Vermont Legislature SmartTranscripts:

[Rep. Alyssa Black (Chair)]: Welcome back. We are going back after a really good committee discussion this morning on May. Department of Financial Regulation was listening in and wanted to discuss some additional information or maybe help clarify things for us.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: Yes. So thank you.

[Rep. Alyssa Black (Chair)]: Thank you for coming in on such short notice.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: Yeah. Of course. Kai Samson, commissioner of DFR. Do we have Hillary with us? Yes. So Hillary is an attorney in our department. You've met her before. I want her to, if she would, just go through any commentary from her, observation of the testimony about how a Blue Cross board member is appointed, what the powers therein. I think that helps understand why, from from our position, we need a little more Vermont flavor Vermont wide flavor. So, Hillary, can you just share briefly? We have about ten minutes total. Observations or not observations. Your analysis I think it's fine. Okay.

[Rep. Alyssa Black (Chair)]: Since we since we bumped five eighty five from this afternoon.

[Hillary Bortcharding, Assistant General Counsel, Department of Financial Regulation]: Sure. I'm Hillary Bortcharding, assistant general counsel for DFR for the record. A few of the things that I have shared with the commissioner in the time between, one is there was some discussion of the appointment of Blue Cross Blue Shield board members. And I didn't hear all of that testimony, but I wanted to clarify what we understand that process is. First, that there is the nominating committee and there is a number of factors that are considered, and that nominating and governance committee will provide a list of those candidates, and that they are in fact submitted to the sole member of the board, and the sole member of the board being Blue Cross Blue Shield Michigan, who has the sole prerogative to appoint all members to the board of directors. So really the final say of any of the board of directors of Blue Cross Blue Shield Vermont would be Michigan.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: And the total break breakdown of the current 12 board members?

[Hillary Bortcharding, Assistant General Counsel, Department of Financial Regulation]: The current 12 board members are that at least five of the directors are individuals who are appointed by the sole members of Michigan, and then at least seven of the directors shall be public directors, a subscriber, and the chief executive officer or president of the corporation. So that's where the Vermonters come in.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: Yeah. So our proposal would be that two of those seven, are appointed, by governor or or you know, I know we've been taking place on that. I wanna Can

[Rep. Alyssa Black (Chair)]: I just ask a clarifying question? Because of the governance structure between Blue Cross Blue Shield of Michigan and Vermont and that Blue Cross Blue Shield of Michigan has sole discretion over who's on the board, If we did these two, they wouldn't be able to say, no, we don't want those two.

[Hillary Bortcharding, Assistant General Counsel, Department of Financial Regulation]: No, because they would then the bylaws wouldn't be in compliance with the law. So part of the proposal here is that they would have to update their bylaws to be in compliance with the law.

[Rep. Alyssa Black (Chair)]: That's that section that we were like, I don't know what that means. Leslie, thank you. Thank you very much. I just need help understanding what that means, this sole nominator. Is that what you're told? Is that what that person's called? And how did that get chosen? So the

[Hillary Bortcharding, Assistant General Counsel, Department of Financial Regulation]: sole member is Blue Cross Blue Shield Michigan. And that happened last two years ago, maybe when Blue Cross Blue Shield Vermont affiliated with Blue Cross Blue Shield Michigan, and Michigan became the sole member. Affiliation really a term of art that is used in the nonprofit insurance context. That really means that Blue Cross Blue Shield Michigan became the director of the board or the sole members of the board for Blue Cross Blue Shield Vermont. In another context, might hear it called a merger or an acquisition even, but the term of art in the nonprofit world would be affiliation.

[Rep. Alyssa Black (Chair)]: Yeah. I'm just trying to understand the sole member thing idea. I mean, how does it get out of Vermont? How come it got went away from Vermont? Because or I mean, Michigan, of course, rescued Blue Cross Blue Shield. I know it's been paid back, so that's great. How that happen that the sole member left Vermont?

[Hillary Bortcharding, Assistant General Counsel, Department of Financial Regulation]: So about two years ago, Blue Cross Blue Shield Vermont submitted a Form A application, which is regulatory filing seeking to affiliate with Blue Cross Blue Shield Michigan. There was an extensive public process and review. And after that process, there was an order that was issued by the then Commissioner of the Department of Financial Regulation permitting that affiliation to go through with the conditions that are in that order. And that order is publicly available on the DFR website.

[Rep. Alyssa Black (Chair)]: So the remainder, it's a bylaws issue, right? So the bylaws would have to be updated in order to go forward with this. So then I imagine that the remainder of the board voted for this bylaw change and allowing the sole member to be from the Michigan Blue Cross Blue Shield Michigan. Is that right? Is that my understanding? Yeah.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: Yeah. It was not a hostile takeover.

[Rep. Alyssa Black (Chair)]: Exactly. So it's like that's

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: what

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

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: trying to understand. And to be clear, it has been absolutely a beneficial partnership, affiliation, whatever you wanna call it. Yeah. But the the purpose of me pointing out that aspect, that that kind of veto power aspect that Michigan has on the seven Vermont appointees to the board is that this proposal for many reasons or or there's many reasons that we put this forward, but one of them is that no matter what happens in that realm, you have two appointees that, you know, as explicitly stated in this in May, have a separate duty statewide health care policy consistency and that aren't subject to that Michigan control, if you will, or or veto power?

[Rep. Alyssa Black (Chair)]: Well, let's say Go ahead. Don't want the infrastructure anymore. We don't want to allow Michigan to have that power, sole member. How do we remove that? Does that get removed?

[Jen Carvey, Office of Legislative Counsel]: This might

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: be That's a legal question.

[Hillary Bortcharding, Assistant General Counsel, Department of Financial Regulation]: I was just I know you're the opposite.

[Rep. Alyssa Black (Chair)]: I we're all hungry.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: I mean, they they'd have to if that if that represented a change of control, they would have to initiate that and and ask through a form a, which is a a form you know, it's a our legal we have a statute for all domestic insurers that says, you know, acquisition of an insurer or change of control, anything like that needs to be approved by us with extensive filings, etcetera, which is how we got here in the first place several years ago.

[Rep. Alyssa Black (Chair)]: So if this this is my last I'm thinking. What we're say what you're saying is what you're hoping, I guess, is by having these two board members, they would be the only two board members not under control of the sole member.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: Correct. Well, you would you agree with that, Hillary? I mean, not under control. Not not the the

[Rep. Alyssa Black (Chair)]: Or appoint not not Yes. Yeah.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: Exactly.

[Rep. Alyssa Black (Chair)]: Yeah.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: Yeah.

[Rep. Alyssa Black (Chair)]: Hold it. Yeah. Debra?

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: I I wanna get Hillary, any thoughts on that? Are we good? We are not being able to see your call right now.

[Hillary Bortcharding, Assistant General Counsel, Department of Financial Regulation]: I agree. I think the one clarification I might make is that pursuant to the language that we've proposed, these board members would be held to every other standard of existing board members confidentiality. So bylaws, articles of incorporation, any of the standards that the board members are being held to the appointed officials, the members of the public would be as well. The only difference would be that the sole member wouldn't have to confirm their appointment to the board.

[Rep. Alyssa Black (Chair)]: So could we add language to this saying we want the sole member to be from Vermont?

[Rep. Brian Cina (Member)]: Well, I

[Rep. Alyssa Black (Chair)]: mean, you say it's just the form a, one a or whatever a.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: Right. I think, you know, that would my concern there again, I I think the relationship with the Michigan plan is is crucial. Crucial. Exactly. That would muscle them out in a way that would probably cause them to think about ceasing their relationship, which is a beneficial relationship. Does that make sense? Yes. Yeah.

[Rep. Alyssa Black (Chair)]: But now that we've given out our debt, what is the nest what what does the relation what does that relationship give us? Can I just I just wanna clear? You're thinking about that debt that these are not connected in any way. I'm not sure, but okay. That's okay.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: Yeah. I mean, that's kinda where I was going. The the benefits to Blue Cross go far beyond the access to capital they had. That that wasn't even really, I think, contemplated when the when the acquisition or merger affiliation happened. Mhmm. It was a a nice bonus, I think, when when surplus started to decline. You know, I think one of the big areas that I'm aware of has been IT support. Mhmm. You know, think things that operationally require scale. It's very helpful for us.

[Rep. Alyssa Black (Chair)]: So that's where the original part came from. IT support. Were there other places that

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: I probably best to to hear from Blue Cross on the on the on the I wasn't there for the acquisition or for the for the affiliation pleadings to form a.

[Rep. Brian Cina (Member)]: Mhmm.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: But I know IT is something that they've reported has been an immediate

[Rep. Alyssa Black (Chair)]: uplift Thank you. And savings.

[Hillary Bortcharding, Assistant General Counsel, Department of Financial Regulation]: I know the commissioner

[Rep. Alyssa Black (Chair)]: oh oh, I was just gonna say that I hold on one second. I know that the commissioner has more than he wants to say, but I know that Brian has a question. Do you want to wait until after the Commissioner finishes what he's saying or do you want to ask him And Hillary, did you want to add something?

[Hillary Bortcharding, Assistant General Counsel, Department of Financial Regulation]: I was just going to suggest that I would be happy to share the affiliation, the order approving the affiliation that is publicly available because it does identify some of the areas that the affiliation was attempting to address, the reasons it was approved. And I think it's a pretty inclusive document that might be helpful to review and can answer some of questions that have been being asked.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: So next, I I wanted to cover two things, here that that came up this morning in your discussion. One is why? Why do we need to do this, or why does the department and the administration feel that it's appropriate at this point in time? And then the second one is the slippery slope argument that somehow this is a threat to other nonprofits. Starting starting with that one, this can only happen by function of law. So the slippery slope argument would be a concern that you as a body would now start passing laws to go that direction. It it you know? And being someone that served on different government nonprofit boards, well, there's no intention of a slippery slope. It's not in this proposal. There is only one nonprofit. That the section of statute you're in, nonprofit medical service, hospital service provider. So I really don't think there's a slippery slope here at all. Is there precedent? Well, let's talk about the why. Why did I propose this? Why did we, as a department, see this as, one of many ways to prevent what happened in terms of the claim surge? I I don't know how closely you you followed that. You know? Again, I I came back on board here at the state in April. For me, I want you to know the defining moment was when the former president came Don George came to the state asking for, as part of a recovery plan, a 15 to $30,000,000 taxpayer backstop, to help them in their recovery. That and, you know, I'm checking with the attorneys about whether I can make that letter public if if that's helpful to you. This is a single state entity. We've talked about how crucial it is to the state. And in my initial testimony on this, I do not wanna get into, you know, second guessing, throwing mud, whatever you wanna call it, at the performance and management actions of this company. That did happen to some extent in Green Mountain Care Board hearings. And so there's a lot of public data out there and a lot of public scrutiny onto questioning the effectiveness of management and management decisions. A good summary of that, I've asked Joe to send to the committee assistant to post, is in an op ed by Emerson Lynn in the Saint Albans messenger from last August. I haven't fact checked every number in there, but that op ed does a pretty effective job of reviewing the compensation that happened during a time when we're also being asked to provide a taxpayer backstop. And that compensation, which is why you see the other piece of our proposal, approached a million dollars for the CEO for a company that was officially asking the state to consider providing a 15 to $30,000,000 backstop. When we talk about a slippery slope of a nonprofit, please raise your hand if you're involved in a nonprofit with that type of salary structure. Now I've said to you earlier in my initial testimony, I'm not in the I don't wanna be in the business of determining what the right compensation is, but the general public has weighed in on that. I think the care board, in certain extent, has has weighed in somewhat, shared some opinions on that. What I wanna be in the business of is making sure the companies that I regulate are governed in a way that those decisions take into account the entire state of Vermont, reputational issues with things like that. I really want to nudge that board of directors to have some fresh thinking, some statewide public policy, not not vetoable by the parent or by the affiliated controlling member. That and I guess I'll stop there and say, like, that is the impetus for this. And, again, I'll I'll point out that two of 12 board members, this is not an attempt to take over the board. This is an attempt to nudge influence, provide some fresh thinking for a company that arguably, has some management challenges and decision challenges, that that got that contributed many contributors, okay, to the financial distress this company got into. So I'll pause there.

[Rep. Alyssa Black (Chair)]: Brian.

[Rep. Brian Cina (Member)]: So I wanted to go back to the form a reference earlier where you if I understood correctly, you were saying that there's a process that an organization of this kind follows when changing its ownership or control structure, structural control, and Blue Cross Blue Shield went through that process and was approved legally. Yes. So the state allowed this current board structure to come into existence. I wanted to confirm that I was hearing that. The organization has done nothing wrong in terms of how they're managing their board, following the rules, following bylaws. What I am hearing is there was concerns about how the finances of the organization were managed. I want to acknowledge that there were other players in the healthcare system who were part of that problem. And so, feel like I'm still struggling with how adding two board members would have resolved any of that other stuff. And I'm curious, are there other pathways besides adding two board members mandating in law that the government comes into a nonprofit and forces an elected official to now have power over the board, or power over the board membership, even if it's small? Are there other pathways? Are there other ways to negotiate or to talk with the company around our concerns as a community, and let them on their own have the time and choice and way to change their board membership over because if they were open to that, then why would we just force this? Perhaps this discussion itself and the watchful eye of the public is enough to change the behavior of a company.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: And that's fair. It may be. A lot has changed in the last nine months. But I'll tell you, why wouldn't are there other pathways? Yes. They're currently being used. I have an appointee or not an appointee. I have a liaison through DFR order sitting in the negotiations now. The care board has liaison a liaison team with the UVM health health with medical center. That level so so the other pathway and I'd like to back away from that. I'd like to let the company because that's not sustainable. You know? In terms of regulatory action for both hospitals that the Green Mountain Care Board is under and what we're doing in DFR, we're at a we're at a sprint right now. And I'd like the ship to sail itself a little better, and I think governance is how you do that. The order that my department did in August around contracting and finding savings and contact and contracting with hospitals, the appointment of liaison, the Green Mountain Care Board's actions. That's, to me, evidence of why we need to, at a at a more hands off level level, influence the governance and the decisions that this company makes. So that because right now, it's getting a little bit too close to we're part of management from a regulatory point of view as is the legislature. Act 55, the actions of the legislature, the care board, and and DFR are are really unprecedented to unwind whatever mess and whoever's fault it was. It's there's a lot of players, including us, all regulators, legislators, you know, the involved you know, across the board, there's responsibility. This is I will feel more comfortable that as we slowly step away to have two members. And, again, in that statute, you'll see that it references their responsibility, those two appointed board members to think in terms of consistent with 94 or whatever of title 18, I think, the principles of health care transformation. So it's a different responsibility and a different lens that two of 12 board members will bring to the table. I think it's overblown to be threatened by that, but I know that many people are, you know, from from the organization point of view or from a completely unrelated nonprofit.

[Rep. Alyssa Black (Chair)]: I can't but do I see a hand down here first? I Okay, it just wasn't joking. Simple math question. We were early the two people, assuming we would then have a board of 14 people, not 12. So what's your understanding of how the board ends up being?

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: Hillary can talk about the detailed sequence of how this would roll out. The reason it says one sixth is there is the potential that rather than two board members rolling off from the current Vermont seven and being replaced by government governor appointees that in the in the near term, they add to. And if they add to, then but I believe, Hillary, we first, they have to submit maybe you can take this question. It's as much legal as it is math.

[Rep. Alyssa Black (Chair)]: Because I was thinking, how am I gonna possibly lose the Orange Council? So we we had earlier discussed before you were here taking out the one sixth and just saying button two, that made fourteenth.

[Rep. Karen Lueders (Member)]: That was our simple math from earlier today,

[Rep. Alyssa Black (Chair)]: but maybe that's not a correct assumption.

[Hillary Bortcharding, Assistant General Counsel, Department of Financial Regulation]: I think the reason the onesix was involved is because pursuant to the Blue Cross Blue Shield bylaws, they can change the size of the board at any time. So we could add two board members and they could change the size of the board to 40. So we wanted to maintain some ratio of influence. And then the one six has the added benefit of being able to provide some flexibility. If Blue Cross Blue Shield doesn't wanna roll off board members right now, but instead wait for their terms to expire, then you could have three government appointees for a small period of time, and then those would flux as as folks terms ended.

[Rep. Alyssa Black (Chair)]: And then once people are on the board, they and however they get approved or appointed, they then have a vote as it's like they're not like the veto power isn't over any of their subsequent actions once they're

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: Correct. Right. Right. Yeah. They they will be like every other board member and as as Hillary mentioned, also subject to confidentiality, code of conduct. They will have no greater or lesser rights than any other board member except for committee chairs, etcetera.

[Rep. Alyssa Black (Chair)]: And but the statute does refer to not being as liable or having

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: Well, because we've given them duties that serve statewide health transformation, that serve the general public explicitly, it seemed appropriate that they should not be getting sued because they advance an idea or make a vote that they feel is in support of statewide health care transformation, but a Blue Cross Blue Shield policyholder, who they may be as well, says that was a breach of fiduciary duty because even though that was better for the state, it was detrimental to the finances of Blue Cross as as an example. Yep. Anything you wanna add there, Hillary? Is that what

[Hillary Bortcharding, Assistant General Counsel, Department of Financial Regulation]: you're Simply just the intention behind those limitations was to put these board members on the same footing as existing board members. They have additional fiduciary obligations, which would mean they have additional liability. And this was intending to equalize that. And you'll notice that the limitations on liability that are included, they actually are taken from the B Corp statutes. So they're intending to do the same thing as we do for folks who are the board members of B corporations.

[Rep. Alyssa Black (Chair)]: K. Any other questions?

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: Final thought. I I would ask that, again, because I think that opinion piece that I asked Joe to to have posted

[Rep. Alyssa Black (Chair)]: It's posted.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: Okay. Yeah. If if before you make a final determination, I would ask that you you read that just because it's a good summary of kind of a lot of chain of events that that that certainly led my department to take seriously the addition of of some greater influence by kind of the general public and public policy and the governors on the governance of that company. Thank you.

[Rep. Alyssa Black (Chair)]: Hey. Karen, did you have one more? Just one more. I was I ended up just glancing at the affiliation agreement, and it it talks about some $2,000,000 savings within a three year period. Is that has

[Rep. Karen Lueders (Member)]: that been realized or shall it be realized?

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: We get report we've we get periodic reports on that, and I can't remember what what the most recent kinda update on that was. There are periodic meetings with my financial staff with Blue Cross. So far, you know, my qualitative takeaway is it's going well. We don't we don't have any concerns about the benefits of affiliation in terms of the expected savings and scale, etcetera.

[Rep. Alyssa Black (Chair)]: It's it's very specific. So I was just wondering

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: Right.

[Rep. Alyssa Black (Chair)]: What's being monitored.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: It is being it is being monitored. I'll see what I can dig up that I can share in terms of the benefits of that.

[Rep. Alyssa Black (Chair)]: If you said instead of having the affiliation agreement on our We could I'm assuming It's a It's a public document.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: You found it. Yeah. I hope I hope so.

[Rep. Alyssa Black (Chair)]: I know. If Natasha wants to Or if somebody forwards it to Natasha, she can post it as a comment. I think I'm going to well, thank you very much.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: I throw in one more comment I forgot. At least I know. I know. It's my trick. I always compare it to Gandalf bringing in the hobbits one by I mean, boards one by one.

[Rep. Alyssa Black (Chair)]: Too hot in the room. I know they feel like being in our room very long.

[Commissioner Kai Samson (Vermont Department of Financial Regulation)]: I did I did see this proposal, the board addition to the board, and remember, we asked that they be part of the compensation committee. Okay? So it is related to just what I would say is is is better thought and care to overall compensation and accountability, not just to the to the entity itself, but statewide thought about that. So I I see that that's that's why I'm part of why I'm here today is I I feel passionate about that this is an appropriate move given Blue Cross, but also on the comp. They they work together. They really do. Thank you.

[Rep. Alyssa Black (Chair)]: Thank you. I I'm going to read the draft later on after we do five eighty three, which after a break, can take some time if they'd like to read the op ed. And then I'm going to restrop.

[Rep. Brian Cina (Member)]: I would like time to read it later.

[Rep. Alyssa Black (Chair)]: Okay, thank you. Thanks for coming in. All right, So, I'm moving to five eighty three. Do I Should still go faster. And then, yeah, and then I'll do it after that. Okay. Chittenden, light them on up. So we haven't seen 583 in a while. I will just say that there's, in full disclosure, there's been many meetings with all interested parties and stakeholders and lots of conversation. And what is being presented to us today is sort of a culmination of all those meetings.

[Jen Carvey, Office of Legislative Counsel]: Too many. Good afternoon, Jen Carvey from the Office of Legislative Council. I will put the language up. Unlike when I usually bring you a new draft, this one is not in markup. There's just too many changes.

[Rep. Alyssa Black (Chair)]: I would encourage you to

[Jen Carvey, Office of Legislative Counsel]: just think of it as part of a new bill.

[Rep. Alyssa Black (Chair)]: It happens to have the same number as I've previously. Even

[Jen Carvey, Office of Legislative Counsel]: exist. Remember that it's shaped from

[Rep. Alyssa Black (Chair)]: This is 2.6.

[Jen Carvey, Office of Legislative Counsel]: I'll give you all a minute to get there.

[Rep. Alyssa Black (Chair)]: 37.8 or so.

[Jen Carvey, Office of Legislative Counsel]: All right, so this would add a new chapter in title 33 on clinical decision making. I'm sorry, in title 18, chapter two thirty three. This is where it's going in the statute is in a part. So titles are broken. Most titles are broken into very large parts. We usually look at chapters, but even bigger than the chapters are parts and there's a part on something around decision making. That is where the advanced directive statutes go. So I thought clinical decision making could go there too. This starts with definitions. A lot of these definitions have been in some form in prior iterations, but we start out with just some cross references. So health care facility is we're using the definition from the certificate of need statutes. So the broad definition of health care facility. Health care provider is in the beginning of Chapter two twenty one. It's the window.

[Rep. Alyssa Black (Chair)]: It's a window open. Nobody's lining up yet. Yes. A little scary behind You concurred to the first word of the bill.

[Jen Carvey, Office of Legislative Counsel]: So we use the definition from AT and BSA 9,402 of healthcare provider, which is a broad definition, but it excludes facilities and institutions. So healthcare provider is people who are licensed or certified or otherwise authorized to provide healthcare services. We have a definition of healthcare services. This one borrows from, I think, the patient financial assistance statutes, and it includes a whole list of services. And we'll see how these kind of come into play later. Health care staffing company is a person engaged in the business of providing or procuring health care personnel for temporary employment or contracting by a health care facility, but not somebody who is tempting, offering out their own services on a temporary basis as an employee or a contractor. New definition, the hedge fund is a pool of funds managed by investors for the purpose of earning a return on those funds regardless of the strategies used to manage the funds. Hedge funds include a pool of funds managed or controlled by private limited partnerships. But a hedge fund does not include individuals or entities that contribute or promise to contribute funds to a hedge fund but do not participate in the management of the hedge fund or the fund's assets or in any change of control of the hedge fund or the fund's assets or entities that solely provide or manage debt financing secured in whole or in part by the assets of a health care facility, including banks, credit unions, commercial real estate lenders, bond underwriters, and trustees. So hedge fund. Licensing, and this term is only used once in this new iteration. Thought we covered different form of stakeholders earlier. It may need to come out. I don't know, if it ends up being overly sheltered, because I'll flag it when it comes up. But it is somebody who's licensed as a physician, advanced practice registered nurse, or physician assistant, who's authorized to diagnose and treat in the applicable clinical setting. We have management services organization, which is an organization or entity that contracts with a healthcare provider or provider organization to perform management or administrative services relating to, supporting, or facilitating the provision of healthcare services. With ownership or investment interest, is any of the following: direct or indirect possession of equity in the capital, stock or profits totaling more than 5% of an entity interest held by an investor or group of investors who engage in the raising or returning of capital and who invest, develop or dispose of specified assets or interests held by a pool of funds by investors, including a pool of funds managed or controlled by private limited partnerships if those investors or the management of the pool or private limited partnership employs investment strategies of any kind to earn a return on that pool of funds. Almost done with the definitions. A few more. Private equity group is an investor or group of investors who primarily engage in the raising or returning of capital and who invest, develop, dispose of, or purchase any equity interest in assets, either as a parent company or for another entity the investor or investors completely or partially own or control. Private Equity Group does not include individuals or entities that contribute or promise to contribute funds to the Private Equity Group but do not otherwise participate in the management of the group or its assets or in any change of control of the private equity group or its assets. So that does not include group as similar for the hedge fund and the private equity group. Provider organization is any kind of corporation, partnership, business trust, association, or organized group of persons that's in the business of health care delivery or management, whether or not incorporated, that represents one or more health care providers and contracting with health insurers for payment for health care services. That includes physician organizations, physician hospital organizations, independent practice associations, provider networks, animal care organizations, management services organizations, and any other organization that contracts with health insurers for payment for health care services. And finally, Significant Equity Investor as any private equity group with a direct or indirect ownership or investment interest in a health care facility or management services organization, an investor, group of investors, or other entity with a direct or indirect possession of equity in the capital stock or profits totaling more than 10% of a health care provider or provider organization, or any private equity group investor, group of investors, or other entity with a direct or indirect controlling interest in a health care facility or management services organization or that operates the business or substantially all the real or should say personal property or both of a health care facility or management service organization under a lease management or operating agreement. Right. That was just the definitions. You

[Rep. Alyssa Black (Chair)]: want to embark here.

[Jen Carvey, Office of Legislative Counsel]: Yep. On the mark my word I added in, I've had property highlighted in green because I thought it was unclear. Last night, made it real or personal, but apparently I haven't made it real or personal. Alright. Now we get into a news section. And just to kind of put this into some terminology we've used in the past, this is the Corporative Practice of Medicine, the Provision on Corporate Practice of Medicine section. So it's entitled Limitations on Control Over Clinical Decision Making by Private Equity Group or Hedge Fund. And it specifies that the purpose of this section is to ensure that clinical decision making and treatment decisions are exclusively in the hands of healthcare providers, didn't have this edited, but again, we're all looking hard, And to safeguard against non licensed individuals or entities such as private equity groups and hedge funds, exerting influence or control over health care delivery. It says the private equity group or hedge fund involved in any manner with a healthcare facility doing business in this state, including as an investor in a facility or an investor or owner of the assets a healthcare facility, shall not do any of the following with respect to the healthcare facility. Shall not interfere with the judgment of healthcare providers in making healthcare decisions, including any of the following: determining which diagnostic tests are appropriate for a particular condition determining the need for referrals to or consultation with another healthcare provider determining the patient's care plan, including the treatment options available to a patient and determining how many patients a healthcare provider shall see in any given period of time or how many hours a healthcare provider shall work, or exercise control over or be delegated the power to do any of the following: setting clinical standards or policies, including clinical staffing levels controlling or otherwise determining the content of patient medical records hiring or firing health care providers, clinical staff, or medical assistants, or any combination based in full or in part on clinical competency or proficiency setting the parameters under which a healthcare provider or healthcare facility shall enter into contractual relationships with third party payers Setting the prices, rates, or amounts the facility charges for a licensee's services. So this is where we may wanna revisit whether this should be that limited licensee definition or expanded more broadly to healthcare providers. Setting the clinical competency or proficiency parameters under which a health care provider shall enter into contractual relationships with other health care providers for the delivery of health care services. Making decisions regarding the coding and billing of diagnoses and procedures for patient care services, and selecting or approving the selection of medical equipment and medical supplies for the health care facility. So all of those are on the list of what we started out by saying a private equity group or hedge fund, in any manner of the health care facility, shall not do any of these things with respect to the health care. That's what that list is about. Subsection C also says that a private equity group or hedge fund or entity controlled directly in whole or in part by a private equity group or hedge fund shall not enter into an agreement or arrangement with a healthcare facility doing business in the state if the agreement or arrangement would enable the person to interfere with the ability of healthcare providers to make health care decisions as set forth in Subdivision B1 or to exercise control over or be delegated the power set forth in Subdivision B2. So basically to do those things we just looked at in that moment. The organizational form of a health care facility as a sole proprietorship, partnership, founding, I think we meant foundation, or corporate entity of any kind shall not affect the application of this section. And nothing in this section shall be construed to prohibit an unlicensed individual or entity from providing nonclinical management, administrative, or business services to assisting or consulting with a healthcare facility doing business in the state with respect to the decisions and activities described in Subdivision (two) provided that a licensed healthcare provider retains the ultimate responsibility for or approval of those decisions and activities, And the services provided do not constitute and exercise a de facto control over the administrative business or clinical operations of the facility in a manner that affects a provider's clinical decision making or the nature or quality of the health care services that the facility delivers. Subsection E allows a health care provider who is aggrieved by the actions of a private equity group or hedge fund or any entity controlled directly in whole or in part by that private equity group or hedge fund, so agreed by actions in violation of this section, may bring an action into career court for appropriate equitable relief. I have a question here about damages, and if so, limit to actual damages, reasonable costs, and attorney's fees. Section ninety seven seventy three is reporting on owner of ownership and control of health care entities. Should probably say facilities and service organization. So this requires on or before 07/01/2026. Each health care facility and each management services organization must provide to the Green Mountain Care Board either for a healthcare facility or management services organization in which one or more private equity groups or hedge funds held an ownership or investment interest as of a date certain, so I put here 06/01/2026, the investment required by subsection b, we'll look at in a moment, or for a health care facility or management services organization in which no private equity or hedge fund held an owner ownership or investment interest as of that date, an attestation that the facility or management services organization currently has no private equity or hedge fund ownership or investment. So by a date certain, July 1, each facility and management services organization has to either say, yes. We do have private equity or hedge fund involvement, and here's what that looks like, and we will look at that next. Or no. We do not have any no private equity or hedge fund or equity group or hedge fund held any ownership or investment interest. So for each health care facility or management services organization in which one or more private equity groups or hedge funds holds an ownership or investment interest as of 06/01/2026, they must report the following information to the Green Mountain Care Board in a form and manner required by the board: the name, business address, and business identification numbers for each person that, with respect to the relevant health care facility, or I'm going to say MSO, Management Services Organization, has an ownership or investment interest, has a controlling interest for health care facilities only, is a management services organization because you don't need an MSO to tell you that it's an MSO or is a significant equity investor a current organizational chart showing the business structure of the facility or MSO, including any entity listed in affiliates, including entities that control or are under common control as the health care facility or MSO and subs subsidiaries. And they must report the or provide the facility's or MSO's most recent fiscal year's profit and loss statement and balance sheet. After 07/01/2026, a health care facility or MSO shall report the information described in subsection b anytime that either a private equity group or hedge fund takes on an ownership or investment interest in the facility or MSO that has not previously been reported to the Green Mountain Care Board, or there's a modification to a private equity group's or hedge fund's existing ownership or investment interest in the facility or MSO. So anytime there's new affiliation or change in in ownership or investment interest. Then there is an exemption on the following entities. Do not have to report. And I wasn't sure if entity is just the right word here, so that's why it's highlighted in flipped. Nursing homes, health care staffing companies, federally qualified health centers, and entities whose health care services delivered in Vermont are provided exclusively through telehealth, including services delivered using telemedicine and store store and forward means as defined in the insurance statutes and all forms of remake remote patient's onogram. Information provided pursuant to this section shall be public information and not considered confidential, proprietary, or trade secret, except couple instances. Any individual health care provider's taxpayer ID that is also their Social Security number and any nonbusiness telephone number, email address, physical address, or mailing address of any individual health care provider shall be exempt from public inspection and copying under the Public Records Act and shall be kept confidential. And except that all profit and loss statements and balance sheets submitted pursuant to subdivision (three) shall be exempt from public inspection and copying of the Equitable Records Act, but kept confidential, except that the Board shall provide copies of these materials or the information contained in them to the Office of the Healthcare Advocate, which shall not further disclose this confidential information. Subsection S, a healthcare facility or MSO that knowingly fails to report the information required by this section is liable to the state for a civil penalty of, and these are taken from some language in a completely different statute. So it's placed to start. But a civil penalty of $50 for each day, not to exceed a total of $10,000 for each year, that it fails to report the required information, and a health care facility or MSO that knowingly misrepresents information in a report required under this section is liable to the State for a civil penalty of, again, I just put in a number here, dollars 25,000 for each instance of knowingly misrepresented information included in the report. And this would allow the Attorney General to maintain an action in Superior Court to collect the penalties imposed in the subsection and seek appropriate injunctive relief. Off of page 13, we have sharing of ownership information to improve transparency. This would require on or before 02/01/2027 and every two years thereafter that the Green Mountain Care Board post on its website a report regarding the information provided to the Board pursuant to that previous section during the previous two year period, including the number of health care facilities and MSOs reporting for the year disaggregated by the business structure of each specified entity, the names, addresses, and business structure of any entities with an ownership or controlling interest in each health care facility or MSO, any change in ownership or control for each health care facility or MSO, any change in the tax ID number of a health care facility or MSO, and as applicable, the name, address, tax ID number, and business structure of of other affiliates under common control, subsidiaries, and MSOs MSO entities or management services entities as the health care facility or management or MSO, including the business type and the tax identification number of each. Information provided under this section is public and shall not be considered confidential, proprietary or trade secret, provided again that any individual health care provider's tax payer ID number that is also their Social Security Number be exempt from public inspection and copying under the Public Records Act and kept confidential. And this allows the Green Mountain Care Board to share information reported under this chapter with Attorney General, the Secretary of State, other state agencies, and other state officials to reduce or avoid duplication in reporting requirements or facilitate oversight or enforcement pursuant to Vermont law or both, And any tax identification numbers that are individual Social Security members and other confidential information may be shared with the Attorney General, other state agencies, and other state officials and agree to maintain confidentiality of the information. And the Board may, in consultation with relevant state agencies, merge similar reporting requirements where appropriate. I don't know if that is still relevant or not. Finally, the Act would take effect on July 1, and I proposed changing the name of the title of the bill to be an act relating to clinical decision making rather than an act relating to health care of financial transactions in the district. Taking out the financial transactions piece. And that is the end.

[Rep. Alyssa Black (Chair)]: Can I ask you that last paragraph? Which last paragraph? Very the the green bond careful when we share information. Does that last sentence fourteen, fifteen, 16, would that allow the Green Mountain Care Board to ask, say for instance, the Secretary of State for business information so that they could possibly inform healthcare entities and providers that this is something that needs to read files?

[Jen Carvey, Office of Legislative Counsel]: I don't think this provision is specific to them. Information in the I don't think so because this is really about allowing the board to merge these reporting requirements in this chapter with other existing report reporting requirements. But I do think I mean, there the secretary of state's office has information on corporations. It is searchable. It may be able to be provided and, you know, sorted and provided in some form, but I don't think I mean, I don't I don't think this section addresses that.

[Rep. Alyssa Black (Chair)]: Is there existing statute that allows state agencies to work together to get information or does it have to be specific to what information that they're getting and for the reason they're getting it?

[Jen Carvey, Office of Legislative Counsel]: I guess I would say it depends. Okay. Yes, in some cases or some of it isn't specifically said, but happens as a matter of course in running state government. But I think if we were aware of a particular obstacle, we could look at addressing that.

[Rep. Alyssa Black (Chair)]: Thank you, Jen. That's thanks for all your hard work on this. Go ahead. Leslie. Thank you. Can you we got testimony from Doctor. Song and Doctor. Singh, I think, about the straw doctor who is not living in Vermont. And could you just point me to the language that

[Jen Carvey, Office of Legislative Counsel]: may is there language in here that- I don't think, I don't know that the bill specifically addresses that issue.

[Rep. Alyssa Black (Chair)]: Language There's in here addressing that. So I think we're going to take a very short break, a very short break, and line up because we have a lot of people in the room. And nobody's on our schedule, right? So I feel like I need to get with these people for a few minutes to Would like to testify? And I think that's a great question. Spoiler alert. Oh, can I ask this question? Do have any questions on the language? No, but just as if you're going go with that thing, the exemption about nursing homes is a flag I for don't know about anybody else. And partly because I come from Springfield catchment area, no Genesis owns Springfield Health and Rehab at the time. They went bankrupt, a lot of people had harm. So I'm worried about that. So that's an issue for me too. If you're gonna