Vermont Legislature SmartTranscripts:

[Senator Virginia "Ginny" Lyons (Chair)]: You're live. All right, good morning. The Senate Health and Welfare. It's Wednesday, April 29, and we are going through a number of bills. The first one is five eighty three that we haven't actually been through at all, so we're going to go through it with Jen. Frankly, committee, I think we'll be able to do all the bills that we've been looking at. I don't feel uncomfortable without saying that. The biggest challenge for us will be September and getting the homeless bill complete. So I'm gonna try and save as much time as possible for next week and really drilling down into that one. Anyway, so Jen, why don't you walk us through age five-thirty eight, please?

[Jennifer Carbee, Office of Legislative Counsel]: Great, good morning, Geoff. I'm from the Office of Legislative Council, yes, five-eighty three. The panel's on the screen. This is an act relating to clinical decision making, and it starts out with a new chapter on clinical decision making. This would go at the end of Title 18, so it's currently the chapter on advanced directives, the certainty of decision making and servicing that fit with the decision making sections. So, we have definitions and some of the definitions are cross referencing other definitions in this title. So we have definitions of healthcare facility and healthcare provider. The healthcare facility is using the certificate of need chapter, sub chapter definitions, a broad description of healthcare definition of healthcare provider. Healthcare services has the same meaning as in section 94.81, which is the large healthcare facility financial assistance policies, and it specifies that it includes all of the following. So it has inpatient, outpatient, habitative, rehabilitative, dental, palliative, including hospice, therapeutic supportive, nursing home, home health, mental health, and substance use disorder services provided by a healthcare facility. Pharmacy services including drugs, devices and medical supplies, performance of functions to refer, arrange and coordinate care, durable medical equipment, diagnostic equipment, surgical devices and infusion equipment, and technology associated with providing those services and equipment such as telehealth, electronic health records, software, claims processing, and utilization systems. A very broad definition of healthcare services, which you'll see how

[Senator Virginia "Ginny" Lyons (Chair)]: it speaks. So Jen, if you were going to describe what we're going to see in this bill, what would be the umbrella, as we did not have

[Senator John Morley III (Member)]: the report or echo on it?

[Jennifer Carbee, Office of Legislative Counsel]: So in general, this is looking at what sometimes refer to as the corporate practice of medicine, prohibiting the corporate practice of medicine, so making sure that healthcare decisions for patients are being made by individual healthcare, licensed healthcare professionals, and it also has some ownership reporting and transparency requirements around what private equity and hedge fund, which are terms you'll see defined ownership there is in the state of healthcare services. Thank you.

[Senator John Morley III (Member)]: All right, so we've got

[Jennifer Carbee, Office of Legislative Counsel]: a definition of healthcare services, yes, thank you, that's a good, you know what's coming and we're looking at these definitions. Healthcare staffing company is a person engaged in the business of providing or procuring healthcare personnel for temporary employment or contracting by a healthcare facility. Does not include somebody who independently provides their own services as a temp, as employee or contractor. 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. Hedge funds include a pool of funds managed or controlled by private limited partnerships. The definition of hedge fund does not include individuals or entities that contribute or promise to contribute funds to a hedge fund, but don't actually participate in the management of the fund or its assets, or in any change of control of the hedge fund or its assets. Also does not mean entities that solely provide or manage debt financing secured in whole or in part by the assets of a healthcare facility, including banks, credit unions, commercial real estate lenders, bond writers, and trustees. So a hedge fund is really just this pool of funds managed by investors

[Senator John Morley III (Member)]: for purposes of earning or returning.

[Jennifer Carbee, Office of Legislative Counsel]: Management services organization is any organization or entity that contracts with a healthcare provider or a provider organization, which is also a defined term, to perform management or administrative services relating to, supporting, or facilitating the provision of healthcare services. Ownership or investment interest, which comes up in the transparency thesis, means any of the following: direct or indirect possession of equity in the capital stock or profits totaling more than 5% of an entity, or interest held by an investor or group of investors who engage in raising or returning capital and who invest, develop, or dispose unspecified assets, or interest held by a pool 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. Getting pretty deep into some of these definitions. 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 through another entity, the investor or investors completely or partially own or controls. 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 do not participate in management of the group or its assets or any change of controls. That's similar to the hedge fund. We're not talking about people who just have their money involved, but people who are actually actively. Provider organization, we're almost done. Last two definitions. Provider organization means any corporation, partnerships, business trust, association, or organized group of persons that is in the business of healthcare delivery or management, whether or not they're incorporated, that represents one or more health providers in contracting with health insurers for payment of health care services. And it includes physician organizations, physician hospital organizations, independent practice organizations, provider networks, accountable care organizations, management services organizations, and any other organization that contracts with health insurers for payment and healthcare services. And finally, significant equity investor meets any private equity group with a direct or indirect ownership or investment interest in a healthcare 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 healthcare 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 healthcare facility or management services organization, or that operates the business for substantially all or real or personal property or both of a healthcare facility or management services organization for their lease, management or operating effort. Alright, we are through the definitions. Now we can get to the meat of what happens. Although for some stakeholders, those definitions matter a

[Senator John Morley III (Member)]: lot to what comes next.

[Jennifer Carbee, Office of Legislative Counsel]: So next we have limitations on control over clinical decision making by private equity group or hedge fund. And it starts out with a purpose statement. The purpose of this section is to ensure that clinical decision making and treatment decisions are exclusively in the hands of healthcare providers and to safeguard against non licensed individuals or entities, such as private equity groups and hedge funds, exerting influence or control over healthcare delivery. So then it has some prohibitions. A private equity group or hedge fund involved in any manner with a healthcare facility doing business in this state, including as an investor in the facility or an investor or owner of the assets of the facility, shall not do any of the following with respect to the healthcare facility. They 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 provider, determining the patient's care plan, including the treatment options available to the patient, and determining how many patients a healthcare provider must see in any given period of time or how many hours a healthcare provider must work. So they can't interfere with the judgment of healthcare providers making healthcare decisions, and that's a non exhaustive list of what that could look like. They also shall not 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 of healthcare providers, clinical staff, or medical assistants, or a combination based in whole or in part on clinical competency or proficiency, Setting the parameters under which a healthcare provider or a facility can enter into contractual relationships with third party payers. Okay, so that, was gonna ask about that. Setting the prices, rates, or amounts the facility charges for healthcare provider services. Setting the clinical competency or proficiency parameters under which a healthcare provider must enter into or will enter into contractual relationships with other providers for the delivery of healthcare services, making decisions about the coding and billing of diagnoses and procedure for patient care services, and selecting or approving the selection of medical equipment and medical supplies for the facility. So again, the lead in language to that part is that a healthcare facility, sorry, a private equity group or a hedge fund shall not exercise control over or be delegated the power to do any of those items.

[Senator Virginia "Ginny" Lyons (Chair)]: Yes.

[Senator John Morley III (Member)]: I synthesized so far. It seems so that these groups can follow their home care facility but they can't administer or manage. Right. You can't put

[Jennifer Carbee, Office of Legislative Counsel]: can't run it. Can't can't direct the clinical, the patient care aspects. Right. So, you'll see a little bit there is some like what they can do.

[Senator John Morley III (Member)]: It's more than that. Correct. There's a couple paragraphs there that says, more than patient care. Yes.

[Jennifer Carbee, Office of Legislative Counsel]: Yeah, yes. I mean, they're not directing the activities of the healthcare Right, right.

[Senator John Morley III (Member)]: Okay.

[Jennifer Carbee, Office of Legislative Counsel]: Yes, this is why I'm going through all the words. It also specifies that a private equity group or hedge fund or an entity controlled directly in full or in part by one of them shall not enter into an agreement or arrangement with a healthcare facility doing business in this state if that agreement or arrangement would enable the person to interfere with the ability of healthcare providers to make healthcare decisions, as set forth in (one), or to exercise control over or be delegated the powers set forth in subdivision (two). So both of them cannot do those things, they also cannot enter into an agreement that would enable them to do those things. It specifies it doesn't matter what the organizational form of the facility is, so the organizational form of a healthcare facility as a sole proprietorship, partnership, foundation, or corporate entity of any kind does not affect the applicability of this section. But then it also says that nothing in this section shall be construed to prohibit an unlicensed individual or entity. So it's okay for an unlicensed individual or entity from providing non clinical 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 B2, as long as a licensed healthcare provider retains the ultimate responsibility for approval of those decisions and activities, and the services do not constitute an exercise of de facto control, not in reality control, over the administrative, business, or clinical operations of a healthcare facility in a manner that affects a provider's clinical decision making or the nature or quality of the services that the healthcare facility approves.

[Senator Virginia "Ginny" Lyons (Chair)]: How do we discriminate any of that? It'd be interesting.

[Jennifer Carbee, Office of Legislative Counsel]: And then it gives some relief to a healthcare provider. So a healthcare provider who is aggrieved by the actions of a private equity group or hedge fund, or an entity controlled directly or in whole or in part by a private equity group or hedge fund, in violation of this section can bring an action into superior court for appropriate equitable relief, actual damages, reasonable costs, attorney's fees. So it does provide an enforcement avenue for a healthcare provider who feels these activities have occurred. Then we get to the transparency pieces. This is, first section of this is reporting of ownership and control of certain healthcare entities, and this requires that by July 1, so a couple pieces of reporting, by July 1, each healthcare facility and each management services organization, so that's why definitions are important, shall provide to the Greenmont Care Board either, if they're a facility or organization in which one or more private equity groups of hedge funds held an ownership or investment interest, yes.

[Senator Virginia "Ginny" Lyons (Chair)]: So that was the question I was gonna ask earlier, and that is, is there any description of a relationship between the Green Mountain Care Board and any investor in facility?

[Jennifer Carbee, Office of Legislative Counsel]: So talking about administrative. And a reporting role, there's nothing in the previous section on the political decision making.

[Senator Virginia "Ginny" Lyons (Chair)]: So there's nothing that includes the hedge fund or the investor from taking its concerns to the Green Mountain Care Board regarding budgeting or payment or rates? I mean, I

[Jennifer Carbee, Office of Legislative Counsel]: think to the same extent as any other member of the public.

[Senator Virginia "Ginny" Lyons (Chair)]: I mean, suppose it's an organization that is regulated by the board.

[Jennifer Carbee, Office of Legislative Counsel]: I'm not understanding the organization that is. Could be a hospital. Okay. All right,

[Senator Virginia "Ginny" Lyons (Chair)]: so it's a hospital. And the hedge fund has a significant investment in the hospital. And in this first part of the bill, they're allowed to hedge fund is allowed to give administrative and financial advice that's in here. So during any review of the budget, is the hedge fund allowed to be a party to that? It is not,

[Jennifer Carbee, Office of Legislative Counsel]: I mean I don't believe under our hospital budget review laws they would be a purdy, that I would want the Green Medicare Board to weigh in on how

[Senator Virginia "Ginny" Lyons (Chair)]: that process works. Yeah, I'll find out about that. I know enough about, I don't know, it could be that the hedge fund

[Jennifer Carbee, Office of Legislative Counsel]: It's is not have to say this case, so I'm not sure if there's a party status, and maybe advocate's office has more healthcare. Healthcare advocate would be there.

[Senator Virginia "Ginny" Lyons (Chair)]: But it would be if the investor would end directly to represent the budget from an administrative perspective at the board. I'm just concerned that there's nothing that would preclude that from happening. Just a question. We'll have to do that at the board. Yes. It out. Nothing in

[Jennifer Carbee, Office of Legislative Counsel]: here that's been getting rid of the

[Senator Virginia "Ginny" Lyons (Chair)]: hospital budget process. Okay.

[Jennifer Carbee, Office of Legislative Counsel]: Let's look at the reporting of ownership and control. So by 07/01/2026, each healthcare facility and management services organization has to provide for the Green Mountain Care Board either if they are a facility or organization that has, in which one or more private equity groups or hedge funds held an ownership or investment interest as of 06/01/2026, then they have to provide the information we're gonna look at in subsection B. If they do not have any private equity group or hedge fund ownership or investment interest as of 06/01/2026, then they have to provide an attestation that they currently have no private equity or hedge fund ownership or interest or investment. So there's sort of a baseline as of 07/01/2026 for each healthcare facility and management services organization to tell the board either, yes, we do have hedge fund or private equity ownership or investment interest, and we're gonna look at what that additional information they would need to provide, or no, we do not. And then there's some updating that happens as well. So for each, so in subsection B, each healthcare facility or management service organization that does have private equity group or hedge fund ownership or investment interest as of 06/01/2026, would have to report the following information to the board by July 1 in a form and manner required by the board. They have to provide the name, business address, and business identification numbers for each person that, with respect to that facility or management services organization, has an ownership or investment interest, has a controlling interest for a healthcare facility they have to report if they are a management services organization, or if they are a significant equity investor, which is one of those defined terms. They also have to provide a current organizational chart showing the business structure of the healthcare facility or management services organization, including any entity listed in this list here above, any affiliates, including entities that control or are under common control as the healthcare facility or management services organization and subsidiaries, and they have to provide the facility or organization's most recent fiscal year's profit and loss statement and balance sheet.

[Senator Virginia "Ginny" Lyons (Chair)]: So that's the sort of initial reporting by 07/01/2026. And all the reporting goes to the Green Mountain Care Board. Yep. It doesn't go to anywhere else, doesn't it?

[Jennifer Carbee, Office of Legislative Counsel]: We'll keep looking. We'll keep some language. Additional language. All right, after 07/01/2026, the healthcare facility or services organization also has to report all of that information in subsection B anytime that a private equity group or hedge fund takes on an ownership or investment interest in the facility or organization that had not previously been reported to the Green Mountain Care Board, or if there is a modification to a private equity group's or hedge fund's existing ownership or investment interest in the facility or organization. There are certain exemptions. The following entities are exempt from the reporting requirements, nursing homes, healthcare staffing companies, federally qualified health centers, and entities whose healthcare services delivered in Vermont are provided exclusively through telehealth, including services delivered using telemedicine and store forward, and all forms of remote patient monitoring. I'll let other witnesses talk to you about the rationales there. Information provided under this section, so this is important, information provided under this section is public information and not considered confidential, proprietary, or trade secret with a couple of exemptions, except that any individual healthcare provider's taxpayer identification that is also their social security number and any non business telephone number, email address, physical address, or mailing individual address of any individual healthcare provider would be exempt from public inspection and copying under the Public Records Act and kept confidential. And all profit and loss statements and balance sheets submitted under Subdivision B3 are exempt from public inspection and copying under the Public Records Act and must be kept confidential, except that the board shall provide copies of these materials or the information in them to the office of the healthcare advocate, which shall also not further disclose the confidential information. So it's reported to the board, but for the most part it becomes public. And a healthcare facility or management services organization that knowingly fails to report the required information is liable to the state for a civil penalty of not more than $50 a day, not to exceed a total of $10,000 for each year that it fails to report the required information. A healthcare facility or management services organization that makes a material misrepresentation in a report required under this section is liable to the state for a single penalty of not more than $25,000 for each material misrepresentation included in the report, and it empowers the Attorney General to maintain an action in Superior Court to collect the penalties imposed in this section and seek appropriate injunctive relief. Then we have another section on sharing of ownership information to improve transparency. And this would require on or before February 1 and every two years thereafter, the Green Mountain Care Board to post on its website a report regarding the information that was provided to it under the previous section during the previous two year period, including the number of healthcare facilities and management services organizations reporting for the year disaggregated by business structure. The names, addresses, and business structure of any entities that have a control ownership or controlling interest in each healthcare facility or management services organization. Any change in ownership or control for each healthcare facility or management services organization, any change in the tax ID number of a healthcare facility or management services organization, and as applicable, the name, address, tax ID number, and business structure of other affiliates under common control, subsidiaries, and management services entities as the healthcare facility or management services organization, including the business type and tax ID number of each. Information provided under this section is public and not confidential, proprietary or trade secret, except again for the protection of any individual healthcare provider's taxpayer ID that is also their Social Security number. And this allows the Green Mountain Care Board to share information reported under this chapter with the, so this is some of the additional sharing information reported under this chapter, with the Attorney General, the Secretary of State, other state agencies, and other state officials to reduce or avoid duplication in reporting requirements, or to facilitate oversight or enforcement pursuant to Vermont law, or both. And it talks about requiring the confidentiality of tax ID numbers that are individual social security numbers and other confidential information, and allows the board in consultation with relevant state agencies to merge similar reporting requirements where appropriate. So yes, the information is reported to the Green Mountain Care Board. A large portion of it is public, and all of it can be shared with other state agencies and officials as appropriate.

[Senator Virginia "Ginny" Lyons (Chair)]: And the accurate effect on July 1. And nursing homes are not included?

[Jennifer Carbee, Office of Legislative Counsel]: Nursing homes are not included in the reporting of that information, and I think you'll hear from witnesses, but my understanding is that information is already required to be reported to the federal government, and may be available to the site as well.

[Senator Virginia "Ginny" Lyons (Chair)]: Okay. And then nothing from healthcare staffing companies. So all of the traveling nurse organizations. I think from each of the two HCs.

[Senator John Morley III (Member)]: Oh, I know. And then senator. On page 12, this is an interesting construct that I'm not familiar with or maybe it's new, but I understand the Green Mountain Care Board is a regulated body doing some of this work, but it's interesting that the materials will be shared and then it seems like held by the office of the healthcare advocate. Seems like a new construct, unless I'm just not aware of the rule.

[Jennifer Carbee, Office of Legislative Counsel]: There are a fair number of provisions in various statutes around certificate of need and health insurance rate review and hospital budget review where the health care advocate receives information that is otherwise confidential. And I think it's prohibited from further disclosure. So it's not a new construct in the

[Senator John Morley III (Member)]: sense of the role of healthcare advocate. Right, think that's helpful. And they shall not disclose, what, is that,

[Senator Virginia "Ginny" Lyons (Chair)]: what legal Confidentiality. Yeah,

[Senator John Morley III (Member)]: okay, so that's just they're bound by HIPAA.

[Jennifer Carbee, Office of Legislative Counsel]: No, they're not bound by HIPAA. HIPAA doesn't, it's not involved here. The health care advocate law is not a covered entity, and most of this is not protected. Mean, that profit and loss statements are not protected health information. They are under contract with the state. That's I mean, the office of the health care advocate is is established in statute, and it is awarded to a nonprofit entity by contract with the state. So I think there'll be enforcement through the state if they were

[Senator John Morley III (Member)]: to disclose confidential information. Alright. Well, enforcement is something that we seem to struggle with a little bit in the state. So I I I do have questions about this. I'll just leave it at that for now.

[Senator Virginia "Ginny" Lyons (Chair)]: Sure, okay. I know we need to have the healthcare advocate and the Green Mountain Care Board, AG, and then I'm also thinking that DIVA, Medicaid or Agency of Human Services, there are some effects here in terms of Medicaid payments and how they might be affected through this type of investment. I don't know whether that's accurate or not.

[Jennifer Carbee, Office of Legislative Counsel]: I'm not sure, I don't think they came up in the house but you can certainly hear from them. I do believe the agency of human services holds a contract with them with care advocate. So if you wanted to understand the important options you could ask them.

[Senator Virginia "Ginny" Lyons (Chair)]: And then DFR? I don't know because it's got contractual relationships in here with payers, which is a concern. So we should have DFR. I think they will invite and they may have limited comment but we need to know that. I'm also what I've heard I don't know a lot about

[Senator John Morley III (Member)]: this but what I've heard is that private equity firms are very good at obfuscating their expense and I would love to hear if all of these definitions and everything that we have in here is strong enough to actually get to the heart of what we're trying to do. I I don't I don't know, but if we could hear from an expert, private equity expert.

[Jennifer Carbee, Office of Legislative Counsel]: Yes, we did work with some folks at Brown University on earlier iterations of it, but I think some of the definitions are consistent with their recommendations. And there were enough changes throughout the process that I'm not sure who's responsible for the ultimate definitions here. But I think

[Senator John Morley III (Member)]: you can certainly hear from

[Senator Virginia "Ginny" Lyons (Chair)]: some experts on. We'll find someone who will qualify as an expert or two. Go ahead, Senator. John, does this language come from, are other states looking

[Senator John Morley III (Member)]: at the same thing, and is there similar states that are close to this H5-three?

[Jennifer Carbee, Office of Legislative Counsel]: Yes, other states are looking at this and some have enacted it, and I have to look at some of the folks in the room to remember if this ended up looking like Oregon's or Massachusetts, Oregon's? Okay, more like Oregon. California. California.

[Senator Virginia "Ginny" Lyons (Chair)]: California, okay. And so healthcare advocate will be able to help us with that a little bit. Okay, okay. VMS? Okay. I just put you on a list of how this

[Senator John Morley III (Member)]: really works.

[Jennifer Carbee, Office of Legislative Counsel]: Yes, can look, there is quite an extensive list of witnesses from the House, you can certainly consult that. When the bill was introduced in the House, what was different about it? Was it broader? Significantly different. Yes, it was much broader. It dealt with some provisions on ownership that are not in this.

[Senator Virginia "Ginny" Lyons (Chair)]: Disallowing hedge fund investment totally or ownership.

[Jennifer Carbee, Office of Legislative Counsel]: There have been so many versions of this. Okay. But I'm gonna go there. Yes. Certainly, I'll able pull up the original, very complicated end if you would like. But Moger went a massive rewrite, then this is the third iteration. Yeah.

[Senator Virginia "Ginny" Lyons (Chair)]: It will be important for us to hear from the expert on private equity and and in private equity investment, we'll look and see who testified and how Yes, very knowledgeable experts. Well the question is, and in talking with a first year medical student upstairs, one of the comments was that in his research there's not an indication that healthcare has improved with private equity investment. So maybe our expert on private equity can help us understand that relationship between outcomes, medical outcomes, clinical outcomes, and investment. Things they can. Were some

[Jennifer Carbee, Office of Legislative Counsel]: folks from Brown University of Norbert who had done a lot of research on private equity and health care.

[Senator John Morley III (Member)]: Would there be some that would be supportive of private health care and equity?

[Jennifer Carbee, Office of Legislative Counsel]: Not that I have heard, but that doesn't mean there are not. I mean, think there are think there are nuances to it. There are certainly financial benefits to struggling healthcare facilities. So I think you may hear some mounting.

[Senator Virginia "Ginny" Lyons (Chair)]: Okay, So, any other questions about the bill with Ginny? And I've made a list of folks we wanna hear from. Some of them will have a lot to say and some of them will say, we don't need to comment at this time. We're okay. So we'll make sure we cover a pace of COVID and that does happen. Is Vermont Medical Society interested in testifying on this one? Not listening, in the future, not now. I'm saying, yes, would be great. Thank you. To see the healthcare advocate will be very important to this. All right, committee, we're good. What other questions? Well, be nice to know what's happening out there in the real world with this. My concern actually is on nursing homes because we've seen, in the past, we've seen a huge investment in nursing homes and then the investor comes in and shuts the nursing home down. And so there's a total loss to outcomes in the state for patient care and that is a huge concern. So we will hear what we can from AHS. I don't know how much we can add in.

[Jennifer Carbee, Office of Legislative Counsel]: And the nursing homes are certainly active in testifying upstairs. Yeah, that represents.

[Senator Virginia "Ginny" Lyons (Chair)]: Any other ideas, let me know. We'll have a list of mine, something else for us pretty soon. Okay?

[Senator John Morley III (Member)]: Sounds good.

[Senator Virginia "Ginny" Lyons (Chair)]: Alright. Good. We're ahead by five minutes. We bank that five minutes because we started five minutes. So you are all lucky. And we'll we'll just go off live briefly and come back and look at $5.36. We also have two bills that we need to look at that are up on the calendar. Melissa, what are the numbers? 57 and $2.39. And 239, 157 and 239.