Current through February, 2024
Section 7.000
General Provisions
7.001 Authority. This rule
is promulgated by the Department of Banking, Insurance, Securities and Health
Care Administration under the authority of
18 V.S.A. §§
9404(d)(2),
9453(b),
and
9456(e).
7.002 Applicability. This rule shall apply to
health care facilities, health care providers, and other persons affected by
the unified health care budget adopted by the Commissioner pursuant to
18 V.S.A. §
9406(a) and the hospital
budget review process under
18 V.S.A. §§
9451 -
9457.
7.003 Purpose. Section
9406 of
Title 18 requires the Department of Banking, Insurance, Securities and Health
Care Administration to adopt a unified health care budget as one means of
achieving the policies set forth in
18 V.S.A. §
9401, including quality health care for all
Vermonters at an affordable price. The budget is to serve as the basic
framework within which health care costs in Vermont can be controlled,
resources directed, and quality and access ensured. This rule establishes the
procedures through which a unified health care budget will be adopted by the
Department.
7.004 Definitions
(A) "Commissioner" means the Commissioner of
the Department of Banking, Insurance, Securities and Health Care
Administration
(B) "Department"
means the Department of Banking, Insurance, Securities and Health Care
Administration.
(C) "Division"
means the Division of Health Care Administration of the Department of Banking,
Insurance, Securities and Health Care Administration established under
18 V.S.A. §
9403.
(D) "File" means receipt by the Division of a
written document.
(E) "Fiscal year"
or "year" means a twelve-month period designated by the Division under Section
7.900 of this rule.
(F) "Health
care facility" means all facilities and institutions, whether public or
private, proprietary or nonprofit, that offer diagnosis, treatment, inpatient
or ambulatory care to two or more unrelated persons. The term shall not apply
to any facility operated by religious groups relying solely on spiritual means
through prayer or healing, but includes all facilities and institutions
included in
18 V.S.A. §
9432(10).
(G) "Health care provider" or "provider"
means a person, partnership or corporation, other than a facility or
institution, licensed or certified or authorized by law to provide professional
health care service in Vermont to an individual during that individual's
medical care, treatment or confinement.
(H) "Person" means a natural person,
partnership, unincorporated association, corporation, municipality, the state
of Vermont or a department, agency or subdivision of the state, or other legal
entity.
(I) "Provider bargaining
group" means a group of health care providers authorized to negotiate with the
Department pursuant to Rule 6.000.
(J) "Public Oversight Commission" means the
commission established pursuant to
18 V.S.A. §
9407(a).
(K) "Sector" means a part of the unified
health care budget as defined by the Commissioner in accordance with Section
7.100 of this rule.
(L) "Unified
health care budget" or "budget" means the annual budget adopted by the
Commissioner pursuant to this rule and
18 V.S.A. §
9406.
(M) "Uniform reporting manual" or "manual"
means the uniform reporting manual published by the Division, including
appendices and supplements, and any subsequent revisions of the
manual.
(N) "Vermont resident" or
"resident" means a person who is domiciled in Vermont and who, if temporarily
absent, demonstrates an intent to maintain a principal dwelling place in
Vermont indefinitely, coupled with an act or acts consistent with that
intent.
7.005 Timelines.
The timelines established in this rule may be changed by the Division as
necessary to accommodate the activities of the Division in establishing a
unified health care budget from year to year. Any such change shall be
effective the budget year following notice by the Division to all hospitals and
to all provider bargaining groups approved under Rule 6.000. Notice shall be
sent by first-class mail and is deemed given on the date mailed. A copy of such
change shall be filed at the same time with the secretary of state's
office.
7.006 Confidentiality.. The
Division and its advisory groups shall handle all confidential information
filed with it under this rule in accordance with the Division's Confidentiality
Code, its policies governing the release of confidential and proprietary
information, and any applicable federal or state statute, rule or regulation
that prohibits or otherwise affects the release or disclosure of the
information.
Section
7.100 Sectors of the Unified Health Care Budget
The Division and its advisory groups shall handle all
confidential information filed with it under this rule in accordance with the
Division's Confidentiality Code, its policies governing the release of
confidential and proprietary information, and any applicable federal or state
statute, rule or regulation that prohibits or otherwise affects the release or
disclosure of the information.
7.101
Definition of Sectors.
18 V.S.A. §
9406(a)(3) requires the
Commissioner to define the various health care sectors of Vermont's health care
system that will be separately identified in the budget. That health care
system consists of a variety of people, assets and services, many combinations
of which could be considered sectors for purposes of the unified health care
budget. Sectors could be defined in many ways, including but not limited to: by
providers, by services offered through a statewide uniform package, by
institutions, by integrated systems of care or other managed-care
organizations, by geographic region, and by funding source.
(A) New definitions.
(1) The Division shall periodically publish
changes to its definitions of sectors to be separately identified in the
following year's unified health care budget.
(2) Health care facilities, provider
bargaining groups, and other interested persons may file with the Division any
written responses, comments, or alternatives to the proposed changes to the
Division's sector definitions. Prior to adopting the proposed changed sectors,
the Division shall consult with health care facilities, provider bargaining
groups, and other interested persons and consider their comments.
(3) The Division shall consider the written
submissions and may, in its discretion, hold one or more meetings with health
care facilities, provider bargaining groups, and other interested persons to
discuss the changes to the sectors to be separately identified in the following
year's budget.
(4) The Division
shall then adopt the sectors, and shall distribute copies of the adopted
sectors to health care facilities, provider bargaining groups, and such other
persons who request it.
Section 7.200 Data Necessary to Support the
Unified Health Care Budget
7.201 Unified
Health Care Data Base. Health care providers, health care facilities and other
persons shall comply with the data filing requirements of
18 V.S.A. §
9410 and
9454
and any rules promulgated thereunder.
7.202 Uniform Reporting Manual. In addition
to any unified health care data base filing requirements, hospitals shall file
the information required by the uniform reporting manual in the time, place and
manner described in the manual.
7.203 Supplemental Information. The Division
may require health care providers, health care facilities and other persons to
file supplemental information deemed necessary to the development of
expenditure analyses, expenditure forecasts, or the unified health care
budget.
Section 7.300
Indicators
In preparing its budget forecast each year under Section
7.402 and in adopting a final unified health care budget under Section 7.406 of
this rule, the Division may use the following indicators:
(A) Gross state product. The annual change in
the gross state product of Vermont.
(B) Inflation indices. Inflation projections
as forecast by the federal Health Care Financing Administration or other
economic forecasters built upon a market-basket of goods and services for a
given industry.
(C) Utilization
cost. A variable cost indicator established to measure utilization costs
related to changes in service usage.
(D) Service case mix. Variable costs
associated with changes in the intensity of services or care to be
provided.
(E) State and federal
budgets. Government program reimbursement estimates that affect hospital
pricing.
(F) State economic
forecast. The annual economic forecast by the Governor's office.
(G) Cost-Shift Impacts. The Division's
estimate of the impact of cost-shifting.
(H) Cost per unit. Costs, including
adjustments for case mix and units of service.
(I) Epidemiology measures. Changes to
underlying incidence of disease and the demographics of the service
area.
(J) Use Rate. A use rate
indicator based upon the population of the service area established for
evaluating hospital service area utilization.
(K) Other factors. Any other factors or
considerations deemed appropriate by the Division.
Section 7.400 Process for Establishing the
Unified Health Care Budget
The Commissioner shall establish a unified health care budget
annually. The process of establishing the budget shall include, but not be
limited to, analysis by the Division of the expenditures of health care sectors
for the most recent full fiscal year for which data are available, analysis of
budget figures submitted by the sectors, and public discussion of the proposed
budget forecast.
7.401 Identification
of Vermont Expenditures. On or before July 1 of each year, the Division shall
publish a health care expenditure analysis. This analysis will identify the
total amount of health care expenditures collected by Vermont providers and the
total amount of health care expenditures made by Vermont residents for the most
recently-ended fiscal year for which data are available.
(A) Expenditures by Vermont health care
providers and categories of services. Using the data obtained pursuant to
Section 7.200 of this rule and
18 V.S.A. §
9410, the Division shall identify all funds
received in the preceding fiscal year by Vermont health care facilities and
providers. To the extent possible, the Division shall identify which portions
of this sum were spent by or on behalf of Vermont residents and which portions
were spent by or on behalf of residents of other states or countries.
(B) Expenditures on Vermont residents. Using
the data obtained pursuant to Section 7.200 of this rule and
18 V.S.A. §
9410, the Division shall identify all funds
spent on health care services in the preceding fiscal year by or on behalf of
Vermont residents, regardless of where the services were rendered or obtained.
To the extent possible, the Division shall identify which portions of this sum
were paid to health care facilities or providers within Vermont, and which
portions were paid to health care facilities or providers outside
Vermont.
(C) Other expenses. The
Division shall also identify other expenses affecting Vermont's health care
system, including but not limited to private and public administrative and
governmental expenses.
7.402 Establishment of a Unified Health Care
Budget Forecast. On or before July 1, the Division shall prepare a proposed
budget forecast for the next fiscal year based on its analysis of health care
expenditures under this section, the letters of intent as to proposed new
institutional health services filed under
18 V.S.A. §§
9431 -
9445, the
information filed in the unified health care data base otherwise required under
Section 7.200 of this rule, the budgets submitted by the hospitals on July 1,
and any other information deemed relevant by the Division. A copy of the
proposed budget forecast shall be sent to Vermont hospitals, provider
bargaining groups, the Public Oversight Commission, and such other persons who
request it.
7.403 Health Care
Facilities and Health Care Provider Bargaining Groups. The Division may hold
one or more meetings with health care facilities, provider bargaining groups,
and other interested persons regarding the proposed budget forecast.
Negotiations with the provider bargaining groups shall be conducted pursuant to
Section 6.500 of the Department rules relating to provider bargaining groups
and
18 V.S.A. §
9409(a).
7.404 Budget Forecast Review. In establishing
the unified health care budget the Commissioner shall take into consideration
the proposed budget forecast, the comments and recommendations of the Public
Oversight Commission, and the oral and written comments made in the course of
the public hearing conducted pursuant to Section 7.504(B), the comments of
health care facilities, provider bargaining groups, or other interested persons
received under Section 7.403 and any other considerations deemed appropriate by
the Division.
(A) The Public Oversight
Commission shall consider the proposed budget forecast in conducting its
hospital budget reviews under
18 V.S.A. §
9456 and Section 7.500 of this
rule.
7.405 Unified
Health Care Budget The Commissioner shall establish a unified health care
budget for the next fiscal year on or before October 1.
Section 7.500 Application of Unified Health
Care Budget to Hospital Budget Reviews
Pursuant to
18 V.S.A. §
9406(b)(3), the unified
health care budget shall apply to the hospital budget review process under
subchapter 7 of Title 18. The Division shall have primary responsibility for
collecting and evaluating hospital financial information and reviewing all
hospital budgets in conformity with the provisions of subchapter 7 and this
section, and recommending the budgets to be adopted by the Commissioner. At a
minimum, the hospital budgets shall include all acute-care hospitals in Vermont
and all expenditures and revenues associated with the hospital organizational
reporting structure.
7.501 Uniform
Formats for Data Filings. Hospitals shall use the methods and formats set forth
in the uniform reporting manual in reporting their financial,
scope-of-services, and utilization data and information to the Division under
Section 7.200 of this rule, using the uniform reporting forms and uniform chart
of accounts contained in the manual.
7.502 Establishing Benchmarks. On an annual
basis, the Division will develop benchmarks for the indicators in Section 7.300
for development and preparation of the upcoming fiscal year's hospital budgets.
The Division may obtain input from the Public Oversight Commission, the Vermont
hospitals, and the Vermont Association of Hospitals and Health Systems prior to
establishing the benchmarks. The established benchmarks shall be included in
the uniform reporting manual, which shall be provided to the hospitals by March
31.
The uniform reporting manual benchmarks will allow the
Division to:
(1) make a determination
whether to waive the need for a hospital to present its budget to the Public
Oversight Commission at a public hearing; and
(2) will be used by the Commissioner to
determine whether a budget may be adjusted.
The established benchmarks, as supported under Section 7.300,
may include the following:
1) growth
indicators,
2) prior budget
performance,
3) efficiency or
productivity indicators,
4) capital
investment indicators,
5)
profitability indicators,
6) cost
and price indicators,
7) liquidity
indicators,
8) debt structure
indicators,
9) other financial
measures recognized or used in evaluating budgets and/or financial
plans.
7.503
Hospital Duties and Obligations. On or before July 1 of each year, each Vermont
hospital shall file the following information with the Division, in addition to
any other information required by the uniform reporting manual:
(A) its proposed budget for the next fiscal
year, including expenditures and revenues for Vermont residents and non-Vermont
residents;
(B) financial
information, including but not limited to its costs of operation, revenues,
assets, liabilities, fund balances, other income, rates, charges, units of
service, and wage and salary data;
(C) scope-of-service and volume-of-service
information, including but not limited to inpatient services, outpatient
services, and ancillary services, by type of service provided;
(D) utilization information;
(E) a description of new hospital services
and programs proposed for the next fiscal year, regardless of whether they are
or may be subject to the certificate of need review process under subchapter 5
of Title 18;
(F) a projected
three-year capital expenditure budget;
(G) the financial condition of the
hospital;
(H) the nature of the
services offered by the hospitals that are subject to the budget;
(I) the needs of the populations served by
the hospital;
(J) the specialized
or franchised services offered by the hospital; and
(K) such other information as may be required
by the Division or Public Oversight Commission.
7.504 Division Review Process After the
financial information required under Section 7.503 is filed with the Division,
the Division shall conduct reviews of all proposed hospital budgets, as
follows:
(A) Information available to the
public. The Division shall make the financial information filed under Section
7.503 available to all persons upon request. The Division may charge the actual
copying costs incurred in providing such information to the persons requesting
the information.
(B) Public
Hearing. Upon receipt by the Division of all financial information filed under
Section 7.503, the Division shall arrange for the Public Oversight Commission
to hold public hearings concerning the hospitals' budgets. The hospitals,
except for those hospitals exempt from the hearing pursuant to Section
7.504(D), shall provide testimony and respond to questions raised by the Public
Oversight Commission, the Division, or the public. The Public Oversight
Commission shall advise and make recommendations to the Commissioner concerning
the hospital budgets.
(C) Use of
Benchmarks. The Division's established benchmarks, outlined in Section 7.502,
shall guide the Commissioner in his/her decision to adjust or not to adjust a
hospital's budget.
(D) Exemption
from Public Hearing. Hospitals that meet the established benchmarks may be
exempt from the Public Oversight Commission public hearing outlined in Section
7.504(B) in the following instance only:
1. A
hospital may be exempt from the public hearing when they meet established
benchmarks. Notwithstanding a hospital's budget meeting the benchmarks, no
hospital may be exempt from the public hearing process for more than one year
consecutively. In any given year, only four hospitals may be waived from
attending a public hearing; hospitals that are waived from attending the public
hearing will not have their budgets adjusted.
The four (4) largest hospitals, as measured by the hospitals'
previous year's net patient revenue, shall not be exempt from the public
hearings in any year.
(E) Budget Adjustments. Hospitals that do not
meet the established benchmarks outlined in Section 7.502 may be subject to
budget adjustments.
(F) Review
process. The Division shall meet with hospitals to review and discuss their
proposed budgets, as to which the hospitals have the burden of persuasion. The
Division's budget reviews shall take into consideration the following, as well
as the advice and recommendations of the Public Oversight Commission:
(1) the proposed unified health care budget
forecast for the next fiscal year;
(2) utilization information;
(3) the goals and recommendations of the
state health plan and CON Guidelines adopted under
18
V.S.A. §
9405, 9556(b)(2), and
9437(5);
(4) the actual performances of hospitals with
respect to past budgets;
(5)
reports from professional review organizations relating to Vermont hospitals or
health care services provided through Vermont hospitals (excluding hospital
internal quality and utilization review reports);
(6) the established benchmarks; and
(7) any other information it deems relevant
or appropriate to hospital budgets.
(G) Establishment of Hospital Budgets. On or
before September 15, the Commissioner shall establish Vermont hospital budgets
for the next hospital fiscal year based on the review of the proposed budgets
by the Division, the advice and recommendations of the Public Oversight
Commission, and the comments of the public. On or before October 1, the
Commissioner shall issue a written decision establishing the hospitals' budgets
for the next fiscal year. The hospital budgets established by the Commissioner
shall modify or supplement the proposed unified health care budget
forecast.
Section
7.600 Application of Unified Health Care Budget to Certificate of
Need Review
Pursuant to
18 V.S.A. §
9436(a)(2), the unified
health care budget shall apply to the certificate of need (CON) review process
under subchapter 5 of Title 18 and any regulations promulgated
thereunder.
Section 7.700
Application of Unified Health Care Budget to Other Sectors
[Reserved.]
Section
7.800 Enforcement
The Division shall enforce those portions of the unified
health care budget affecting hospital budgets and the certificate of need
review process as follows.
7.801
Hospitals. The Division shall periodically review the performance of hospitals
under the budgets established for them. This review may occur at any time
through independent review by the Division of a hospital's performance.
(A) Review criteria. The Division's review of
a hospital's performance under an established budget shall take into
consideration the following factors:
(1) the
variability of a hospital's actual revenues, which depend on the resources of
payers and the methods of payment used by the payers;
(2) the hospital's ability to limit services
to meet its budget, consistent with its obligations to provide appropriate care
for all patients;
(3) the financial
position of the hospital in relation to other hospitals and to the health care
system as a whole, using the statistics developed from information submitted in
compliance with the uniform reporting manual;
(4) any other considerations deemed
appropriate by the Division, including but not limited to other instances in
which a hospital has less than full control over the expenditures limited by
the budget; and
(5) the hospital's
performance under budgets identified or established under subchapter 7 of Title
18 for the previous three years and its budget projections for the next three
years.
(B) Adjustment
methods. After making a determination of a hospital's performance under an
established budget, the Division may recommend to the Commissioner an
adjustment to the hospital's budget. Any such adjustment shall take into
account the factors set forth in subsection 7.801(A).
(1) Where a determination is made that a
hospitals performance has differed substantially from its budget, the
Commissioner may adjust its budget by:
(a)
changing hospital rates or prices by the amount of net revenues exceeding the
budgeted net revenues;
(b) changing
the net revenue and/or expenditure levels of future budgets.
(c) allowing hospital rates to be increased
for a hospital with a deficit caused by revenues that were less than projected,
but whose actual expenditures were within the budget limits;
(d) allowing a hospital to retain surplus
funds if the surplus was achieved while the hospital stayed within its
established budget;
(e) allowing a
hospital to retain a percentage of surplus generated primarily by volume in
excess of that projected for a particular year; or
(f) any other circumstance the Commissioner
deems appropriate.
(C) Application. Adjustment methods based on
past performance shall be applied by the Division in the course of establishing
a new budget and may be imposed over a multi-year period. In recommending
adjustment of a hospital's budget, the Division shall consider the financial
condition of the hospital and any other factor it deems appropriate.
7.802 Certificate of Need Reviews.
Adjustment methods available as to persons subject to the certificate of need
review process may be set forth in the Department's certificate of need
regulations.
7.803 Exceptional or
Unforeseen Circumstances. In determining the appropriate adjustments that will
be applied to a person or sector that the Division has determined is not in
compliance with the unified health care budget, the Commissioner must consider
any exceptional or unforeseen circumstances that may have affected the person's
or sector's ability to comply.
(A) The person
or sector whose compliance is at issue has the burden of proving the existence
of exceptional or unforeseen circumstances, as well as the effect those
circumstances had on his or her ability to comply with the applicable portion
of the unified health care budget.
(B) Any person or sector relying on the
existence of an exceptional or unforeseen circumstance as a reason for a
failure to comply with the budget shall also recommend to the Division a
proposed course of action that will bring its budget into compliance. Such a
course of action includes, but is not limited to, review of the person's budget
compliance over a span of years or an adjustment to the person's base for the
succeeding fiscal year.
Section 7.900 Fiscal Year
7.901 Definition. The fiscal year is
initially defined as the twelve-month period beginning on October 1 of each
year.
7.902 Modification of Fiscal
Year. The Division may change the fiscal year as it applies to the unified
health care budget or to individual sectors within the budget from time to
time. Public notice of such a change shall be made in newspapers of record in
the manner provided for the publication of proposed rules under
3 V.S.A. §
839, and notice shall also be given by the
Division by first-class mail to all provider bargaining groups approved under
Rule 6.000. The change shall be effective 90 days after notice has been
given.
7.903 Conforming Amendments
to Rule. The Division, upon adoption of a different fiscal year, shall promptly
file the necessary proposed changes to this rule so as to conform to the new
fiscal year. Proposed changes shall be temporarily effective upon filing of the
proposal with the secretary of state under
3 V.S.A. §
838 until the adoption of the final
changes.
Statutory Authority: 18 V.S.A. Chapter 221
§§ 9404, 9453 and 9456