Exemptions and Excuses

Gov. Peter Shumlin says Vermont must get spiraling health care costs under control [1] if there is any hope of moving the state to a single-payer health care system.

Team Shumlin’s cost-cutting skills will be put to the test in the coming months as the state Banking, Insurance, Securities and Health Care Administration begins reviewing proposed budgets from Vermont’s 14 hospitals.

Will this be one of the “tough things” the gov gets done? So far, it’s not looking good.

That’s because a 2010 law designed to keep hospital spending in check for FY 2011 and FY 2012 also gave the institutions the opportunity to exempt millions of dollars in revenues and expenses from their budget “targets.”

Excluded expenses include information technology and electronic-medical-records investments, as well as the acquisition of physician practices. In addition, a hospital can exempt all, or a portion, of the state-levied provider tax and any costs associated with health care reform.

Not a single Vermont hospital sought such exemptions in FY 2011. But, with the new administration in place — guess what? — hospitals are seeking tens of millions of dollars in exemptions, which could actually increase Vermont’s health care spending costs.

Vermont’s hospitals have boosted net patient revenues by roughly $314 million during the past three years, with annual increases of about 6.3 percent. Those are the actual dollars captured by hospitals for services rendered, after any deductions or discounts given to insurance providers. The money comes from all of us, through higher insurance premiums, heftier out-of-pocket charges, taxes or all three combined.

To get the health care system under control, Vermont lawmakers limited the allowable increase of net patient revenues at the state’s hospitals to 4.5 percent in FY 2011. The FY 2012 target is 4 percent.

In early July, Vermont’s hospitals submit their budgets to BISHCA for review and approval. BISHCA Commissioner Steve Kimbell, a former health care insurance lobbyist [2], has the final word on whether hospitals get the budget numbers they seek. He has until mid-September to make those decisions.

Kimbell has the authority to deny hospitals some of the exemptions mentioned earlier. Whether he will remains to be seen. He points out that lawmakers introduced the exemptions to entice hospitals to spend money in areas that might help reform the system.

“The current process that I have supervision of is a total failure if the [criterion] is cost containment,” Kimbell told “Fair Game.” “I’m not doing what has been done in the past. My focus is on how do we get where we want to get, which is a sustainable budgeting process.” Investments in IT and electronic medical records should help control future costs, Kimbell noted.

How much money are we talking about? Several of the state’s hospitals provided numbers to “Fair Game.”

• Fletcher Allen Health Care is seeking a net patient revenue increase of $35.8 million over last year’s figure, to almost $1 billion. In addition, FAHC is seeking $23 million in exclusions. Add the two and it’s an increase of nearly 5 percent, well above the cap.

• Rutland Regional Medical Center is asking for $10 million in new net patient revenues and $5 million in exemptions, for a combined increase of 5.5 percent.

• Southwestern Vermont Medical Center in Bennington is seeking $5.8 million in new net patient revenue and $11.2 million in exclusions, for a combined increase of 5.5 percent.

• Northwestern Medical Center in St. Albans is seeking $6.8 million in new net patient revenues and $5 million in exclusions, for a combined increase of 6.3 percent.

• Central Vermont Medical Center is Berlin is seeking a $7.5 million increase in net patient revenues and $4 million in exclusions, for a combined increase of 6 percent.

• Copley Hospital in Morrisville is seeking a $4 million increase in net patient revenues and $2 million in exclusions, for a combined increase of 6 percent.

• Porter Medical Center in Middlebury is seeking $3 million in new net patient revenues and $2 million in exclusions, for a combined increase of 8 percent.

• Northeastern Vermont Regional Hospital in St. Johnsbury wants a $400,000 increase in net patient revenues and $746,000 in exclusions, for a combined increase of 7.1 percent.

These eight hospitals account for more than $60 million in exclusions. Will you and I wind up paying the difference? Probably, but we’ll feel good about it, because the hospitals, the Shumlin administration and lawmakers kept costs under control.

The so-called government takeover of health care is starting to look more like a handover.

Vermonters can weigh in on these budget requests at a whopping three-and-a-half-hour meeting (1:30 to 5 p.m.) on August 4 at Montpelier’s Department of Labor, or via Vermont Interactive Television.

The fix is in, according to longtime Burlington-based health care policy analyst Jeanne Keller.

“The way the process is going to work this year is very good for the Shumlin administration and hospitals. It’s a win-win for them. The hospitals get to build all of these increases into their budgets and at the same time everyone gets to take credit for cost containment,” said Keller. “If they are serious about containing costs, they’ve got to show some backbone.”

Absent backbone, consumers will continue to face higher insurance premiums and they’ll know just who to blame, predicts Keller.

The hospitals? Nope.

“Insurance companies will be sent to the gallows first,” said Keller. “I predict they will be treated harshly for bringing the bad news, when, in fact, it should be the hospitals, the Shumlin administration and the legislature for negotiating these exclusions.”

Anyone got an aspirin?

Telecom Lives!

Burlington Telecom wants permission from the Vermont Public Service Board to finish wiring its network throughout the Queen City. The pace of work would be determined by how much cash it has on hand — not how much it can borrow.

An August 2009 audit found that BT’s services reached all but 3297 — or 20 percent — of the city’s addresses. Of those, about 1355 addresses are located on private rights-of-way. BT is asking the PSB for a green light to reach the remaining 1942 addresses.

BT plans to spend more than $500,000 on capital investments this year — up more than $200,000 from last year — to hook up new customers.

BT is also seeking PSB approval to exempt BT from having to reimburse the city several hundred thousand dollars it spent on financial advisers Dorman & Fawcett to renegotiate the city’s $33.5 million lease-purchase deal with CitiCapital.

In two separate regulatory filings submitted June 30, BT officials claim they have two “letters of intent” — one from a financial investor, one from an out-of-state, independent telephone company — to help address BT’s woes. An in-state telecom firm remains interested but has not made a formal offer. The city has not heard from CitiCapital since February.

BT’s filings came just two days after State’s Attorney T.J. Donovan announced he would not seek criminal charges [3] against city or BT officials for running afoul of PSB rules by failing to repay $16.9 million borrowed from taxpayers to prop up the muni telecom. Add to that the $33.5 million owed to CitiCapital and BT remains more than $50 million in debt.

Attorney William Ellis noted in the filing that BT’s cash flow — before debt service — improved from a negative $819,000 in FY 2010 to a positive $651,000 at the end of FY 2011.

That’s nearly a $1.5 million turnaround in one year. Not bad. Just $48.9 million to go.

Lies, Damn Lies & Entergy

Two Vermont corporate miscreants received “Get Out of Jail Free” cards from top prosecutors in the past few weeks. What gives?

Both Burlington Telecom and now Entergy have been scolded rather than indicted. The takeaway from these decisions: Misleading state regulators pays.

City and BT officials escaped “neglect of duty” and “false claims” charges [4] when two state’s attorneys opted against pursuing misdemeanor charges.

Last week Attorney General Bill Sorrell said he couldn’t find enough evidence to prove that Entergy Vermont Yankee officials had willfully committed perjury [5] before the Public Service Board. He said his office spent roughly $100,000 on its 18-month investigation.

Sorrell’s shop tried to determine if Vermont Yankee officials knew what they were doing when they misled state regulators about the existence of buried pipes that carried radionuclides. You know, the pipes that were later discovered after they leaked millions of gallons of water containing tritium, strontium and cesium into the groundwater.

Sorrell said he didn’t have a “smoking gun” to prove perjury. Maybe he should have looked for a “soaking gun” instead.

Dubie’s Dough

Former lieutenant governor Brian Dubie remained coy about his future political plans [6] during a Friday night interview on WCAX-TV’s 5:30 p.m. newscast, “The :30.”

“I haven’t ruled out any possibility about elected office in the future,” Dubie said. “Right now it’s time to eat some fried dough and go to some fairs and enjoy our families.”

Dubie said he’d let his political plans be known in the fall.

“Labor Day is a good time of year to be thinking about politics or elective office,” Dubie said. Which one? Odds are it’s either another bid for governor or taking on U.S. Sen. Bernie Sanders (I-VT).

For political junkies who can’t wait till Labor Day for their next fix, Friday marks the first filing deadline of the 2012 election cycle. Candidates and parties have to report how much campaign dough they’ve raised [7] between January 1 and July 13. Reports are due to the secretary of state’s office by 5 p.m.