“This is a historic moment,” said Rep. Ann Pugh, D-S. Burlington, as she spelled out to House lawmakers details of the sweeping bill drafted to respond to the loss of the 54-bed state hospital in Waterbury, which was flooded and closed by Tropical Storm Irene.

By a 124-3 vote, legislators agreed with Pugh, chairwoman of the House Human Services Committee, that it was time to seize “this tremendous opportunity growing out of the crisis Irene gave us.”

“We’ve been talking about transforming the mental health system in Vermont ever since I’ve been a legislator,” said Pugh, noting the state’s extensive and futile effort in the past decade to plan and fund a replacement for the antiquated buildings that comprise the state hospital.

Lawmakers have been working feverishly for weeks with the administration of Gov. Peter Shumlin to draft legislation that addresses the mental health treatment crisis caused when the acute-care state hospital beds were removed from the system.

The governor launched the process in December when he declared patients would never go back to the Waterbury facility and set out a plan to trim acute-care beds, arguing for a comprehensive proposal that stresses treating mental illnesses in a spectrum of community settings instead.

Lawmakers in the House tweaked Shumlin’s plan and together with Mental Health Commissioner Patrick Flood filled in innumerable blanks on funding to come up with the consensus bill that won backing Thursday.

Flood said Thursday that the pricetag for the proposed system is around $174 million, roughly $20 million more than the fiscal 2012 mental health budget. However whether there is any actual cost increase to the state is unclear because of the complexities of extensive federal Medicaid reimbursements.

The one major dispute over the bill involved the size of Shumlin’s proposed new state hospital in central Vermont, which lawmakers decided needed to be bigger than the 16 acute-care beds proposed. The bill, H.630, proposes a 25-bed facility instead. Those beds are paired with a six-bed facility at Rutland Regional Medical Center and 14 beds at the Brattleboro Retreat.

The bill also calls for a secure five-bed acute-care facility for patients under department of corrections control.

Rep. Alice Emmons, chairwoman of the House Institutions and Corrections Committee, told House lawmakers her panel struggled with the complexities of deciding the right size for the new state-run hospital since Vermont doesn’t know how much FEMA and insurance money will be available for the $25 million facility. But she also said because the hospital won’t be built for “anywhere from two to three years,” stakeholders in mental health will have to time to make sure the 25-bed hospital is right-sized for the needs of Vermonters.

Pugh noted more than 70 individuals from psychiatrists and clinicians to mental health experts and consumers came before her panel, some urging no state hospital beds at all and others as many as 100.

“We spent over a month trying to weigh those different perspectives,” she said. Her committee eventually concluded by a 9-1 vote last Friday that a 25-bed facility was needed in the northern part of the state and formed the best “backstop” to meet the needs of Vermonters and provide a professional “staff to promote recovery.”

“We were not able to receive sufficient data that a 16-bed facility could do that,” she said.

The overhaul bill includes a range of other beds outside of the acute-care facilities: four short-term crisis beds designed to avert hospitalization, a five-bed voluntary non-coercive residence with peer support; and one 15-bed and two eight-bed facilities around the state providing for intensive recovery.

A wide variety of peer services provided by those who have had experience in the mental health system, crisis intervention teams, housing subsidies and mobile support teams are also provided in the bill. The community services, housing and the four-bed and five-bed beds facility are estimated to cost $8 million annually.

The bill that reached the floor included a provision to ensure that the 240 state hospital workers, who were dispersed to work at facilities around the state, will have extended and preferential rights for jobs when the new state hospital is built. Emmons said those provisions were agreed to by the Vermont State Employees Union and the administration.

Rep. Thomas Koch, R-Barre Town, rose to support the bill, humorously saying he felt like a member of the audience throwing flowers on the ice at the national skating championships. Noting he had “become extremely frustrated by the lack of progress” during the last nine years in reforming mental health, he praised the committees that slogged through the complex process and found consensus.

While he had his own concerns about letting private institutions handle some of the former state hospital patients, he said lawmakers should be “extremely proud” of the bill.

“There’s been a lot of inaction, a lot of talk. We’ve done more in the last five months than we had done in the last eight and a half years,” he said.

The bill will have its final reading Friday and upon passage move over to the Senate for that body’s review.

Rep. Pugh was elated with the large margin for passage.

“I think a vote of 124-3 is incredible,” she said, especially considering how “controversial” replacement of the state hospital has been in the past.

Asked what is likely to happen in the Senate, she said she didn’t know and was just going to let the process work.

Emmons had the same response, calling the vote “terrific.”

“Now we’ll see where it goes,” she said.

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A Fletcher Allen doctor watches during the health care bill signing. VTD/Taylor Dobbs

A report released this week by the Shumlin administration concludes that a no-fault system for medical malpractice liability is not the best direction for health care reform in Vermont.

The report, a requirement of last year’s health care reform law, addressed the merits of moving to a no-fault system in the context of the state’s efforts to contain health care costs.

A report produced for the state by Harvard economics professor William Hsiao in February 2011 recommended the state shift to a no-fault system similar to New Zealand’s to reduce health care expenditures. The Vermont Medical Society and many health care providers have pushed for this type of reform. The theory is that less fear of lawsuits means doctors practice less “defensive medicine” which generally means avoiding extra tests or office visits that providers order for fear of being sued if they miss something. Fewer tests would help reduce the costs of the state’s health care system.

Robin Lunge, director of health care reform for the Shumlin administration, said the report found that the connection between tort reform and increased health care costs is not as strong as some may think.

“The research we found hasn’t found a strong correlation between tort reform and reductions in defensive medicine,” she said.

The prime example for malpractice reform, the New Zealand system, is not an apples-to-apples comparison to Vermont, the report finds.

In New Zealand, the medical malpractice liability system is “part and parcel of that country’s system for dealing with personal injuries writ large, just as our current medical malpractice system fits within our overall tort system,” the report states.

The no-fault system in New Zealand works through one entity that adjudicates claims and reimburses injured patients regardless of fault. It addresses all personal injuries, not just those due to medical procedures.

In Vermont, medical malpractice compensation is based on tort law. To prove liability for medical malpractice, patients have to demonstrate that a doctor breached a duty to a patient and that breach caused the patient’s injuries.

While the report falls short of recommending a no-fault system, Lunge said the administration proposes other methods of dealing with disputes between doctors and patients when there is a bad outcome.

For example, early mediation where the parties work out their differences before going to court, could be beneficial. Such dispute resolution, she said, can result in compensation for patients and benefit doctors by resolving issues before they are made public in the court system.

For many physicians, the proposal not to move toward a no-fault system was a disappointment.

Paul Harrington, executive vice president of the Vermont Medical Society, said he was not surprised that the administration did not recommend a no-fault system.

Reforming medical malpractice liability would be a big step for the state, he said. The idea of no-fault compensation is still worth considering on a pilot basis, Harrington said.

“Most Vermont physicians think the current system is not working for injured patients or for doctors,” he said.

Rep. George Till, a physician who sits on the House Committee on Health Care, echoed concerns from doctors who often live in fear of lawsuits.

The fear of legal action is the motivating factor for doctors, Till said. “The only way you get rid of defensive medicine is getting rid of the fear,” Till said.

Doctors order additional tests, office visits and procedures in order to protect themselves from legal liability.

Till said doctors will err on the side of caution unless the possibility of being sued is removed.

The report from the administration found malpractice payouts in Vermont are some of the lowest in the country. It found the number of medical malpractice claims in Vermont was below the national average. It also found the state’s malpractice insurance premiums were the lowest in New England in 2003.

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Some mental health advocates and psychiatrists testified in hearings that it would be difficult for the state to create a therapeutic environment with 16 patients.

The federal government doesn’t like to fund institutions of mental disease, or residential psychiatric treatment programs that are larger than 16 beds. Though Vermont has a special waiver through 2013 that allows the state to operate a so-called IMD with 17 or more beds, if the government doesn’t renew the waiver operating costs associated with nine additional beds could be appreciable. A 25-bed facility under this scenario could be significantly more costly.

The political ramifications of House Dems backing a change to the bill that the governor, also a Democrat, appeared to be borne out in House Appropriations late Wednesday afternoon. The majority of members of the budget-writing committee grudgingly supported the bill with the caveat that they preferred a 16-bed option with room to expand if needed. Lawmakers said they were worried about the long-term budget impacts of a larger hospital.

Rep. Mitzi Johnson, vice chair of House Appropriations, said she preferred a 16-bed facility. The Democrat from Grand Isle said she is comfortable with the idea of going from a total of 54 beds (the capacity of the now-defunct Vermont State Hospital) to 41, including placements at regional hospitals. Under the new system, the state would create an additional 40 placements at other residential facilities that she said would help to take pressure off the institutional, acute care system.

“I’m frustrated that we have a plan we know is going to cost a chunk more money as soon as the doors open,” Johnson said.

Rep. Kitty Toll, also a Democrat and a member of House Appropriations, said she wanted a larger psychiatric facility. “For me, I’m committed to taking money within our budget,” Toll said. “We have to look across state government and have priorities.”

Other lawmakers worried that a larger hospital and accompanying costs would pull money away from the community mental health system, which they also view as crucial.

Anxiety over whether lawmakers were making an ideal decision under emergency circumstances in the wake of Tropical Storm Irene, were overridden, however, by a sense of relief that at least they were moving on after years of wrangling over what to do with the Vermont State Hospital, which given its difficult history had long been a source of angst for the Legislature.

“I think it’s high time we moved on this thing,” said Rep. Bob Helm, R-Fair Haven, and a member of House Appropriations. “If we don’t get the FEMA money we’ll be the first to know. I’m not afraid. I’m glad we’re finally getting this thing off the shelf.”

Conor Casey of the Vermont State Employees Association said a 25 bed facility is a step in the right direction and “it’s an improvement from the governor’s plan.”

“What’s regrettable is this debate is about community mental health versus in-patient beds, when really we need to fund both properly for an effective mental health system,” Casey said.

The bill, H.630, passed House Appropriations on a 10-1 vote. Rep. Philip Winters, R-Williamstown, was the sole dissenter. The bill has already advanced through the Corrections and House Human Services Committees, and the GOP has agreed to suspend the rules. The House will take up the bill on Thursday.

Editor’s note: This story was updated at 6:38 a.m. and again at 7:20 a.m. Feb. 2.

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Some business owners are concerned that they will have to give up the health insurance plans they have worked hard to set up as the state transforms its health care system.

Others feel their costs of paying for health care are breaking the bank, and they want everyone to pay into a program that provides care for everyone.

Both camps gave testimony Wednesday before two legislative committees that will consider pending legislation to set the stage for health care reform in Vermont. By the end of the legislative session, lawmakers plan to have a road map for how they will set up a health benefits exchange.

The exchange is a federal mandate that requires states to set up virtual marketplaces for individuals and small groups to purchase health insurance. The 2010 federal health care reform law allows some wiggle room for states to tailor their own systems.

For businesses, the main issue is whether they will be required to buy an insurance policy through a health benefits exchange. Under House Bill 559, businesses with 100 or fewer employees must purchase health insurance through what will be the virtual marketplace.

Under the federal Affordable Care Act, the decision whether to treat businesses with up to 50 or up to 100 employees as “small” for 2014 and 2015 is up to the states. Starting in 2016 employers with 100 or fewer employees will be considered “small” and eligible for the exchange.

Some businesses have been rattled by the state’s decision to prohibit larger employers from purchasing insurance outside the exchange.

Nigel Mucklow, owner of New England Floor Covering in Burlington, said the plan he buys for his employees has a $2,500 deductible. He said the flexibility he has with his insurance provider enables him to keep costs down.

“We don’t want you to box us in to a certain category and a certain way of doing business,” he said.

Mucklow said he was skeptical of the state’s ability to control costs.

“We’re scared you’re going to make us have a product that costs a lot,” he said. “We are responsible people, and we don’t necessarily need you guys to tell us how to run our businesses.”

One consistent concern from many businesses is the lack of high-deductible, low-premium plans in which employers contribute to health savings accounts. These plans, which most likely will not meet the qualifications the legislation proposes, save business owners money.

Craig Fuller of the Employer Health Alliance, which lobbies on behalf of businesses, expressed concerns that such plans may be illegal under the administration’s proposal.

Tom McKeown, executive director of Business Resource Services, polled his business owner clients and he says more than 90 percent believe that so-called “bronze” plans should be offered in the exchange.

The concept behind the federal health care law, McKeown said, is to offer choices. He said businesses want more choice to choose their own plans, inside or outside the exchange.

“The current system is working,” he said. “Don’t disrupt what’s happening.”

Sara Byers, vice president of Leonardo’s Pizza, echoed that the state should be hesitant to move forward too quickly. Byers said the state should keep the exchange limited to smaller groups in order to avoid “unintended complications and kinks.”

The administration’s proposal will likely increase the costs of providing insurance for companies with 51 to 100 employees who “shouldn’t cross-subsidize smaller businesses,” Byers said.

But not all businesses think the state should put the brakes on health care reform.

Bram Kleppner, CEO of Danforth Pewter in Middlebury, hopes bringing larger businesses into the exchange will level the playing field.

Like many businesses, Kleppner said he has been forced to pass on high health care costs on to his employees.

“It has caused significant suffering for these people and their families,” he said.

Kleppner said he hopes bringing more people into the exchange will lower costs for employers collectively as more businesses share the costs.

Michael Roche, an arborist who owns Stowe Tree Experts, agrees. Roche employs five people. He says the cost of paying for their health insurance puts him at a competitive disadvantage against other employers who don’t offer the benefit.

Roche said even with the modest insurance plan he offers, he can’t charge enough for his services to cover the cost. With a $12,000 premium for each employee, Roche estimates it costs around $200 a day.

If he charges $1,000 for a service, and another employer who does not offer insurance charges $800, he said, “A customer might look at me and say, ‘Mike, I really like your social responsibility but I want the $200.’”

For this reason, Roche said he wants everyone to have skin in the game.

“I want everybody in because everybody’s got to feel the pain,” he said.

Some single-payer advocates have also expressed concerns that the state is “herding” small businesses into the exchange. According to John Franco, a Burlington attorney and proponent of health care reform, the mandate to require employers with 100 or fewer employees to purchase health insurance on the exchange will affect about one quarter of the 355,000 Vermonters with private insurance.

These individuals, Franco said, will be forced to cover the administrative costs of the exchange while large businesses and those with grandfathered plans will not be in. Furthermore, Franco asserts, more people in the exchange does not create a larger risk pool necessarily because each insurance carrier will have its own pool.

“The exchange is a shopping mall, not an insurance pool,” Franco said. Single-payer, he says, is a uniform benefit package provided through a single insurance fund. They are not the same idea, he said.

Franco said the whole point of the exchange as it relates to a universal health care system is to encourage individuals to enroll and receive federal subsidies for their health insurance. This will set the bar for a block grant that the state can receive in 2017 when it aims to request a waiver from the federal law to implement its universal system. Franco adds that he is not trying to attack the administration for its proposal but rather save it from a bad policy decision.

Bill Driscoll, vice president of Associated Industries of Vermont, said the business community reiterated the concern with limiting choices and flexibility. He said he is concerned the state may do away with things like high deductible plans which have saved money for the past 20 years. Bringing in larger businesses, he said, could eliminate the benefit for some of the largest cost-savers.

Plans with health savings accounts, Driscoll said, help to decrease the costs of health care utilization because people have to pay for services out of their own pockets.

“We have to be able to have to link to some degree health care consumption choices with the cost of those choices,” he said.

Peter Sterling, executive director of the Vermont Campaign for Health Care Security, helps people get on plans like Catamount Health and the Vermont Health Access Plan. He said while these high deductible plans may save money for employers, he fields calls constantly from employees trying to get off them and onto the more robust state plans. The problem, he said, is that employees are not eligible in some cases because they have not met a requirement that they be uninsured for one year.

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Sen. Anthony Pollina. VTD/Josh Larkin

Parents and lobbyists held a press conference Wednesday promoting a bill that would expand private insurance coverage for people diagnosed with autism spectrum disorder to include those older than 6 years.

In 2010, Vermont passed Act 127, which mandates that private insurance companies and Medicaid cover diagnosis and treatment for autism spectrum disorders for children from the age of 18 months to 6 years or when the child enters first grade.

The private insurance aspect of the 2010 law went into effect in October. The Medicaid part has yet to be implemented.

Sen. Anthony Pollina, the lead sponsor of the new bill, said the idea is to require insurance companies to treat people with autism the same as those with other health problems.

Only covering children up to age 6 is not sufficient, he said. His bill requires insurers to pay for services for autism regardless of the patient’s age.

“If you don’t continue beyond 6, you can lose a lot of ground,” he said.

Judith Ursitti, the regional director of state government affairs for Autism Speaks, praised the state for the 2010 law but said Vermont should do more.

“People benefit from early intervention, but autism doesn’t disappear once you reach age 6,” she said.

According to claims data from states that mandate insurance coverage, Ursitti says, on average private insurance company policyholders would only have to pay about 25 cents more each month to cover expanded services.

One insurance company, MVP Health Care, has estimated that the current law mandating covering up to age 6 would increase its premiums across the board 0.5 percent to 1 percent — enough to cause those on the edge of being able to afford insurance to drop coverage. Unlike other states, Vermont puts no cap on the dollar amount that insurance companies will have to pay per individual.

Parents of children with autism, however, say lack of private insurance coverage creates a burden for them.

Claudia Pringles has a 12-year-old daughter with autism. She dropped private insurance coverage for her daughter to receive assistance through the Medicaid’s Early Periodic Screening, Diagnosis, and Treatment Program. Still, most of the services her daughter receives come through school.

“After 3, I have no access to treatment,” Pringles said.

Pringles’ daughter is one of 183 children in Vermont who receive Medicaid assistance through what is called a Katie Beckett waiver, which disregards a parent’s income for a child with a certain degree of disability.

Switching to Medicaid is common practice for parents with children with autism since private insurance will not cover specialized services after age 6. Until October, when Act 127 went into effect, they would not cover any specialized services for autism.

Vermont’s 2010 law is the only one among the 29 states that mandate autism coverage to require expanded Medicaid coverage to the same level of private insurance. Essentially, in Vermont, Medicaid will have to cover the same services as private insurance. In other states, this is not the case.

Expanding that coverage for children up to age 6, the state Agency of Human Services estimated in a report, would cost $10 million. Ursitti said her group is working with the state to revamp that analysis to only include medically necessary treatments, which, she says will cost much less.

Gov. Peter Shumlin has proposed postponing these payments to save the state money.

Pollina said his bill focuses on private insurance, but it would require Medicaid coverage for children up to age 6. After 6, the mandate is only for private insurance.

In the Senate Committee on Health and Welfare Wednesday, Sen. Kevin Mullin, R-Rutland, questioned whether it is hypocritical for the state to require private insurance to cover services that the government will not cover through Medicaid.

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Whether or not teachers and school employees will participate in the health benefit exchange is still in question. VTD/Josh Larkin

A provision in the federal health care law may mean teachers and other educators will not be in the so-called health benefit exchange insurance market in 2014.

Critics say this is unfair.

According to the Department of Vermont Health Access, 30 plans in the state in 2010 qualified for “grandfather” status under the federal health care reform law. Grandfathered plans are exempt from some new consumer protections and may not be included in the exchange if they continue to offer the same plan as they have in the past.

One such plan is through the Vermont Education Health Initiative (VEHI), a large, nonprofit purchaser of health care plans for school employees. The plan covers some 40,000 people, including teachers and other educational professionals, their families, and retirees.

Critics say it is unfair that groups like educators will be allowed to be outside the exchange while individuals and businesses with up to 100 employees will be required to be inside.

“Why give one group the potential to let some people stay out and not others?” said Jeanne Keller, a health policy analyst and lobbyist. “One can only speculate that this is a political and not a policy reason.”

The problem, Keller says, is that the exchange will limit what types of insurance people can buy, and, she fears, it will cost more. Essentially, people on the VEHI plan, could end up with better plans and not have to cover the overhead of the exchange, she said.

“If people resented the teachers before … cowabunga,” Keller said.

Under federal law, in 2014 and 2015 states will be required to include employers with 50 or few employees. The proposed legislation, House Bill 559 now in the House Committee on Health Care, proposes that employers with between 50 and 100 employees be “in” the exchange during this time — an option under the federal law. The proposed legislation also mandates that these groups can only buy insurance on the exchange.

The issue, says Sen. Vince Illuzzi, R-Essex Orleans, is that the under-50 employee and 50-to-100-employee groups are required to be part of this marketplace, while the larger over-100-employee businesses and certain plans like VEHI are exempt. Illuzzi proposed legislation that would have limited the exchange to businesses with 50 or fewer employees and allow them to purchase insurance outside the exchange.

Illuzzi said he is concerned that the proposed bill will allow large businesses and some unions to have a wider variety of plans to choose from outside the exchange while individuals and small businesses will be limited to the plans in the exchange.

“It’s not fair because if the exchange is being publicly promoted as a stepping stone to single payer and you give the largest group in Vermont a political pass it wants, how does that public proclamation stand in the face of scrutiny,” Illuzzi said.

The Shumlin administration has promoted the exchange as a way to bring more lives into the insurance risk pool to ensure more stability.

As for the inclusion of teachers in the exchange, Rep. Mike Fisher, D-Lincoln, who sponsored House Bill 559, said there is nothing the state can do about whether they are in or out.

The requirements for grandfathering, Fisher said, are “federal rules that we would have no power of changing or ignoring.”

“Will they be grandfathered on January 1, 2014, has to do with their ability to keep costs down,” he said.

Darren Allen, communications director for the Vermont-National Education Association, said the union is “taking a long hard look along with everyone else” at health care reform.

Allen said educators have worked very hard to achieve what they have in terms of health insurance. He said the contract they have for their health insurance has saved taxpayers millions by keeping premiums for these employees from rising as sharply as other plans.

Whether the 40,000 or so people on VEHI insurance will be in or out of the exchange, it is still an open question that hinges on those plans continuing to meet federal requirements.

For the teachers union, Allen said, “We are very concerned about what this will do to our members and retirees. It’s something we’ve worked decades to build.”

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Angela and Tristan Timpone in the dining room of their Montpelier home. VTD/Josh Larkin

On Oct. 2, Lisa Howarth’s daughter, Stella, celebrated her sixth birthday.

Stella has been diagnosed with autism, and she uses a communication device instead of speaking.

For Stella, turning 6 brought a harsh dose of reality.

A law passed in Vermont requires insurance companies to cover the diagnosis and treatment of autism spectrum disorders for children 18 months old to 6 years. The mandate was originally supposed to go into effect in July 2011, but the state postponed implementation until Oct. 1. This left Stella with one day to receive the benefits of coverage through her parents’ private insurance. That day was a Saturday when offices were closed.

The recent roadblock to private insurance coverage is one of many the Howarths have encountered.

Stella’s communication device, for example, cost around $8,000. Private insurance denied coverage. Medicaid eventually paid for it, but only after a fight.

The ordeal added to the stress her parents are already under as they struggle to provide around the clock attention for their daughter.

“From the time we get up to the time we go to bed, it’s all about Stella,” said Lisa Howarth.

Lisa, who is a teacher, and her husband, Daniel, try to ensure Stella gets enough speech therapy and emotional support. The really frustrating thing, Lisa Howarth said, is the notion that one day, under the law, services for Stella would be covered and on another they wouldn’t.

“You’re giving a child a voice, and you’re not going to pay for it,” Lisa said.

Stella qualifies for assistance under a waiver that enables severely disabled children and adults to be eligible for Medicaid based on the individual’s income and assets alone.

While the Howarths are grateful for the assistance Medicaid provides, Lisa said services have been cut back. As Stella grew up, she was permitted fewer therapy sessions.

“People are saying ‘she’s old enough; she’s had enough treatment; you can replicate the services at home,’” Howarth said.

Stella is one of hundreds of children in Vermont with an autism spectrum disorder — ASD as it is commonly known. These complex disorders manifest themselves in varying degrees, from minor difficulties in social interaction and communication to more severe problems. According to the U.S. Centers for Disease Control and Prevention, around one in 110 children fall on the autism spectrum. About one in 70 boys in the United States is diagnosed with autism.

Under Vermont’s current law, Stella’s private insurance company does not have to cover specialized services to treat her disorder.

A new bill, championed by Progressive Sen. Anthony Pollina would lift the age cap for mandatory private insurance coverage.

“The basic thrust is to require private insurance companies to cover necessary autism therapies for people who need them regardless of their age,” Pollina said. “I think the question for us as Vermonters is what’s taking us so long to do this?”

According to the advocacy Web site autismvotes.org, 29 states have enacted autism insurance reform laws mandating some type of private insurance coverage.

Some states, like Massachusetts, have no age limit or dollar amount for what private insurance has to cover. New York has no age limit, but it puts a cap on the amount of money insurance companies have to pay out for applied behavioral analysis. Vermont has one of the lowest age limit cutoffs under its current law, but it doesn’t cap coverage. Vermont is also the only state to include Medicaid coverage in its private insurance coverage law.

The low age limit, Pollina says, doesn’t make sense.

“There’s clearly in practice a bias against people affected by autism without a doubt,” he said. “If I developed a brain tumor and I’m only going to live six months, insurance covers it, but it won’t cover services for a kid with autism who has the chance to live a long, productive life.”

While Pollina says early intervention is key, the benefit of autism therapy is not really evident unless it goes beyond age 6, he said.

Sen. Dick McCormack, D-Windsor, is a co-sponsor of Pollina’s bill. McCormack is a self-proclaimed “curmudgeon” who says he is skeptical of so-called behavioral issues in children. Autism, he says, is different — therapy really helps this diagnosable disorder.

“The alienation from the community is a tragedy, and we know that it can be mitigated, that it can be addressed,” he said. “To help a person who’s autistic get to that level of functionality is a very important thing to do.”

Angela Timpone agrees. Timpone is the parent of a 9-year-old boy with autism. Her son, Tristan, is in fourth grade and receives the majority of his therapy at school through an individualized education program. Tristan was nonverbal until he was 4½ years old. Now, he is a smiling but seemingly shy kid.

Tristan still needs help with social skills training, Timpone said, over the next two years before he enters middle school. Tristan is too old to get private insurance coverage for his therapies under the Vermont mandate. Years ago his parents dropped private insurance to get Medicaid coverage for their son.

Under what is commonly called a Katie Beckett waiver, Tristan is eligible for coverage under Medicaid regardless of his parents’ income. Medicaid covers some services, but with reimbursement from Medicaid chronically low in Vermont, parents struggle to find providers who will take it.

For now, Tristan receives most of his therapy in school, which can be disruptive, Timpone said.

“All the other kids are doing math and halfway through you get pulled out to work on reading or speech,” Timpone said.

If private insurance covered some of these services, Timpone said, he could have a more regular school day and undergo therapy paid for by insurance after school.

“Last year we had to decide that Tristan didn’t learn cursive so he could get social skills training,” Timpone said.

Timpone said she is also curious about the cost shift from private insurance to Medicaid since it is common practice for parents of children with autism to drop private insurance coverage because it will not pay for autism therapies.

While advocates cheer expansion of private insurance coverage, insurance companies opposed the 2010 law and Pollina’s new bill.

The problem, says Gary Hughes, director of media relations for MVP Health Care, is the expense of the treatments, especially with no dollar limit. He said the costs will drive up premiums for all policyholders, inevitably causing some of them to drop coverage.

“There’s always a push and pull between what should be a covered benefit and what it would do in terms of overall cost of coverage,” Hughes said. “The question is: Do you reach a price point where some drop coverage and have no coverage?”

The current mandate in Vermont would raise the premiums for all MVP policy holders somewhere between 0.5 percent and 1 percent. For some people, that could tip them to the point where they cannot afford already increasing premiums, and they will go without insurance. Hughes said a dollar cap on how much individuals receive could ease that burden.

Another uncertainty in autism coverage comes from a new definition of the disorder that could sharply reduce the rate at which autism is diagnosed and limit the number of people who meet the criteria for health, educational and social services. The definition is now being reassessed by an expert panel appointed by the American Psychiatric Association, which is completing work on the fifth edition of its Diagnostic and Statistical Manual of Mental Disorders, the first major revision in 17 years, according to the New York Times.

Medicaid muddies the waters

A provision in Act 127, the 2010 law that mandated private insurance coverage, requires Medicaid to fund autism therapies also.

That provision has created a roadblock to implementation based on a study that shows it would cost $10 million in net Medicaid expenditures to fund these services for the 183 children who qualify for Medicaid in Vermont.

In his annual budget address, Gov. Peter Shumlin proposed postponing these payments to save money.

Autism advocates have questioned the administration’s estimate of the $10 million line item.

The number comes from a 2011 report to the Legislature by the Agency of Human Services, Department of Education and Agency of Administration.

Suzanne Santarcangelo, director of health care operations for the Vermont Agency of Human Services, said the extra $10 million is primarily due to the fact that the definitions in Act 127 for what Medicaid would cover are broader than the existing mandate.

The report, Santarcangelo said, calculated the cost for applied behavioral analysis based on the Early Intensive Behavioral Intervention model that is most researched.

It is based on 40 hours of intensive intervention each week. The report estimates future savings due to early intervention, but the state would incur costs at the outset due to expanded services.

“It’s based on the intensity of need,” Santarcangelo said. “Not all kids get full packages in the current program.”

The gist of it is that the terms and definitions for what would be covered under Medicaid are broader than those already in use, Santarcangelo said.

The Medicaid issue has brought additional confusion into the implementation process for the 2010 law. While some parents advocated for increased Medicaid coverage, other groups pushed to repeal the law in its entirety.

Judith Ursitti is the Regional Director for State Advocacy Relations for Autism Speaks, an advocacy group.

For the 183 children covered by Medicaid in Vermont, that $10 million comes out to about $70,000 per child.

Ursitti said that estimate is flat out wrong. The issue, Ursitti said, is because autism is a spectrum, some kids need intensive care while others only need limited therapy.

“It’s like saying every person in the cardiologist’s waiting room needs a heart transplant,” Ursitti said. “It’s not one size fits all.”

Ursitti said she and others are pushing for Medicaid coverage for medically necessary health care, not global comprehensive coverage under Medicaid. Ursitti said she hopes the state and advocates can come to an agreement on what are the really essential services that kids need. This will bring that $10 million number way down and allow for more coverage.

One of the problems with Medicaid currently under what is called Early Periodic Screening, Diagnosis, and Treatment — or EPSDT — is that it covers a broad range of therapies but not enough to the degree that is necessary to make a real difference in a child’s life, Ursitti said.

“The problem with Medicaid is instead of doing three or four things, they do 20,” Ursitti said. “You get a little smattering, but all the research supports intensive intervention for people with autism.”

Ursitti said a global approach from things like babysitting to horseback riding is great, but the state should focus on evidence-based medical care and cover those services to the degree that they are meaningful.

Another issue in Vermont is the low reimbursement rate for providers, which discourages many from accepting Medicaid and fails to draw experts to the state.

Sam Abel-Palmer, an attorney with the Disability Law Project at Vermont Legal Aid, said he too has doubts about the $10 million figure because it does not factor in individual necessity, meaning what does each child need.

The fundamental issue, Abel-Palmer said, is one of fairness. The Medicaid budget is strapped, he said.

“Medicaid has the entire burden of serving these kids,” he said. “You have kids who are Medicaid eligible who might be on private insurance but they don’t bother because what they need isn’t covered.”

Broader private insurance coverage could move a certain percentage of kids off Medicaid entirely, Abel-Palmer said, and take some of the burden off the government.

Postponing the Medicaid payments is not a done deal and will be factored into the budget process this legislative session. The Senate Committee on Health and Welfare plans to hear testimony this week on coverage for autism therapies.

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Adding machine. Photo by Charles Tilford.

When the Vermont State Hospital was abruptly closed on Aug. 28 after Tropical Storm Irene floodwaters inundated Waterbury, workers quickly evacuated the facility and state officials found emergency placements at local hospitals and small private mental health institutions for the 50-plus patients who were suddenly displaced.

Since the storm hit, the scrambling hasn’t stopped. For the last five months, Shumlin administration officials, lawmakers and providers have been weighing options for replacing the hospital. In the short term — until lawmakers and the Shumlin administration can cement an interim plan — Vermonters who need intensive psychiatric care are being treated at Fletcher Allen Health Care in Burlington, Rutland Regional Medical Center, Brattleboro Retreat and several small residential mental health care facilities.

Long term, the state suddenly has an opportunity to reimagine what the system might look like after nearly a decade of intense debate over what to do with the old facility, which was decertified by the Centers for Medicaid and Medicare Services in 2005 and was no longer eligible for Medicaid funding.

The Shumlin administration is betting on a decentralized system that relies more on community and peer services, and less on institutional care. Under the governor’s plan, about 41 patients would receive care in intensive institutional settings and an additional 40 patients would be treated in community based residential programs. The state would plow new money — about $9 million a year — into local support services.

Making the new system work financially is difficult because much of what the state wants to do is tied to complex rules and formulas for federal funding. It’s possible, for example, that the Federal Emergency Management Agency will largely back the construction of a new facility with a 90 percent federal, 10 percent state match, after the state’s insurer pays its share of the cost.

Though federal funding will likely be available for the structure, it’s possible the Centers for Medicaid and Medicare could drop funding for annual operating costs if the state builds a facility with more than 16 patients, according to lawmakers and Shumlin administration officials.

On Friday, legislators in the House Human Services Committee agreed in a 9-1 vote to approve plans for a 25-bed facility in Central Vermont that would take the place of the Vermont State Hospital. The measure includes the outline for a complex system of decentralized care that would include 13 additional programs or facilities proposed by the Shumlin administration.

House Appropriations will examine the budget impacts of the proposal on Monday; House Corrections and Institutions will consider the financial implications of the proposal on the capital bill Tuesday.

Gov. Peter Shumlin wants a plan for a 16-bed facility from lawmakers on his desk by Feb. 17, and he made it clear in his press conference last week that he won’t budge on the number of beds he has specified.

The number 16 has particular financial significance. If a global commitment waiver provision for the state hospital set to expire in 2014 isn’t reauthorized by the federal government, operating costs at “institutions for mental disease,” or standalone psychiatric facilities, won’t be eligible for Medicaid reimbursements unless they have 16 or fewer patients or have an affiliation with a medical hospital.

The difference between operating the 16-bed facility and a 30-bed hospital, which many in the medical community feel is needed, could be as much as $15 million in state money under the worst case scenarios. Privately, some lawmakers have suggested the operating cost figures are a rough ballpark guess at best in any case and don’t factor in economies of scale. Though the new facility would likely to be located near the Central Vermont Medical Center, there is no formal affiliation between the state and the center.

The Shumlin administration has pitched a 16-bed facility because officials say more institutional beds aren’t necessary. According to statistics from the Department of Mental Health, nearly half of the 54 patients at the Vermont State Hospital didn’t need to stay at the hospital because they were ready to be discharged or moved to other facilities.

A 16-bed facility also happens to be the threshold for match rate eligibility (currently 57 percent federal funds, 43 percent state monies) for operating costs — even if the global commitment waiver isn’t approved. Projections from the Joint Fiscal Office show the state’s share would be $3.37 million of the annual estimated operating cost; Medicaid reimbursements would be about $4.7 million.

The Vermont State Hospital wasn’t eligible for federal match money after it was decertified by the Centers for Medicaid and Medicare in 2003 for a number of safety problems. (It regained certification in November 2004 for 60 days but lost it again in Februrary 2005.) When the facility in Waterbury was closed because of the flood, the federal government began matching the state’s costs for qualified patients who are placed in hospitals and small psychiatric facilities with 16 or fewer beds.

The total amount the state expects to receive for acute psychiatric patients in fiscal year 2012 is about $11 million.

Rep. Alice Emmons, D-Springfield, said the state has been struggling to figure out how to develop a long-term plan for a replacement facility based on the federal criteria.

“The federal government considers 17 beds on up, if not affiliated with a hospital, they consider that an institution for mental disease and that has been what we’ve been struggling with since 2005 as we’ve tried figure out how to replace the state hospital,” Emmons said. “That’s a fundamental piece all the way through this.”

Emmons said the state will be negotiating the global commitment waiver with the feds through 2013 before it expires in January 2014. “The question then becomes will be able to continue with that waiver provision and we don’t know,” she said.

Patrick Flood, the commissioner of the Department of Mental Health, said going beyond the 16-bed threshold means that “we (the state) would go back into the world we were in when we were not certified.”

The Brattleboro Retreat, which is classified as an institution for mental disease, would cost $7.5 million a year to operate and would not be eligible for a federal match should the global commitment waiver change, according to a spreadsheet from the Joint Fiscal Office. The pricetag for Windsor would be $2 million without federal support.

Payments for treatment at Rutland Regional would be matched, Flood said. Other facilities, including the secure treatment center at the Windsor Correctional Facility and five other “step down” residential care programs would be Medicaid reimbursed as well, according to JFO data.

The cost to rebuild

Emmons and others on the committee said the new psychiatric hospital is expected to take at least 3.5 years to build, which offers some leeway on the complex issue.

The capital costs for a new facility are roughly $1 million per bed. The cost of retrofitting the Brattleboro Retreat is $4 million; Rutland is $6 million and Windsor would run $1.8 million.

The state’s match would be 10 percent. At this point, the total cost is estimated at $27.8 million for all four facilities. The state’s match, after insurance estimates is $2.58 million.

Emmons suggested a reasonable course of action considering “so much uncertainty” was to pass out a bill authorizing state buildings officials to proceed with a certain facility size, knowing lawmakers had time to revisit the issue next session.

By then, she said, the state would know how much Irene insurance and federal FEMA funds had come in to pay for building the facility and the state would have a better handle on costs and how a raft of new community mental health programs the administration has proposed are working – which might reduce pressure for acute care psychiatric beds.

“As people have said, It’s very fluid,” she said.

Emmons also reminded her panel to consider that a larger psychiatric hospital that costs more to run would reduce funds available for community programs. “They’re interconnected,” she said.

Total expenditures would go up

Under the plans now under consideration, patients who need acute care would no longer be sent to one main psychiatric facility. Instead they would be sent to Brattleboro, Windsor, Rutland or the facility to be built in central Vermont.

Lawmakers and the Shumlin administration appear to have a similar take on the regional services, but there are three different scenarios for the central Vermont psychiatric hospital. Each scenario comes with a different pricetag.

The total cost of intensive institutional care, which would provide 41 beds (including the 16-bed facility in central Vermont), would be $20.5 million. That number bumps up to $25 million with a 25-bed facility (50 beds in all) and $27.5 million for a 30-bed plan (55 beds total). The Vermont State Hospital cost about $23 million a year.

Without a global commitment waiver to use institutions for mental disease, the state’s share goes up considerably for the central Vermont, Rutland and the secure Windsor beds. The state could have to pay the full $7.5 million a year for Rutland and $2 million a year for Windsor. Depending on the size of central Vermont facility, the state’s share ranges from $3.371 million to $15 million.

In addition, patients would receive treatment through geographically distributed peer services, emergency services and small residential facilities in southern and northern Vermont. The state would spend about $9 million a year on community based services and sub acute care.

The total cost of community based mental health care, including the regional designated agencies or nonprofits that provide outpatient and crisis services, is projected to be $130 million. The state’s share of that total is $52.9 million.

The grand total for the cost of Vermont’s mental health system, including the designated agency expenditures, was $153 million before Irene, and the state’s share was $72.8 million.

All three of the new proposals leverage more federal dollars and increase the overall cost of the system. The governor’s plan, the most conservative of the three, costs the state $76 million (without the global commitment match). With federal dollars, the total is $171 million. The 25-bed option with no global commitment matches for the new state hospital, Rutland or Windsor costs the state a total of $85.7 million. The total cost, including federal match, is $176 million. The most expensive option, including the 30-bed facility, Rutland and Windsor, comes in at $178 million total, with federal money, and a $88 million match from the state.

Editor’s Note: Andrew Nemethy contributed to this report. An update of this report was posted at 6:15 a.m. Jan. 30. A second update was posted at 10:30 a.m. Jan. 30.

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The entrance to Vermont State Hospital one month after Tropical Storm Irene. VTD/Josh Larkin

MONTPELIER – A major shift in Vermont’s mental health system toward vastly expanded community treatment was given near-unanimous backing by a key House panel Friday afternoon.

By a 9-1 vote, the House Human Services Committee approved plans by Gov. Peter Shumlin to overhaul the mental health system following the closure of the 54-bed Vermont State Hospital in Waterbury after it was flooded in tropical storm Irene.

However, the House panel diverged from Shumlin in one key aspect, recommending a new 25-bed state hospital be built in central Vermont instead of the 16-bed facility the governor proposed. The panel backed the rest of Shumlin’s replacement plan for the state hospital, which proposes a four-year contract for six acute-care beds at the Rutland Regional Medical Center and 14 at the Brattleboro Retreat, as well as five beds for those held in the department of corrections at a yet-to-be-determined site.

The fast-tracked bill is a response to the crisis in treatment created by the closure of the state hospital, which removed 54 acute-care beds from the system, creating a space squeeze for acute-care beds and severe disruption in private hospital psychiatric wards and treatment centers around the state.

But it also marks a pronounced shift – which many advocates say is long overdue – to more community oriented mental health care, with peer services, housing subsidies, early intervention, and three new intensive residential recovery facilities (one with 15 beds, two with eight) located in Northwestern, southeastern and either central or southwestern Vermont. Four short-term crisis beds in underserved areas and a five-bed residence for those seeking to avoid medication are also set out in the proposal.

The complex 36-page bill that emerged from the committee also sets up strong oversight and coordination for the new decentralized system, calls for monitoring reports, sets out legal protections for patients involuntarily committed and spells out the “no refusal” rules under which Rutland Hospital and the Retreat agree to treat acute care patients.

Separately Friday, Mental Health Commissioner Patrick Flood said the state is exploring use of the former Genesis Nursing Home in Morrisville to help ease the crunch in intensive psychiatric care on a temporary basis. The 90-bed facility shut down as a nursing home in 2007 but is being used as office space and already meets the state’s stringent safety needs.

Flood said it could provide from 6-8 beds to as many as 20, including a secure ward for patients under court-ordered evaluation or supervision, one of the state’s most severe needs now. However he cautioned that many other sites have been evaluated and fallen through since the state hospital closed, comparing the process to “pulling rabbits out of a very deep hat.”

The bill passed in committee Friday includes a last-minute provision that would permit a contract with an interim site like the Genesis facility.

The late afternoon vote came after several days of wading through both minutiae and large policy questions, not to mention a multitude of dollar figures which weren’t filled in until the last minute. Many lawmakers involved have described the process as unprecedented in scope and urgency.

Rep. Sandy Haas, P-Rochester, recalled for fellow committee members that the state has been trying to close the antiquated state hospital building in Waterbury and revamp care for nine years without success.

“Today I get to do that and I am very proud,” she said.

Topper McFaun, R-Barre Town, agreed, saying, “I feel very positive about we’re about to do for the people of the state of Vermont.”

Chairwoman Ann Pugh, D-South Burlington, noted the intense pressure on the panel to move a bill and find compromise on a host of complicated issues.

“The committee process is a darn messy process, but it sure beats any alternative,” she said, calling the bill a workable “middle ground.”

The lone dissenting vote was cast by Rep. Tom Burditt, R-West Rutland, who praised the committee’s work though he disagreed with its decision to bump the acute care beds from 16 to 25. Burditt said he was concerned that would mean a $10 million jump in operating costs for the new hospital, and also said based on testimony he was not convinced the extra beds were needed.

State building officials have said the new hospital, targeted for two potential sites near Central Vermont Medical Center in Berlin, will not be built for at least three or more years. Its cost is expected to be around $25 million. The state expects state insurance and FEMA funds to provide much of the funding for the three hospital facilities that comprise the new acute-care system. However there is considerable uncertainty about how much of its operating costs, estimated at $12.5 million, will have to be paid by the state under federal Medicaid regulations.

The bill now moves on to two other committees. House Appropriations will take a crack at the dollar figures and Institutions and Corrections will add its voice to the decisions on the new facilities proposed, both early next week. The bill is scheduled to be reported to the floor for debate by Thursday.

Rep. Anne Donaghue, R-Northfield, said the decision to increase the beds in the central Vermont acute care facility to 25 is a cautionary move that allows the state some flexibility. If the new community system reduces the need for intensive care beds, the psychiatric hospital’s size can be scaled back. Donaghue said she agreed with testimony from many mental health professionals who said a larger hospital was needed to meet Vermont’s needs and would also best serve the clinical needs of patients and staff.

She downplayed any conflict with the governor over the hospital’s size, saying “I believe he is, like most of us, mostly interested in a positive outcome” for Vermonters.

Donaghue, a strong advocate for mental health patients, said the pressure to vote out the bill preempted more detailed discussions and language on legal protections that she would have liked in the “ideal world.” But she said she felt confident patients were protected by language added to the bill requiring the mental health department to continue to work on the issue and report back to the panel.

“It’s a very early step. There’s a long way to go,” she said.

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Faithful members of the Vietnam Veterans Motorcycle Club may be a little surprised to find themselves on a list of “security threat groups” offered by the Department of Corrections to the Senate Judiciary Committee on Thursday.

Whether the aging vets at the local watering hole constitute a gang comes down to a definition from the Department of Justice.

According to information offered to the Senate Judiciary Committee, a gang designation is appropriate for a group three or more people with a common identifying sign, symbol or name who individually or collectively engage in criminal activity which creates an atmosphere of fear and intimidation.

Sen. Alice Nitka wasn’t so sure that the retirees of the motorcycle club in Windsor are a menace to society.

Why shouldn’t the club be lumped in with the home-grown Chittenden County White Boys or “Anybody Can Get It” (commonly-known as ACG-137 according to the department), or maybe even the Bloods and the Crips?

If all it takes for a “gang” to make the list is for a few members of a group to commit a crime, Sen. Jeanette White asked, will the Boys and Girls Club be next?

Vermont Medical Society to Green Mountain Care Board: Not so fast

The authority for the Green Mountain Care Board to create emergency rules has the Vermont Medical Society asking them to slow down.

A provision in House Bill 559 allows the board to fast-track rules regarding insurance rate review and hospital budget review.

“In general, the medical society opposes emergency rules,” said Paul Harrington, executive Vice President of the Vermont Medical Society. “However, I think the administration has tried to address some of those concerns by allowing for additional comment and review.”

Harrington said the group is stinging from an experience in December, when the Department of Vermont Health Access proposed reducing Medicaid reimbursements for radiologists with a 10-day notice period during the holidays.

Georgia Maheras, executive director of the Green Mountain Care Board, said the emergency rule authority is necessary to allow the board to get rules in place and work with hospitals to set up a structure for their budgets. Assuming H.559 passes in the spring, under traditional rulemaking, it could take until the end of the year before a rule emerged.

“The intent is not to shorten or limit public input but really provide guidance for the interim period,” Maheras said.

The usual notice and comment process for regulations would be 30 days, Maheras said, and the proposed bill limits that to 10 days. It could be as short as five days, but the board was not comfortable with that, Maheras said. She said the board will also go through the traditional rulemaking process simultaneously.

Fix in midwifery bill could ensure coverage

Negotiations with insurance companies, lawmakers and midwives have led to what could be an agreement ensuring coverage for home births.

A law passed last year requires private insurance companies to cover home births, but some families were finding midwife services were not covered based in large part on the fact that many midwives do not carry malpractice insurance.

Proposed language by Blue Cross Blue Shield of Vermont would prohibit an insurance company from requiring that a midwife meet the insurance plan’s network requirements, including malpractice insurance. It does attach other strings, however, like cost-sharing and benefit plan limitations.

“We’re working towards a compromise that honors the intent of the law and works with Blue Cross Blue Shield’s standards and policies, which is the best solution for Vermont families,” said Cassandra Gekas, a lobbyist for the Vermont Public Interest Research Group.

Leigh Tofferi, director of government relations for Blue Cross Blue Shield, said the next step is to figure out how the Legislature wants to proceed and notify others who have a stake in the matter and were not part of the discussion.

Rep. Chris Pearson, P-Burlington, who presented the bill to the Senate after it passed the House last year, said he is still skeptical.

The piece of the original legislation that caused the original problem, Pearson said, was included at the request of the insurance companies.

“They’ve really broken trust with spirit of what we’re trying to do, and they were a collaborative part of that,” Pearson said. “We have no choice but to be really skeptical and really dig in to make sure they follow the law and follow the intent of law.”

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