Vermont Legislature SmartTranscripts:

[Rep. Emilie Kornheiser (Chair)]: Here we are in Ways and Means. It is still Tuesday, January 27. It is 02:45. We are talking, continuing our conversation about the impacts of the summer's federal legislation. And one piece that we have not dug into yet is the changes to the provider tax. So we have our health care team here to tell us all about it.

[Nolan Langweil (Joint Fiscal Office)]: Great, for the record, Noel Langwell, director the political office.

[Jennifer Carbee (Office of Legislative Counsel)]: I'm Jen Carbhee from the Office of Legislative Counsel.

[Nolan Langweil (Joint Fiscal Office)]: So, can't really start talking about provider tax until I do a really, really, really quick background of why does it matter.

[Unidentified Committee Member]: Yes, please.

[Nolan Langweil (Joint Fiscal Office)]: Provider tax, they're healthcare related taxes, they just refer to as provider taxes. And we'll show you in a future slide which providers actually get taxed. And as you know, Medicaid is financed as a state federal partnership. Provider taxes are used to help generate revenues to draw a state match to help pay for the Medicaid program. But they must comply with federal laws, and that's why Jen is here, Because you'll have questions about the law, and then Jen and I like to say, I do numbers, she does words. I didn't go to law school. Provider taxes are deposited into the general fund. They used to be deposited into a separate fund called the State Health Care Resources Fund, but now they're in the general fund. And I have this slide up because I want to give you a sense of how much, when you think about the Medicaid bucket or the pie, how much of the general fund pie provider taxes account for? So the left side are the state only. Of all the general fund dollars that we raise, provider tax account for 28% of the total state dollars that we use to pay for the Medicaid. 88% are general fund, or other general funds, and then you have these other state funds. So that's special funds, some other pieces. If you look at the whole bucket and you throw in the federal piece, you can see these provider taxes still account for 9% of the money you use to pay for our Medicaid. So that's why it's important. So I don't remember the last time I did a presentation on FMAP, Federal Medical Assistant Percentage, but basically that is the formula that's used to calculate the state federal match. We have multiple match rates. Our regular normal match rate for the majority of the program is this 58.81% federal and 41.2% state. This is the state fiscal year '26 numbers. So to translate that for every $1 of state dollars we put in, we draw $1.43 of federal dollars for a total gross of $2.43 So translated, one state means $2.43 a service. Now, goes the other way. When you cut a Medicaid dollar, you lose $2.43 a service. So it goes both ways. We have other matching rates for our children's health insurance program. That's about 4,400 kids. That's about a seventythirty match. And we have this group called the Childless New Adult. They're not new. It's just the title that was given to them when it was part of the Affordable Care Act expansion. But this particular group is a ninetyten match. We've got 41,000 childless adults who get this match. So just to give you a sense. And then I throw this one in here, this is the 27 FMAP rates. It's actually gone, the FMAP has gone down, which means the state share has gone up, which means that we have to pay, I think it was an extra 15 plus million dollars per year, just the level set for the current programs. That map goes up, it goes down. It's this calculation that's done by the federal government. I can do a whole presentation on that, but I won't today.

[Jennifer Carbee (Office of Legislative Counsel)]: Jen's gonna talk about the federal parameters. Yes, so for provider taxes, provider taxes we're allowed under federal law to tax up to 19 different types of services. We do fewer and Roland's got slides coming up that show those, what we do and what we don't. But there are certain requirements around provider taxes. They must be broad based. So if we tax a class of providers like hospitals, we have to tax all hospitals. We can't say we're gonna tax certain types of hospitals and not other types of hospitals. There are some questions from another committee about physician services, which we don't tax. But if we did, we couldn't say, we're not taxing the primary care providers. We're only taxing specialists or gastroenterologists, cardiologists. So they must be broad based. If you pick a class to put a provider tax on, it must apply across class. The And similarly, the provider tax must be uniformly applied. So if you go pick a class to apply a provider tax to, everybody has to get the same tax rate in that class. So it's the same licensing fee or the same per bed fee or the same percentage on gross for net receipts, things like that. And then finally, you must not hold providers harmless. In general, the idea behind provider taxes is to tax providers to generate revenue that then can be matched with the federal matching funds from the percentages Nolan was showing you. And then the funds are redistributed to providers through Medicaid rates. So when they get paid for services, that's how we generated a lot of the money to pay them for the providers for the services that they provide. But we can't guarantee them directly or indirectly that we're gonna hold them months. We can't say, you pay us this amount in provider tax and then we'll get the federal match and then we'll give you back the amount that you gave us and make you both. So some of the, there are some winners, there are some losers for the providers depending on what their payer mix is. How many patients they have that are on Medicaid or on other types of coverage or no coverage. So we can't guarantee providers in any way that we will return it to them to make them whole. There is a presumption under existing law or previous law that this requirement is met if we don't tax at more than 6% of net patient revenue. So if you have a tax that's higher than that, the feds reserve the right to poke around and make you prove that you have not held anybody harmless. But if you set your rate at 6% or less of net patient revenue or the equivalent for different types of taxes, then they have historically said, we're just gonna take you at your word that you're not holding anybody harmless. And as we'll go over in future slides, this provision starts changing in fiscal year twenty twenty eight as a result of HR1, the Federal Reconciliation Act that was passed in July '5.

[Rep. Emilie Kornheiser (Chair)]: I wanna be patient for slide 11, but when you refer to this provision, do you mean the final bullet or the whole slide?

[Jennifer Carbee (Office of Legislative Counsel)]: The safeguard, the percent piece. So yes, so not helpful to our finances, things happen with percentage.

[Nolan Langweil (Joint Fiscal Office)]: These are the classes that we can tax. If they're in red, they are on the books in Vermont. So if inpatient, outpatient hospital, together that is our hospital provider tax. We also have nursing home facilities. Now this intermediate care facilities, we actually don't have any anymore. They're still on the books, but we don't have any.

[Rep. Emilie Kornheiser (Chair)]: Meaning we don't have any actual facilities, not we don't have any actual facilities.

[Nolan Langweil (Joint Fiscal Office)]: We have no facilities left, anyway.

[Jennifer Carbee (Office of Legislative Counsel)]: We don't have any facilities that are licensed as, these are intermediate care facilities for individuals with developmental disabilities, and that is no longer how we do licensure for those types of services.

[Nolan Langweil (Joint Fiscal Office)]: We have one for outpatient prescription drugs, and then we also have one for emergency medical services. This slide shows you One, sorry.

[Rep. Emilie Kornheiser (Chair)]: It's only chiropractic services of physicians?

[Jennifer Carbee (Office of Legislative Counsel)]: That is a category. So you can see physician services is a category that the feds allow chiropractors are not physicians, they're chiropractors. So you could do a provider tax on chiropractors, you could do provider tax on podiatrists, optometrists. Physician services. Does that make sense? It's not a subset of physician services, And it's just a different type of

[Rep. Emilie Kornheiser (Chair)]: so the rows are not? They're not rows, it's just a list that's hitting it. Yes,

[Rep. Woodman Page (Member)]: okay,

[Rep. Emilie Kornheiser (Chair)]: Is

[Unidentified Committee Member]: there any reason why some boxes were selected and others

[Rep. Woodman Page (Member)]: were not?

[Nolan Langweil (Joint Fiscal Office)]: That gets into the history. What I can say from anecdotal from our years here was there were agreements with those particular providers. And when they were done, they were negotiated with those providers. So for instance, nursing homes, I'm actually gonna go to this next slide. Nursing homes, you'll see some of these are 6%, 3.3%, but nursing home it's per bed. And it's because when it was being implemented with some nursing homes, they were like, it's lot easier for us to just do it on a per bed than like our net patient revenue. We know it's below 6%. But another story that is back during Governor Shumlin, there was a proposal to do a provider tax on dentists and the dentist did not want it. And one of the reasons it sort of failed is because at least with like nursing homes and hospitals, there's not a lot of them and they have to report a lot of their cost data to the state. Whereas dentists, they're privately owned, independent, they don't have audited financial statements, they don't have to report stuff to the state, we don't know how many of them there are, we don't know how much revenue it raised.

[Jennifer Carbee (Office of Legislative Counsel)]: Do you know how many there are, officially licensed dentists?

[Nolan Langweil (Joint Fiscal Office)]: Oh, but you know

[Rep. Emilie Kornheiser (Chair)]: what mean. They

[Jennifer Carbee (Office of Legislative Counsel)]: behave as they

[Rep. Emilie Kornheiser (Chair)]: taxes already because they're businesses.

[Jennifer Carbee (Office of Legislative Counsel)]: Yes. But

[Nolan Langweil (Joint Fiscal Office)]: this is a tax on net patient revenue.

[Rep. Emilie Kornheiser (Chair)]: Okay.

[Nolan Langweil (Joint Fiscal Office)]: A different epitax.

[Rep. Emilie Kornheiser (Chair)]: Sure.

[Nolan Langweil (Joint Fiscal Office)]: But anyway, it failed. Part of the reason is because the complexity of how would you implement it, we didn't know, just, and then they were resistant to it versus emergency medical services, that's the newest one we had. And that was the, at that time the providers wanted a provider tax. So they worked with us to come up with a way to figure out how to tax them. So a lot of had to do with cooperation with the industry and desire within the industry to do it as a way to sort of help raise money to increase rates for that industry.

[Rep. Emilie Kornheiser (Chair)]: Can you go back to the slide before?

[Unidentified Committee Member]: That's why you wanted to ask.

[Rep. Emilie Kornheiser (Chair)]: So some of it's the wisdom of the body, but some of it might be services that receive more Medicaid dollars, so might feel more interested in having more Medicaid dollars in that mix.

[Nolan Langweil (Joint Fiscal Office)]: There's that, because for dentists that allow us to lower Medicaid mix.

[Rep. Emilie Kornheiser (Chair)]: Fewer dentists. Now I'm stuck in hypothesizing what past legislatures did, which seems like a terrible idea to try to imagine, for Bridget Thank

[Unidentified Committee Member]: you. So there are reasons that you would want a provider tax in your setting. One is, it would allow the sector to raise money, they could increase rates, and was the other so that they could provide more services to Medicaid patients?

[Nolan Langweil (Joint Fiscal Office)]: No, so when the when EMS providers were negotiating reimbursement rates for some of the things they were doing on the lower side, and it was a way to raise money to put back into increased rates. To Jen's point before we talked about how you can't say, okay, you gave me a million dollars, I wanna make sure you get a million dollars back. If you pay a money and you have a high Medicaid payer mix, you're gonna get more back than if you are a low Medicaid payer mix. But it's not how the providers use that money, it's all in the rates. Medicaid provider mix means- So if you have a

[Jennifer Carbee (Office of Legislative Counsel)]: Pay your class.

[Nolan Langweil (Joint Fiscal Office)]: No, payer mix is like, I am a business, I have Medicare, Medicaid, commercial. If I'm a business where a lot of my business comes from Medicaid beneficiaries, I'm gonna do really well because I'm gonna pay the provider tax on the total net patient revenue of all my payers. But if I have high Medicaid, now I'm gonna get more Medicaid back versus if I have a very heavy commercial and not a lot of Medicaid, I'm paying provider tax on my total across all the different payer mixes, but I'm not getting a lot back in Medicaid reimbursements because I don't have a high Medicaid population in my

[Unidentified Committee Member]: So can I ask a follow-up? So if you wanted, as a policymaker, to encourage more dental practices to serve Medicaid patients, you want a provider tax?

[Nolan Langweil (Joint Fiscal Office)]: No, you would want to increase reimbursement rates for dentists.

[Rep. Emilie Kornheiser (Chair)]: And one way to do that might be creating a provider trust.

[Jennifer Carbee (Office of Legislative Counsel)]: Or you could only buy that could, right. It also depends how many dentists you'd have who were actually paying in and whether that is significant enough to impact the rates. You're on the right track though.

[Nolan Langweil (Joint Fiscal Office)]: I see where you're trying to go.

[Jennifer Carbee (Office of Legislative Counsel)]: Yeah, but don't get too excited about new provider taxes, because keep

[Nolan Langweil (Joint Fiscal Office)]: Yeah, wait till the final slide. Guarantee to bring you right down. All right, so these are the different provider taxes that we currently have. So hospitals are 6%, our 26 actual rate $212,000,000. We forecasted the rate $225,000,000 for fiscal year twenty six. Hospital provider taxes are the bulk of our provider tax money raised. Nursing homes are 14,400,000.0, ambulances are about 1,400,000.0, and pharmacies we raised about between 800 and $900,000 per year. Home health, we sunsetted back in 2023. So as you can see, hospital provider taxes account for about 93% of our total provider tax mix. Couple more slides before we get to the grand finale, though. It's like watching the fireworks and you're just waiting for that finale where all the fireworks go up in one.

[Rep. Emilie Kornheiser (Chair)]: That's how I feel right now.

[Jennifer Carbee (Office of Legislative Counsel)]: It's like a picnic blanket.

[Nolan Langweil (Joint Fiscal Office)]: So in 2004, there were 35 states that had provider tax. In 2024, 49 states and the District Of Columbia had at least one healthcare provider tax. The most common was nursing homes, followed by hospitals. Approximately 13 states, including Vermont, had a provider tax rate of more than 5.5%, and 20 states had provider tax for hospitals that were less than 3.5. So you can see how states are using it and what they're using it for kind of varies all over the map. And then 32 states have intermediate care facilities, and we don't have it yet. I'm just curious, who's the one state that doesn't? I think it's the last. I believe it is the last. One of the slides you've been waiting for.

[Rep. Woodman Page (Member)]: So

[Jennifer Carbee (Office of Legislative Counsel)]: one of the things that the federal legislation does is it phases down that maximum, that safe harbor or really allowable, and I think it's beyond even safe harbor in what they've done. They've phased down that 6% cap, 0.5% a year over several years. So we go from 6% down to 3.5% by the time they're done ratcheting it down.

[Unidentified Committee Member]: Can I ask you a

[Rep. Emilie Kornheiser (Chair)]: question about that? Yeah. So it's very unusual for the federal government to limit our ability to tax. And so I just wanna make sure it's really like the limit to taxes, not the limit to tax and use as match?

[Jennifer Carbee (Office of Legislative Counsel)]: So if we are taxing providers, we are presumed to be using it for match, whether we actually do or not. It's a provider tax.

[Rep. Emilie Kornheiser (Chair)]: That we must be using for match?

[Jennifer Carbee (Office of Legislative Counsel)]: That is regulated by the limits on provider tax. Looked at this a little bit too.

[Rep. Emilie Kornheiser (Chair)]: It's like, could we shift things around? Maybe we could dedicate it to the transportation fund.

[Rep. Woodman Page (Member)]: Yeah,

[Jennifer Carbee (Office of Legislative Counsel)]: no. Thank you, everyone. I was like, that is a delayed laugh. I deserve

[Nolan Langweil (Joint Fiscal Office)]: a laugh for that one.

[Unidentified Committee Member]: Nice idea, though.

[Unidentified Committee Member]: Thank you. Thank you.

[Jennifer Carbee (Office of Legislative Counsel)]: Yeah, so I believe it is. If we are going to tax providers, these are the

[Unidentified Committee Member]: letters.

[Rep. Emilie Kornheiser (Chair)]: It's just a presumption that it's, okay, thank you.

[Unidentified Committee Member]: And I

[Unidentified Committee Member]: said, no, we can't do that law.

[Rep. Emilie Kornheiser (Chair)]: The federal government?

[Jennifer Carbee (Office of Legislative Counsel)]: Oh, that's part of the federal law.

[Rep. Emilie Kornheiser (Chair)]: The new federal law that passed this summer.

[Nolan Langweil (Joint Fiscal Office)]: Yeah.

[Jennifer Carbee (Office of Legislative Counsel)]: Yes, I mean, actually the provider tax limitations, I think, are just the provider tax generally, but they, on this particular one, are ratcheting down our max rate. So it freezes our existing rates and then ratchets them down. Are you gonna talk about it in Vermont?

[Nolan Langweil (Joint Fiscal Office)]: Sure, yeah. So in Vermont, this only affects the hospital provider tax. And that's because nursing homes and intermediate care facilities are excluded. And then the other provider tax that are left over are below 3.5 in Vermont. So it really only hits the hospital provider tax. Now to all the questions before about what we wanna tax this provider or that provider, well, now under HR1, like Jen just said, it freezes it. We can't increase any existing provider taxes to go higher, so we couldn't raise the ambulance provider tax. And we can't institute a new one like dentists or Cairo, like it freezes them in place. Now, one of the reasons the federal government is because people, and when it does poorly, they go, why are they even doing this? And I can't say why they're doing it, you can't pinpoint it, but what you could say is the federal government has booked significant federal savings in the bill under the assumption that states will be drawing, raising less money to draw less federal match. And that's where the savings are on the HR1 bill.

[Jennifer Carbee (Office of Legislative Counsel)]: And some of these provisions only apply to states that expanded Medicaid eligibility under the Affordable Care Act.

[Rep. Carol Ode (Member)]: Right. She's healthy. Right.

[Unidentified Committee Member]: So is this 6% for the hospitals all picked up by the insurance?

[Nolan Langweil (Joint Fiscal Office)]: No, it's the net patient revenue. So it's the revenue across all payers.

[Unidentified Committee Member]: When the hospital pays.

[Nolan Langweil (Joint Fiscal Office)]: Hospital If you're thinking of claims taxes, the insurance company pays, but the hospital pays the provider.

[Unidentified Committee Member]: Okay, so it must reflect on the patient's bill somewhere. Or does it?

[Jennifer Carbee (Office of Legislative Counsel)]: It's probably built into charges and negotiated rates. I mean, yes, they have to find the revenue to pay it somewhere, but I don't think there's a line item under bill that says this amount goes towards the correct.

[Nolan Langweil (Joint Fiscal Office)]: Especially because we take the revenue, and if they're adding money to the provider tax and the revenue, then we're taxing them on the provider tax revenue. It gets confusing, but it's cyclical. And it's from the previous year, if look back.

[Rep. Woodman Page (Member)]: Thank you. So the hospitals must

[Unidentified Committee Member]: be happy

[Rep. Woodman Page (Member)]: with the rate decrease, but then how do you make up for the decrease in Medicaid payments? There are lot

[Nolan Langweil (Joint Fiscal Office)]: of good questions. A good transition to the next slide, but I don't know, and I don't want to speak for the hospitals, but when you, it's a mixed bag, because they will have a lower, their provider tax rate will go down, but resulting, if you have, the way I describe it is you have free leverage, you can raise taxes, you can cut services, or you can find efficiencies or find money elsewhere in government. In reality, the federal government is assuming that we'll cut or reduce our Medicaid spending, which means that we're going to have cuts to Medicaid. Cuts to Medicaid may increase uncompensated care in hospitals. So they might have a less of a provider tax, but they might start seeing more uncompensated care that they have to, free care, that they have to compensate for. So I don't know that you could articulate or assume that it's a win for them. So this is the impact. This is the Nolan JFO moving target. It's interesting because AHS, they have a similar chart, their numbers are slightly different, but I like to say they're not really that different. They're similar, and it's a moving target, and we won't know until we know. But in essence, this is state fiscal year, you can see it doesn't start until state fiscal year '28, and We're assuming that the first year it'll be about $15,000,000 reduction in general fund, second year 35,000,000, by fiscal year thirty fifty seven million. You can see that when it's fully annualized by fiscal year thirty three, this is in today's dollars, we assume it to be $113,000,000 But this is like in today's dollar, steady state, doesn't take into consideration many healthcare reports. Today's dollar. Yeah, doesn't take into consideration, well, I take that back. I do assume, it's today's trend, because I do assume an increase in net patient revenue of 3% each year, so it's actually not completely today's dollars, but it doesn't take into consideration any policies or healthcare reform or anything we can do to cut reducing rates. It's just sort of like steady state based on today's policies. That's probably a better way to say it.

[Rep. Emilie Kornheiser (Chair)]: And so this is just a straight loss in revenue to the state, is also not creating the multiplier of losing the match if we decide to lose the match.

[Nolan Langweil (Joint Fiscal Office)]: Yeah, this is assuming just a state match because

[Rep. Emilie Kornheiser (Chair)]: because there's a policy decision that we would then make about whether or not we would reduce our spending

[Nolan Langweil (Joint Fiscal Office)]: to So

[Rep. Emilie Kornheiser (Chair)]: reduce the if this is just a reduction in revenue, it wouldn't necessarily, but we keep spending somehow magically the same. It wouldn't be a loss of all the revenue to the hospitals.

[Nolan Langweil (Joint Fiscal Office)]: Yeah, I I see where you're going.

[Rep. Emilie Kornheiser (Chair)]: If we lost the match, it would be a loss of revenue to the hospitals.

[Nolan Langweil (Joint Fiscal Office)]: Yeah, I can't, yeah.

[Rep. Emilie Kornheiser (Chair)]: Yeah, okay, but we would still have to make that policy decision for that to happen.

[Unidentified Committee Member]: You're correct. The loss to the hospitals, 113,000,000 times 2.38.

[Nolan Langweil (Joint Fiscal Office)]: Well, it's not loss to the hospital, it's loss to the state. And then it's a loss to the system. Because not just hospitals that aren't getting this money, it's all the providers that get Medicaid back. It's a reduction in the system. If you were to say, we're just gonna cut the equivalent amount versus raising revenue or finding money from any government or efficiency, like I said, those are the policy lever choices that will have to be made by the governor or legislature as we move forward, unless things change with the federalists.

[Unidentified Committee Member]: So I just want to make sure I'm a little slow here, make sure I got this. If you're going down 100,000,000 by 'thirty three, and you assume FMAP rate of, I mean, I look at your numbers on the previous slide, the total revenue is twice that that we've lost for the system.

[Nolan Langweil (Joint Fiscal Office)]: You assume that's Not really. So again, that's if you assume that we're not gonna raise revenue, we're not gonna offset it elsewhere, we're just gonna cut that equivalent general fund, then you're looking at about $275,000,000 across the system. But again, that's up to whatever policy levers you choose. One can argue as much as. And again, those numbers will start coming to fruition once policy goes into effect. Yeah.

[Rep. Emilie Kornheiser (Chair)]: So right now, those policy decisions are a little bit outside of this room, but the reality is that we're responsible for the revenue of the state and we're about to lose a lot of revenue is sort of why we're hanging up here. Representative Higley?

[Rep. Mark Higley (Member)]: Thank you. You said some key words here. Unless things change federal. I think it's interesting that the start date is fiscal year twenty Any particular reason why it was pushed out for four years?

[Nolan Langweil (Joint Fiscal Office)]: I can't speak to the federal decisions.

[Rep. Emilie Kornheiser (Chair)]: We've heard in other testimony that a whole lot of the implementation dates of the federal bill this summer start after the midterms.

[Rep. Mark Higley (Member)]: I've seen what?

[Jennifer Carbee (Office of Legislative Counsel)]: Start after the midterms, and

[Rep. Emilie Kornheiser (Chair)]: you can take whatever from that you want to. But that's the reality of a lot of the start dates.

[Unidentified Committee Member]: Just a policy question. If we did not reduce the provider tax from six down to three and a half, is it that the federal government would then just take that into account when figuring out the Medicaid match? It's not that the state would be liable for anything on a legal basis, but

[Jennifer Carbee (Office of Legislative Counsel)]: We are just prohibited from imposing a tax at rates higher than whatever they ratchet it down to. It says the cap.

[Unidentified Committee Member]: Prohibited only in the sense of what gets matched, correct?

[Jennifer Carbee (Office of Legislative Counsel)]: No, this is what we, the tax we can impose on the hospitals. Prohibit it.

[Unidentified Committee Member]: Yeah, I agree with you, I'm just trying to Work around it? Figure out, it's a federal ban on a state tax.

[Jennifer Carbee (Office of Legislative Counsel)]: The federal camp on the tax rate.

[Rep. Emilie Kornheiser (Chair)]: Which I don't think they do on anything else.

[Unidentified Committee Member]: It's kind of fascinating. Do they have anything else?

[Jennifer Carbee (Office of Legislative Counsel)]: Don't get outside of healthcare here, I don't know. Not

[Rep. Woodman Page (Member)]: healthcare. But what happens

[Unidentified Committee Member]: if you tell them something right instead?

[Nolan Langweil (Joint Fiscal Office)]: Out If of compliance, federal law?

[Jennifer Carbee (Office of Legislative Counsel)]: Yeah, anything out of compliance, I think they would, I mean, I can look at the Medicaid law, but I think it would not go well for our expectation of match on I mean, know what the specific levers are on this. We don't defy them on these issues.

[Nolan Langweil (Joint Fiscal Office)]: Yeah, James might think you could say, we're just not gonna match.

[Rep. Emilie Kornheiser (Chair)]: They can always say, we're suing you because you're in violation of federal law, right? That's not quite it. Well, sometimes we do need to find out. Representative Page.

[Rep. Woodman Page (Member)]: So it doesn't matter what you call it. We added 3% cats to the hospital, it's called, I don't know, son in front or something. We couldn't do that, is that correct?

[Jennifer Carbee (Office of Legislative Counsel)]: That's my understanding and I'll look at the language again of the federal law, but it seems to be just generally the state's taxation of the listed providers, not for things like property tax or whatever else they get taxed on, but.

[Rep. Emilie Kornheiser (Chair)]: I mean, will offer that some states extend their sales tax to services, and sometimes health care providers are considered one of those services that the sales tax gets extended to. And that is considered a sales tax, not a provider tax. But I wouldn't want to talk about it in the context of this right here, because that could get a little confusing in the future.

[Rep. Woodman Page (Member)]: And I don't imagine I mean, there any legal groups that are going forward, that's maybe the attorney general's looking at?

[Jennifer Carbee (Office of Legislative Counsel)]: I'm not aware of any, because this is a only federal provision. So I'm not sure what we would be suing on other than we don't like it and that's not generally.

[Rep. Emilie Kornheiser (Chair)]: I mean, it is interesting that it is worth us finding out if there are any other places that we are limited on taxation.

[Unidentified Committee Member]: Yeah, Representative Branagan. So if we, worst case scenario, if we accept this 3.5% as a cap, and we accept the loss of the 113,000,000 by six years out, what do we lose as far as services in the hospital?

[Nolan Langweil (Joint Fiscal Office)]: Again, that's similar to the question that was asked earlier. It's depending on what policy levers you choose, if you were to say, we're just going to cut all that money out of Medicaid, then you're looking at about $275,000,000 worst case scenario of services cut in Medicaid. Now that might be cutting eligibility, it might be cutting services, it might be reducing reimbursement rates, it's a whole slew of things that you might be doing. That's why I said you have policy levers. You can look at your revenue sources, you can find efficiencies, you can, whatever, that's the policy levers.

[Unidentified Committee Member]: So if we can find a way to make it up from running a consultant base, that would be legal.

[Nolan Langweil (Joint Fiscal Office)]: You're not taxing the providers?

[Unidentified Committee Member]: Not taxing the provider, and that's the hospital?

[Nolan Langweil (Joint Fiscal Office)]: Yeah, if you find other revenue sources that are not provider tax and put them in the general fund, yes, can use that.

[Jennifer Carbee (Office of Legislative Counsel)]: So the federal law says as far as a healthcare related tax, a healthcare related tax is a licensing fee assessment or other mandatory payment that is related to healthcare items or services or the provision of, or the authority to provide the healthcare services or the payment for the healthcare items or services. And a tax is considered to be related to healthcare items or services if at least 85% of the burden of the tax review falls

[Unidentified Committee Member]: on healthcare providers. But you kept saying services, so that zeroes out any idea

[Jennifer Carbee (Office of Legislative Counsel)]: of providers. Yeah, I'm not sure how, I mean, they may be doing it at such a level that currently it is permitted under the provider tax statutes, but wouldn't be.

[Rep. Emilie Kornheiser (Chair)]: I wanna be clear, that was not a proposal. That was just like a round

[Jennifer Carbee (Office of Legislative Counsel)]: of If it's 5% tax on services, then maybe that's permissible under the existing scheme, but won't be at 5% as it goes down to 3.5%, but I don't know enough about

[Unidentified Committee Member]: how they're structured. One last thing, dumb question, the HR1, that's the big beautiful

[Unidentified Committee Member]: bill. That's

[Nolan Langweil (Joint Fiscal Office)]: pretty much.

[Unidentified Committee Member]: Yeah, go ahead.

[Jennifer Carbee (Office of Legislative Counsel)]: And then Representative Ode

[Unidentified Committee Member]: in there.

[Nolan Langweil (Joint Fiscal Office)]: Looking at this timeline, do we have

[Rep. Carol Ode (Member)]: to act before 2028?

[Nolan Langweil (Joint Fiscal Office)]: There's nothing that you have to do before then. But when you see the Governor's budget for fiscal year twenty eight, you'll see the assumption of loss of revenue, there'll probably be some language changes to comply with federal law, but in fiscal year twenty seven, there's nothing you have to do other than be mindful on the appropriation side of any increases in base spending in healthcare fields.

[Jennifer Carbee (Office of Legislative Counsel)]: It does look like it is a reduction in federal financial participation if we do not stay at

[Unidentified Committee Member]: the minimum. Just to confirm.

[Rep. Emilie Kornheiser (Chair)]: If we are interested in doing something about it, I genuinely have absolutely no proposals, schemes, ideas about something to do about it. Most taxes take a couple years to implement. And so we would need to start the conversation now if we did want sign up. Or was it Ode and then Masland?

[Jennifer Carbee (Office of Legislative Counsel)]: After what you said,

[Unidentified Committee Member]: don't remember why I had my hand up before, but after what you just said, you could make it. Since it's not even going to start taking effect till '28, you could say whatever thing you put in place to raise the money somehow otherwise, but it's not against the law, would only come into effect if this went forward. And the first year it's small, $16,000,000 difference, so suffer the 16 and then.

[Unidentified Committee Member]: We only have fifteen months from now in order to stand up the new revenue source.

[Rep. Emilie Kornheiser (Chair)]: If that's what we're talking about.

[Rep. Woodman Page (Member)]: Representative Masland. An

[Nolan Langweil (Joint Fiscal Office)]: old question from a

[Rep. James Masland (Member)]: number of minutes ago. Said, if this stuff comes to pass, we may see a decrease in net revenue to hospitals, and they gave three reasons that I wrote down, except the only real time to reduces the Medicaid match, we've been talking about that. It'll be less on Could talk

[Rep. Emilie Kornheiser (Chair)]: a little bit louder? I can't really

[Rep. James Masland (Member)]: hear you. Reduces in Medicaid match, FMAP, Reduced reduction in uncompensated care that will cost the hospitals. And there was a third thing. I wrote down the wrong words, but

[Nolan Langweil (Joint Fiscal Office)]: Well, I said those things in different contexts, each individual with a different context.

[Rep. James Masland (Member)]: Understood, but there was a third thing, if this stuff comes to pass, that'll cause a decrease in hospital revenue.

[Nolan Langweil (Joint Fiscal Office)]: Well, so the question there was from Representative Page when he said, Are the hospitals all happy about this? And I would say no, because they have a reduction in their tax, but they could see an increase in their own compensated care. And then the payer mix was in response to Representative Ode's question about people, if they pay the provider tax, how do they see it back? And then the other piece is just, I think I'm just trying to link your question together, like, are our levers if this, when? This is the law of the land, so I would say when this comes to fruition, your levers for offsetting it are cut, make cuts in Medicaid, increase revenues, or find efficiencies or money from elsewhere within state government. Those seem to be your major leverage to, trying to help string your stuff together. I'm sorry if I'm not answering the question.

[Rep. James Masland (Member)]: No. That's alright. You know, if it's I just there was there was another phrase you used that made sense up here, but I don't have it much at but the that's okay. This is a good explanation if it's gonna work or not. Yeah.

[Rep. Mark Higley (Member)]: Thank you. My understanding is, you know, there's some changes for qualifications for the Decade folks. How does this fall into the relationship with the student?

[Nolan Langweil (Joint Fiscal Office)]: There were some, so there's, we have a whole presentation on that, but there were some changes in eligibility, some around folks who are immigration status. There was one around, you can just run it off the of my head, that changes the redetermination period from one year to six months, which means that people have to put more paperwork in more often to stay on the roles. All those were efforts to, yeah, I shouldn't say effort, all those are things that will reduce Medicaid populations. Not necessarily, well, the immigration one is not a big one, but the redetermination one could be. I think, I forgot, I think I don't remember an estimate I heard, but it could be several thousand people who just don't have the wherewithal or the capacity to carry that level of paperwork. So the relationship is that that would be a reduction in Medicaid, which means it would be a reduction of cost to both the state and the federal government over here, but then it again could see it elsewhere within the system in terms of uncompensated care or untreated illnesses. Again, that just kind of goes into the speculation of how healthcare works, but they don't impact the provider tax, they're they're things that the federal government, when they were costing out their bill, okay, there's some federal savings here, there's federal savings here, there's federal there.

[Rep. Woodman Page (Member)]: Thank you. Does that help? Yeah.

[Unidentified Committee Member]: Prasad, Ode? Thank you. I think I heard

[Unidentified Committee Member]: one choice you have for policy levers to cut services for eligibility. I didn't think we could determine who's eligible and not for federal programs.

[Nolan Langweil (Joint Fiscal Office)]: We can in some populations.

[Jennifer Carbee (Office of Legislative Counsel)]: It's a state and federal partnership program.

[Nolan Langweil (Joint Fiscal Office)]: Yeah, you have, and if I ever do a Medicaid presentation, or if you have one on one, there's two, you'll be able to call the mandatory population and an optional population, both population and services. Those are the populations and services that are required under the mandatory and the ones that are optional. Optional services would be things like dental, chiro, prescription Prescription drugs, they're all gonna be optional, we can drop those. And then same with certain populations and certain services, like our beef farm program, or some of our expansion populations, or those are all things that we have the allowance to reduce if we choose to.

[Rep. Emilie Kornheiser (Chair)]: You get a chance, can you just send us the YouTube link or the date of the last time you gave a presentation like that somewhere so folks can watch it if they want?

[Nolan Langweil (Joint Fiscal Office)]: Oh, on the HR one or It's okay. Both things.

[Rep. Emilie Kornheiser (Chair)]: Sure. Thanks.

[Unidentified Committee Member]: Floor? No, you can't, all the rules apply

[Nolan Langweil (Joint Fiscal Office)]: in both places, go for it. I

[Rep. Woodman Page (Member)]: was just going to help our rural hospitals. All the funds that we're receiving for change in our auto health transformation, We can't use any of that for this.

[Jennifer Carbee (Office of Legislative Counsel)]: Not specifically, mean you can't use it for services, can't use it to make up for lost revenues, no, there are specific parameters for what it can be used for. Some of which may help the rural hospitals, but not

[Unidentified Committee Member]: for some of them.

[Unidentified Committee Member]: And Mr. Bills on that, but when we expanded Medicaid, did we see a reduction in things like rehospitalization and uncompensated care? And would we expect to see that shift back? And if so, when would we start to see it?

[Rep. Mark Higley (Member)]: I'm not sure

[Nolan Langweil (Joint Fiscal Office)]: either one of us It's want to answer a great question, but it's not an analysis that neither of us have done. I'm assuming maybe it has been done through the Blueprint or other programs. But what I can say is, Vermont does have one of the lowest unemployment rates in the country, but that's the only measurement that I used to really quote off the top of my head. And one of the ideas behind our waiver in general was to expand population and improve health outcomes. I couldn't tell you if we measured those, but that is the goal of what our Medicaid program, one of the many goals Medicaid program has.

[Unidentified Committee Member]: Anyone else?

[Rep. Woodman Page (Member)]: This is funny, come on. Just kidding, it'd good.

[Rep. Emilie Kornheiser (Chair)]: You. Well, that was your last slide. Thank you so much. It really was a fireworks show. Appreciate it. Folks, we are done for the day. If you haven't read all your reports yet, go read them. And we're back here tomorrow at nine Tomorrow, we have oh, I know what everyone can do for the next hour. The annual PBR report was released yesterday. Oh, it's so popular.

[Nolan Langweil (Joint Fiscal Office)]: Oh, I really enjoyed it.

[Rep. Emilie Kornheiser (Chair)]: I'm really excited about that because I was actually having this moment of really missing Scott Beck who would, like, act like it was Christmas when the report showed up in the committee room. So you are, and I thank you for that. We want you to bring him back from the Senate. And so if folks could read that, actually, that would be great. And then we are then jumping into the Regional Assessment District Report, which is also really exciting. And then in the afternoon, we are hearing about the governor's recommended budget. And then taking our first dive into legislative language, I worked with Kirby to take the tax department's classifications report that Jake took us through, whenever that was, and turn it into legislative language. And the places where there were policy decision points. He's highlighting the policy decision points as a way of us to work through next steps for that. And so we'll do that tomorrow at two It's going be really fun day. I'm pretty excited about it.

[Rep. Woodman Page (Member)]: I don't

[Rep. Mark Higley (Member)]: see the PVR report here on the list of, findings. Is that

[Rep. Emilie Kornheiser (Chair)]: I'll send it to everyone now. I don't know why you I'm sorry. I didn't notice that you didn't get it, Sorsha. Maybe I did.

[Unidentified Committee Member]: Yeah. It's 2025. That's

[Nolan Langweil (Joint Fiscal Office)]: it. No.