Vermont Legislature SmartTranscripts:

[Alyssa Black]: Welcome back to Caledonia Healthcare for 03:50, 03:40 something in the afternoon. Our schedule got pushed back a little bit today because we were taking testimony this morning that was frankly riveting, or at least I thought it was riveting. So some of our witnesses got pushed back. We thank them very much for coming back. So first up, we're going to have we've got Michael Barber from Green Mountain Care Board, so if you'd like to join us up front. We have not done a complete walkthrough of this bill. In fact, we've barely done any walkthrough of the bill. So, are some sections that concern the Green Mountain Care Board, so that's what Michael's here to talk about.

[Michael Barber]: Good afternoon. For the record, Michael Barber, General Counsel for the Green Mountain Care Board. Thanks for having me here this afternoon. This testimony won't be riveting. I apologize.

[Alyssa Black]: Well, you're totally at a hurry, Mike.

[Michael Barber]: Pretty dry, think. Yeah. So I obviously reviewed the bill, discussed it with the board chair, the executive director. I'm happy to share some initial thoughts. I I do wanna just caution here at the outset or or set up at the outset that the bill deal deals with some pretty complicated issues, nuanced issues, and does so at a pretty granular level. And some of these issues are a bit outside of the Green Mountain Care Board's wheelhouse and that position autonomy on day to day practice patients that we don't have a ton of insight or expertise into. So we are quite interested, as I'm sure you guys are, in hearing from other agencies, other, entities that might be affected by this bill and would like at least the opportunity to come back in at a later date, after the kind of testimonial record develops a bit. So Great. With that, I'll get get into it here. Kinda jump around just a little bit, if that's okay. And I wanted to start with sections, that would render non competition agreements, nondisclosure agreements, and nondisparagement agreements null and void. So we support those provisions. Sorry.

[Alyssa Black]: No. Section

[Michael Barber]: ninety five thirty three b, which starts on page 15, line four. As well. It's in these are in two different sections of the bill. There's also section ninety five thirty four b, which starts on page 18, line 18 of it. So the different kind of subjects, but but both both of those provisions render these non noncompetition agreements, nondisclosure agreements, and nondisparagement agreements null and void with some exceptions, caveats. So we we do support that. In particular, we think that the provision on noncompetition agreements or noncompetes is a good idea. By definition, these agreements are designed to limit competition. Competition is something we generally need more of in Vermont. The American Medical Association has some some literature on this that says that, you know, non competes can effectively prevent physicians from, leaving a practice, particularly if, that practice has a large geographic footprint or the or is in a highly concentrated market like we have here in Vermont. The a AMA also warns that noncompetes can harm patients by compromising physician autonomy. And they give an example of a doctor with at will employment terms might be more reluctant to advocate for patients or speak up on matters that might negatively affect patient care if their employment is at will, they can be terminated at will, and that termination triggers a noncompete that would effectively prevent them from practicing elsewhere in the state. So a number of states have enacted laws to regulate the use of noncompetes. The language in this bill appears similar to some other bills, particularly Oregon is the one that looked very similar to this bill.

[Alyssa Black]: I know this isn't your domain, but the board does do hospital budget review, and you have regulation over hospitals. Do you wanna know if any of our hospitals in Vermont currently use noncompete clauses in their contracts?

[Michael Barber]: No. It's not something that I had insight into. That might be something that We'll ask the hospitals. The chair I'll ask Owen when Yeah. When I see him again. Thanks. We also support the limitations on misleading advertising, where's that? In section ninety five thirty three e starting on page 16. Not much more to say there.

[Alyssa Black]: Do you support this? Yeah. Okay.

[Michael Barber]: And now I'm gonna skip ahead a bit to the sections of the bill that deal with the board primarily. So it's regarding submission of information on ownership and control of health care entities and reporting that information to the public. So starting on page 20. Got a new section of law here, ninety five forty one, which would require health care entities, which is maybe one of the definitions you covered earlier, would require them to report information to the board and the attorney general at least once every two years and upon consummation of a material change transaction, which is another defined term, And then moving on to page 24. So was that and

[Alyssa Black]: you want that or not want that? Yeah. I'm going

[Michael Barber]: to address these together.

[Alyssa Black]: Keep in mind that we're not lawyers and we haven't seen this language yet. Sure. So you're going to address both?

[Michael Barber]: I am going to address both, kind of hand in glove. Was the other page? Four. 24, section 9,542. Okay. So this would require the Green Mountain Care Board on or before 02/01/2027 and every two years thereafter to post a report on the board's website, kind of using that information that is received from health care entities under the under the previous section. The report would need to include, among other things, changes in ownership or control for each health care entity, changes in tax ID of each health care entity, the names, addresses, tax ID numbers, business structures of the health care entities, as well as their affiliates, subsidiaries, management services, entities, and lastly, an analysis of trends in horizontal and vertical consolidation disaggregated by business structure and provider type. So, again, these two sections are working. We're getting this information at least every two years and on upon consummation of a material change transaction. And then every two years, we're preparing a report using that information and posting it on our website. At a high level, I wanna say that this seems consistent with the approach that some other states have taken to make this information public, increase the transparency around it, and we very much appreciate the shift in focus from, you know, review of these transactions or the ability to review these transactions to to reporting and transparency. That said, I don't wanna minimize the work that this would be for the board, because I don't think it will be trivial. And, I suspect that the volume of data we we get could be quite high. A little cup to know at this point because it's not something we have insight into. But there's a couple of reasons I say that. A health care entity you may have covered this earlier is defined quite broadly. And it includes health care providers, health care facilities, provider organizations like accountable care organizations, management services organizations, pharmacy benefit managers, health insurers. So it's a pretty broad scope of entities. There are some exceptions, but for the most part, these health care entities would need to report information as long as they have total assets, annual revenues, or anticipated annual revenues of at least a million dollars, which is a pretty low threshold, a million dollars, And the list of material change transactions, that's, like I said, another defined term, is pretty broad as well. So it's broad scope of people transactions that would need to be reported, so I think the volume might be quite high. I think we can can manage it, but there is one provision that we would ask be stricken. So that's the one suggestion I do have for you, and that is on page 25, stricken or revised. Page 25, lines three and four. This is, like I mentioned, this is part of our reporting requirement, where we would have to report an analysis of trends in horizontal and vertical consolidation disaggregated by business structure and provider type. Most of the other provisions that we'd be reporting, the information we'd be reporting is aggregate data from what we get. This requires us to go beyond and analyze trends. I think we're concerned about whether we have the resources and staff to do that. So we would like that to be stricken or modified in some way.

[Alyssa Black]: Do you have suggestions over modifications, or prefer would to stricken?

[Michael Barber]: I think for now our preference is stricken, but I do plan to talk with the healthcare advocate about this and some other issues, and we can talk about that as well.

[Alyssa Black]: Yeah, of course, would the healthcare advocate like to chime in?

[Michael Barber]: Just want to say, healthcare advocate, I just

[Alyssa Black]: want say, feel confident that the board and the board came to a reasonable place that works in the board. Great.

[Michael Barber]: And then I I just gonna talk about the other provisions of the bill that prohibited transactions, which is well, I don't think you need to go to each of them, but prohibited transactions, corporate practice of medicine, corporate entities being permitted to employ physicians. There's a number of other, like the meat of the bill. I think we're still working through. We have a number of questions that we've shared with the health care advocate. We're going to discuss later, and I think with Ledged Counsel as well, just about how these provisions work together, whether there may be some unintended consequences, whether they make sense, I don't think it would be the best use of your valuable time to, like, go through those in detail. They're pretty technical. You haven't had a walk through. I'm happy to come back and if I still have questions that I'd like to share with you or concerns. But at this point, I think we're still kinda digesting those those pieces. Okay. I'll just I'll I'll leave it at that. I'm happy to answer.

[Alyssa Black]: Just because I'm making notes here, in general, other than the administrative burden of putting together a report every two years, Is the Green Mountain Care Board in favor of subchapter four that you noted for us around reporting of ownership and control of care entities and then the sharing of information to improve. Are you generally supportive of both those sections except for six on page 25? Yes, yes. And noting that it will take

[Michael Barber]: Just put a yes, with a caveat I haven't spoken with the actual people who will do the work.

[Alyssa Black]: Oh, they're not going to support it.

[Michael Barber]: Just figuring that out, I think. But generally, I think you're supportive of increasing transparency around that. If we need to be the vehicle for that, provided we have the resources to do that. I think you need to dig into that a little bit more, but I I don't see I don't anticipate. This one here too, they support that? Yes, they do. Okay,

[Alyssa Black]: do you want me to pivot to I'm sorry, you wanted to think about some other things a little bit more, I think you said, around prohibited practices.

[Michael Barber]: Yeah, I think we'd like to speak with the ACA about some questions we had in the Legis Council about how some of these provisions work together and potentially tend to consequences, and and we can come back if there are still questions and concerns around that stuff. But I I don't think it'd be the best use of your time this afternoon to kind of walk through those in detail, if that makes sense. Can you just speak a little bit louder? Oh, sure. Sorry, thank you.

[Alyssa Black]: I actually had a question. During the budget review process this year, there were several instances of identified services that hospitals are contracting out to other entities. In some cases, hospitalists in one hospital were contracted out, emergency doctor, ED physicians. In general, are there things in this field that would be helpful so that we could have a little bit more illumination on this, I guess, or clarity.

[Michael Barber]: Actually, some of the reporting would touch on that. I can go back and review that with that in mind. I will say that there is a there is a bill that would address the outsourcing issue. I can't remember whether it's s one eighty nine or one ninety. Or From the senate. But there is a bill that specifically addresses that issue that arose. Yep.

[Alyssa Black]: We'll see if we get that. Thank you. Anyone have any questions? I'm sorry, didn't have any questions, sir? Thank you. Oh, did you have a question? It is in the outsourcing of many sections in SB 190, and tomorrow morning Senate House of America picking that bill. Okay, thank you. Stay tuned. Thanks. Okay, Todd, let's wrap your run up. Thanks for coming back. Pleasure. It's been a full day at the State House. Super fun.

[Todd Daloz]: It's a long commute for me. Good morning. Nope.

[Alyssa Black]: About you.

[Todd Daloz]: Do I just

[Alyssa Black]: Sing the evening.

[Todd Daloz]: Again. Good afternoon. For the record, Todd Delos. I'm the director of policy for the attorney general's office. And thank you for having me in. Thank you for engaging in this important topic. And I know you've gotten a ton of information today, and I also know you haven't finished the walk through with ledge counsel. So I'm gonna similar to Mike Barber, I'm gonna stay fairly high level and just kinda give you a rough take of of where the AG stands on this bill. But by way of background, along with being an AG, in a previous iteration, I worked in the agency of human services and engaged in some of the transactions or reviewing some of the transactions that I think this bill is really seeking, to address and analyze. And I think it is a really important area in terms of the health care sustainability in the state. Really looking at how these transactions occur and recognizing that on the one hand, we need to be ensuring that the medical judgment is what is driving care. And on the other hand, recognizing that investment in health care is an incredibly important tool for the sustainability of our health systems. So with that as preamble, we support the broad policy goals of h five eighty three. They are a little outside the traditional lane of the attorney general's office, and I'll I'll get to that. But the goals of transparency, certainly of paramount importance, especially in this space, And the goals that were laid out this morning by the health care advocate in terms of how to how to ensure that transactions and certain degrees of control that occur within the health care space are understood by the players and meet the policy goals of the legislature. So when I talk about the lanes of the attorney general's office, I'll just I haven't been before this committee yet.

[Alyssa Black]: Oh, thanks for

[Michael Barber]: Last year on

[Alyssa Black]: Yeah.

[Michael Barber]: You were here once. '28.

[Alyssa Black]: Oh,

[Todd Daloz]: yes. But not about something like this. So, you know, obviously, we have work in the environmental space, in the criminal space, and a lot of our work is in the consumer space. And we provide oversight regulation enforcement in areas as diverse as lead paint, fuels, nonprofits. We don't do a lot of work in the healthcare space. And I think it's important to understand that that doesn't mean we don't have the ability to enforce our existing consumer protection laws, and that's actually what the bill proposes is to is to recognize these as violations of consumer protection. But with any enforcement action so the criminal space is the easiest one to kinda understand this analogy. If a law is broken, if there's some kind of crime committed, law enforcement is, first and foremost, the folks who investigate that violation. Law enforcement then creates a case and brings it to a prosecutor, be it a state's attorney in Vermont or the AGO. It's almost always the state's attorney. And the state's attorney then takes that case, that investigation, and acts upon it and prosecutes the case. The analogy is in the consumer space, we have maybe two investigators, maybe three, who do this investigation, who look into unfair and deceptive acts of practices in commerce, working with AAGs, assistant attorneys general. They then build a case and may seek an enforcement action there. What I see in this bill and what I think is contemplated, and I'm happy to keep working with the health care advocate on this, is that in some ways, the care board will be the repository of that information and will provide a measure of, but I do not wanna speak for the care board, a measure of that investigation and sort of flagging where there may be concerns in these transactions. And then the attorney general's office, who also will get the same information under the bill, could take action in that space. I think what is unclear and and the care board just spoke to this, we don't know what the volume of this work is gonna look. And I think that is gonna be a crucial area for us to understand how to take on this work. I will say I recognize these transactions have occurred in Vermont. They are likely to still be occurring in Vermont. And I think what I don't know is how much person power the attorney general's office is gonna need in this space. And that's something that we can look at, again, continue working with the board and and others to assess those needs. But I think it's important to just say that that's maybe the the animating space that we wanna investigate further and look at in this bill.

[Alyssa Black]: It may I interrupt you really briefly? Do you feel as though I mean, this this is already occurring in the state. We know it's already occurring. Do you think at least the process of having this in law, that these are prohibited practices, would, at the bare minimum, be a deterrent?

[Todd Daloz]: That's a great question. I do think so. And I think there will always be scoff laws and folks who skirt the law or unaware of it and and need assistance complying. But I think needing to touch base on some of the language, and and I've spoken with the care board and some other folks, and I'll talk about that in a minute. I think there are some areas where we'd like to make some recommendations on changes to language. Again, you haven't walked through it, so I don't wanna presuppose how Jen's gonna walk you through it and explain things, but there are certain areas that I think could be clarified a little bit. But generally speaking, yes, I think most reputable organizations will comply with the law. And that in and of itself will prevent a degree of whatever prohibited activity you may decide upon actually occur. It's a very fair point. I think the other piece that I would flag is that there may be a a resource need for the AGO, but we're also looking at the ways in which existing structures within state government may respond to some of those needs. So whether it's how the care board responds to the information they get, I think it's also probably valuable, and I respectfully would would suggest to the chair and the committee to have the Department of Financial Regulation come in to talk about it. I think there may be some overlapping authority there that could help provide some clarity, and I think they're a really important partner in this space as well. They understand the insurance market. They understand a lot about elements of the health care market, and I think that's gonna be an important partnership in any kind of regulatory structure that comes out of this. And as I said, we we're more than happy to work with the health care advocate on some of the the littlest pieces. The the one maybe area I would direct your attention in terms of specific language so the AGO, the attorney general's office, really only appears in the bill mainly in the enforcement section. We get the reports the same that the care board gets, and then looking on all the way on page 25 and enforcement of the chapter, it's a fairly simple cross reference to the consumer protection act, which is nine VSA chapter 63. I think it's important, and I'm gonna be careful not to walk through it. But there are some important deviations from that in terms of the level of penalties that we're able to seek. I think that's important. One item I would raise for consideration of the committee is there are certain prohibitions suggested in the bill that if you had, for example not presupposing how the bill is actually prohibiting actions, but if you had a nonmedical person in charge of medical decision making understood very broadly, That could be considered a violation. We could go after somebody and say that's a violation. Every decision that person makes is a violation. Every day they make a decision is a violation. And that's a pretty significant penalty that'll likely change behavior. What I haven't seen, and I'm happy to have it pointed out by others, is if there's a prohibited transaction, so not an operational determination, but a transaction where a leverage some kind of private equity engaging and purchasing health care entity in Vermont in a way that's prohibited by the by the bill law at that point. I'm not sure how we unwind that. So we could say that transaction was a violation, and there would be penalties for that if we could prove it. But I'm not sure there's something in the bill that would then require that to be undone. Now maybe there's language that says every day that that entity exists after the prohibited transaction is a violation of the law. I'm not sure the language is there, but just something to consider is and I am not well versed in corporate law, but I'm not sure how you would frame up unwinding. But I think that's probably what the committee or or certainly the sponsors and and advocates for the bill are looking for, is some way of preventing that level of control and potentially damaging actions by those entities that are owning the health care practice. Am I making sense?

[Alyssa Black]: Yes. So basically what you're saying is like a medical decision making, every single time you make one medical decision, that's a violation in itself. But just the owning is one. And you're saying that maybe we can get to a point where maybe every day you own it is.

[Todd Daloz]: That yeah. I think there's sort of two ways to look at it. So the operational, we consider anytime there's an unfair, deceptive act of practice in commerce, and we can identify it and prove it, we can say that's a $10,000 fine for each occurrence. When you have a a financial or a real estate or an operational not an operation, but that kind of purchase and sale, right, that you sign, that's the transaction.

[Alyssa Black]: One touch.

[Todd Daloz]: The plan happens. It's under the under the draft language. It's a $100,000. That's a fairly significant penalty, but on a multimillion dollar transaction, maybe it's not. I I certainly, it would be for me. Mhmm. But I'm not sure then that we get to the point that the committee wants is which I think is to prevent that level of

[Alyssa Black]: Yeah.

[Todd Daloz]: Of marketplace interaction. And so I would just say there may be an interest in figuring out how you un if there's authority to unwind or otherwise undo a transaction. And I I don't have an offer on on language around that, but it could be that. Or as you said, chair Black, it could be every day that you continue to own is a violation. Yeah. And then the financial penalties become certainly a deterrent to continuation. So those are I mean, those are the main points in terms of the bill. And I think, as I said, continuing happy to work with folks on language, some of the concerns that we have, and then, you know, just being transparent with the committee that I think we'll need to determine over time what the volume of work is and how we respond to the volume of work.

[Alyssa Black]: Any questions? Yeah, go ahead. I'm not quite sure how to ask it, but do you have any concerns that this bill, as it's currently written, would prohibit or dampen health care innovation in terms of partnerships and mergers for sustainability purposes?

[Todd Daloz]: I would certainly defer to folks who are more versed in current systems of care and and the strains and stresses they're under. But I I think there is some language in here that could it would be friction within the system. Right? And I think anytime you regulate an industry, that's a degree of friction. But I think we usually say the balance is better than the detriment, you know, the benefit, I should say. In this instance, I think, again, I wanna be a little careful because I think it's worth further conversation with the health care advocate and the committee around maybe some tweaks in the language that could limit that. And I think it would also be beneficial to hear from arguably the regulated entities under this because they would certainly be better able to speak to that question. But I think there are areas where some of the language would suggest regulation where I'm not sure the committee quite wants there to be regulation, and that would impact innovation. I think it's solvable.

[Alyssa Black]: I have a question that I'm posing, and it's more than I'm posing the question, but you can just answer a yes or no, or not answer at all.

[Todd Daloz]: That's an option.

[Alyssa Black]: That's a good option. You can say, I need to think about that. You were listing, what did you call them? Basically the types of things that you deal with at the AGL. Consumer protection, water, you think you Environmental. Environmental. But you don't typically move into the health care space other than in consumer protection things. Think you

[Todd Daloz]: Yeah. I mean, I think there are a few areas where there are consumer I mean, S one twenty eight from last year is an example of of a consumer protection in the health care space that's around truth in advertising and health care services. I but it isn't the degree of I mean, I think Sam's testimony and and Mike Fisher's testimony this morning is very helpful. Like, these are incredibly complex transactions. That's really what I'm I mean, we have good litigators. We have folks who are really expert in the in the field of deceptive and unfair practices. And here, we're really looking at some very complex corporate structures. And that just to be transparent, that is not an area that we regularly practice at. And so there's language in the bill that suggests the ability to go get expert help. I have some suggestions around tweaking that a little bit. But I think it's important. This is not sort of the core work of the AGO.

[Alyssa Black]: So the question I'm posing is, in the state of Vermont, we're now spending well over $10,000,000,000 a year. I always like saying a billion dollars a year on healthcare and health care related services and all these providers. And we know that we've had issues. And we're also dealing with Vermonters' lives here. This isn't, you know, I got sold something bad. This is life and death in a lot of cases. Don't you think we need to devote resources to it? Yes. That was the yes, no, or what do think about it? That was pretty straightforward.

[Todd Daloz]: That

[Alyssa Black]: was all. Any other questions? Didn't think you would just call them. It's important work.

[Todd Daloz]: It's important work. And I mean, at the risk of saying more than you were requesting, but now I'm talking. And that may be what we need to come back to this committee about.

[Alyssa Black]: Okay. Thank you. Resources. Thanks, Todd. Okay. Welcome. Thank you all. We're done with the day. Thanks everybody for coming back, and we can