable payments to health care professionals and to eliminate the shift of costs between the payers of health services. (b) The office shall negotiate with health care professionals and groups of health care professionals to establish a payment amount for the health services provided by Green Mountain Health. The amount shall be sufficient to provide reasonable access to health services, provide sufficient payment to health care professionals, and encourage the financial stability of health care professionals. In determining the payment amount, the department shall consider: (1) the actual cost of the health service; (2) expected revenues; (3) cost containment targets; (4) shared costs between affiliated health care professionals. (c) The office may negotiate a contract including payment methods and amounts with any out-of-state health care professional or hospital that regularly treats a sufficient volume of Vermont residents to provide health services under Green Mountain Health. § 2026. ADMINISTRATION (a) Green Mountain Health shall be administered by the office or the administrator contracted with under section 903 of Title 22 , or, under an open bidding process, the office shall solicit and receive bids from insurance carriers or third party administrators for administration. The office may consider bids from out - of - state entities as well as Vermont entities to administer Green Mountain Health, but may require that the administrative work for Green Mountain Health occur in a location and facility within Vermont. (b) Nothing in this subchapter shall require an individual already covered by health insurance to terminate that insurance, enroll in Green Mountain Health, or contribute to the financing of Green Mountain Health.

- 197 - (c) Vermonters shall not be billed any additional amount for health services covered by Green Mountain Health, except as provided for as cost sharing in section 2027 of this title. (d) The office or plan administrator shall make available the necessary information, forms, and billing procedures to health care professionals to ensure payment for health services covered under Green Mountain Health. The office or plan administrator may use a single, uniform, simplified form to determine eligibility for Medicaid, any Medicaid waiver program, any state - funded pharmacy program, and Green Mountain Health to ensure that any individual eligible for these programs has the opportunity to enroll. The office shall provide coverage for health services up to three months prior to the date of application for Medicaid, any Medicaid waiver program, or the state pharmacy programs. (e) An individual aggrieved by an adverse decision of the office or plan administrator may appeal to the human services board established under section 3090 of Title 3. § 2027. COST SHARING; WELLNESS DISCOUNT (a) As part of the office’s budget, the office shall propose to the general assembly reasonable sliding - scale deductibles, co-payments, or other cost - sharing amounts applicable to Green Mountain Health. The cost-sharing amounts shall not apply to preventive health services covered by Green Mountain Health. (b) The office may include also financial or other incentives applicable to Green Mountain Health to encourage healthy lifestyles and patient self - management. In particular, the office may establish discounts, rebates, or modifications of applicable cost-sharing amounts in return for an individual’s adherence to programs of health promotion and disease prevention consistent with federal regulations relating to wellness. If such incentives are included, the office shall adopt by rule standards consistent with the standards and rules adopted under subdivisions 4080a(h)(2)(B) and (C) of Title 8. * * * Green Mountain Health Financing * * * Sec. 25. 32 V.S.A. chapter 151, subchapter 4A is added to read: Subchapter 4A. Universal Hospital Access for Green Mountain Health Infrastructure Premium § 5848. GREEN MOUNTAIN HEALTH EMPLOYER INFRASTRUCTURE PREMIUM (a) An employer health insurance impact premium is imposed upon every person who is required under subchapter 4 of this chapter to withhold income - 198 - taxes from payments of income with respect to services. The premium shall be imposed at the rate of: (1) 3.0 percent of the wages as defined for Vermont Medicare part A taxable earnings paid to each resident employee in the reporting period, reduced by: (2) qualified health insurance premiums and costs of qualified self- insurance paid for those employees in the reporting period, but not reduced below $0.00. (b) The premium under subsection (a) shall not be imposed upon the wages of any employee who is covered by health insurance through another employee of the employer during the reporting period. (c) The premium under this section shall be paid in the same manner as income withholding under subchapter 4 of this chapter and shall be subject to administrative and enforcement provisions of this chapter. Revenues from this premium shall be deposited into the Vermont health access trust fund established under section 1972 of Title 33 for the purpose of financing health care coverage under Green Mountain Health, as provided under subchapter 6 of chapter 19 of Title 33. (d) “Qualified health insurance” and “qualified self-insurance” in this section mean coverage offered by the employer to any employee who works on a basis of at least 17.5 hours per week in the reporting period. Sec. 26. 32 V.S.A. § 5822a is added to read: § 5822a. GREEN MOUNTAIN HEALTH INDIVIDUAL IMPACT PREMIUM (a) An individual health insurance impact premium is imposed upon every resident who is subject to income tax under section 5822 of this title. The premium shall be in the amount of 3.0 percent of the taxpayer’s wage income plus the taxpayer’s self-employment income, both as defined for Vermont Medicare part A taxable earnings. The premium shall be withheld from the individual’s wages in the same manner as income tax under chapter 151 of this title, and paid from self-employment income in the same manner as quarterly income tax payments under chapter 151 of this title; and shall be subject to administrative and enforcement provisions of that chapter. Revenues from this premium shall be deposited into the Vermont health access trust fund established under section 1972 of Title 33 for the purpose of financing health care coverage under Green Mountain Health, as provided under subchapter 6 of chapter 19 of Title 33.

- 199 - (b) An individual shall be exempt from the health insurance impact premium for any calendar quarter following a quarter in which the individual submits proof, as required by the commissioner of banking, insurance, securities, and health care administration, of health insurance coverage for the individual and his or her spouse and dependents. (c) In this section, “health insurance coverage” means coverage for primary care, preventive care, immunizations and prenatal care. Sec. 27. IMPLEMENTATION AND EFFECTIVE DATE (a) The commissioner of banking, insurance, securities, and health care administration and the commissioner of taxes are authorized to adopt rules and regulations necessary to implement the provisions of this act. (b) The health care premiums imposed by Secs. 23 and 24 of this act shall take effect for taxable years beginning on or after January 1, 2007. 2007. Sec. 28. 33 V.S.A. § 1972(b) is amended to read: (b) Into the fund shall be deposited: (1) revenue from the cigarette and tobacco products tax established in chapter 205 of Title 32; (2) revenue from health care provider assessments collected and deposited into the health care trust fund pursuant to subchapter 2 of chapter 19 of this title; (3) transfers from the tobacco litigation settlement fund established in section 435a of Title 32, authorized by the general assembly; (4) transfers from the general fund, authorized by the general assembly; and (5) revenue raised under sections 5822a and 5848 of Title 32; and (6) the proceeds from grants, donations, contributions, and taxes and any other sources of revenue as may be provided by statute or by rule. * * * Drug Utilization Review Board * * * Sec. 29. 1 V.S.A. § 313(a) is amended to read: (a) No public body described in section 312 of this title may hold an executive session from which the public is excluded, except by the affirmative vote of two-thirds of its members present in the case of any public body of state government or of a majority of its members present in the case of any public body of a municipality or other political subdivision. A motion to go - 200 - into executive session shall indicate the nature of the business of the executive session, and no other matter may be considered in the executive session. Such vote shall be taken in the course of an open meeting and the result of the vote recorded in the minutes. No formal or binding action shall be taken in executive session except actions relating to the securing of real estate options under subdivision (2) of this subsection. Minutes of an executive session need not be taken, but if they are, shall not be made public subject to section subsection 312(b) of this title. A public body may not hold an executive session except to consider one or more of the following: * * * (9) Information relating to a pharmaceutical rebate or to supplemental rebate agreements, other than information protected from disclosure by federal law, by the terms and conditions required by the federal Centers for Medicare and Medicaid Services as a condition of rebate authorization under the Medicaid program. Sec. 30. 33 V.S.A. § 1998(f)(2) is amended to read: (2) The board shall meet at least quarterly. The board shall comply with the requirements of subchapter 2 of chapter 5 of Title 1 (open meetings) and subchapter 3 of chapter 5 of Title 1 (open records), except that the board may go into executive session as provided for in subdivision 313(a)(9) of Title 1 in order to comply with subsection 2002(c) of this title. * * * Studies * * * Sec. 31. ECONOMIC, FINANCING, AND ADMINISTRATIVE STUDIES (a) In order to assess more fully the benefits and costs and to prepare and plan for the implementation of full and universal access to health care in Vermont, the general assembly, in consultation with the department of banking, insurance, securities, and health care administration, directs that the following studies be undertaken during the interim of the 2005 legislative session. (1) Economic impact study. The joint fiscal committee shall direct its staff or contract for a consultant to undertake a study of the economic impact of full implementation of Green Mountain Health to provide universal access to health care in Vermont. The study shall examine the impact on business and the labor force, the future growth of the economy and the economic competitiveness of Vermont, and the effects on residents and population groups and on current and potential insurers and providers of health care. (2) Financing options. The joint fiscal committee shall direct its staff or contract for a consultant to undertake a study of the financing options and - 201 - implications for financing expansions to Green Mountain Health. The study shall include examination of all financing options and their implications including the income tax, a payroll tax, premiums or cost-sharing measures, consumption taxes, specific more limited taxes to support parts of the health care system’s financial needs, and other revenue sources including insurance risk pools and insurance assistance and incentives. In addition, it shall address issues involved with federal law and taxation, including ERISA and other areas of preemption and shall analyze methods for recapturing insurance premiums as a result of any reductions in uncompensated care, such as the Dirigo model enacted in the state of Maine. (3) Governance and administrative study. The secretary of administration, in consultation with the office of Vermont health access, the department of banking, insurance, securities, and health care administration, and the agency of human services, shall examine and develop a plan for reorganizing their respective offices and functions consistent with the purposes of this act, including recommendations relating to personnel, operations, and budgetary requirements. The recommendations shall consider the most appropriate and efficient approach to integrating health care policy, planning, delivery, regulation, and defining clear lines of accountability within the health care system. The study shall include also an examination of means to coordinate or integrate Green Mountain Health with the current workers’ compensation system. (b) Reports, including findings and recommendations, from each study required by this section shall be submitted to the General Assembly no later than January 15, 2006. * * * Schedule for Attainment of Health Care Goals * * * Sec. 32. SCHEDULE FOR ATTAINMENT OF HEALTH CARE GOALS (a) During the interim of the 2005 legislative session and of subsequent sessions, the joint fiscal committee, in consultation with the health access oversight committee, the senate committee on health and welfare, and the house committee on health care shall oversee and monitor Green Mountain Health and any expansions to that program. In addition, the committee shall receive input and make recommendations to the general assembly regarding long-term development of policies and programs designed to insure that, b y 2009, all Vermonters have access to affordable, continuous, quality health care that is financed in a fair and equitable manner. (b) On July 1, 2006, Green Mountain Health shall offer a package of primary and preventive care to all uninsured Vermont residents.

- 202 - (c) On July 1, 2007, provided the joint fiscal committee confirms that benchmarks consistent with this section have been met, the following programs shall be implemented: (1) Green Mountain Health shall be expanded to include hospital coverage; and (2) Under a premium-based model, all Vermonters shall have the option of participating in Green Mountain Health. The joint fiscal committee shall recommend whether such coverage shall include: (A) the full Green Mountain Health plan, including primary and preventive care and hospital coverage; (B) only hospital coverage; or (C) specified primary or preventive health services. (d) On July 1, 2009, provided the joint fiscal committee confirms that benchmarks consistent with this section are met, all Vermonters shall have a minimum common benefit level, including hospital coverage, and shall be able to choose between Green Mountain Health and any commercial plan offering a common benefit level. (e) In addition, the joint fiscal committee shall consider the following: (1) offering publicly financed stop-loss insurance to all health plans doing business in Vermont; (2) designing organizational structures that integrate the delivery of care at both the regional and state level; (3) incorporating within a public health care program the health benefits covered under workers’ compensation policies; and (4) implementing tort reform consistent with the findings and recommendations of the medical malpractice study authorized under Sec. 292 of No. 122 of the Acts of the 2003 Adj. Sess. (2004). (f) Recommendations by the joint fiscal committee shall be based on data received or proposals made by the office of Vermont health access and the department of banking, insurance, securities, and health care administration as well as on any other relevant public input received by the committee. (g) The office of Vermont health access and the department of banking, insurance, securities, and health care administration shall report to the joint fiscal committee at such times and with such information as the committee determines is necessary to fulfill its legislative oversight responsibilities.

- 203 - (h) All recommendations by the joint fiscal committee to the general assembly shall be assessed in terms of benchmarks that measure cost savings; increased access; improvements in quality and delivery; administrative simplification; fairness and equity in financing; continuity of coverage; and financial sustainability. (i) Specific benchmarks that measure the viability of maintaining or developing health care programs or policies may include: (1) changes in health care sector growth rate as measured against the projected growth rate; (2) changes in aggregate health care spending as measured against projected spending; (3) insurance rates as compared to trend filings; (4) Medicaid spending; (5) availability of funds; (6) survey data such as quality reports and the rate of uninsured; and (7) a hospital rate of growth that is not greater than the Consumer Price Index plus the rate of growth of the gross state product. (j) With respect to each of its proposals, the joint fiscal committee shall determine whether access to health care and cost containment are best achieved through public plans, private plans, or a combination thereof. (k) Any data or reports requested by the joint fiscal committee not available until the legislative session shall be submitted to the president of the senate, the speaker of the house, the senate committees on finance and on health and welfare, and the house committees on health care and on human services. * * * Appropriation * * * Sec. 33. APPROPRIATION There is appropriated in fiscal year 2005: (1) the amount of $125,000.00 from the general fund to the general assembly for the studies authorized by Sec. 31 of this act; (2) the amount of $1,000,000.00 from the general fund to the department of banking, insurance, securities, and health care administration as follows: $250,000.00 plus an additional appropriation of $750,000.00 in dollar-for-dollar matching funds to leverage resources necessary to fund the pilot program authorized under Sec. 20, subsection 9417(e) of Title 18; and

- 204 - (3) the amount of $3,000,000.00 from the general fund to the office of Vermont health access to fund the Vermont Blueprint for Health: The Chronic Care Initiative under Sec. 19 of this act. (Committee vote: 5-1-0) Reported favorably with recommendation of proposal of amendment by Senator Cummings for the Committee on Finance. The Committee recommends that the Senate propose to the House to amend the bill by striking out all after the enacting clause and inserting in lieu thereof the following: Sec. 1. FINDINGS The general assembly hereby finds that: (1) In 2006, it is projected that Vermont will spend $3.8 billion on health care. That amount has doubled since 1998. If the trend continues, health care spending will double again in eight years. In other words, for every year Vermont fails to address the health care crisis, health care costs will rise by at least another $350 million. (2) Over 60,000 Vermonters have no health insurance. The costs of health services provided to individuals who are unable to pay are shifted to others. Of the $2.1 billion charged by hospitals in 2005, $88 million was not collected as follows: $37 million in charity care and $51 million in bad debt. (3) There are two fundamental inequities in the insurance-based financing system: (A) premiums are not based on ability to pay, and (B) deductibles and coinsurance place a financial burden on those with serious illness. In addition, health care financing is complex and fragmented, placing administrative burdens on health care professionals, in particular. (4) Improvements in health care quality will result in improved health and reduced costs. The existing payment system, because it is based on the amount of care provided, does not tie reimbursement to improved health. (5) The Vermont health care system is fragmented and disorganized, leading in some instances to excessive care or inadequate care and creating barriers to coordination and accountability among health care professionals, payers, and patients. (6) Federal laws and programs, such as Medicaid, Medicare, and the Employee Retirement Income Security Act of 1974 (ERISA) constrain Vermont’s ability to immediately establish an integrated health care system. Presently, there are 130,000 Vermonters enrolled in Medicaid, 90,000 in Medicare, and 150,000 in private sector employer-sponsored self-insured - 205 - plans. Combined, it is projected that these individuals will account for nearly $2.3 billion of the $3.8 billion Vermont will spend on health care in 2006. (7) The largest costs of a medical facility are apportioned between fixed costs, such as buildings and equipment (32 percent), and fairly inflexible costs, such as skilled professional staff (52 percent). Together, these account for 84 percent of a facility’s costs. Sec. 2. GUIDELINES FOR HEALTH CARE REFORM The general assembly adopts the following guidelines, modeled after the Coalition 21 principles, as a framework for reforming health care in Vermont: (1) It is the policy of the state of Vermont to ensure universal access to and coverage for essential health care services for all Vermonters. (2) Health care coverage needs to be comprehensive and continuous. (3) Vermont’s health delivery system must model continuous improvement of health care quality and safety. (4) The financing of health care in Vermont must be sufficient, equitable, fair, and sustainable. (5) Built-in accountability for quality, for cost, for access and for participation must be the hallmark of Vermont’s health care system. (6) Vermonters must be engaged, to the best of their ability, to pursue healthy lifestyles, to focus on preventive care and wellness efforts, and to make informed use of all health care services throughout their lives. Sec. 3. GOALS OF HEALTH CARE REFORM Consistent with the adopted guidelines for reforming health care in Vermont, the general assembly adopts the following goals: (1) Universal Access. By 2009, Vermont shall have an integrated health care system that provides all Vermonters with access to affordable, high quality health care that is financed in a fair and equitable manner. (A) As an initial step toward reaching this goal, the state shall offer a benefit of primary and preventive health services to all uninsured Vermonters. (B) Subsequent steps shall include expanded benefits to expanded populations. Expansions shall occur upon a determination that they meet specified benchmarks. The benchmarks shall measure the appropriateness and feasibility of a proposed expansion based on its ability to promote the following: long-term cost savings, increased access, improved quality and delivery, administrative simplification, fair and equitable financing, financial sustainability, and continuity of coverage. - 206 - (2) Cost Control. It is imperative that health care costs are brought under control. Likewise, it is essential that cost containment initiatives address both the financing of health care and also the delivery and quality of health services offered in Vermont. Strategies for containing costs shall include: (A) global budgeting of hospitals; (B) tort reform; (C) increased consumer access to health care price and quality information; (D) promotion of self-care and healthy lifestyles; (E) enhanced prescription drug initiatives; (F) funding of the chronic care initiative; (G) investments in health information technology; (H) alignment of health care professional reimbursement with best practices and outcomes rather than utilization; and (I) development of a long-term strategy for integrating the health care delivery system as well as a strategy for integrating health care policy, planning, and regulation within government. (3) Legislative Oversight. There is created a legislative commission on health care reform to monitor and provide input on Vermont’s health care policy, cost containment initiatives, pilot programs, studies, and expansions to public programs. * * * Process for Attaining Goals * * * Sec. 4. PROCESS FOR ATTAINING HEALTH CARE GOALS; COMMISSION ON HEALTH CARE REFORM (a) There is established a legislative commission on health care reform. The commission shall monitor health care reform and recommend to the general assembly actions needed to attain the health care goals established by this act. (b) Members of the commission shall include three representatives appointed by the speaker of the house, three senators appointed by the committee on committees, and a nonvoting member appointed by the governor. (c) Beginning in the interim of the 2005 legislative session through July 1, 2009, the commission shall:

- 207 - (1) oversee and monitor Green Mountain Health, propose to the general assembly as described in section 2022 of Title 33 a package of benefits to be covered under that program and, based on an assessment of whether specified benchmarks have been met, make recommendations to the general assembly on expansions to the program; (2) identify and report emerging trends and behaviors among various participants in the health care system; (3) assess the effectiveness of cost-containment initiatives; (4) establish demonstration or pilot projects designed to contain health care costs and improve the delivery and quality of health care; (5) direct the studies established under Sec. 32 of this act; (6) assess the feasibility of: (A) a publicly financed stop-loss insurance policy for all health plans doing business in Vermont; (B) organizational structures that integrate the delivery of care at both the regional and state level; (C) a public health care program that incorporates the health benefits covered under workers’ compensation policies; and (D) tort reform consistent with the findings and recommendations of the medical malpractice study authorized under Sec. 292 of No. 122 of the Acts of the 2003 Adj. Sess (2004); (7) recommend reimbursement mechanisms for health services that reward primary care practices that prevent chronic illnesses, avoid preventable hospitalizations, and reduce long-term costs to the system; and (8) receive input and make recommendations, generally, to the general assembly regarding the long-term development of policies and programs designed to ensure that, by 2009, Vermont has an integrated system of care that provides all Vermonters access to affordable, high quality health care that is financed in a fair and equitable manner. (d) The commission shall retain the services of one full-time director and such other staff as is needed, and shall receive administrative, fiscal, and legal support from the joint fiscal office and the legislative council. The director shall have expertise in finance, planning, systems analysis, and processes involving weighing competing interests among parties. In addition, with the approval of the speaker of the house and the president pro tempore of the senate, the commission may retain the services of one or more consultants or

- 208 - experts knowledgeable in health care systems, financing, or delivery to assist in its work and may request funding from the legislative budget. (e) The commission may request analysis from the office of Vermont health access, the department of banking, insurance, securities, and health care administration, and other appropriate agencies. The agencies shall report to the commission at such times and with such information as the commission determines is necessary to fulfill its oversight responsibilities. (f) The commission may meet as needed and have such powers as are necessary to carry out the purposes of this section. Members shall be entitled to compensation and expenses as provided in 2 V.S.A. § 406. (g) The department of buildings and general services shall provide the commission with office space near the state capital building in Montpelier for three individuals. * * * Schedule and Benchmarks for Attaining Health Care Goals * * * Sec. 5. SCHEDULE AND BENCHMARKS FOR ATTAINING HEALTH CARE GOALS (a) On or before January 1, 2006, based on a proposal made by the office of Vermont health access under section 2022 of Title 33, the legislative commission on health care reform shall recommend to the general assembly a package of primary and preventive care health services to be covered under Green Mountain Health beginning July 1, 2006. (b) On or before July 1, 2009, provided the commission determines that cost savings relative to the benchmarks established under this section are met, all Vermonters shall have a minimum common benefit level, including hospital coverage, and shall be able to choose between Green Mountain Health and any commercial plan offering a common benefit level. (c) Recommendations by the commission shall be based on data received or proposals made by the office of Vermont health access and the department of banking, insurance, securities, and health care administration as well as on any other relevant public input received by the commission. (d) All recommendations by the commission to the general assembly shall be assessed in terms of benchmarks that measure cost savings; increased access; improvements in quality and delivery; administrative simplification; fairness and equity in financing; continuity of coverage; and financial sustainability and may include: (1) changes in health care sector growth rate as measured against the projected growth rate;

- 209 - (2) changes in aggregate health care spending as measured against projected spending; (3) insurance rates as compared to trend filings; (4) Medicaid spending; (5) availability of funds; (6) survey data such as quality reports and the rate of uninsured; and (7) a hospital rate of growth not greater than Consumer Price Index plus the rate of growth of the gross state product. (g) With respect to each of its proposals, the commission shall determine whether access to health care and cost containment are best achieved through public plans, private plans, or a combination thereof. * * * Global Hospital Budgets * * * Sec. 6. 18 V.S.A. § 9456 is amended to read: § 9456. BUDGET REVIEW (a) The commissioner shall conduct reviews of each hospital’s proposed budget based on the information provided pursuant to this subchapter, and in accordance with a schedule established by the commissioner. (b) In conjunction with budget reviews, the commissioner shall: (1) review utilization information; (2) consider the goals and recommendations of the health resource allocation plan; (3) consider the expenditure analysis for the previous year and the proposed expenditure analysis for the year under review; (4) consider any reports from professional review organizations; (5) solicit public comment on all aspects of hospital costs and use and on the budgets proposed by individual hospitals; (6) meet with hospitals to review and discuss hospital budgets for the forthcoming fiscal year; (7) give public notice of the meetings with hospitals, and invite the public to attend and to comment on the proposed budgets; (8) consider the extent to which costs incurred by the hospital in connection with services provided to Medicaid beneficiaries are being charged to non-Medicaid health benefit plans and other non-Medicaid payers;

- 210 - (9) require each hospital to file an analysis that reflects a reduction in net revenue needs from non-Medicaid payers equal to any anticipated increase in Medicaid reimbursements resulting from appropriations designed to reduce the Medicaid cost shift. (c) Individual hospital budgets established under this section shall: (1) be consistent with the health resource allocation plan; (2) take into consideration national, regional, or instate peer group norms, according to indicators, ratios, and statistics established by the commissioner; (3) promote efficient and economic operation of the hospital; (4) reflect budget performances for prior years; (5) include a finding that the analysis provided in subdivision (b)(10) of this section is a reasonable methodology for reflecting a reduction in net revenues for non-Medicaid payers; (6) consider the unified health care budget under section 9406 of this title applicable to hospitals; (7) include any physician’s practices owned or operated by the hospital; (8) include all revenue received by hospitals; and (9) include any charity care plan offered by the hospital. (d) For hospital fiscal year 2006 and thereafter, the hospital budget shall serve as a spending cap within which hospital costs are controlled, resources directed, and quality and access assured. The hospital budget shall limit the total annual growth of hospital costs to the Consumer Price Index plus the rate of growth of the gross state product. The commissioner shall ensure that any certificate of need requests under subchapter 5 of chapter 221 of this title are consistent with the hospital budgets. (d)(e) Annually, the commissioner shall establish a budget for each hospital by September 15 followed by a written decision by October 1. Each hospital shall operate within the budget established under this section. (e)(f) The commissioner may establish, by rule, a process to define, on an annual basis, criteria for hospitals to meet, such as utilization and inflation benchmarks. The rule shall permit the commissioner to waive one or more of the review processes listed in subsection (b) of this section, but not for more than two years consecutively. Tertiary teaching hospitals shall not be eligible for a waiver.

- 211 - (f)(g) The commissioner may, upon application, adjust a budget established under this section upon a showing of need based upon exceptional or unforeseen circumstances in accordance with the criteria and processes established under section 9405 of this title. The department may adopt rules for the development of a voluntary three-year hospital budget process to facilitate long-term planning and to moderate variation in utilization. The rules shall include a process for annual budget adjustment within the three-year period. (g)(h) The commissioner may request, and a hospital shall provide, information determined by the commissioner to be necessary to determine whether the hospital is operating within a budget established under this section. (h)(i)(1) If a hospital violates a provision of this section, the commissioner may maintain an action in the superior court of the county in which the hospital is located to enjoin, restrain or prevent such violation. (2) After notice and an opportunity for hearing, the commissioner may shall impose on a person who knowingly violates a provision of this subchapter, or a rule adopted pursuant to this subchapter, a civil administrative penalty of no more than $40,000.00, or in the case of a continuing violation, a civil administrative penalty of no more than $100,000.00 or one-tenth of one percent of the gross annual revenues of the hospital, whichever is greater. This subdivision shall not apply to violations of subsection (d) of this section caused by exceptional or unforeseen circumstances. (3)(A) The commissioner shall require the officers and directors of a hospital to file under oath, on a form and in a manner prescribed by the commissioner, any information designated by the commissioner and required pursuant to this subchapter. The authority granted to the commissioner under this subsection is in addition to any other authority granted to the commissioner under law. (B) A person who knowingly makes a false statement under oath or who knowingly submits false information under oath to the commissioner or to the public oversight commission or to a hearing officer appointed by the commissioner or who knowingly testifies falsely in any proceeding before the commissioner or the public oversight commission or a hearing officer appointed by the commissioner shall be guilty of perjury and punished as provided in section 2901 of Title 13. * * *Captive Medical Malpractice Insurer* * * Sec. 7. MEDICAL MALPRACTICE CAPTIVE INSURER REQUEST FOR PROPOSALS

- 212 - The secretary of administration or the secretary’s designee shall invite the Vermont Medical Society to discuss with any captive insurance company licensed to insure medical malpractice risk the possibility of offering such coverage in Vermont. If after such discussions the secretary determines that such approach is not possible, the secretary shall prepare and publish a request for proposals to prepare a plan, including a feasibility study, for establishing either a captive insurer, a cell captive, or a risk retention group based in Vermont to provide Vermont health professionals with medical malpractice insurance at the lowest possible cost. The plan shall include recommendations for state participation in order to reduce the cost of the initial capitalization and facilitate the creation of the insurer. The plan shall be submitted to the general assembly, the House committees on health care and commerce and the Senate committees on health and welfare and finance on or before January 15, 2006. * * * Consumer Health Care Price and Quality Information * * * Sec. 8. 18 V.S.A. § 9410(a) and (c) are amended to read: (a) The commissioner shall establish and maintain a unified health care data base to enable the commissioner to carry out the duties under this chapter and Title 8, including: (1) Determining the capacity and distribution of existing resources. (2) Identifying health care needs and informing health care policy. (3) Evaluating the effectiveness of intervention programs on improving patient outcomes. (4) Comparing costs between various treatment settings and approaches. (5) Providing information to consumers and purchasers of health care. (A) The program authorized by this section shall include a consumer health care price and quality information system to make available to consumers transparent health care price information, quality information, and such other information as the commissioner determines is necessary to empower individuals to make economically sound and medically appropriate decisions. (B) The commissioner shall convene a working group composed of the commissioner of health, health care consumers, health care providers and facilities, the Vermont program for quality in health care, health insurers, and any other individual or group appointed by the commissioner to advise the commissioner on the development and implementation of the consumer health care price and quality information system.

- 213 - (C) The commissioner may require a health insurer covering at least 15,000 lives in this state to file with the commissioner a consumer health care price and quality information plan, in accordance with rules adopted by the commissioner. Approved plans may include the internet publication of the charges established by health care facilities and health care providers and other providers of health care services and products, including but not limited to providers of pharmaceutical products and medical equipment, and the reimbursable amounts negotiated with health insurers and payable by the individual in connection with the individual’s deductible or other cost - sharing obligations. (D) The commissioner shall adopt such rules as are necessary to carry out the purposes of this subdivision and ensure for the confidentiality of proprietary information. The commissioner’s rules may permit the gradual implementation of the consumer health care price and quality information system over time, beginning with health care price and quality information which the commissioner determines is most needed by consumers or which the commissioner determines can be most practicably provided to the consumer in an understandable manner. (c) Health insurers, health care providers, health care facilities, and other providers of health care services or products, including but not limited to providers of pharmaceutical products and medical equipment, and governmental agencies shall file reports, data, schedules, statistics, or other information determined by the commissioner to be necessary to carry out the purposes of this section. Such information may include: (1) health insurance claims and enrollment information used by health insurers; (2) information relating to hospitals filed under subchapter 7 of this chapter (hospital budget reviews); and (3) any other information relating to health care costs, prices, quality, utilization, or resources required to be filed by the commissioner. * * * Healthy Lifestyles Insurance Discount * * * Sec. 9. 8 V.S.A. § 4080a(h) is amended to read: (h)(1) A registered small group carrier shall use a community rating method acceptable to the commissioner for determining premiums for small group plans. Except as provided in subdivision (2) of this subsection, the following risk classification factors are prohibited from use in rating small groups, employees, or members of such groups, and dependents of such employees or members:

- 214 - (A) demographic rating, including age and gender rating; (B) geographic area rating; (C) industry rating; (D) medical underwriting and screening; (E) experience rating; (F) tier rating; or (G) durational rating. (2)(A) The commissioner shall, by rule, adopt standards and a process for permitting registered small group carriers to use one or more risk classifications in their community rating method, provided that the premium charged shall not deviate above or below the community rate filed by the carrier by more than 20 percent (20%), and provided further that the commissioner’s rules may not permit any medical underwriting and screening. (B) The commissioner’s rules shall permit a carrier, including a hospital or medical service corporation, to establish premium discounts or rebates or otherwise modify applicable co-payments or deductibles in return for adherence to programs of health promotion and disease prevention, in accordance with federal regulations relating to bona fide wellness programs. Under the federal regulations, permissible bona fide wellness programs shall: (i) limit any discount, rebate, or waiver of cost sharing to not more than 15 percent of the cost of employee-only coverage; (ii) be designed reasonably to promote good health or prevent disease for individuals in the program, and not be used as a subterfuge for imposing higher costs on an individual based on a health factor; and (iii) provide that the reward under the program is available to all similarly situated individuals. (C) The commissioner, in consultation with the commissioner of health, shall adopt by rule: (i) standards for approved health promotion and disease prevention programs, based on the best scientific, evidence-based medical practices; and (ii) standards and procedures for evaluating an individual’s adherence to programs of health promotion and disease prevention. (3) The commissioner may exempt from the requirements of this section an association as defined in section subdivision 4079(2) of this title which:

- 215 - (A) offers a small group plan to a member small employer which is community rated in accordance with the provisions of subdivisions (1) and (2) of this subsection. The plan may include risk classifications in accordance with subdivision (2) of this subsection; (B) offers a small group plan that guarantees acceptance of all persons within the association and their dependents; and (C) offers one or more of the common health care plans approved by the commissioner under subsection (e) of this section. (4) The commissioner may revoke or deny the exemption set forth in subdivision (3) of this subsection if the commissioner determines that: (A) because of the nature, size or other characteristics of the association and its members, the employees or members are in need of the protections provided by this section; or (B) the association exemption has or would have a substantial adverse effect on the small group market. Sec. 10. 8 V.S.A. § 4080b(h) is amended to read: (h)(1) A registered nongroup carrier shall use a community rating method acceptable to the commissioner for determining premiums for nongroup plans. Except as provided in subdivision (2) of this subsection, the following risk classification factors are prohibited from use in rating individuals and their dependents: (A) demographic rating, including age and gender rating; (B) geographic area rating; (C) industry rating; (D) medical underwriting and screening; (E) experience rating; (F) tier rating; or (G) durational rating. (2)(A) The commissioner shall, by rule, adopt standards and a process for permitting registered nongroup carriers to use one or more risk classifications in their community rating method. After July 1, 1993, provided that the premium charged shall not deviate above or below the community rate filed by the carrier by more than 40 percent (40%) for two years, and thereafter 20 percent (20%). Such rules may not permit, and provided further that the commissioner’s rules may not permit any medical underwriting and screening

- 216 - and shall give due consideration to the need for affordability and accessibility of health insurance. (B) The commissioner’s rules shall permit a carrier, including a hospital or medical service corporation, to establish premium discounts or rebates or otherwise modify applicable co-payments or deductibles in return for adherence to programs of health promotion and disease prevention, in accordance with federal regulations relating to bona fide wellness programs. Under the federal regulations, permissible bona fide wellness programs shall: (i) limit any discount, rebate, or waiver of cost sharing to not more than 15 percent of the cost of employee-only coverage; (ii) be designed reasonably to promote good health or prevent disease for individuals in the program, and not be used as a subterfuge for imposing higher costs on an individual based on a health factor; and (iii) provide that the reward under the program is available to all similarly situated individuals. (C) The commissioner, in consultation with the commissioner of health, shall adopt by rule: (i) standards for approved health promotion and disease prevention programs, based on the best scientific, evidence-based medical practices; and (ii) standards and procedures for evaluating an individual’s adherence to programs of health promotion and disease prevention. Sec. 11. 8 V.S.A. § 4516 is amended to read: § 4516. ANNUAL REPORT TO COMMISSIONER Annually, on or before the fifteenth day of March, a hospital service corporation shall file with the commissioner of banking, insurance, securities, and health care administration a statement sworn to by the president and treasurer of the corporation showing its condition on the thirty-first day of December. The statement shall be in such form and contain such matters as the commissioner shall prescribe. To qualify for the tax exemption set forth in section 4518 of this title, the statement shall include a certification that the hospital service corporation operates on a nonprofit basis for the purpose of providing an adequate hospital service plan to individuals of the state, both groups and nongroups, without discrimination based on age, gender, geographic area, industry, and medical history, except as allowed by subdivisions 4080a(h)(2)(B) and 4080b(h)(2)(B) of this title. Sec. 12. 8 V.S.A. § 4588 is amended to read: - 217 - § 4588. ANNUAL REPORT TO COMMISSIONER Annually, on or before March 15, a medical service corporation shall file with the commissioner of banking, insurance, securities, and health care administration a statement sworn to by the president and treasurer of the corporation showing its condition on December 31, which shall be in such form and contain such matters as the commissioner shall prescribe. To qualify for the tax exemption set forth in section 4590 of this title, the statement shall include a certification that the medical service corporation operates on a nonprofit basis for the purpose of providing an adequate medical service plan to individuals of the state, both groups and nongroups, without discrimination based on age, gender, geographic area, industry, and medical history, except as allowed by subdivisions 4080a(h)(2)(B) and 4080b(h)(2)(B) of this title. * * * Pharmacy Best Practices and Cost Control Program * * * Sec. 13. 33 V.S.A. § 1998(a) is amended to read: § 1998. PHARMACY BEST PRACTICES AND COST CONTROL PROGRAM ESTABLISHED (a) The commissioner of prevention, assistance, transition, and health access director of the office of Vermont health access shall establish and maintain a pharmacy best practices and cost control program designed to reduce the cost of providing prescription drugs, while maintaining high quality in prescription drug therapies. The program shall include: (1) A Use of a statewide preferred list of covered prescription drugs that identifies preferred choices within therapeutic classes for particular diseases and conditions, including generic alternatives and over-the-counter drugs. The director of the office of Vermont health access shall encourage all health benefit plans in the state to participate in the preferred drug list by inviting the representatives of each health benefit plan providing prescription drug coverage to residents of this state to participate as observers or nonvoting members in the drug utilization review board, and by inviting such plans to use the preferred drug list in connection with the plans’ prescription drug coverage. (A) The commissioner and the commissioner of banking, insurance, securities, and health care administration shall implement the preferred drug list as a uniform, statewide preferred drug list by encouraging all health benefit plans in this state to participate in the program. (B) The commissioner of human resources shall use the preferred drug list in the state employees health benefit plan only if participation in the program will provide economic and health benefits to the state employees health benefit plan and to beneficiaries of the plan, and only if agreed to

- 218 - through the bargaining process between the state of Vermont and the authorized representatives of the employees of the state of Vermont. The provisions of this subdivision do not authorize the actuarial pooling of the state employees health benefit plan with any other health benefit plan, unless otherwise agreed to through the bargaining process between the state of Vermont and the authorized representatives of the employees of the state of Vermont. No later than November 1, 2004, the commissioner of human resources shall report to the health access oversight committee and the senate and house committees on health and welfare on whether use of the preferred drug list in the state employees health benefit plan would, in his or her opinion, provide economic and health benefits to the state employees health benefit plan and to beneficiaries of the plan. (C) The commissioner shall encourage all health benefit plans to implement the preferred drug list as a uniform, statewide preferred drug list by inviting the representatives of each health benefit plan providing prescription drug coverage to residents of this state to participate as observers or nonvoting members in the commissioner’s drug utilization review board, and by inviting such plans to use the preferred drug list in connection with the plans’ prescription drug coverage; (2) Utilization review procedures, including a prior authorization review process;. (3) Any strategy designed to negotiate with pharmaceutical manufacturers on behalf of individuals under the supervision of the department of corrections, the division of mental health, or the department for children and families, individuals receiving coverage for prescription drugs through Medicaid, the Vermont Health Access Program (VHAP), Dr. Dynasaur, VHAP Pharmacy, VScript, VScript-Expanded, Healthy Vermonters, Healthy Vermonters Plus, and workers’ compensation on behalf of the applicable state agency, and any other insurer, employer, or group covered by a collective bargaining agreement, such as teachers or state employees, who elects to participate, to lower the cost of prescription drugs for program participants, including a supplemental rebate program;. (4) With input from physicians, pharmacists, private insurers, hospitals, pharmacy benefit managers, and the drug utilization review board, an evidence-based research education program designed to provide information and education on the therapeutic and cost-effective utilization of prescription drugs to physicians, pharmacists, and other health care professionals authorized to prescribe and dispense prescription drugs. To the extent possible, the program shall inform prescribers about drug marketing that is intended to circumvent competition from generic alternatives. Details of the - 219 - program, including the scope of the program and funding recommendations, shall be contained in a report submitted to the health access oversight committee and the senate and house committees on health and welfare no later than January 1, 2005;. The program shall be implemented no later than July 1, 2005. (5) Alternative pricing mechanisms, including consideration of using maximum allowable cost pricing for generic and other prescription drugs;. (6) Alternative coverage terms, including consideration of providing coverage of over-the-counter drugs where cost-effective in comparison to prescription drugs, and authorizing coverage of dosages capable of permitting the consumer to split each pill if cost-effective and medically appropriate for the consumer;. (7) A simple, uniform prescription form, designed to implement the preferred drug list, and to enable prescribers and consumers to request an exception to the preferred drug list choice with a minimum of cost and time to prescribers, pharmacists and consumers; and. (8) Negotiating a contract with the pharmacy benefit manager that would most further the goals of prescription drug price transparency, safety, quality, and cost-effectiveness. The office shall consider both proprietary and nonprofit pharmacy benefit managers, as well as the feasibility of a state-run pharmacy benefit manager. (9) Providing information on programs offered by pharmaceutical manufacturers that provide prescription drugs for free or reduced prices. (10) Creating a plan to encourage Vermonters to use federally qualified health centers (FQHC) and FQHC look-alikes, focusing on participants in the Medicaid and Medicaid waiver pharmacy programs, state employees, individuals under the supervision of corrections, and individuals receiving workers’ compensation benefits if applicable, including contracting with one or more FQHCs or FQHC look-alikes to provide case management or record management services. (11) Any other cost containment activity adopted, by rule, by the commissioner director of the office of Vermont health access that is designed to reduce the cost of providing prescription drugs while maintaining high quality in prescription drug therapies. * * * PBM Regulation * * * Sec. 14. 18 V.S.A. chapter 221, subchapter 9 is added to read: Subchapter 9. Pharmacy Benefit Managers

- 220 - § 9471. DEFINITIONS As used in this subchapter: (1) “Beneficiary” means an individual enrolled in a health plan in which coverage of prescription drugs is administered by a pharmacy benefit manager and includes his or her dependent or other person provided health coverage through that health plan. (2) “Health insurer” is defined by subdivision 9402(9) of this title. As used in this subchapter, the term includes the state of Vermont and any agent or instrumentality of the state that offers, administers, or provides financial support to state government. It also includes Medicaid, the Vermont health access plan, the VScript pharmaceutical assistance program, and any other public health care assistance program. (3) “Health plan” means a health benefit plan offered, administered, or issued by a health insurer doing business in Vermont. (4) “Pharmacy benefit management” means an arrangement for the procurement of prescription drugs at a negotiated rate for dispensation within this state to beneficiaries, the administration or management of prescription drug benefits provided by a health plan for the benefit of beneficiaries, or any of the following services provided with regard to the administration of pharmacy benefits: (A) mail service pharmacy; (B) claims processing, retail network management, and payment of claims to pharmacies for prescription drugs dispensed to beneficiaries; (C) clinical formulary development and management services; (D) rebate contracting and administration; (E) certain patient compliance, therapeutic intervention, and generic substitution programs; and (F) disease management programs. (5) “Pharmacy benefit manager” means an entity that performs pharmacy benefit management. The term includes a person or entity acting for a pharmacy benefit manager in a contractual or employment relationship in the performance of pharmacy benefit management for a health plan. § 9472. PHARMACY BENEFIT MANAGERS; REQUIRED PRACTICES (a) A pharmacy benefit manager that provides pharmacy benefit management for a health plan shall:

- 221 - (1) Discharge its duties with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent pharmacy benefit manager acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. (2) Provide all financial and utilization information requested by a health plan relating to the provision of benefits to beneficiaries through that health plan and all financial and utilization information relating to services to that health plan. A pharmacy benefit manager providing information under this subsection may designate that material as confidential. Information designated as confidential by a pharmacy benefit manager and provided to a health plan under this subsection may not be disclosed by the health plan to any person without the consent of the pharmacy benefit manager, except that disclosure may be made in a court filing under the consumer fraud provisions of chapter 63 of Title 9 or when authorized by that chapter or ordered by a court for good cause shown. (3) Notify a health plan in writing of any proposed or ongoing activity, policy, or practice of the pharmacy benefit manager that presents, directly or indirectly, any conflict of interest with the requirements of this section. (4) Adhere to the following provisions with regard to the dispensation of a substitute prescription drug for a prescribed drug to a beneficiary: (A) With regard to substitutions in which the substitute drug costs more than the prescribed drug, disclose to the health plan the cost of both drugs and any benefit or payment directly or indirectly accruing to the pharmacy benefit manager as a result of the substitution. (B) Transfer in full to the health plan any benefit or payment received in any form by the pharmacy benefit manager either as a result of a prescription drug substitution under subdivision (A) of this subdivision (4) or as a result of the pharmacy benefit manager’s substituting a lower-priced generic and therapeutically equivalent drug for a higher-priced prescribed drug. (5) If the pharmacy benefit manager derives any payment or benefit for the dispensation of prescription drugs within the state based on volume of sales for certain prescription drugs or classes or brands of drugs within the state, pass that payment or benefit on in full to the health plan, unless the contract between the pharmacy benefit manager and the health plan provides otherwise. (6) Disclose to the health plan all financial terms and arrangements for remuneration of any kind that apply between the pharmacy benefit manager and any prescription drug manufacturer, including formulary management and drug-switch programs, educational support, claims processing, pharmacy - 222 - network fees charged from retail pharmacies and data sales fees, and any other information required to be disclosed under section 9420 of this title. A pharmacy benefit manager providing information under this subsection may designate that material as confidential. Information designated as confidential by a pharmacy benefit manager and provided to a health plan under this subsection may not be disclosed by the health plan to any person without the consent of the pharmacy benefit manager, except that disclosure may be made in a court filing under the consumer fraud provisions of chapter 63 of Title 9 or when authorized by that chapter or ordered by a court for good cause shown. (b) Compliance with the requirements of this section is required in all contracts for pharmacy benefit management entered into in this state by a health plan in this state. § 9473. ENFORCEMENT (a) In addition to any remedy available to the commissioner under this title and any other remedy provided by law, a violation of this subchapter shall be considered a violation of the Vermont Consumer Fraud Act in subchapter 1 of chapter 63 of Title 1. All rights, authority, and remedies available to the attorney general and private parties to enforce the Vermont Consumer Fraud Act shall be available to enforce the provisions of this subchapter. (b) In connection with any action for violation of the Vermont Consumer Fraud Act, the commissioner’s determinations concerning the interpretation and administration of the provisions of this subchapter and any rules adopted hereunder shall carry a presumption of validity. The attorney general shall cooperate and consult with the commissioner prior to the commencement of any investigation or enforcement action with respect to any pharmacy benefit manager. The commissioner may enforce a violation of this subchapter by a pharmacy benefit manager under section 9412 of this title. Notwithstanding the foregoing, the commissioner and the attorney general may bring a joint enforcement action against any person or entity for a violation of this subchapter. Sec. 15. APPLICATION Sec. 14 of this act applies to contracts executed or renewed on or after September 1, 2005. For purposes of this section, a contract executed pursuant to a memorandum of agreement executed prior to September 1, 2005 is deemed to have been executed prior to September 1, 2005 even if the contract was executed after that date. * * * Pharmaceutical Marketer Disclosures * * * Sec. 16. 33 V.S.A. § 2005(a)(4) is amended and (d) is added to read:

- 223 - (4) The following shall be exempt from disclosure: * * * (D) scholarship or other support for medical students, residents, and fellows to attend a significant educational, scientific, or policy-making conference of a national, regional, or specialty medical or other professional association if the recipient of the scholarship or other support is selected by the association; and (E) unrestricted grants for continuing medical education programs; and (F) prescription drug rebates and discounts. * * * (d) Disclosures of unrestricted grants for continuing medical education programs shall be limited to the value, nature, and purpose of the grant and the name of the grantee. It shall not include disclosure of the individual participants in such a program. * * * Pharmacy Discount Plans * * * Sec. 17. 33 V.S.A. § 2003 is amended to read: § 2003. PHARMACY DISCOUNT PLANS * * * (b) The Healthy Vermonters program shall offer beneficiaries an initial discounted cost for covered drugs. Upon approval by the Centers for Medicare and Medicaid Services of a Section 1115 Medicaid waiver program, and upon subsequent legislative approval, the The Healthy Vermonters program and the Healthy Vermonters Plus program shall offer beneficiaries a secondary discounted cost, which shall reflect a state payment toward the cost of each dispensed drug as well as any rebate amount negotiated by the commissioner. * * * (n) The department shall agency may seek a waiver from the Centers for Medicare and Medicaid Services (CMS) requesting authorization any waivers of federal law, rule, or regulation necessary to implement the provisions of this section, including application of manufacturer and labeler rebates to the pharmacy discount plans. The secondary discounted cost shall not be available to beneficiaries of the pharmacy discount plans until the department receives written notification from CMS that the waiver requested under this section has been approved and until the general assembly subsequently approves all

- 224 - aspects of the pharmacy discount plans, including funding for positions and related operating costs associated with eligibility determinations. * * * Price Disclosure and Certification * * * Sec. 18. 33 V.S.A. § 2010 is added to read: § 2010. ACTUAL PRICE DISCLOSURE AND CERTIFICATION (a) A manufacturer of prescription drugs dispensed in this state under a health program directed or administered by the state shall, on a quarterly basis, report by National Drug Code the following pharmaceutical pricing criteria to the director of the office of Vermont health access for each of its drugs: (1) the average manufacturer price as defined in 42 U.S.C. § 1396r- 8(k); and (2) the best price as defined in 42 U.S.C. § 1396r - 8(c)(1)(C). (b) The pricing information required under this section is for drugs defined under the Medicaid drug rebate program and must be submitted to the director following its submission to the federal government in accordance with 42 U.S.C. § 1396r - 8(b)(3) . (c) When a manufacturer of prescription drugs dispensed in this state reports the average manufacturer price or best price, the president or chief executive officer of the manufacturer shall certify to the office, on a form provided by the director of the office of Vermont health access, that the reported prices are the same as those reported to the federal government as required by 42 U.S.C. § 1396r - 8(b)(3) for the applicable rebate period. (e) Notwithstanding any provision of law to the contrary, information submitted to the office under this section is confidential and is not a public record as defined in subsection 317(b) of Title 1. Disclosure may be made by the office to an entity providing services to the office under this section; however, that disclosure does not change the confidential status of the information. The information may be used by the entity only for the purpose specified by the office in its contract with the entity. Date compiled in aggregate form by the office for the purposes of reporting required by this section is a public record as defined in subsection 317(b) of Title 1, provided it does not reveal trade information protected by state or federal law. (f) The attorney general shall enforce the provisions of this section under the Vermont Consumer Fraud Act in subchapter 1 of chapter 63 of Title 1. The attorney general has the same authority to make rules, conduct civil investigations, and bring civil actions with respect to acts and practices governed by this section as is provided under the Vermont Consumer Fraud Act. - 225 - * * * Chronic Care Initiative * * * Sec. 19. BLUEPRINT FOR HEALTH; APPROPRIATION There is appropriated from the general fund $3,000,000.00 to the office of Vermont health access to fund the goals of the Vermont Blueprint for Health: The Chronic Care Initiative. The goals of the initiative are to: (1) implement a statewide system of care that enables Vermonters with, and at risk for, chronic disease to lead healthier lives; (2) develop a system of care that is financially sustainable; and (3) forge a public-private partnership to develop and sustain the new system of care. On or before January 1, 2006, and annually thereafter, the director of the office of Vermont health access, in consultation with the commissioner of health, shall file a report with the general assembly detailing progress made in reaching these three goals. * * * Information Technology * * * Sec. 20. 18 V.S.A. § 9417 is added to read: § 9417. HEALTH CARE INFORMATION TECHNOLOGY (a) The commissioner shall facilitate the development of a statewide health information technology plan that includes the implementation of an integrated electronic health information infrastructure for the sharing of electronic health information among health care facilities, health care professionals, public and private payers, and patients. The plan shall include standards and protocols designed to promote patient education, patient privacy, physician best practices, electronic connectivity to health care data, and, overall, a more efficient and less costly means of delivering quality health care in Vermont. (b) The health information technology plan shall: (1) support the effective, efficient, statewide use of electronic health information in patient care, health care policymaking, clinical research, health care financing, and continuous quality improvements; (2) educate the general public and health care professionals about the value of an electronic health infrastructure for improving patient care; (3) promote the use of national standards for the development of an interoperable system, which shall include provisions relating to security, privacy, data content, structures and format, vocabulary, and transmission protocols; (4) make strategic investments in equipment and other infrastructure elements that will facilitate the ongoing development of a statewide infrastructure; and

- 226 - (5) recommend funding mechanisms for the ongoing development and maintenance costs of a statewide health information system. (c) The commissioner shall contract with the Vermont information technology leaders (VITL), a broad-based health information technology advisory group that includes providers, payers, employers, patients, health care purchasers, information technology vendors, and other business leaders, to develop the health information technology plan, including applicable standards, protocols, and pilot programs. In carrying out their responsibilities under this section, members of VITL shall be subject to conflict of interest policies established by the commissioner in the certificate of need regulations to ensure deliberations and decisions are fair and equitable. (d) The following persons shall be invited to participate in VITL as nonvoting members: (1) the commissioner of information and innovation who shall advise the group on technology best practices and the state’s information technology policies and procedures, including the need for a functionality assessment and feasibility study related to establishing an electronic health information infrastructure under this section; (2) the director of the office of Vermont health access or his or her designee; and (3) the commissioner or his or her designee. (e) On or before July 1, 2006, VITL shall initiate a pilot program involving at least two hospitals using existing sources of electronic health information to establish electronic data sharing for clinical decision support, pursuant to priorities and criteria established in conjunction with the health information technology advisory group. Objectives of the pilot program may include: (1) supporting patient care and improving quality of care; (2) enhancing productivity of health care professionals and reducing administrative costs of health care delivery and financing; (3) determining whether and how best to expand the pilot program on a statewide basis; (4) implementing strategies for future developments in health care technology, policy, management, governance, and finance; and (5) ensuring patient data confidentiality at all times. (f) The standards and protocols developed by VITL shall be no less stringent than the “Standards for Privacy of Individually Identifiable Health Information” established under the Health Insurance Portability and - 227 - Accountability Act of 1996 and contained in 45 C.F.R., Parts 160 and 164, and any subsequent amendments. In addition, the standards and protocols shall ensure that there are clear prohibitions against the out-of-state release of individually identifiable health information for purposes unrelated to treatment, payment, and health care operations, and that such information shall under no circumstances be used for marketing purposes. The standards and protocols shall require that access to individually identifiable health information is secure and traceable by an electronic audit trail. (g) On or before January 1, 2007, VITL shall submit to the commissioner, the commissioner of information and innovation, the director of the office of Vermont health access, and the general assembly a health information technology plan for establishing a statewide, integrated electronic health information infrastructure in Vermont, including specific steps for achieving the goals and objectives of this section. The plan shall include also recommendations for self - sustainable funding for the ongoing development, maintenance, and replacement of the health information technology system. Upon approval by the commissioner, the plan shall serve as the framework within which certificate of need applications for information technology are reviewed under section 9440b of this title by the commissioner. (h) Beginning January 1, 2006, and annually thereafter, VITL shall file a report with the commissioner, the commissioner of information and innovation, the director of the office of Vermont health access, and the general assembly. The report shall include an assessment of progress in implementing the provisions of this section, recommendations for additional funding and legislation required, and an analysis of the costs, benefits, and effectiveness of the pilot program authorized under subsection (e) of this section, including, to the extent these can be measured, reductions in tests needed to determine patient medications, improved patient outcomes, or reductions in administrative or other costs achieved as a result of the pilot. (i) VITL is authorized to seek matching funds to assist with carrying out the purposes of this section. In addition, it may accept any and all donations, gifts, and grants of money, equipment, supplies, materials, and services from the federal or any local government, or any agency thereof, and from any person, firm, or corporation for any of its purposes and functions under this section and may receive and use the same subject to the terms, conditions, and regulations governing such donations, gifts, and grants. (j) The commissioner, in consultation with VITL, may seek any waivers of federal law, rule, or regulation that might assist with implementation of this section. Sec. 21. 18 V.S.A. § 9437(4) and (5) are amended and (6) is added to read: - 228 - (4) in the case of a proposal for the addition of beds for the provision of skilled nursing or intermediate care, the number of beds to be approved is not inconsistent with the considerations identified under subsection 9439(e) of this title; and (5) The the proposed new health care project is consistent with the certificate of need guidelines published by the department in accordance with its rules, and is within the portion of the unified health care budget applicable to the proposed health care facility; (6) if the application is for the purchase or lease of new health care information technology, it conforms with the health information technology plan established under section 9417 of this title, upon approval of the plan by the commissioner. Sec. 22. 18 V.S.A. § 9440b is added to read: § 9440b. INFORMATION TECHNOLOGY; REVIEW PROCEDURES Notwithstanding the procedures in section 9440 of this title, upon approval by the commissioner of the health information technology plan developed under section 9417 of this title, the commissioner shall establish by rule standards and expedited procedures for reviewing applications for the purchase or lease of health care information technology that otherwise would be subject to review under this subchapter. Such applications may not be granted or approved unless they are consistent with the health information technology plan and the health resource allocation plan. The commissioner’s rules may include a provision requiring that applications be reviewed by the health information advisory group authorized under subsection 9417(c) of this title. The advisory group shall make written findings and a recommendation to the commissioner in favor of or against each application. * * * Health Care Purchasing Pool * * * Sec. 23. 33 V.S.A. chapter 19, subchapter 7 is added to read: Subchapter 7. Health Care Purchasing Pool § 2050. VERMONT HEALTH CARE PURCHASING POOL (a) The office of Vermont health access shall establish a Vermont health care purchasing pool for the purpose of coordinating and enhancing the purchasing power of health care benefit plans for groups and individuals who choose to participate and the groups identified in subsection (b) of this section. It is not the intent of the general assembly to exacerbate cost shifting or adverse selection in the Vermont health care system through the creation of the health care purchasing pool. In offering and administering the purchasing pool, the director of the office of Vermont health access shall not discriminate - 229 - against individuals or groups based on age, gender, geographic area, industry, or medical history. The director shall not administer the purchasing pool under this subsection in a manner that pools the risks of participants. The provisions of this section shall not affect the rights of any party to a collective bargaining agreement and shall not require that participating health insurance plans have a common benefit plan. (b) In administering the purchasing pool, the director may: (1) Contract on behalf of participants in the pool with health care providers, health care facilities, and health insurers for the delivery of health care services, including agreements securing discounts for regular bulk payments to providers, and agreements establishing uniform provider reimbursement; (2) Consolidate administrative functions through a common contract on behalf of participants in the pool, including claims processing, utilization review, management reporting, benefit management, and bulk purchasing; (3) Create a health care cost and utilization database for participants in the pool, and evaluate potential cost savings; and (4) Establish incentive programs to encourage pool participants to use health care services judiciously and to improve their health status. (c)(1) The director may include in the purchasing pool individuals who have health insurance through a non-group plan and all employees, retirees, and dependents covered by the group health insurance plans of the following entities: (A) the state of Vermont; (B) the University of Vermont; (C) Vermont State Colleges; (D) any municipality or school district; and (E) such portions of the Medicaid caseload, Green Mountain Health, or any other public health care program as the secretary deems proper. Access to medical care or benefit levels for Medicaid recipients shall not diminish as a result of participation or nonparticipation in the pool. (2) On and after October 1, 2006, the director may make the purchasing pool available to any employer group, association, or trust that chooses to participate in the pool on behalf of the employees or members of the group, association, or trust.

- 230 - (d) On or before December 15 of each year, the director shall report to the general assembly on the operation of the purchasing pool, including the number and types of groups and group members participating in the pool, the costs of administering the pool, and the savings attributable to participating groups from the operation of the pool. * * * Green Mountain Health * * * Sec. 24. 33 V.S.A. chapter 19, subchapter 6 is added to read: Subchapter 6. Green Mountain Health § 2020. POLICY AND PURPOSE In order to ensure all Vermont residents have access to key health services and all contribute to the financial sustainability of Vermont’s health care system, Green Mountain Health is established to provide uninsured Vermont residents a defined benefit package of primary and preventive care. Expansions to the program shall be consistent with recommendations by the commission on health care reform approved by the general assembly. § 2021. DEFINITIONS As used in this subchapter: (1) “Benefits” means primary and preventive care health services. (2) “Green Mountain Health” means the plan established under this subchapter. (3) “Health care professional” means an individual licensed, registered, or certified in the state of Vermont to provide health services. (4) “Health service” means any medically necessary treatment or procedure to maintain, diagnose, or treat an individual’s physical or mental condition, including services provided pursuant to a physician’s order and services to assist in activities of daily living. (5) “Office” means the office of Vermont health access. (6) “Preventive care” means health services that include screening, counseling, treatment, or medication determined by scientific evidence to be effective in preventing or detecting disease and shall include immunizations. (7) “Primary care” means health services provided by health care professionals specifically trained for and skilled in first-contact and continuing care for individuals with signs, symptoms, or health concerns, not limited by problem origin (biological, behavioral, or social), organ system, or diagnosis and shall include prenatal care. Primary care services include health promotion, preventive care, health maintenance, counseling, patient education, - 231 - case management, and the diagnosis and treatment of acute and chronic illnesses in a variety of health care settings. (8) “Uninsured” means not having health insurance coverage under either a private or public plan, including Medicaid. (9) “Vermont resident” means an individual domiciled in Vermont as evidenced by an intent to maintain a principal dwelling place in Vermont indefinitely and to return to Vermont if temporarily absent, coupled with an act or acts consistent with that intent. The director of the office of Vermont health access shall establish specific criteria to demonstrate residency. § 2022. BENEFITS DEVELOPED; PRIMARY; PREVENTIVE (a) Not later than October 1, 2005, the office of Vermont health access shall propose to the legislative commission on health care reform a package of benefits to be provided uninsured Vermont residents under Green Mountain Health, beginning July 1, 2006. The commission on health care reform shall recommend benefits to the general assembly for approval January 1, 2006. (b) The office shall ensure the benefits provide a choice of services and of health care professionals, contain costs over time, and improve the quality of care and health outcomes. (c) The benefits shall consist of at least the same primary and preventive care health services covered under the Vermont health access plan. In developing the benefits, the office shall: (1) engage in a public process designed to respond to Vermonters’ health care values and priorities; (2) consider the current range of health services received by Vermonters through public and private benefit packages; (3) consider credible evidence-based scientific research and comment by health care professionals both nationally and internationally concerning clinical efficacy and risk; (4) consider health care ethics; (5) consider the cost-effectiveness of health services and technology; (6) consider revenues anticipated to be available to finance Green Mountain Health; (7) consider the state health plan and the health resource allocation plan established under section 9405 of Title 18; and (8) consider any Vermont-specific initiatives that would inform the department. - 232 - § 2023. BUDGET FOR BENEFITS (a) Beginning January 15, 2006, and annually thereafter, the office shall propose to the general assembly a budget for the benefits covered under Green Mountain Health. The budget shall include recommended expenditures during the next succeeding state fiscal year broken down by health care sector and region and anticipated revenues available to support such expenditures. (b) In developing the proposed budget, the office shall consider the payment methods under section 2024 of this title, the negotiated payment amounts under section 2025 of this title, cost sharing developed under section 2027 of this title, and the cost containment targets under subsection (c) of this section. (c) To further the legislative goals of this subchapter, the office shall develop and issue a cost containment target for each health care sector. The cost containment target shall be considered when negotiating payment amounts under section 2025 of this title. § 2024. PAYMENT METHODS (a) By February 1, 2006, the office of Vermont health access shall determine by rule pursuant to chapter 25 of Title 3 the type of payment method to be used for the health services covered under Green Mountain Health. The payment methods shall be in alignment with the goals of this subchapter and shall encourage cost - containment, provision of high quality, evidence-based health services in an integrated setting, patient self - management, and healthy lifestyles. In developing the payment methods, the department shall consult with health care professionals prior to filing the draft rules for comment. (b) The office shall consider the following payment methods: (1) capitated payments; (2) incentive payments to the health care professionals based on performance standards, which may include evidence-based standard physiological measures, or if the health condition cannot be measured in that manner, a process measure, such as the appropriate frequency of testing or appropriate prescribing of medications; (3) fixed annual payments to health care facilities; and (4) fee for service. (c) The office shall modify the payment methods by rule as it deems appropriate. § 2025. PAYMENT AMOUNTS

- 233 - (a) The intent of this section is to ensure reasonable payments to health care professionals and to eliminate the shift of costs between the payers of health services. (b) The office shall negotiate with health care professionals and groups of health care professionals to establish a payment amount for the health services provided by Green Mountain Health. The amount shall be sufficient to provide reasonable access to health services, provide sufficient payment to health care professionals, and encourage the financial stability of health care professionals. In determining the payment amount, the department shall consider: (1) the actual cost of the health service; (2) expected revenues; (3) cost containment targets; (4) shared costs between affiliated health care professionals. (c) The office may negotiate a contract including payment methods and amounts with any out-of-state health care professional or hospital that regularly treats a sufficient volume of Vermont residents to provide health services under Green Mountain Health. § 2026. ADMINISTRATION (a) Green Mountain Health shall be administered by the office or the administrator contracted with under section 903 of Title 22 , or, under an open bidding process, the office shall solicit and receive bids from insurance carriers or third party administrators for administration. The office may consider bids from out - of - state entities as well as Vermont entities to administer Green Mountain Health, but may require that the administrative work for Green Mountain Health occur in a location and facility within Vermont. (b) Nothing in this subchapter shall require an individual already covered by health insurance to terminate that insurance, enroll in Green Mountain Health, or contribute to the financing of Green Mountain Health. (c) Vermonters shall not be billed any additional amount for health services covered by Green Mountain Health, except as provided for as cost sharing in section 2027 of this title. (d) The office or plan administrator shall make available the necessary information, forms, and billing procedures to health care professionals to ensure payment for health services covered under Green Mountain Health. The office or plan administrator may use a single, uniform, simplified form to determine eligibility for Medicaid, any Medicaid waiver program, any state - funded pharmacy program, and Green Mountain Health to ensure that any - 234 - individual eligible for these programs has the opportunity to enroll. The office shall provide coverage for health services up to three months prior to the date of application for Medicaid, any Medicaid waiver program, or the state pharmacy programs. (e) An individual aggrieved by an adverse decision of the office or plan administrator may appeal to the human services board established under section 3090 of Title 3. § 2027. COST SHARING; WELLNESS DISCOUNT (a) As part of the office’s budget, the office shall propose to the general assembly reasonable sliding - scale deductibles, co-payments, or other cost - sharing amounts applicable to Green Mountain Health. The cost-sharing amounts shall not apply to preventive health services covered by Green Mountain Health. (b) The office may include also financial or other incentives applicable to Green Mountain Health to encourage healthy lifestyles and patient self - management. In particular, the office may establish discounts, rebates, or modifications of applicable cost-sharing amounts in return for an individual’s adherence to programs of health promotion and disease prevention consistent with federal regulations relating to wellness. If such incentives are included, the office shall adopt by rule standards consistent with the standards and rules adopted under subdivisions 4080a(h)(2)(B) and (C) of Title 8. * * * Green Mountain Health Financing * * * Sec. 25. 32 V.S.A. chapter 151, subchapter 4A is added to read: Subchapter 4A. Universal Hospital Access for Green Mountain Health Impact Tax § 5848. GREEN MOUNTAIN HEALTH EMPLOYER IMPACT TAX (a) An employer health insurance impact tax is imposed upon every person who is required under subchapter 4 of this chapter to withhold income taxes from payments of income with respect to services. The tax shall be equal to an estimated rate of 3.0 percent of the total taxable earnings, as defined for Medicare part A taxable earnings, paid to employees in the reporting period who were not covered by health insurance for the entire calendar quarter preceding the reporting period. The first $25,000.00 of wages which, but for this provision would be subject to this tax, shall be exempt each year. An employee whose only health insurance coverage is through any combination of Green Mountain Health, Medicaid, Dr. Dynasaur, the Vermont Health Access Program, or a Medicaid-waiver program is considered not covered by health insurance for purposes of the health impact tax under this subsection. - 235 - (b) The tax under this section shall be paid in the same manner as income withholding under subchapter 4 of this chapter and shall be subject to administrative and enforcement provisions of this chapter. Revenues from this tax shall be deposited into the Vermont health access trust fund established under section 1972 of Title 33 for the purpose of financing health care coverage under Green Mountain Health, as provided under subchapter 6 of chapter 19 of Title 33. (c) In this section: (i) “Employee” shall not include any person who has not attained the age of eighteen years on or before the December 31 preceding the withholding tax reporting period. (ii) “Employer” shall not include the government of the United States or self-employed persons. Sec. 26. 32 V.S.A. § 5822a is added to read: § 5822a. GREEN MOUNTAIN HEALTH INDIVIDUAL IMPACT TAX (a) An individual health insurance impact tax is imposed upon every resident who is subject to income tax under section 5822 of this title, and who attained the age of eighteen years on or before the December 31 preceding the taxable period. The tax shall be in the amount of an estimated 3.0 percent of the taxpayer’s taxable earnings plus the taxpayer’s self-employment income, both as defined for Medicare part A taxable earnings. The tax shall be withheld from the individual’s wages in the same manner as income tax under chapter 151 of this title, and paid from self-employment income in the same manner as quarterly income tax payments under chapter 151 of this title; and shall be subject to administrative and enforcement provisions of that chapter. Revenues from this tax shall be deposited into the Vermont health access trust fund established under section 1972 of Title 33 for the purpose of financing health care coverage under Green Mountain Health, as provided under subchapter 6 of chapter 19 of Title 33. (b) An individual shall be exempt from the health insurance impact tax for any calendar quarter if the individual had, during the entire preceding quarter, health insurance coverage other than Green Mountain Health, and if the individual submits proof, as required by the commissioner of banking, insurance, securities, and health care administration, and receives certification of that health insurance coverage during that entire quarter. Certification must be submitted to the Department of Taxes to qualify for exemption under this subsection for any quarter. Sec. 27. IMPLEMENTATION, EFFECTIVE DATE AND REPORT

- 236 - (a) The commissioner of banking, insurance, securities, and health care administration and the commissioner of taxes are authorized to adopt rules and regulations necessary to implement the provisions of this act. (b) The health care taxes imposed by sections 25 and 26 of this act shall take effect April 1, 2006. (c) The commissioner of banking, insurance, securities, and health care administration shall monitor whether persons who enroll in the Green Mountain Health Insurance program were formerly covered by health insurance, and whether former insurance was self-paid or paid by an in-state or out-of-state employer. The commissioner of taxes shall determine whether technical amendments are necessary for (i) implementation of this act by April 1, 2006, and (ii) implementation in compliance with the Employee Retirement Income Security Act as determined by the Legislative Commission on Health Care Reform. The commissioner of taxes shall report his findings to the Legislative Commission on Health Care Reform by January 15, 2006, and the commissioner of banking, insurance, securities, and health care administration shall report his findings to the Legislative Commission on Health Care Reform by January 15, 2007. (d) The 3.0 percent rates in 32 V.S.A. § 5848(a) in Sec. 25, and § 5822a(a) in Sec. 26 of this act are subject to change by the general assembly when it reconvenes in 2006, upon consideration of the report by the Legislative Commission on Health Care Reform. * * * Health Access Trust Fund * * * Sec. 28. 33 V.S.A. § 1972(b) is amended to read: (b) Into the fund shall be deposited: (1) revenue from the cigarette and tobacco products tax established in chapter 205 of Title 32; (2) revenue from health care provider assessments collected and deposited into the health care trust fund pursuant to subchapter 2 of chapter 19 of this title; (3) transfers from the tobacco litigation settlement fund established in section 435a of Title 32, authorized by the general assembly; (4) transfers from the general fund, authorized by the general assembly; and (5) revenue raised under sections 5822a and 5848 of Title 32; and (6) the proceeds from grants, donations, contributions, and taxes and any other sources of revenue as may be provided by statute or by rule. - 237 - Sec. 29. 33 V.S.A. §1972(d) is amended to read: (d) All monies received by or generated to the fund shall be used only for the administration and delivery of health care covered through state health care assistance programs administered by the department of prevention, assistance, transition, and health access office of Vermont health access, including the Medicaid program, the Vermont health access plan program, the Vermont health access plan-pharmacy program, the VScript program, the VScript- Expanded program, the state children's health insurance program, the General Assistance program, Green Mountain Health, and any other state health care assistance program administered by or through the department. To the extent permitted under federal law and any Medicaid waiver, including the global commitment Medicaid waiver, the monies received by or generated to the fund shall be matched by federal funds. * * * Drug Utilization Review Board * * * Sec. 30. 1 V.S.A. § 313(a) is amended to read: (a) No public body described in section 312 of this title may hold an executive session from which the public is excluded, except by the affirmative vote of two-thirds of its members present in the case of any public body of state government or of a majority of its members present in the case of any public body of a municipality or other political subdivision. A motion to go into executive session shall indicate the nature of the business of the executive session, and no other matter may be considered in the executive session. Such vote shall be taken in the course of an open meeting and the result of the vote recorded in the minutes. No formal or binding action shall be taken in executive session except actions relating to the securing of real estate options under subdivision (2) of this subsection. Minutes of an executive session need not be taken, but if they are, shall not be made public subject to section subsection 312(b) of this title. A public body may not hold an executive session except to consider one or more of the following: * * * (9) Information relating to a pharmaceutical rebate or to supplemental rebate agreements, other than information protected from disclosure by federal law, by the terms and conditions required by the federal Centers for Medicare and Medicaid Services as a condition of rebate authorization under the Medicaid program. Sec. 31. 33 V.S.A. § 1998(f)(2) is amended to read: (2) The board shall meet at least quarterly. The board shall comply with the requirements of subchapter 2 of chapter 5 of Title 1 (open meetings) and

- 238 - subchapter 3 of chapter 5 of Title 1 (open records), except that the board may go into executive session as provided for in subdivision 313(a)(9) of Title 1 in order to comply with subsection 2002(c) of this title. * * * Studies * * * Sec. 32. ECONOMIC, FINANCING, AND ADMINISTRATIVE STUDIES (a) In order to assess more fully the benefits and costs and to prepare and plan for the implementation of full and universal access to health care in Vermont, the legislative commission on health care reform, in consultation with the department of banking, insurance, securities, and health care administration, directs that the following studies be undertaken during the interim of the 2005 legislative session. (1) Economic impact study. The commission on health care reform shall direct its staff or contract for a consultant to undertake a study of the economic impact of full implementation of Green Mountain Health to provide universal access to health care in Vermont. The study shall examine the impact on business and the labor force, the future growth of the economy and the economic competitiveness of Vermont, and the effects on residents and population groups and on current and potential insurers and providers of health care. (2) Financing options. The commission on health care reform shall direct its staff or contract for a consultant to undertake a study of the financing options and implications for financing expansions to Green Mountain Health. The study shall include examination of all financing options and their implications including the income tax, a payroll tax, premiums or cost-sharing measures, consumption taxes, specific more limited taxes to support parts of the health care system’s financial needs, and other revenue sources including insurance risk pools and insurance assistance and incentives. In addition, it shall address issues involved with federal law and taxation, including ERISA and other areas of preemption; technical proposals to exempt non-resident employees of Vermont businesses; a provision to ensure a soft landing for affected businesses and a provision for phasing out the $25,000.00 soft landing; a simplified structure based on employee numbers, employer payroll, or a combination for ease of administration and clarity; and the recommendations of the tax department. The study shall analyze methods for recapturing insurance premiums as a result of any reductions in uncompensated care, such as the Dirigo model enacted in the state of Maine, any reductions in insurance premiums resulting from public financing, and for ensuring that all Vermonters contribute to the financing of health care’s fixed costs.

- 239 - (3) Governance and administrative study. The secretary of administration, in consultation with the office of Vermont health access, the department of banking, insurance, securities, and health care administration, and the agency of human services, shall examine and develop a plan for reorganizing their respective offices and functions consistent with the purposes of this act, including recommendations relating to personnel, operations, and budgetary requirements. The recommendations shall consider the most appropriate and efficient approach to integrating health care policy, planning, delivery, regulation, and defining clear lines of accountability within the health care system. The study shall include also an examination of means to coordinate or integrate Green Mountain Health with the current workers’ compensation system and the feasibility and merits of authorizing the state to act as an insurer in pooling risk and providing benefits, including a common benefits plan, to participants of the health care purchasing pool. (b) Reports, including findings and recommendations, from each study required by this section shall be submitted to the general assembly not later than January 15, 2006. * * * Appropriation * * * Sec. 33. APPROPRIATION There is appropriated in fiscal year 2005: (1) the amount of $125,000.00 from the general fund to the general assembly for the studies authorized by Sec. 32 of this act; (2) the amount of $1,000,000.00 from the general fund to the department of banking, insurance, securities, and health care administration as follows: $250,000.00 plus an additional appropriation of $750,000.00 in dollar-for-dollar matching funds to leverage resources necessary to fund the pilot program authorized under Sec. 20, subsection 9417(e) of Title 18; and (3) the amount of $3,000,000.00 from the general fund to the office of Vermont health access to fund the Vermont Blueprint for Health: The Chronic Care Initiative under Sec. 19 of this act. (Committee Vote: 4-2-1) (For House amendments, see House Journal for April 20, 2005, page 704.)

- 240 - Committee Bill for Notice S. 178 An act relating to recommendations for expanding high school educational opportunities. By the Committee on Education. House Proposal of Amendment S. 159 An act relating to updating and clarifying education law. The House proposes to the Senate to amend the bill as follows: Sec. 1. 16 V.S.A. § 165(a)(2)(K) is amended to read: (K) data provided by the commissioner which enable a comparison with other schools, or school districts if school level data are not available, for cost-effectiveness. The commissioner shall establish which data are to be included pursuant to this subdivision and, notwithstanding that the other elements of the report are to be presented in a format selected by the school board, shall develop a common format to be used by each school in presenting the data to community members. The commissioner shall provide the most recent data available to each school no later than October 1 of each year. Data to be presented may include student-to-teacher ratio, administrator-to-student ratio, administrator-to-teacher ratio, and cost per pupil, cost per square foot of building, class sizes, course offerings, and other performance data. Sec. 2. 16 V.S.A. § 426(a) is amended to read: (a) The town treasurer shall be treasurer of the town school district unless, by vote of the town school district a town school district treasurer is elected. He or she shall keep in a separate bank account all the money appropriated or given for the use of the school district. Within 20 days after the date the school taxes become due and payable or within such other period of time as may be agreed upon in writing by both the board of selectmen and the board of school directors, he or she shall deposit in the school account, payments of the school tax levy received. However, if notification of the amount to be transferred to the school district by the commissioner has not been received within 20 days of the date taxes are due and payable, the transfer shall be effected within 20 days of notification by the commissioner. Sec. 3. 16 V.S.A. § 559(e)(7) is amended to read: (7) nothing in this section shall require a school board or supervisory union board to invite or advertise for bids if it is renewing a contract entered - 241 - into pursuant to subsection (a) of this section provided that annual costs will not increase more than the most recent Cumulative Price Index New England Economic Project cumulative price index, as of December 1 November 15, for state and local government purchases of goods and services, the total amount of the contract does not exceed an increase of 30 percent more than the total amount of the original contract, and the contract for the renewal period allows termination by the board following an annual review of performance. Sec. 4. 16 V.S.A. § 562(8) is amended to read: (8) Shall vote authorize at each annual school district meeting a sum of money necessary an amount of money from all revenue sources to be expended by the board for the support of public schools; and the board shall determine how the voted authorized funds shall be expended; Sec. 5. 16 V.S.A. § 563(17) is amended to read: (17) Shall employ a public accountant at least once in each period of three years to audit the financial statements of the school district and the average daily membership count submitted by the district to the department of education under subdivisions 4001(1)(A) and (B) of this title. However, if the town has voted to eliminate the office of auditor under section 2651b of Title 17, the school board shall employ a public accountant annually to audit the financial statements of the school district and the average daily membership count pursuant to that section. The school board may authorize an audit in conjunction with another school district or a supervisory union. Sec. 6. 16 V.S.A. § 706m is amended to read: § 706m. TERMS OF OFFICE; ELIMINATION OF OFFICE OF AUDITOR (a) The terms of office of directors and auditors shall be three years after the first term and of all other officers one year. At the first annual meeting one auditor shall be elected for a term of one year, one auditor for a term of two years, and one for a term of three years, or until their successors are chosen and qualified. (b) At any annual or special meeting warned for the purpose, the electorate may vote to eliminate the office of auditor and to employ instead a public accountant annually to audit the financial statements of the union school district. Sec. 7. 16 V.S.A. § 823 is amended to read: § 823. ELEMENTARY TUITION (a) Tuition for elementary pupils shall be paid by the district in which the pupil is a resident. The tuition paid to a public elementary school shall be at a - 242 - rate not greater than the calculated net cost per elementary pupil in average daily membership in the receiving school district for the year of attendance The district shall pay the full tuition charged its students attending a public elementary school. However, if a payment made to a public elementary school is three percent more or less than the calculated net cost per elementary pupil in the receiving school district for the year of attendance, the district shall be reimbursed, credited, or refunded pursuant to section 836 of this title, unless otherwise agreed to by the boards of both the receiving and sending districts. (b) The tuition paid to an approved independent elementary school shall not exceed the lesser of: (1) the average announced tuition of Vermont union elementary schools for the year of attendance; or (2) the tuition charged by the public elementary independent school attended by the greatest number of the district’s pupils. However, the electorate of a school district may authorize the payment of a higher amount at an annual or special meeting warned for the purpose. Sec. 8. 16 V.S.A. § 824(b) is amended to read: (b) Except as otherwise provided for technical students, the district shall pay the full tuition charged its pupils attending a public high school in Vermont or an adjoining state, or a public or independent school in Vermont functioning as an approved area technical center, or an independent school meeting school quality standards. However, if a payment made to a public high school or an independent school meeting school quality standards is three percent more or less than the calculated net cost per secondary pupil in average daily membership in the receiving school district for the year of attendance then the district shall be reimbursed, credited, or refunded pursuant to section 836 of this title, unless otherwise agreed to by the boards of both the receiving and sending districts or independent schools. Sec. 9. 16 V.S.A. § 825(a) is amended to read: (a) Calculated net cost per pupil for purposes of this chapter shall be defined by the commissioner. Expenditures shall include those for equipment and school building construction, additions or renovations. Expenditures excluded shall be: (1) Transportation costs incurred by the receiving school district for its resident pupils; (2) Transportation costs for which the receiving school district receives reimbursement; (3) That portion of the total cost which is provided by direct grants from state or federal sources for salaries or other specific expenses;

- 243 - (4) Expenditures for maintenance, and payments of principal and interest for buildings used exclusively for boarding students if any; (5) Expenditures for special education; (6) Tuition payments for technical education. Sec. 10. 16 V.S.A. § 836(a) is amended to read: (a) Annually, on or before November 1, the commissioner shall inform each school board of a receiving public school, each board of trustees of a receiving approved independent school for which the commissioner has calculated a net cost per pupil, and each sending school district in Vermont of the calculated net cost per elementary or secondary pupil in the receiving schools. Each school board or board of trustees of a receiving school shall then determine whether it overcharged or undercharged any sending district for tuition charges and shall notify the district by December 15 of the same year of the amount due or the amount to be refunded or credited. Sec. 11. 16 V.S.A. § 1552(c) is amended to read: (c) For students from a school district within Vermont, funds received under subsections subsection 1561(b) and (c) of this title shall be subtracted when calculating the tuition charge. For students who are not Vermont residents, funds received under subsections 1561(b) and (c) of this title shall not be subtracted when calculating the tuition charge. Sec. 12. 16 V.S.A. § 1561(a) is amended to read: (a) For the purpose of reducing the amount of tuition charged to Vermont residents under section 1552 of this title, technical centers shall receive assistance as provided in this section. In this section,: (1) “Student” means a Vermont secondary student without a diploma regardless of age and regardless of whether the student is enrolled in a high school in Vermont; and (2) “Full-time equivalent student” means the average of a Vermont school district’s three prior years’ full-time equivalent enrollment of students in the technical center. Sec.13. 16 V.S.A. § 1593 is amended to read: § 1593. SECONDARY STUDENTS IN POSTSECONDARY TECHNICAL PROGRAMS A secondary technical student may be enrolled in postsecondary technical courses at the expense of the student’s school district of residence if the enrollment is accepted by the postsecondary institution and approved by the - 244 - district of residence as being in the best interests of the student, and if the enrollment is approved for credit toward high school graduation requirements. The school board awarding graduation credits shall consider the recommendation of the regional advisory board, regional technical center school district board, or any other authorized alternate governing board and shall provide an opportunity for the secondary student also to receive postsecondary credit. Sec. 14. 16 V.S.A. § 2904 is amended to read: § 2904. REPORTS Annually, each superintendent shall report to the commissioner in a form prescribed by the commissioner, on the status of the educational support systems in each school in the supervisory union. The report shall describe the services and supports that are a part of the education support system, how they are funded, and how building the capacity of the educational support system has been addressed in the school action plans. The report shall include a description and justification of how the following funds were used: (1) as required under subsection 2959a(e) of this title, funds received due to Medicaid reimbursement under section 2959a of this title were used; (2) for a school district required to provide learning readiness experiences for preschool age children or early reading and math experiences for school age children pursuant to subsection 4011(d) of this title, funds attributable to an increase in student count due to the poverty ratio of the district and the number of students with limited English proficiency. Sec. 15. 16 V.S.A. § 2957(e) is amended to read: (e) Except as provided in 20 U.S.C. § 1412(a)(10)(C) or unless a court or hearing officer determines otherwise, where a unilateral placement has been made without the school district of residence being offered a reasonable opportunity to evaluate the child and to develop an individualized education plan, reimbursement may not be sought for any costs incurred before the school district is offered such an opportunity. Sec. 16. 16 V.S.A. § 4011(a), (c), and (h) are amended to read: (a) Annually, the general assembly shall appropriate funds to pay for an adjusted education payment for each equalized pupil statewide education spending and a portion of a base education payment for each adult diploma student and student or client in the adult education and literacy program. (c) Annually, each school district shall receive an adjusted education spending payment for support of education costs. Funds distributed under this section shall be allocated on the basis of the equalized pupils in each school - 245 - district, except for unorganized towns and gores. An unorganized town or gore shall receive an amount equal to its adjusted education payment for that year for each student based on the weighted average daily membership count which shall not be equalized. If the district’s adjusted education payment is less than the base education payment, then in fiscal years 2005 and 2006 only, the district shall receive its education spending per equalized pupil plus 40 percent of the excess of the base education payment over the district’s adjusted education payment, but only for deposit in a district’s education reserve fund, authorized in accord with section 2804 of Title 24, for expenditure on legitimate items of education expense. In fiscal years 2007 and after, no district shall receive more than its education spending amount. (h) Annually, by October 1, the commissioner shall send to school boards for inclusion in town reports and publish on the department website the following information: (1) the calculations for the current year of: (A) the total statewide average district education spending per equalized pupil for the current fiscal year, minus the portion of that spending that is approved school capital construction spending, divided by the statewide equalized pupil count, which yields the statewide average equalized per pupil spending; and (B) 125 percent of that average spending; and (2) a statewide comparison of student-teacher ratios among schools which are similar in number of students and number of grades. Sec. 17. 16 V.S.A. § 252(1)(B)(viii) is amended to read: (viii) Drug sales, including delivery or sale to minors: selling on school grounds, selling or dispensing under sections 4230(b), 4231(b), 4232(b), 4233(b), 4234(b), 4235(c), 4235a(b), and 4237 of Title 18. Sec. 18. TUITION OVERCHARGE STUDY; COMMISSIONER OF EDUCATION The commissioner of education shall study the amounts of announced tuition charged by public schools and how these amounts relate to the calculated net costs per pupil. On or before January 15, 2006, the commissioner shall make a recommendation to the Senate and House committees on education concerning methods to ensure that the announced tuition will more accurately reflect the calculated net cost per pupil. One of the methods considered by the commissioner shall be a cap on the amount that a receiving district may charge to reconcile the difference between the two amounts.

- 246 - ORDERED TO LIE S. 157 An act relating to rulemaking for Vermont origin. PENDING ACTION: Second reading of the bill. H. 510 An act relating to amending the charter of the city of Barre. PENDING ACTION: Second reading of the bill. CONFIRMATIONS The following appointments will be considered by the Senate, as a group, under suspension of the Rules, as moved by the President pro tempore, for confirmation together and without debate, by consent thereby given by the Senate. However, upon request of any senator, any appointment may be singled out and acted upon separately by the Senate, with consideration given to the report of the Committee to which the appointment was referred, and with full debate; and further, all appointments for the positions of Secretaries of Agencies, Commissioners of Departments, Judges, Magistrates, and members of the Public Service Board shall be fully and separately acted upon. Theodore Lindgren of Springfield – Member of the Parole Board – By Sen. Campbell for the Committee on Institutions. (4/14) Joseph Acinapura of Brandon – Member of the Parole Board – By Sen. Giard for the Committee on Institutions. (4/20) Dean George of Middlebury – Member of the Parole Board – By Sen. Giard for the Committee on Institutions. (4/20) Karen Handy Luneau of St. Albans – Member of the Vermont State Colleges Board of Trustees – By Sen. Collins for the Committee on Education. (5/5) David E. Luce of Waterbury Center – Member of the Community High School of Vermont Board – By Sen. Doyle for the Committee on Education. (5/5) Walter E. Freed of Dorset – Member of the Liquor Control Board – By Sen. Dunne for the Committee on Economic Development, Housing and General Affairs. (5/6) Ugo Sartorelli of Barre – Member of the State Police Advisory Commission – By Sen. Doyle for the Committee on Government Operations.

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