Vermont Legislature SmartTranscripts:

[Alyssa Black (Chair)]: Welcome back everyone, it's afternoon February 4 and we're going back to H585. I keep forgetting these sections when we go through bringing them up, and we hadn't had a walkthrough of them.

[Jen Carvey (Office of Legislative Counsel)]: So we're going do a walkthrough of the last remaining sections. Good afternoon. Jen Carvey from the Office of Legislative Counsel. Yes, I think we're actually doing sections one and two is where I think we are, the determining the governance and compensation.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: That

[Jen Carvey (Office of Legislative Counsel)]: sounds, yep, what you're expecting. Okay. Great. Let me take the language up in the screen. Alright. So this is H585, an act relating to health insurance reforms. We are now ready to do the last couple of sections. And these deal with health insurer, government, governance and executive compensation, typically amending section eight BSA chapter 123, which is the chapter on nonprofit hospital service corporations. I think the primary example of that is Blue Cross Blue Shield of Vermont, who I think you're also hearing from this afternoon. And so some of the changes here are really just sort of updating language, but many of them are more substantive. But at the beginning, you'll see a few changes that are just trying to modernize language to get rid of unnecessary legalese. So for example, our very first word here started with such hospital service corporation like you were in the middle of the conversation, but because we don't read the statutes all in a book In order right now, it seems much easier to steer much more straightforward to just say a hospital service corporation. So in existing law, a hospital service corporation, this doesn't change it, is a nonprofit sharing corporation without capital stock, and it is required to be maintained and operated solely for the benefit of, and I'm saying its subscribers instead of the subscriber thereof, and then this is new, and shall ensure that benefits and services are balanced with the efficient and economical management of the corporation. And then continues on with what is existing law but just starting a new sentence. Hospital Service Corporation will not be authorized to pay money in lieu of hospital service. Nobody shall contract to provide hospital service unless they're authorized to do so under the provisions of this chapter. And then there's some references in here to corporations under Title 11B. Just like this morning, we're still waiting into titles. We're not usually in 11B is the nonprofit corporation's title. So that's what that reference There are some references here in this chapter to There's a conflict between the provisions of Title XI or what applies from Title XI. So for the most part, we're following XI, but to the extent these provisions can be layered on, they will. Alright, so now we're into section forty five thirteen. And it looks like a change, but it's really not. It's just moving this from one section to a new section. So 4513 is a permit to engage in business. I'm talking about foreign corporations. And the first section of that talks about what the composition of the Board of Directors has to be for a nonprofit hospital service corporation. And this language is literally just moving down to this new section. So it's crossed out here and repealed because it's getting moved to a new spot. That new spot is in this new section 4,513, which is on board of directors, still talking about nonprofit hospital service corporations. And we have some definitions. The definition first and first definition is not new provider. It's just taking this language from the end of the section that was repealed above and moving it here. So a provider is any person who is a provider of hospital or medical services or is an employee, director, trustee, or representative of a provider of goods service. And then we have a new definition, representative of the public, which you'll see a lot in the provisions to come. And this is any member of the Board of Directors appointed by the Governor. A representative of the public may be a member of the public, a subscriber or a provider. The composition of the Board, again, this is the rest of the piece that was moved from up above. So at least three fourths of the Board of directors, and down here at least three fourths of the board of directors, of a corporation organized under this chapter must be composed of subscribers and members of the public. That is not new. The remainder may be providers, also not new. The subscriber members of the board shall comprise at least a majority of the board and a corporation organized under this section as to provide for the election of its board of directors at a publicly announced meeting. And we get to new stuff. Yeah. Question on this.

[Alyssa Black (Chair)]: We have this actually in May, I think, or some other bill. Everybody a member of the public?

[Jen Carvey (Office of Legislative Counsel)]: Yes. These are representatives of the public. Representative of the public becomes a defined term for purposes of this section. And so everywhere it's used in this section, it has this meaning.

[Alyssa Black (Chair)]: So that means as they're serving on the board, yes, they're a member of the public, but they have to actually represent sort of the public good. You'll see,

[Jen Carvey (Office of Legislative Counsel)]: I mean, it gets explained in a lot of people are coming up.

[Alyssa Black (Chair)]: So I think

[Jen Carvey (Office of Legislative Counsel)]: for the moment, the important part here is that this representative of the public who can be appointed by the governor may be a member of the public, so just anybody, or a subscriber, somebody who's covered by a plan offered by this type of insurer, or a provider, which is a provider of hospital and medical services, or if they're employee, director, trustee, or representative. So that's creating the kind of the universe of who we could be talking about when we're talking about representing the public in this section.

[Alyssa Black (Chair)]: All She just answered. Okay.

[Jen Carvey (Office of Legislative Counsel)]: All right. So now we get to representatives of the public. Two voting members of the board. So this is all new. But in no event, less than one sixth of the board of directors shall be representatives of the public appointed by the governor. And unless otherwise specified in this chapter, a representative of the public has the same rights and responsibilities as any other member of the board of directors. It creates some staggered terms for the initial terms in order to have staggered terms going forward. So the initial term of one representative of the public will be two years and the other will be three years. If there are more than two representatives of the public, then divide them their initial terms as equally as possible between two years and three years so that we end up with some, they're not all coming off the board at the same time, you keep some, some continuity. And then thereafter, each representative of the public appointed by the governor to succeed a representative of the public would serve a three year term and serve until their successor is appointed. The representative of the public's term can be terminated only by the appointing authority or the end of the term or because that member voluntarily resigns. Meaning the press of the board can't vote them off or anything.

[Alyssa Black (Chair)]: So the appointing authority would be the governor's. The governor could fire them. Determines. Determines, or they could leave. Or they say quit. Leslie,

[Leslie Goldman (Member)]: I'm just wondering about if there are criteria to be terminated, how does that get determined?

[Jen Carvey (Office of Legislative Counsel)]: I think these are the I mean, the the appointing authority, generally, whoever can appoint can remove. Yeah. But don't have purpose. For any purpose. This doesn't I

[Leslie Goldman (Member)]: just don't like you anymore. You're wearing purple.

[Jen Carvey (Office of Legislative Counsel)]: I would say a nondiscriminatory purpose.

[Leslie Goldman (Member)]: Purple is my favorite color. I'm just saying.

[Brian Cina (Member)]: Color is listed as a protected status.

[Jen Carvey (Office of Legislative Counsel)]: Oh, I I I it should be. So I guess what does that mean? It doesn't mean

[Brian Cina (Member)]: it is.

[Jen Carvey (Office of Legislative Counsel)]: I think this is fairly typical. I'd say on the same basis that they can choose who they want to put on, they can choose to take someone off and put someone else on. It sounds arbitrary, but I guess that's life free.

[Brian Cina (Member)]: It's that whole part have to be in there.

[Alyssa Black (Chair)]: What do mean?

[Allen "Penny" Demar (Member)]: Two two voting members from the public appointed by the governor.

[Jen Carvey (Office of Legislative Counsel)]: This is the proposal from the administration. You can ask

[Brian Cina (Member)]: them Okay.

[Allen "Penny" Demar (Member)]: That's that's all I Yes.

[Jen Carvey (Office of Legislative Counsel)]: Ask them why. I'm just telling you what.

[Allen "Penny" Demar (Member)]: I I understand.

[Jen Carvey (Office of Legislative Counsel)]: Okay. So then if there's a vacancy before the conclusion of the term, whether by termination, resignation, or otherwise, the governor appoints a new representative of the public to complete the term. Committees, this allows, so the Board of Directors may create one or more committees and may appoint members of the Board, including those representatives of the public to serve on them. In addition, the Board shall create a Compensation Committee to review and recommend to the full Board for approval of all compensation packages offered to the corporation's officers and executives. And the compensation committee must be composed of two or more members who serve at the pleasure of the board, and at least two representatives of the public shall be voting members of the compensation committee. So they can create whatever committees they want, but they have to have a compensation committee. Compensation committee has to have at least two people on it. And at least two people, at least two representatives of the public shall be on the compensation committee and voting members. So it could be just those two members since there have to be two or more members.

[Alyssa Black (Chair)]: Go ahead.

[Brian Cina (Member)]: Why don't we say it's a pleasure? I always wanted to ask that. It sounds weird to me. Is that a legalese term that goes back to colonization?

[Jen Carvey (Office of Legislative Counsel)]: Probably. I mean, it's sort of as long as it shall please be the appointing authority is. So if

[Brian Cina (Member)]: you displeased them, you're off, basically.

[Jen Carvey (Office of Legislative Counsel)]: Well, they have that authority. Why did you take you off?

[Alyssa Black (Chair)]: Let's see. Hand out nothing.

[Jen Carvey (Office of Legislative Counsel)]: Guiding principles for representatives of the public. So I think this is where the chair was kind of getting. In discharging the duties of a director, including as a member of a committee, each representative of the public shall, in determining what the representative of the public reasonably believes to be in the best interests of the hospital service corporation, this entity, consider the effects of any action or inaction on the subscribers, so the people who are covered by the policy issued by this insurer. The community and societal considerations of the state of Vermont, including the principles for healthcare reform expressed in statute, often referred to as the Act 48 principles. And the goal that the hospital service corporations benefits and services should be provided at minimum cost and under efficient and economical management of the corporation. So these are the things that, again, for discharging their duties, the representatives at the public are figuring out what is in the best interest of the corporation.

[Alyssa Black (Chair)]: I hate to interrupt you in the middle. Can I go back to the page before with the compensation committee? Can the compensation committee consist of existing members of the board? Or do they have to be different people?

[Jen Carvey (Office of Legislative Counsel)]: No, it doesn't say that they can't. And the board can create, can appoint members of the

[Alyssa Black (Chair)]: board to serve on these committees. But at least two of them have to be representatives of the public.

[Jen Carvey (Office of Legislative Counsel)]: These two of them have to be representatives of the public and at least and there have to be at least two members on the compensation committee. So it could be just those two representatives of the public or more members of the board.

[Alyssa Black (Chair)]: Theoretically, the governor appoint two representatives of the public. The board creates a compensation committee and chooses those two representatives of the public, and they can serve as the compensation committee that reports to

[Jen Carvey (Office of Legislative Counsel)]: the board. Yes, you'll see some more provisions around executive compensation coming up in a future section. Okay.

[Alyssa Black (Chair)]: Alright. I'm just trying to wrap my head up who all these people are.

[Jen Carvey (Office of Legislative Counsel)]: Leslie? It is obvious, but are we saying that the members appointed by the public have different charge than other members of the board? Or is it all kind of a sim like, how how's that why is it This does not specify guiding principles for the rest of the board. So the only one so I I think it is asking these representatives of the public to have a a more sort of system wide view of what is in the best interest of both the corporation and the state. So that's that's what's different is that they have a they're asking to

[Leslie Goldman (Member)]: have a different the governor is asking them to look at it in a different way?

[Jen Carvey (Office of Legislative Counsel)]: Yeah. And these are the only people appointed by the governor. I mean, the rest of they're by appointed by anybody specified in statute that I'm aware.

[Leslie Goldman (Member)]: How do the other board of directors get

[Jen Carvey (Office of Legislative Counsel)]: I'm gonna phone a friend to DFR maybe when they No idea. Yeah. Know the answer to that. Okay. So these are again, in in discharging, the duties of a director, representatives of the public must, and we just looked at considering the effects of actions and inactions on different constituencies determining what is in the best interest of the corporation. The representatives of the public may consider any other relevant factors and the interests of any other group that the representative of the public determines are appropriate to consider. And they shall not be required to give priority to the interests of any person or group described in one or two over the interests of any other person or group. Subsection F is just specifying that considering interests and factors in the manner described in the previous section shall not constitute a violation of title 11 b, the nonprofit corporations statute or title. And then subsection g provides some limitations on liability. So it says a representative of the public is not liable for the failure of the hospital service corporation to create general or specific impacts on the community or the healthcare system. And a representative of the public is not liable to the corporation for any action or failure to take action in the representative's official capacity if they perform the duties of the office in compliance with the nonprofit corporations laws and this section. And in the event of a conflict between Title 11 B and this chapter as far as performing their duties, this chapter will control. It's more specific to their role. And a representative of the public shall have no duty to any person who is a beneficiary of the general or specific public benefit purposes of the corporation arising solely from the person's status as a beneficiary of the general or specific public benefit. Basically, this doesn't put the representatives of the public on the hook for anything that the corporation does or doesn't do. And as long as they're acting kind of in good faith in their role, they're not responsible for what happens. Is that similar to a conflict of interest? I don't think so. This is just a limitation on liability. If they were gonna be personally liable for what happens as a result of their actions, nobody would wanna serve on both. Conflict of interest would be like if they, you know, were also, I don't know, had some financial stake that would be affected by how they voted as a member of the board. And then bylaws, it requires any new hospital benefit corporation to adopt bylaws in accordance with the requirements of this chapter and title 11B and file them with the Commissioner of Financial Regulation for review and approval. And that's consistent with how we handle it. You'll see there's some transition language for existing hospital benefit corporations as well. So then we skip some sections and we get into executive compensation, but we're still in the same chapter on nonprofit hospital benefit corporations. So we have some definitions again. First, compensation is total cash compensation, including the base salary and annual incentive compensation. And executives are the president, chief executive officer, chief medical officer, chief administrative officer, chief fiscal officer, vice presidents, and anybody functionally equivalent

[Commissioner Sampson (Department of Financial Regulation)]: to this

[Jen Carvey (Office of Legislative Counsel)]: corporation, even if they use a different terminology. Top of page eight, on or before 07/01/2026, and prior to approving any changes to the compensation of any executive after that date, each Hospital Service Corporation must file with the Commissioner of DFR a statement sworn to by the Chair of the Board of Directors and the President of the corporation that includes the following information regarding compensation to pay to corporation executives. First, all compensation benchmarks used in connection with establishing or awarding compensation for each of the executives, including information used by any consultant, vendor, or other third party retained by the corporation. Also, a detailed compensation survey or peer group data used by the corporation or by any consultant vendor or other third party retained by the corporation to establish compensation benchmarks or otherwise to establish or award compensation for the executives. And then if any bonus or variable compensation was awarded or paid for the prior fiscal year, what criteria were used to evaluate whether that compensation should be paid or awarded and the specific results that supported the payment. And then in subsection C, it allows the DFR Commissioner to require the corporation to modify the group of peers or compensation survey or peer group data if in the commissioner's discretion the group contains entities that are not sufficiently similar to the corporation in terms of size, business operations, nonprofit status, or other factors. Allows the Commissioner to retain at the Corporation's expense whatever outside consultants and other experts that as a reasonably necessary to help the Commissioner evaluate the material provided by this section. If those persons would be under the direction and control of the Commissioner, ensure they would be acting in a purely advisory capacity. And then finally, nothing in this section should be construed to preclude a Corporation to prevent them from segregating and designating anything they provide to the Commissioner under this section as confidential due to content that is proprietary, privileged or otherwise confidential under Vermont law. And the Commissioner must maintain the confidentiality information as appropriate under the public record, which specifies what would be maintained as confidential. And then Section two is the implementation piece. So we saw at the beginning, at the end of this section on the board of directors, it said for new hospital service corporations, this says, not later than 09/01/2026, each existing hospital service corporation, each corporation operating in this state on July 1, must amend its bylaws to comply with the new requirements in APSA Chapter 123 that were in Section one, and then file the amended bylaws with the Commissioner of DFR for review and approval.

[Alyssa Black (Chair)]: Any questions for Jen?

[Brian Cina (Member)]: Not projected.

[Alyssa Black (Chair)]: Oh, there's lots of questions. Thank you, you, Jen. Jen. Commissioner? Hang on. Hello.

[Commissioner Sampson (Department of Financial Regulation)]: Hi, Samson. Commissioner, DFR. I believe we'll get yes. Attorney from DFR, Hillary Houghton, is with me.

[Alyssa Black (Chair)]: Hello. So

[Commissioner Sampson (Department of Financial Regulation)]: what we have here with these two provisions is, obviously, changes to governance and, I'd say, more insight and data for the department when it comes to compensation practices. Zooming out, we're talking about nonprofit hospital service corporations. So we have a special place in statute that enables the creation of these entities. At this point, Blue Cross is the only Blue Cross Blue Shield of Vermont is the only entity that fits into this category. They are unique in many ways in terms of tax exempt status, but also in terms of governance. So typically in the insurance world, you would see well, there's lots of permutations we won't get into, but most common is a stock company owned and governed, you know, through a board of directors elected by its stockholders or a mutual company owned and governed by policyholders, of which we have quite a few in Vermont. In both of those situations, you have, whether it be the stockholder as an investor or the policyholder as as a stakeholder in in the company through through their policy, has, an avenue for, say on who's on the board of directors, and then the board of directors sets the tone from the top and and, directs management to run the company. In the situation of a non profit hospital service corporation, you have a board that, is essentially self perpetuating. I think many of you are familiar or sit on non profit boards where there comes a time when a board member retires or leaves, and it's time to find a new board member. And, typically, how that works is you talk to your fellow board members and say, let's or or you have a nominating and governance committee, which or nominating committee that does the work of of trying to identify and recruit new board members. So in terms of the governance change we're looking for here, it recognizes that there is a self perpetuating nature to this board. It recognizes or it it definitely puts out there that Blue Cross has a unique position in its market dominance, insurance in Vermont, as well as as its originating originating statute or enabling statute. And I do wanna add that the I the the kind of concept of being a public entity, a nonprofit entity, in more than one court case, with the Vermont Supreme Court has kind of been affirmed by the courts in Vermont, and, you know, that that we have a quasi public entity in a nonprofit hospital service company. So the concept here in terms of having two appointed public members and defining a different charge for them, a broader charge, is to infuse more thinking at the governance level, at the board level, around the health care transformation goals of this state as defined in statute and implemented by the administration, by the Green Mountain Care Board, etcetera. We put forward the concept of two governor appointees at least. Currently, the board of directors of our only nonprofit hospital service corporation has 12 members. So but there's the ability to have a a larger or smaller board if they change their bylaws. So that's why you see the at no point less than one sixth. So if they chose to grow their board to 14 or 17, etcetera, they'd have to do that calculation and ensure that at least one sixth of the board is represented by by the public. I think it's a modest proposal, actually. Not everyone's going to agree. We're not looking for kind of control of the board in terms of governor appointees. We're looking for some influence and some infusion of thinking about, you know, additional thinking about what the goals of the state are, what's not only best for subscribers of Blue Cross Blue Shield, but what's best for the people of Vermont and the goals that you guys talk about in committee and what AHS and the care board and DFR and the governor's office, no matter who's governor, you know, are are going to consider. So I'll pause there, but next, I'll go into the executive compensation piece if there are no questions at this point.

[Alyssa Black (Chair)]: I have a question, which I'll ask you, but I'm also gonna ask

[Leslie Goldman (Member)]: Blue Cross Blue Shield. So do the

[Alyssa Black (Chair)]: board members get paid? Yes. Do we have any roughly any idea how much they're getting paid?

[Commissioner Sampson (Department of Financial Regulation)]: It's public information. It's filed. If I may, I'd leave that to Blue Cross because I don't wanna throw a number out there that's that's wrong, but it's, I'd say, relative to the yeah. It's it's it's it's not a job similar to your own that someone would take for pay, I would say. And

[Alyssa Black (Chair)]: I guess my question is really around that,

[Leslie Goldman (Member)]: is

[Alyssa Black (Chair)]: you started talking about the current board and boards in general, if anyone's ever served up there. For the fact that you've never been on a board. Oftentimes they become a group of affiliated people, I guess you would say. So what's to stop the governor from just and governor, he or she, future, past? What what's to stop the governor from just appointing, like, two of their friends?

[Commissioner Sampson (Department of Financial Regulation)]: In this proposal, nothing. But I'd say if we're open to it's my belief as a regulator and and the administration would support, you know, if that was a concern, a nomination process or framework, because I I do believe it's you know, board membership of an entity like this is critical. Mhmm. And I I believe that it needs there there's some certain, I'd say, minimum qualifications that as we devise this proposal, we had in mind.

[Alyssa Black (Chair)]: So maybe something like what we do with Green Mountain Care Board, which is we have a nominating committee and then give the governor qualified people.

[Commissioner Sampson (Department of Financial Regulation)]: Yeah. That might be name model.

[Alyssa Black (Chair)]: Yeah. Qualified people.

[Brian Cina (Member)]: Is the administration attached to the governor being the appointing power, or would there be possibility of having another power be the appointor, like the legislature or a community group or judiciary or you know?

[Commissioner Sampson (Department of Financial Regulation)]: I think we see we see the model of of governor appointees in many different areas. I'd say we're open to any discussion with the the priority being that the intent of the legislation is achieved, which is highly qualified folks that can properly represent the the direction of the state in terms of health care reform and the interests of the public. I think the nomination idea or following models that are out there in terms of other bodies is a great place to start.

[Alyssa Black (Chair)]: Can I sort of expand on that?

[Brian Cina (Member)]: Yeah, that was my only question. You answered it. Thank you.

[Alyssa Black (Chair)]: I'm just wondering if it is there anything in here that would stop the administration from putting somebody on

[Leslie Goldman (Member)]: the board who's part of

[Alyssa Black (Chair)]: the administration? Like, say, for instance, if it was happening present presently, is there anything that would stop him from putting you on the board?

[Allen "Penny" Demar (Member)]: I would.

[Alyssa Black (Chair)]: Think I

[Commissioner Sampson (Department of Financial Regulation)]: I think that the better answer is, the boards. This is very much, written and intended intended and written to not put these appointed board members under any different obligations to the board, meaning they have to follow there's gonna there's a conflict of interest policy that the board has. I I would absolutely be conflicted. I can't be on a board for a company that I regulate. That's a problem. And I think so I think the easiest or the most available answer to that is that members of the administration currently involved in the execution of health care policy, we'd have to think I think the number one issue that might come up would be conflict of interest. Yeah. Because the work that they're doing for the administration

[Alyssa Black (Chair)]: Inflates.

[Commissioner Sampson (Department of Financial Regulation)]: So much of it could conflict or be inside information on either end that because confidentiality is a huge piece of this as well. These board members will have to abide by all all the the rules of the current board and expectations around confidentiality. It is a separate entity. It is quasi public, but it is a separate entity that needs to be able to have confidential strategic discussions.

[Alyssa Black (Chair)]: Right.

[Brian Cina (Member)]: Do you think that if you expressed an openness to a process similar to the Green Mountain Care Board nomination process, where the governor, regardless of who that person is now or in the future, because I don't want to make it about the individual, but the position, that that position would choose from a pool of applicants vetted by a group. It sounded like you were open to that kind of a process. Yeah. So I think if we did something like that, maybe I think we should, but if we do, perhaps we can work together on what those criteria are for that nominating group, because that's a place where we might include language like, I'm not saying we have to do this, just an example to address your concern, language like a member of the current administration at high level shall not be appointed regardless of conflict of interest, to make sure there's more voice. Or we could say there needs to be, the nominating pool needs to reflect a wide range of gender, sex, race, color, creed, every We could put an equal opportunity clause in there so that he gets a diverse applicant pool. We could say that there needs to be someone who makes under $20,000 a year on theirs. I'm just saying that we could, in theory, or hypothetically or whatever, could give the nominating board criteria to meet to shape the pool, and then ultimately, the governor's just choosing from a pool of well vetted people who meet those criteria. Good.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Yeah. So

[Brian Cina (Member)]: I guess the question would be, would you be open to that, and if we could come up with criteria together?

[Commissioner Sampson (Department of Financial Regulation)]: I I'd like I'd like to discuss that further. Yeah. And I think the concern being that, you know, or not the concern, the balance really being that the more criteria we put out there, we have to be cognizant of not unnecessarily limiting the applicant. But some of that criteria would arguably expand the applicant. Exactly.

[Brian Cina (Member)]: Because ultimately, I guess what where I'm going with this is, like, if the governor is deciding from a pool that's been well vetted by a community group, then there's a lot of influence over that. Really does root out the potential of nepotism in the present or future by a governor, because they can't just pick their friend if their friend didn't make it through that whole process. If their buddy made it through that whole process, they're qualified. If that's who they choose in the end, we can't hold it against that individual because the body vetted it. So I think that that's a way to safeguard. Even though it's a bit bureaucratic, it's a way to engage the public in shaping the outcome. And I don't know, I just think if you're amenable to that, that seems like a path forward. Anyway, I

[Alyssa Black (Chair)]: don't want to perseverate on it, so thanks. Such a good word. I

[Brian Cina (Member)]: was feeling like I was channeling past members of the committee a little bit.

[Alyssa Black (Chair)]: All right, did you want to go on or did Hillary have anything she wanted to add on this? Oh, Allen, I'm so sorry.

[Allen "Penny" Demar (Member)]: Haven't talked about a cap on the board members being compensated. No. Would that be under consideration having a I think you've got up to 14 members there, or possibility. Right. Yeah. Should there be a cap?

[Commissioner Sampson (Department of Financial Regulation)]: My opinion, a a a cap on board.

[Brian Cina (Member)]: Oh my god. I think you said a cat.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: And I was like, what? Well, you said of all oh, sorry. I think I think forage.

[Commissioner Sampson (Department of Financial Regulation)]: A a feline member of the board.

[Brian Cina (Member)]: Board should have a cat.

[Jen Carvey (Office of Legislative Counsel)]: Oh my goodness.

[Commissioner Sampson (Department of Financial Regulation)]: So so it's it's it's not part of this proposal. It's my opinion and also, you know, just from a from a regulatory the compensation of the board in its entirety, whether it be 10 or 20, is is really not a mover in terms of and it's you know, I think I can say that I I do know the compensation. I'm not saying it out loud because I think I know it correctly, but I will let we'll let the Blue Cross representative

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: give you

[Commissioner Sampson (Department of Financial Regulation)]: that if if he has that available. But it's not it's not offend it would not I don't think it'd be offensive to anybody.

[Allen "Penny" Demar (Member)]: And that's true. But what would be offensive is having 26 people on board.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Right.

[Commissioner Sampson (Department of Financial Regulation)]: Right. And so we have Hillary, I bet you I know what you're thinking in terms of regulatory thoughts on bylaws. Maybe you wanna go in on that? I mean, we Yeah.

[Jen Carvey (Office of Legislative Counsel)]: It's a

[Hillary Houghton (Assistant General Counsel, DFR)]: Bortcharding, assistant general counsel for the record. I can tell you that the the size and number and qualifications of the board are typically set by the bylaws. So the statute will give a minimum of requirements, and in this case, will create, the category of representative of the people. But the size of the board is in Blue Cross Blue Shield's bylaws right now and can be changed by the board through those bylaws.

[Commissioner Sampson (Department of Financial Regulation)]: And we have some regulatory authority over those approving those bylaw changes?

[Hillary Houghton (Assistant General Counsel, DFR)]: We do.

[Commissioner Sampson (Department of Financial Regulation)]: Yeah. So it's also my opinion that a board of 20 is unwieldy. Right? So I think you could count on on at least me in this position to try to exert some moderating influence if if they wanted to expand the board to an unwieldy number.

[Alyssa Black (Chair)]: 11 is not so easy either. Very good. Sorry.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: What are

[Brian Cina (Member)]: you trying

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: to say? Was it unwieldy?

[Alyssa Black (Chair)]: I spend a lot of time saying, we need a quorum.

[Commissioner Sampson (Department of Financial Regulation)]: You need an executive committee.

[Brian Cina (Member)]: Five. Yes.

[Commissioner Sampson (Department of Financial Regulation)]: So in terms of the compensation piece, so from a regulatory point of view, we do not run insurance companies. I talked about conflicts of interest. We cannot be involved in in that. That's a clear conflict of interest. And we have no interest in running insurance companies, but we do have an interest, in our as do all 50 state regulators, in issues of governance and issues of compensation around compensation. A lot of what insurance regulators do when we come in for an exam, which we do every three to five years, it's very governance focused, risk focused. And in terms of compensation, we're gonna look at do the goals and the compensation meet the market? Is there good study and governance around whether that compensation is grounded in market realities, particularly when you have a self perpetuating board? And then it doesn't just have to be an entity like this. Any kind of board like that can risk lacking accountability in terms of any practice, including compensation practices. So when I started in in April back at the department, I wanted to learn more about because it had been a while since I've been involved in an exam of one of these entities. And so I wanted to gain an understanding of of how compensation was set. And, you know, we we do have access to all books and records of our regulated entities, including this type of entity. What was disappointing to me was that and and as expected, typically, how you see companies like this run-in the insurance sector and and outside even in some of the nonprofits that you may be familiar of is that there's a compensation committee of which there is at at at this entity, and they seek outside consultant assistance in determining appropriate levels of executive compensation. And those outside consultants typically have access to broad market data of similar entities and what similar compensation packages look like for similar individuals. And they sensitize that by type event or they could sensitize it by type of entity, you know, assets, employees, geographic region, competitive factors, all that stuff. So I had made a request to see that study, and the study I received simply had the benchmarks and some explanation as to what type of entities were benchmarked against. But I was unable to and they were unable to provide the actual entities that they were benchmarked against. And that was not for lack of willingness to provide it. It was because, as it was explained to me, that the entity they used used another entity for certain data, and so it wasn't readily available to to kind of unpack it. So very broadly, what you see in this proposal is that I believe DFR needs the ability to essentially examine and kind of audit that information, which is who who are your peer group, you know, that you're using? Did you weight them differently? Like, I need to be able to recompute the benchmarks they came up with in order to determine, me and my staff, the department, in order to determine whether we believe it's it's reasonable. And so a lot of what you're seeing here is really aimed at compelling that type of this type of organization to that if they're gonna use benchmarks like that, they have to have access to that data as a as a company, and they have to be able to provide that access to us as a regulator. Then we take it a step further and say, if we're unsatisfied with the peer group, we we wanna be able to exercise our influence to add entities to that peer group that maybe better represent the nonprofit status, the single state status of an entity entity like this to ensure that the information that the board is working with when they look at compensation are as good as as much as possible, a true group of peers representative of not only the asset size or premium size or number of employees, but also the nonprofit quasi public nature, etcetera.

[Alyssa Black (Chair)]: Can I can I interpret loosely what you just said? Just to make sure I'm understanding. Because I'm frankly a little, I think I'm alarmed.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Okay.

[Alyssa Black (Chair)]: So you're telling me, okay, so recently Blue Cross Blue Shield has a new CEO, I believe.

[Commissioner Sampson (Department of Financial Regulation)]: Correct.

[Alyssa Black (Chair)]: Their previous one resigned. They have a new

[Brian Cina (Member)]: one. Retired. Retired.

[Alyssa Black (Chair)]: Retired.

[Jen Carvey (Office of Legislative Counsel)]: You're done.

[Alyssa Black (Chair)]: Are you telling me that the board basically goes to an entity and says, how much should we pay our new CEO? What's good? And they make some weird calculations and they look at stuff and then they don't tell what they've really looked at to get and they just spit a number out to them?

[Commissioner Sampson (Department of Financial Regulation)]: No, I don't think that's what I'm saying.

[Alyssa Black (Chair)]: But it's not really based on

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: like,

[Alyssa Black (Chair)]: you said that it wasn't based I mean, like, you didn't know what which which peers they were talking about or which entities.

[Commissioner Sampson (Department of Financial Regulation)]: I I have no reason to to to doubt that the peer so I I I what I did see, what I was able to see so there's a difference between what the compensation practices are of the board versus what I have insight to, and that's what we're trying to fix here. I I do wanna let the company itself talk about their compensation process. So I'm fairly confident that the board of directors and the compensation committee doesn't kind of farm out as you kinda characterize it to an entity. I mean, they have their own ideas. It's really I would say it's more of a a benchmarking and reasonableness check. Like, here's where we're at with our executive salaries. We wanna make sure we're we're paying enough to retain excellent talent, etcetera, all those things that, you know, we're we're familiar with. So we'll use a third party, an independent third party, as a as a gut check, essentially, and and for guidance. You know? If there's some new flashy compensation model that similar entities are losing using, and we could lose some top talent to that model and we're not aware of it, that's where a compensation consultant can can help. I think it was the level of detail because at DFR, you know, with an entity like this, I believe that purely benchmarking a company like this against similar sized insurance companies is not adequate, is not a fair representation of the nature of this type of entity in terms of its unique characteristics both in statute, it's the size of Vermont, the size of the market, and the unique challenges and opportunities we have around health care transformation. I was unable to verify my hunch as to what type of entities were in there. I need to be able to do that. Yeah.

[Alyssa Black (Chair)]: Got it. Thank you. Sorry. I didn't hear too. You were all set.

[Commissioner Sampson (Department of Financial Regulation)]: I think I think that's that's does anything come to mind that I that I missed here, Hillary? You know, essentially, again, that these members are subject to the same standards that any board member would, you know, as determined by the board and the chair, etcetera. We want them on the the questions around the compensation committee, I think Hillary kind of addressed earlier that whether it be the board or the compensation committee, sometimes statute lays out the minimum size, but that really becomes the, discretion of the board as expressed in their bylaws.

[Alyssa Black (Chair)]: Any questions on this piece? All right.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Thank you.

[Alyssa Black (Chair)]: Thank you. Thank you, Hillary, for joining us. Oh,

[Leslie Goldman (Member)]: she's gone already. Thank

[Alyssa Black (Chair)]: you. Thank you. Let's move on to Courtney. You want come on up? Yeah, thanks. Running ahead of schedule, which

[Brian Cina (Member)]: is a first on this bill. No promises. All

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: right, thanks. Sorry. First, for the record, Courtney Harness, Blue Cross and Blue Shield of Vermont. Sorry I missed Wednesday. The weather threw a little wrinkle in it. And happy that we got the opportunity to come in today after last week. So appreciate it. Sorry we jumped you last week. I'm glad that we have the time. Thank you. So I want to start by saying, and Commissioner Sampson referenced this Blue Cross and Blue Shield of Vermont is a nonprofit organization. We have a mission. It just so happens that that mission is pretty similarly aligned with our regulatory conditions in that our mission is to make health care work better for Vermonters. Simple mission. And we really take that seriously. I was not planning on mentioning this, but we did have our annual employee recognition ceremony this morning at our offices. And as someone relatively new to the organization, I don't think I can appropriately put into words how impactful that was for me to understand how my 400 plus colleagues go about their work on a day to day basis and the importance of which they take their work. And more importantly, whether it's our mission or in statute, how seriously they take their dedication to Vermonters. And so I want to say that first and foremost. Secondly, we are wildly enthusiastic, and I don't think that's overstating, the opportunity that this bill presents in the form of site neutral billing. Vaz laid out some of the financial impact for Vermonters very clearly in that last week. I think that their slide represented a $200,000,000 impact to Vermonters immediately in cost. That's what they pay for services. From our perspective, that's the most important piece of this entire bill. Unfortunately, not going to have a lot of time to talk about it today because I need to talk to you about sections one and two of the bill.

[Alyssa Black (Chair)]: You have loads of time, just to let you know.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Appreciate that.

[Alyssa Black (Chair)]: And with that, before you move on, I

[Jen Carvey (Office of Legislative Counsel)]: actually have a question

[Brian Cina (Member)]: about that. Sure.

[Alyssa Black (Chair)]: There is this piece around site neutral. Yeah. And that it I think we received testimony, it would be like a $200,000,000 impact. First of all, I'm not sure how we can measure that because we haven't set what the neutral is. So are you excited because in your mind you would be paying at the exact same amount that you currently pay, say, in non hospital based service using, say for instance, your community fee schedule? Because I don't get the bill says that.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Yeah, we're excited at the opportunity that the language of the bill presents. And whether that's a handful of provider codes or services phased in over time, or whether that's to the presentation that Bob laid out, 200. I think we've seen estimates as high as 300,000,000. Let's just be clear, if we do that this session, we'd probably lose all of our hospitals. So that's not something that we're excited about. Let's just be clear. If we lose all of our hospitals, we also lose us. So we've done some preliminary analysis of site neutral billing, and I think we have some more extensive modeling to do. And we do feel like the language in the bill, particularly on-site neutral billing, gives us a path forward to work with hospitals, our regulator, this committee on how we do that responsibly. I would akin it probably to Act 55. I think that that Can you I'm sorry. Just from the dollar savings perspective.

[Alyssa Black (Chair)]: Act 55, can you The prescription drug. Okay.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: There's layers to how we can do this. And Commissioner Sampson referenced the health care transformation work. It's part of it, frankly, lowering costs. And for us, that means the opportunity that cost reduction brings to frankly reduce premiums.

[Alyssa Black (Chair)]: Do you not see what we did in, and please don't ask me the ACT number, but whatever S-one 126 became?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Reference based pricing.

[Alyssa Black (Chair)]: Do you not That is basically almost the same thing?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Two different things. And I think I did send a sheet to the committee to help us understand the difference. I watched back some testimony and there seemed to be some questions on what the difference is. I think there's an opportunity to do both in concert responsibly and sensitive of to use Commissioner Sampson's word, the marketplace and the ecosystem. Both things, in fact, are not duplicative, are not overlapping, and serve different purposes. I wouldn't go as far as to say that they both need to be rolled out to their full extent immediately. But we have, like I said, we have some modeling on ways in which that we would be excited to do it that could work and be sustainable for the system.

[Alyssa Black (Chair)]: Are you going to share the modeling? Not today necessarily, but will you be sharing that modeling with us? Oh, we could. And my last question in that regard, because I don't want to move away from site neutral killing. We have a couple bills on our wall. I almost feel like a new one came in, think it's around facility fees.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Yeah, I saw that. So,

[Alyssa Black (Chair)]: I mean, we haven't delved into facility fees in this committee, but is that something that possibly as we're doing a phased in approach of reference based pricing, also setting floors for non hospital affiliated services, could we utilize removal of some facility fees to also get us there in a more measured approach?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Yeah, I think that's absolutely an opportunity. We did see Rep. Berbeco's bill on facility fees.

[Brian Cina (Member)]: I

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: think we started having internal discussion about it yesterday. And frankly, some of the modeling on-site neutral billing includes modeling related to facility feeds. And so I think that work probably goes hand in hand. I'll share with the committee that we have an internal meeting tomorrow to discuss some of the early opportunities that we see. And obviously, we'd love to be welcomed back to share some of that information if the committee would like that. Great. If you're going

[Alyssa Black (Chair)]: to share modeling with us, I wanted to put out the invitation to include possibly any analysis you've done around

[Brian Cina (Member)]: the physical space. Sure, I think

[Alyssa Black (Chair)]: really we're really welcome. In that. That's fantastic. Any other questions on this particular section before Courtney moves on to?

[Allen "Penny" Demar (Member)]: It's not a personal recommendation. I think while this conversation is going on, maybe that conversation should take place between EPR and Blue Cross.

[Alyssa Black (Chair)]: EPR? EFaD. Okay. From a public video with this. Yeah, it should happen.

[Jen Carvey (Office of Legislative Counsel)]: It's not a conflict.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: It's a great recommendation. I would go as far as to share without details that, in fact, the testimony from VOS last week compelled us to meet with them recently and discuss some of our thoughts and ideas relative to all of these issues. And it was actually a really good, productive conversation, given the sensitive nature of all of it and how it affects all of us. And so that conversation in and of itself, I think, is representative of the work that we can do together to move some of these efforts forward, especially when there's so much work being done here

[Commissioner Sampson (Department of Financial Regulation)]: in the Senate on those cost containment efforts.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Yeah, we'd love to come back at a point in which we're invited for modeling on signature billing and facility fees. Michael? Yeah, I'll keep going because there's a lot. I think we know this. There's a lot in this one. So I want to talk about and so I'll go back to mentioning our mission and the understanding that in the statute and you heard from the commissioner, the regulatory conditions that are placed on us are probably the most strict of any industry in the state, certainly up there. Good conversation related to our board and how people come onto the board and who would want to come onto the board to work in that space at the particular point in time. But I want to go back in particular, and some testimony last week struck me. And so first, I want to say, and I don't think that we've shied away from this, we acknowledge and hold ourselves accountable as much as anyone else to the financial pressures that we felt over the last several years. There is no blame placing. There is no shoulda, coulda, woulda. There is this happened, we need to figure out how to move forward from it. And we did testify in this committee on January 9 to the positive effects financially of some of those efforts, including a corrective action plan with our regulator. But I just wanted to go through some of the things from the claim surge that happened from 2021 through 2025. I want to start with some of the things that we didn't do. And for me, that's representative of our mission and our commitment to Vermonters. We didn't lay off a single employee. 400 Vermonters. 400 plan members, 400 people that we are statutorily obligated to maintain their best interests. We stuck with them because their work to Vermonters is important. We didn't automatically deny any claims. And just so everyone knows, sometimes in other places that are not here, when things like what we saw with costing claims happens in a series of years, some insurers just begin to automatically deny claims at a clip of upwards of 30%. We did not do that. We didn't even come close to that. And we are statutorily obligated to not do that, even if it wasn't our mission and our primary focus. And we didn't reduce any benefits to anyone on any of our plans. We did not go to DFR and say, in an effort to reduce premiums and soften these financial challenges, we would like to lessen what Vermonters have access to in terms of the quality of their care. So those three things are very important to us. And while we talk about our accountability, we're really proud that we did those things. And those are hard decisions that we have to make while we are going through unprecedented financial stress. And that commitment to Vermonters, I don't think we can understate overstate, excuse me. And some other things that happened during that time, I was a little caught off guard from some testimony last week that may have suggested that we sat idly by waiting to be saved. For folks around this table, I want you to know that our affiliation with Michigan did not start in 2023. That conversation started with our board in 2020. 2020. With our board. That's a long process. That's a conversation around sustainability of our organization so that 200,000 Vermonters don't lose access to care due to our financial condition. Our board started that conversation.

[Brian Cina (Member)]: So

[Leslie Goldman (Member)]: what triggered that conversation in 2020 that, obviously, somebody was worried

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: about? Yeah, and actually, that's a great question. And Nolan and his issue brief did a really great job of laying out some of the RBC numbers over time. If you go back a little further, I'll share a little bit about that later on. But the RBC number may have been under what we would have liked it to have been for a few years prior. So 2021 was the RFP that our board put out to decide whether or not we would seek affiliation. 2021. That's an important year because it's not 2024. And I need to stress in this particular conversation that that directly comes from our board understanding their responsibility to Vermonters and their fiduciary oversight. And as you know, once that affiliation became concrete, we borrowed money from Michigan to help our reserves. It's not an easy thing to do when you're operating an organization for your neighbors and for your fellow Vermonters. It's not an easy thing to do to ask for that much help. And I think we reported to the board on January 9 that that entire loan has been repaid in one year. I do want to mention some of the filings. Going back a few years, when we submit rate filings and these are all public record to simplify it as best I can for me, we have a team of experts. And they use a combination of cost, claims, and risk to determine what we need rates to be able to cover all of those claims. And then appropriately add to our reserves, Because we are a nonprofit, there is no profit. Any profit goes to the reserves. And if we get close to receiving those rates, things look better. If we don't, they become much more challenging. All of our rate filings, going back for a number of years, are publicly available. And along with all of those rate filings is a solvency opinion from our regulator that very clearly lays out the potential consequences of us. I will say Commissioner Sampson has said this in testimony many times, and we cannot agree more. If we do not receive adequate rates, Here is what might happen. So I need to make sure that we all know when we are leaned on as experts, we can't just be experts when it's convenient. We've got hundreds of years of experience doing this work, and we do it with our mission first. I'll point to if

[Allen "Penny" Demar (Member)]: this is gonna take too long, don't do it now, we'll talk What do you gain from affiliating with Michigan?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Primarily for us, other than partner with what we believe to be one of the more forward thinking Blues plans in the country. So they have a reputation for being innovative, for being forward thinking when it comes to how they roll out particular pieces of technology. And there are some cost saving structures for us in that. As you might imagine, given the time that we were in when we made that agreement, that's of interest. It's a good question.

[Alyssa Black (Chair)]: You're talking about all the things that Blue Cross did. You entered into an agreement with Blue Cross Blue Shield affiliate, Blue Cross Blue Shield of Michigan, for efficiencies that you just called them innovative. And yet you just told us that you're really proud that you kept all 400 of your employees. How is that?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Oh, how do we need to keep them up?

[Alyssa Black (Chair)]: No. How is that inefficiency? If you're now affiliated with Blue Cross Blue Shield of Michigan and they're bringing in all this, why do you still have 400 employees? Shouldn't you have eliminated positions if you were more efficient now and utilizing innovative technology?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: That's a great question. I would say right now, no. Right now, those people are necessary to carry out what we believe to be high quality service to our members. That's reflected in almost every single year, 95% plus customer service satisfaction rating. And I would also say that those efficiencies, I believe we mentioned in testimony on January 9, came out to $7,000,000 in 2025. The efficiencies are in operations, less in the people that we need to be able to serve almost a third of Vermont. Okay. I won't I won't be able

[Leslie Goldman (Member)]: see the other things.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: And we talked about reference based pricing. That's on my list. Right? The support of reference based pricing and and what we think that can do for cost. We talked about Act 55 and the 4% premium reduction that we realize from that. We've talked to this committee this session about our corrective action plan with DFR, and we've talked specifically about and what's really important to us moving through financial challenges. And I think we've said this in this committee. We're far from the end of the corrective action plan. But our progress would lead us towards the end result that Vermont needs us to be in, frankly. And that's a good solid state financially. We talked about the reduction in operating costs. I think Doctor. Loeffler was in last week and talked about positive negotiations with Blue Cross and Blue Shield. I'm not sure that that's a conversation that folks are used to hearing. But we're really happy with that, and really, really glad with where that relationship is at currently. So I say all that to say we've had some struggles. They're well documented. They're all public record. They've been talked about in this committee at length. We've done some good work and maintained our commitment to Vermonters. And so I want to talk a little bit about sections one and two. And I want to talk primarily want to talk about some of the comments from testimony last week. Commissioner Sampson, the chief health care advocate, Chair Black, I think all of you mentioned last week at some point in testimony, the main driver of high premiums is the cost of care. And we see solutions like Act 55 and reference based pricing and site neutral billing and facility fees and, frankly, hospital negotiations as really positive pathways to moving the needle on those things. And I loved and appreciated the Vaas testimony, like I said, about the opportunity in site neutral billing. I think it's really important to not lose sight of. And while I say that, I find myself sitting here as we talk about board governance and I think we just heard that our regulator does have the ability to influence the bylaws of our board already What does Section one and two do to improve affordability or accessibility? Or what do they do to fix pricing or efficiency? I understand that theoretically, these sections would increase accountability and hopefully prevent a repeat of what we saw during, I would say, 2021 to 2024. But I think there's a wider range of years probably included in that. And I would say it's been mentioned in this committee several times that we own and hold ourselves accountable to some of the things that we could have done different. And when we look at an unprecedented and that's not our word, that's something that we saw nationally claim surge. It's hard for us to do some of the things that we did and hear not from our regulator, but from other folks in testimony that we somehow just waited for someone to come in and save us.

[Alyssa Black (Chair)]: You've said that twice now, and I'd like to push back on that a little bit. I do not believe that is what we said. No one on the committee said You just sat back.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: I don't think anyone on the committee

[Alyssa Black (Chair)]: said that. I think some of the frustration is I mean, you said, and we all said that we are in the situation

[Brian Cina (Member)]: of the environment

[Alyssa Black (Chair)]: because prices are high. But Blue Cross Blue Shield Vermont is culpable in a way for those prices being high.

[Susan Ridzon (Health First)]: I mean,

[Alyssa Black (Chair)]: if we want to talk about what was not being done, do you feel as though you had a great year this year? Do you feel in the past you have negotiated contracts with hospitals to the best of your ability and to the advantage of I mean, I think about the 340B bill, the pricing cap. For years, Blue Cross Blue Shield has known that they were paying wildly high prices on certain drugs. And yet every year the contract negotiations were just like, yeah, we're just going to pay you 90% of Chargemaster. No questioning of, wait a minute, why are we paying this?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Think that's

[Allen "Penny" Demar (Member)]: a Push great back.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Yes, please.

[Alyssa Black (Chair)]: And prices are high because hospitals have been working in their silo because their boards have a mission for that hospital. Blue Cross Blue Shield has been working in their silo because the board of Blue Cross Blue Shield has had the solvency and the mission of Blue Cross Blue Shield Vermont that they've been driving. Let's not pretend that everybody's been working together to save the system of health care in Vermont.

[Brian Cina (Member)]: I'm

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: sorry. I don't think you're wrong. Here's what I'll say. I've worked for Blue Cross and Blue Shield since November. So I wouldn't be able to speak responsibly as to negotiations prior to this year. That said, I don't think that there's a lot of folks that would argue with your assessment of some past negotiations, or at least argue it well. I think that's when I talk about accountability. I think there's some stuff that we're aware of. And I think, frankly, we maybe haven't argued that either. And so I think that's a great point. And I think it's partially why I bring up positive negotiations and negotiations that are beyond in a good way for Vermonters what's been ordered. And I appreciate that focus. I

[Alyssa Black (Chair)]: just want to amplify what Commissioner Sampson said. It's something that I believe fervently. The mission, the direction of any organization starts

[Jen Carvey (Office of Legislative Counsel)]: at the poor level. And

[Alyssa Black (Chair)]: when they are not rowing in the direction where we want to go in Vermont, perhaps it's time to shake it up a little bit. So let's keep going on section So one and

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: I think that's a really interesting point. And I think that we've heard that, and we heard last week, and certainly this week, that the purpose of these two sections of the bill would be, in fact, to increase accountability. And I think if we go to subsection G, and I don't have it in front of me, but I think we're at page six, line 16 on the limited liability, I'm not sure that that particular section would say that the people appointed to our board have that level of accountability. So I believe, and again, it's not in front of me, so if I misquote it, I hope that someone does correct me. But I think that that section expressly states that in the event of adverse action within the organization, those people are essentially held harmless. That doesn't scream accountability to me. But we did want to make sure that we pointed out that language. So if the committee were interested in changing that language, it's our responsibility to point out that language relative to accountability to our actual results.

[Alyssa Black (Chair)]: So, are you suggesting that we remove protections for the two members who are representing the public if the board, which they would only be one third of, basically says, we'll take that under advisement?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: I am not recommending that. What I'm recommending is that what I think would hopefully do what these sections are set out to do, if the folks appointed to the board are held to the same level of accountability as the rest of the board, we may move further down the pathway of achieving the goals of the sections of the bill.

[Leslie Goldman (Member)]: So that would not be the case? Are you saying that your board members currently don't have this provision?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Oh, our board members currently are accountable to any adverse actions and all issues related to performance, yes.

[Leslie Goldman (Member)]: Would make sense that everyone would have

[Alyssa Black (Chair)]: to dive into it a little bit.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: And you hear me reference last week's testimony. There was, and certainly not today, and I would just mention there was testimony last week that we invite our friends onto the board. So for those of you that work on boards, I'm not making light of it. I'm just giving my experience from working with and on several boards. I would not invite my friends to join a board to spend tens of hours a month in one of the most highly regulated industries in the state at this particular time when we're under more scrutiny than ever. And also, would say that I would probably not go as far as to invite one of my friends to be my boss, because if any of you have ever done that, it usually doesn't work out very well.

[Alyssa Black (Chair)]: Is the current reimbursement for surveying them?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: That's a really good question. So that is public record to the commissioner's remarks. That's part of our Act 152 filing. It's on our website, and I can give you the range because there's a wide range. The lowest is about $3,000 and the highest is about $40,000 For a year? That's in the most recent filing, so that would be for 2024.

[Alyssa Black (Chair)]: What is the time commitment?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Oh, think it depends on, frankly, a number of factors, what committee you sit on, what your place on the board is. So the board chair has a much more significant time commitment than someone that's not an officer of the board. I would say it's not uncommon for board chairs and executives to communicate at least weekly and frequently much more often than that. And then that's just day to day communication. That does not include board meetings, committee meetings, agenda setting, and other

[Alyssa Black (Chair)]: If we do. Which I

[Allen "Penny" Demar (Member)]: don't get

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: paid. Yeah, right. And so, that's all I have to say on the board piece of it. And so I just wanted to have the committee hear me say there are still a lot of questions around that section from our perspective, particularly around what it does for affordability and accessibility. And I want to make sure that I talk to executive compensation as well and that piece of this bill. And I'll say, listen, we understand the concerns. I need to just make sure that I say that out loud. We understand the concerns, and particularly when we look at executive compensation and the totality of the health care system, we understand. Again, these are public record. So the salaries of our executive team are all available publicly. We know they're viewed as large. And our goal and in fact, we are statutorily obligated to make sure that we're as open and transparent as possible when it comes to them. Like I said, those salaries can be found on our website. And there was an important piece, again, from last week that I just want to make sure that I flagged for the committee. It was remarked in testimony that executives received their 40% salary increase last year. That is not true. Not at all accurate, not fact, not

[Commissioner Sampson (Department of Financial Regulation)]: true.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: I need to make sure that I say that to this committee. There is not an executive at Blue Cross and Blue Shield of Vermont that received a 40% raise last year.

[Alyssa Black (Chair)]: I'm sorry. And what testimony was that?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: That was in the Green Mountain Care Board's testimony.

[Leslie Goldman (Member)]: I see your executive compensation compared to other Chittenden Shield entities statewide or nationally?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: That's a good question. And that's the next piece of the I want to make sure that I speak to the commissioner did a good job of referencing how we go about our current process. And so we use an independent consultant, Sullivan Cotter. They're nationally recognized for their work. Frankly, this is all that they do for insurers and health systems nationwide. And so we go through a whole benchmarking process with them, where they actually have work that they do, and then they take work that other similar consultants do and bring in not just Blue's plans, but also other health insurers, other health system executives of similar size, similar scope. So by scope, mean number of members served. And all of the folks that meet those factors get all piled in. It's a lot. It's not five, and we certainly don't cherry pick them. The reason why you have an independent consultant to do that work, and to share Black's point, we have our own in house people that do that for our employees. They use job pointing and all of this independent work to set salaries for all of our employees. But it's not best practice to have your own employees do that for your executives. So you hire an independent firm to do that work for you. And that work informs the decision making of the compensation committee through a number of different conversations. And I would say that is not my job. But if the committee would like more information on how that process comes to life, we would certainly be willing to have some of our team come in and speak to that process. To answer the question directly, it's a pretty wide variation. We could look at other New England states, Southern New England with similar budget size and similar scope in terms of membership. CEO makes close to four times what ours makes. So that would be one that I would imagine would be in the benchmark as it relates to geography and scope of a budget and scope of membership. There are some that make less, I would say. And again, for the nonprofit Blues plans, this is public record. So you can look at Idaho or Wyoming and certainly see that.

[Leslie Goldman (Member)]: Well, one one thing we learned last year

[Jen Carvey (Office of Legislative Counsel)]: Mhmm.

[Leslie Goldman (Member)]: Was the sort of to watch our venture bloated administration of the academic. And you did mention that you didn't cut any employees. I'm not saying you should have. I I It's not my arena. But I'm just looking at, you know, you said 200,000 Blue Cross members with 400 employees. So that's like one employee for every 500. How how does how do you how do we assess the appropriateness of the staff that you have?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: I'm so happy you asked that. That was the next part of what I wanted to share with the committee. Committee may or may not know this, but the Green Mountain Care Board actually, last year, in our rate filing hearing, hired their own independent consultant to specifically look at our administrative costs. I'm going to read from my notes here, because I want to make sure that I don't misquote it. That independent consultant determined that among individual and small group carriers nationwide, our administrative costs rank in the first percent nationally, Meaning, out of 100 carriers nationwide, our administrative costs are lower than 99 of them. I wanna make sure that I stress that for the committee. Additionally Wait.

[Alyssa Black (Chair)]: Hold on one second. Say that again.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: We're in the first percentile, meaning that

[Alyssa Black (Chair)]: First percentile. Is that for your total costs, or is that for the percentage of

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Different factors. One is per member per month, one is as percentage of premiums. Okay, so

[Alyssa Black (Chair)]: if Vermont has the special designation of having the highest premium in the entire country, the percentage of premium, frankly, should be pretty low, wouldn't it?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Yeah, I think that's an interesting question for the auditor. I would also say, as a reflection of per member per month, which is the spend on our members, I think we're I want to say and I could get this wrong. So I want to say we're in the twentieth percentile, which I think we're still pretty proud of. I would just go on to say, and this is a direct quote from the auditor, It appears that Blue Cross and Blue Shield of Vermont manages and limits administrative costs better than the typical health plan nationally. So I want to say that we did not hire this consultant. They're not contracted by us. That was, frankly, actuarial work done as part of

[Commissioner Sampson (Department of Financial Regulation)]: our rate

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: filing, and we're pleased by it.

[Alyssa Black (Chair)]: Let's wrap the topic up. Why do you think you're so efficient? I guess my question is, what aren't you doing that other plans are doing in administration? What do you Maybe I'm looking at it more right, rather than

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: positive. I get it. Yeah.

[Alyssa Black (Chair)]: So what isn't happening?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: What isn't happening? Are you saying like, hey, we have this financial situation, what's not happening? What

[Alyssa Black (Chair)]: things are you not doing? Are you not looking at? Are you not auditing? What explains this data? What explains your low administrative costs?

[Allen "Penny" Demar (Member)]: So

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: you're saying, if I'm looking at financial challenges, how does a low administrative cost play into that?

[Alyssa Black (Chair)]: Yes. And maybe we should have invested in some administration so that things were not getting a little out of control, possibly.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: That's more investment in our staff. I think we would welcome that. Absolutely. Get it. I hear you. Yeah.

[Alyssa Black (Chair)]: Surface, when you say, look how low our administration is, like, Okay, if you've got anything, it could be low administration. Is that really the best for the system?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: I'm sorry, keep going. Those are great questions. I think those are all really important questions. And again, I might not have a great answer for you today, but I can certainly find out. I would say too, and Chair Black, you talked about Act 55 and prescription drugs and the impact that the legislature has had on cost and prices. I think we testified to 4% of premiums. I want to put our executive compensation in the frame of premiums and how much that would move the needle. And we'll just take a blunt object to it. So if we were to eliminate our entire executive team, all of their salaries and benefits and their hundreds of years of experience, We had moved the needle on premiums by one quarter of 1%. Act 55 had an impact 16 times that. 16 times. I just want to say Chair Black raised the point, so I'll bring it up before she does with me again. I think there's questions around the premium prices in that data. But what I've heard from committee on testimony on this bill is some requests for data and evidence. So I tried to bring some of that for you today as it relates to our board governance and our executive compensation. Of the questions, I think, warrant some deeper dives on our behalf. And so I appreciate them.

[Alyssa Black (Chair)]: Lori, I

[Lori Houghton (Member)]: appreciate everything that you've been saying. But I'm also really curious, and maybe it's not for today, but what Blue Cross Blue Shield is bringing to the table to help Vermonters be able to access and afford health care?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Need to be more specific. Like in plan design or

[Lori Houghton (Member)]: In any way that you think it's appropriate that you can get to those goals that we are trying to do as a state. And again, big question, so you

[Leslie Goldman (Member)]: don't need

[Lori Houghton (Member)]: to answer it But I feel like what this committee is trying to do is help Vermonters. You're a big part of that. And we need to understand.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: I think it's a good question. And here's what I would say based on some stuff that I've already said. If I didn't sit here or if Doctor. Leffler had sat here last week and say the negotiations are terrible and we're way off, that would not be serving our mission. And Chair Black raised that point about negotiations. I think that that relationship and the relationship, frankly, that we have with all hospitals is important and sensitive. Monitors depend on it. And I think we're working really hard on that. And not just us. I think hospitals are working really hard on it, too. And I feel good sitting here saying that because it is more important now than it has ever been. And if I wasn't saying that, I would be really scared. So that's one. I think the relationship, frankly, healing that's happening with Vermonters front and center has been really positive. I think that the implementation of legislation on both sides again, I'll say this for both sides hospitals and us and other insurers has been really positive and, frankly, has moved the needle. I can tell you and again, there's a process that this goes through, so I can't share a whole lot. But we're actively looking at benefit design. And there are very few levers that we can pull on benefit design. And I'm sure you know this. But those levers don't typically they might result in lower premiums, but they don't necessarily result in better coverage. And some of this stuff and the bill speaks to that. And in about a month, we'll have to submit those to our regulator for approval before we can release them to the public. But that's work that we're doing now. I think beyond negotiations or beyond legislation or implementing I wasn't suggesting, by the way, that we should cut our entire executive team, just merely providing a data point. I think that particularly with new leadership, we're looking at some options that maybe are new and frankly can be a really good part of the transformation process. So that's those two sections. I've got about eight minutes left that I'm scheduled for. So sorry, what's that?

[Lori Houghton (Member)]: I just look forward to hearing more of the positive and not the difference.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Yeah, sure. I appreciate that. So a couple of things in the bill that we want to say just flat out. It doesn't make a whole lot of sense for us to say much more other than we support it. On high dollar claims and claim editing, currently in statute, there is no floor. So there is no minimum number. The number that we use is $100,000 So, if that were put in statute at '25, I think that we would be compelled and Chair Black, to your point, that may produce some positive impact for us financially. And I will also be mindful of the fact that it may not be really positive for Vermonters. So we will say, of course, we're supportive of that. It's our job to do that, and we do a good job of it. And once there are expectations set forth with a number, we would more than likely work to that number.

[Alyssa Black (Chair)]: Yeah. This is for prepayment review to '25, which I just want to go on record, is two years ago, I asked Blue Cross, would you like me to put a number there? And he said, Oh, no, no, no, no, we don't need a number. We know what a high quality claim is. Okay, sure. What does your post audit look like? Because that was actually something that came up in Act 111, was the

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: How many errors we find?

[Alyssa Black (Chair)]: No, that you kind of had stopped doing post payment edits. And are you putting resources towards actually doing that now that it has been identified that you're probably not doing that?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: It's a really great question. In fact, one of our employees won an award this morning at our recognition ceremony for doing that work and exceeding the goal in which he had or his team had for that work. It's hard to talk about our mission and our commitment to Vermonters. It's hard work, but we have to do that for our business and for our financial status. So I'm really happy to say that we're doing that.

[Alyssa Black (Chair)]: How how many people do you have working in audit right now?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: I wouldn't be able to give you that exact number off the top. I can find it for you and get it for you.

[Alyssa Black (Chair)]: That would be helpful.

[Commissioner Sampson (Department of Financial Regulation)]: Yeah. I could do that.

[Alyssa Black (Chair)]: Assuming if we put $25,000 on this, you're gonna need more auditors. Yep.

[Commissioner Sampson (Department of Financial Regulation)]: That's true. Prior

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: auth refinements, again, I think we're we're kind of aligned with what we heard from the committee and testimony on this. It's really new. We're not sure that there's causation. There might be some correlation. And we appreciate the testimony that we heard on probably needing to understand that a little bit more before we make any moves. I'm going to say all that to say, from our position and what we do, we would be supportive of prior authorizations. I'm not going to say I'm wildly enthusiastic about it like I did with site neutral billing. I'm going say it's our obligation to be supportive of that if that piece of the bill is passed.

[Alyssa Black (Chair)]: Would you be upset if that was removed and we gave you the year for a report back from you, which is due next year, and waited until that time to look at it.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: If the committee would like a report on the effect of Act 111, we'd be happy to do that.

[Alyssa Black (Chair)]: Well, one is due next year. Yeah. Okay.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Reinsurance, I think same. I can just say quickly like others did. Yes, we're supportive of the state applying for a reinsurance waiver. Association health plans, I want to say one thing on these. I think face value and I'll say this about short term limited duration plans as well. From a technical perspective, yes, there's an opportunity for people buying a new association health plan or an expanded short term limited duration plan with lesser coverage for that to be cheaper. And also, what we have seen and saw in the past is that sometimes, not all the time, that ends up in what we would call a degradation of the small group risk pool, wherein this group that moves out of that gets a lower rate, and the group that's left behind gets a higher rate. It doesn't mean that that's guaranteed to happen. We've seen it happen before. Not a guarantee that it would happen. I think that the language of the bill has some opportunity to put some different parameters on that. And I think, in fact, we've heard the commissioner say that the benefits would need to be adequate on any moves that get made. And it might have been married, not Commissioner Sampson. But we've got an open mind. Will say there are some risks associated with it. And those risks may potentially outweigh the benefits. And one thing, if you ever changed insurance, it's not fun. And if you've ever changed insurance plans, also not fun. End result, potentially, not saying certain. And I do not have data on this, but we have seen it before. There could present an opportunity where Vermonters just end up jumping from plan to plan, year to year. And if it works for them, maybe it's their prerogative. And also, it's pretty hard to stabilize a risk pool when that's happening and give any type of doesn't help our actuarial analysis, let's say that. Limited age rating, think, is really interesting. And we think it's interesting. I don't know that our initial assessment of it is that it's going to be the thing that changes the game, but I think, fundamentally, we need to know a little more about it. We need to know a little bit more about the ages and where they fall. And I think we would be looking more at a curve maybe rather than a cliff. And what those percentages need to be to really be impactful for Vermonters. And maybe that is 5%. You've heard me say we're doing some modeling on some things, and we're doing some benefit design and working on some new products that are hopefully add a layer for our member. We'd like to look at this more. And I think recently, we've said, as it relates to this in particular, we're one group. There's a pretty big we serve a third of Vermonters. That's a lot, but it's not all Vermonters. And I think there would be some benefit to some deeper dives with maybe a broader group of really understanding the totality of the system as it relates to age rating. But there are a number of states that do it, and there is certainly some opportunity for age rating to be a positive thing.

[Alyssa Black (Chair)]: Regarding age rating, I realize you don't have numbers now. I just want to make sure if you're running some modeling that we make distinction between the small group market and the individual. And if we can run the model on the individual and how that's affected by the tax credits for certain levels, and also as we're looking at metal levels and what it would do. So, if you could separate the markets out. Sure. And you mentioned you're looking at some plan designs. My takeaway question, which I know that you can't answer now, but this is something, does Blue Cross Blue Shield have any recommendations whatsoever for the legislature in plan design right now that possibly would be helpful for certain benefits that are available?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Actually, yeah, think we'd love to come in and talk about that.

[Jen Carvey (Office of Legislative Counsel)]: I'd love to hear. Sure.

[Alyssa Black (Chair)]: I'm doing anything.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Well, and

[Alyssa Black (Chair)]: can stay on it.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Yeah, Repoten's question was really good on that, and similar to yours. Like, Okay, here is and also, by the way, I hope that you see some more positive energy in the other sections of the bill that we get to talk about. That's by design. And really think, and I think our team feels that, yeah, we're in a tough spot. And there are some good pathways out of it. And frankly, the pathways out of it are focusing on long term affordability, sustainability, accessibility. And the pathway out of it is, frankly, doing it together. And there's some stuff in here that we think have the opportunity to be really positive.

[Alyssa Black (Chair)]: Leslie, did you need to?

[Leslie Goldman (Member)]: I'm just curious. You mentioned needing study and actuarially analysis. The EFR has also said the same thing. So how do you see working together as a more larger seeing all of Vermont and how we can do this more effectively, efficiently, and reasonably.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Well, I think and everyone's talking about it a lot. And so I'd be remiss to not say the Rural Health Transformation proposal has a lot of different buckets in it and probably has some opportunity for people to come together more frequently around some immediate I say immediate as five years plans on that that end up being long term. And we see ourselves as a big part of that. And I think we've had some of those conversations with folks already around how we support that work in the way that we can, in the way that we feel that it helps best. And to Chair Black's point, whether that's analysis on product design or whether that's I know that there's a bill on primary care reform in the Senate. There's a number of different things moving around where we see the benefit. And part of the benefit of the Rural Health Transformation proposal is bringing different people together to work on various aspects of it. And so I'll say almost always, unless we're in a time crunch on something else, when folks reach out for analysis or modeling, we do it. And we do it to the best of our ability to inform any decisions that might be being made off of it. That's whether it's our regulator or the care board or the House or the Senate, we're happy to do that work.

[Leslie Goldman (Member)]: I just worry about a lot of silos. You're doing one.

[Jen Carvey (Office of Legislative Counsel)]: You're doing one.

[Leslie Goldman (Member)]: So how do we get a overarching analysis?

[Jen Carvey (Office of Legislative Counsel)]: I think

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: that folks would be surprised at how frequently we talk to either our regulator or the care board in a good way, not in a bad way. In a, hey, we need to make some progress on this and how are we going to do it kind of way. I've been very pleasantly surprised by that. Great. Thank you. Yeah. Great.

[Alyssa Black (Chair)]: Thank you. Thanks

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: very much. If it's okay, I think I got asked to get some more answers and do some more.

[Jen Carvey (Office of Legislative Counsel)]: A lot questions.

[Alyssa Black (Chair)]: You take your time.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Got it.

[Alyssa Black (Chair)]: Okay?

[Brian Cina (Member)]: I have a question for Courtney if I can ask it quick. You don't have to answer it today, though.

[Alyssa Black (Chair)]: Okay. Yeah. Go ahead, Brian. Sorry.

[Brian Cina (Member)]: Yeah. And and and please, if it's complicated, tell us later. But I I can't help but ask if if Blue Cross Blue Shield has any position on the idea of chipping in towards some kind of supportive primary care that provides universal access, similar to H433?

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: That's a good question. I'd have to do a deeper dive on that, Bill, and get a more informed answer to you.

[Brian Cina (Member)]: Well, maybe when we talk about primary care, we can discuss that further. You just mentioned the other primary care bill, brought it to mind. So anyway, thank you.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Absolutely. Thanks. Thank you very much. Thank you, Courtney.

[Alyssa Black (Chair)]: Great. Susan?

[Susan Ridzon (Health First)]: Our President Houghton asked the question what Blue Cross is doing for affordability and access, and I will say they have been promoting lower cost options for care. Hello everybody. For the record, I'm Susan Ritson with Health First. Let me just share my screen. So thanks for the opportunity to provide testimony on H585. I just presented this like a week ago, so I'll skip over this slide, but I left it in there just for context. I'm gonna start with the sections of the bill that we feel most strongly about and have some knowledge of some of the stuff in the bill. Don't, not in our lane, so I'll skip those. But I will say we strongly support site neutral billing. We think there's a number of benefits to this cost savings for patients and payers, which as we all know, is something Vermont desperately needs. It'll lower the patient out of pocket costs. A real example, I may have told this committee about this before, happens today. Somebody goes into the ED with chest pain, is determined they need a stent. They could pay wildly different out of pocket costs depending if it's an independent cardiologist on call that night or a hospital employed cardiologist. Same procedures, same location, everything. That really shouldn't happen in psych neutral billing, could stop some of that stuff. It'll obviously reduce price variation and insurance premiums and overall healthcare spending. And as I believe Joe mentioned in earlier testimony, site neutral billing provides the biggest dollar impact of all the different levers in this particular bill. Importantly, at least from our perspective, it helps to level the playing field right now. Just because it's a hospital site, they're often paid much, much more than an independent or community based provider for providing the same service. And that really has helped to drive consolidation and weaken the overall independent provider network, which is sad because they're really high value options that we need in this space. Also, helps reduce incentives for provider consolidation. When cost is kept equal, you're really driving to quality and efficiency, which is definitely something that we need. So, and if the committee doesn't want me to go through this, I won't. But these are actually Blue Cross slides from the legislative briefing. Back in December, I've added the red parts, but this is just basically to demonstrate the pretty wide variation in prices and the red reflects the difference from the independent facility costs. So, you know, three, six times different, and it's kind of not justifiable. If the service can be provided in a non hospital setting safely, we should be doing it in that setting because it's less expensive.

[Alyssa Black (Chair)]: I want to make the same point I made with Blue Cross. Everybody keeps talking about the savings. The savings are if everybody gets paid $17.99 Site neutral billing in here, it doesn't actually specify what anything is. If we say everybody gets $65.2 we're not saving anything.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Correct.

[Alyssa Black (Chair)]: There's this fine line between site neutral billing, what is neutral.

[Susan Ridzon (Health First)]: True. And I believe They'll take Right. Work. Work.

[Alyssa Black (Chair)]: Who decides what that is?

[Susan Ridzon (Health First)]: I agree with DFR's testimony that a blended approach is really the way to go. So, because we keep talking about moving things out of the hospital setting, but we really have sort of starved and restricted the lower cost entities. So to bring them up a little and the hospitals down so that it's a balanced approach, I think makes sense. So this is just another Blue Cross side from the legislative briefing, just to sort of demonstrate the difference. But you'll see here, this slide shows the percentage of Medicare of different Vermont hospitals, excluding critical access hospitals. So, wildly different prices for lab services. So, each of the bars represents a different hospital. So, this next slide, put in my own information here. That top bars, same lab services that were presented in the last slide. But I've put in a theoretical reference based pricing that the Green Mountain Care Board might determine for each. So, we made it up. Variation So, would still be there with reference based pricing theoretically. Whereas in the bottom slide. And again, I've made up the level I said, maybe 300% of Medicare would be the reference base. But everybody is at that same level for those services that can be provided in a non hospital and hospital setting. So, you're taking out that variation that really has an impact on the patients. There's some predictability there and you'll notice that I also put in a non hospital provider in the bottom thing just to kind of show because the reference based pricing at this point only includes the hospitals. So we're site neutral would impact

[Alyssa Black (Chair)]: both.

[Jen Carvey (Office of Legislative Counsel)]: Does that make sense? This is percent Medicare? Correct.

[Susan Ridzon (Health First)]: Okay, thank you. Is that helpful at all? Is that just like, you know this already kind of thing?

[Alyssa Black (Chair)]: Might want to put that on your slide. I'll You say to myself, this was really sad, is I can look at unlabeled Well, you said I know exactly what you're about. Keep going. Sorry. I'm just That's alright.

[Susan Ridzon (Health First)]: Okay, so moving on. So just to recap, we definitely support the site neutral. I'm happy to be a part of the conversations that happen around that. We also support expanding access to association health plans. And I realize this is a little tricky area, but what we hear loud and clear from our small businesses, these are medical practices trying to ensure themselves and their employees, that the ever increasing health insurance premiums are killing them. It's just untenable. And I actually spend a lot of my time trying to find options for our members to help this. And there's really not any good options. So this is why we support having that option. I actually think just facing the research we've done so far is that Health first, the isn't even big enough to do their own association health plan and have it be really beneficial for our members. We need a bigger pool. I'd love to see like, all the healthcare entities and being able to be considered one large group. I don't know if that's possible, but I feel like we need to help these

[Alyssa Black (Chair)]: businesses. Can you ask question about that? I understand AHVs from the perspective of your members and providing health insurance to their employees. But I'm wondering if you have pulled your members, because you talk an awful lot in this committee on administrative burden, have you pulled your members on the administration of billing associated health plans along with reimbursement rates that aren't necessarily beneficial contract debts? You looked at it from that perspective?

[Susan Ridzon (Health First)]: Not in-depth, you've got some really good points. And obviously the devil is in the details. And I know of some of our practices who have attempted to do self insured, it's a tricky situation. It's administratively burdensome. So for sure. And yeah, I mean, there's no good answers here. I just know that this is the top concern of our members, the high cost of health insurance for their businesses.

[Alyssa Black (Chair)]: I will also say that it also, the more people that go into associated health plans, the prior authorization work that you work very, very hard on for the primary care physicians, that all comes back for those members. For your providers to administer, they would have to do that. Removes Okay. I'm just

[Susan Ridzon (Health First)]: perfect solution. That's a really good point.

[Alyssa Black (Chair)]: I'm sorry. I'm saying this from the perspective of a former administrator who lived in the world under associated health plans, and they are not fun to administer. Leslie, I just want

[Jen Carvey (Office of Legislative Counsel)]: to make sure I understood something you said. I went back to

[Leslie Goldman (Member)]: your first slide, which is 66 primary care, blah, blah, all the people, and that all these people, 90,000 patients, this would not be a sufficient group to have an

[Jen Carvey (Office of Legislative Counsel)]: associated health plan. Is that what you said?

[Susan Ridzon (Health First)]: Well, those are the number of, patients that the primary care practices serve, No, that 90

[Leslie Goldman (Member)]: but you're saying 66 primary care practices, 11 counties, 108 specialists. I don't know how many primary care people are actually in that, But what I heard you say, I just want to make sure I understood, that this amount of people would not be sufficient to have a viable associated health plan.

[Susan Ridzon (Health First)]: I wouldn't say that it wouldn't be viable, but what we've learned in the past is that, A, not everyone would do it. Some of our providers are Medicare age or solo practitioners, so they wouldn't sign on. And it just seems like, for one, healthcare employees tend to be higher cost. So unless the group is really big, it didn't seem like we had the size to really get the economies of scale that we were hoping. And perhaps that'd be the case if it was an association health plan option. It just didn't seem

[Leslie Goldman (Member)]: So I guess I'm curious, and I don't know where that information is about what would it take to have a sufficient pool to make associate head plan worth doing.

[Commissioner Sampson (Department of Financial Regulation)]: Yeah,

[Susan Ridzon (Health First)]: yeah. I do understand that this is a tricky area. I mean, there's some ambiguity on the federal level, you know, Alyssa or Chair Black, you brought up some good points on the downsides and certainly pulling these folks out of the QHP is a little tricky. Although some would argue we're already heading in a bad direction with the exchange. But an alternative, we don't want to pull them out, offering some sort of subsidies or tax credits to these businesses who have been shouldering so much of this burden of these pricing would be a consideration.

[Brian Cina (Member)]: Chair, have a question about that.

[Alyssa Black (Chair)]: Oh, yes. Go ahead, Brian. I'm sorry, Brian. I can't see hands.

[Brian Cina (Member)]: Yeah. I didn't I didn't even raise it because I know you can't see it. And I was trying not to interrupt. Anyway, I did. Hopefully, I didn't interrupt anyone, and it was actually at the pause. But what you were just talking about about providing tax incentives for for businesses. I'm curious if you could say more about that. Like, could there be a way what could one path be this is straying a little bit from association health plans, but it's related to the topic of of of why this is being proposed. Could there be, like, a tax incentive, or would it help to have a tax incentive to promote big all health care, like, health care businesses participating in in the exchange? Like, what would happen if every health care organization in Vermont, including the hospital, participated in the exchange instead of, know, doing all these separate things? Could that create a large enough pool to bring the premiums down? And, like, could could the tax incentives promote that behavior? That that that's my question.

[Susan Ridzon (Health First)]: Good question. Yeah. I mean, I'm not sure I'm qualified to answer that question, but it's a compelling idea.

[Alyssa Black (Chair)]: Yeah.

[Susan Ridzon (Health First)]: Alright, moving on to prior authorizations. We do appreciate that there was mention of independence and keeping the exemption for them. We do support though retaining the exemption from Act 111 for all primary care. And I know at least Chair Black knows what it's like, but I invite any of you to come into a primary care office and see the burden that prior auth puts on not only the providers, but the patients. It's significant. And so, and we also believe, you know, we just did act 111, that's the committee worked so hard on. We recommend keeping that going, let it see what happens with it, wait for the reporting to come out before we go changing it. And that was all I have for today. Unless there

[Alyssa Black (Chair)]: are questions or answers?

[Jen Carvey (Office of Legislative Counsel)]: Thank you. Thanks for the opportunity. Hi, Michelle.

[Alyssa Black (Chair)]: Hello. It's two days in a row.

[Michelle Wade (Vermont Nurse Practitioners Association)]: I know, thanks for having me back two days in a row. I for coming appreciate it. For the record, Michelle Wade, Vermont Nurse Practitioners Association, and Susan gave me a fantastic lead in. I'm not really sure there's a whole lot more I can add, but I did submit written testimony on behalf of our primary care providers, which I'm now doing one day a week again, so I'm feeling the pain of the prior auths that I do have to We wanted to come before you guys, first of all, to thank you for all the dedicated work that you did last year on Act 111 to get us where we are. And we too want to request that that struck from this bill or at least changed so that there is no exemption for who you are or where your practice is, because the reality of it is, sorry, my notes just went to sleep. The reality of it is primary care is primary care no matter where you get it. Whether I get it at a hospital based, a clinic based, the free clinic, or if I get it at Gifford where I work, if I get it at Rutland, UVM, it's still primary care and patients need access to their care. It's unfathomable the amount of time that we as providers, that our nurses, and that our MAs and office staff spend on the phone or doing faxing paperwork back and forth trying to get things approved. I don't want to read my testimony. Y'all probably remember that's not my style from the past, But what I do want to do is share with you a story that one of my colleagues brought forth yesterday to me while we were on the hill about prior authorization, knowing that I was talking about this today. I have a colleague in primary care who assessed a patient, nurse practitioner assessed a patient in her clinic, was fairly confident this clinic patient probably had appendicitis. Luckily, was able to send this patient for a CAT scan to patient's facility of choice without having to get a prior authorization for it. Patient got the CAT scan and got immediate lab work done. Patient had active appendicitis. Patient was immediately taken from the CAT scan area directly to an Operating Room where her appendix was removed and subsequently discharged same day from the post acute care holding area. Never spent a night in the hospital, never required more than intraoperative IV antibiotics, and never required admission through the emergency department. That in itself is a huge money saver for our healthcare system. Had this provider needed to get a prior authorization for this patient, it may or may not have happened timely. That patient may have potentially burst their appendix and had peritonitis, which would have required an extensive hospital stay with IV antibiotics, would have required the OR potentially at off hours, where they would have need to call in an on call team. So there's just compounding evidence that we do the right thing and take care of our patients and ultimately can save money by keeping in place ACT 111. Wait for that report that you've asked for, and then let's re approach it. And as you may recall, PCCAG also did a lot of work on this over the years, and I sit on the PCCAG committee as well, and we've proven that over 90% of prior authorizations ultimately are authorized. So it's just wasted time. There's no cost shifting here with this. It's all about patient care. And that's really the bulk of what I wanted to share with you guys today. But because I feel a little bit comfortable in your committee, and I appreciate that I feel comfortable, I know that you guys pull up everything that I send to you. My testimony today has three logos on it. I'd like to know what logo catches your eye because we would like to update our logo.

[Alyssa Black (Chair)]: I like the tap help. I I really like that tap help.

[Jen Carvey (Office of Legislative Counsel)]: I like the middle one. Like the middle one.

[Alyssa Black (Chair)]: Maple syrup and tap. Yeah. Yeah.

[Michelle Wade (Vermont Nurse Practitioners Association)]: Wonderful. I'm surveying every committee this year, but I

[Alyssa Black (Chair)]: It's feel comfortable asking green one with the tree. I think it's more the round. I was like, that's my favorite.

[Brian Cina (Member)]: Miss my boat.

[Alyssa Black (Chair)]: Okay, anyway. Yeah. Anything else, Michelle, you wanna do since you're okay. Since you're so comfortable here. I said kind.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: Like it.

[Brian Cina (Member)]: Madam Chair.

[Alyssa Black (Chair)]: Yes. Yeah. Brian, go ahead.

[Brian Cina (Member)]: Can I please weigh in on the logo?

[Lori Houghton (Member)]: Oh, of

[Brian Cina (Member)]: I vote for one of the trees. I think I lean towards the round tree one, but I like the trees. Thank you.

[Courtney Harness (Blue Cross Blue Shield of Vermont)]: I do too.

[Alyssa Black (Chair)]: Thank you, senator. So does now.

[Michelle Wade (Vermont Nurse Practitioners Association)]: Thank you. Have a wonderful day.

[Jen Carvey (Office of Legislative Counsel)]: Thanks, Michelle.

[Alyssa Black (Chair)]: I think we are all set for the day. We have floor coming up here in fifteen minutes. So take your time getting to the

[Brian Cina (Member)]: floor

[Jen Carvey (Office of Legislative Counsel)]: and

[Commissioner Sampson (Department of Financial Regulation)]: we

[Alyssa Black (Chair)]: can