 So, good morning, everyone. Welcome to the Green Mountain Care Board. My name is Kevin Mullen, chair of the board, and we are proceeding with hospital budgets. And we went through several yesterday and we are going to proceed where we left off. So, at this point, I'm going to turn it over to Patrick and his team to lead the discussion. Patrick. Good morning. Good morning, board members and members of the public. Lori is going to get the slide deck up and we will begin with Springfield Hospital. All right, Springfield Hospital. Their fiscal year 21 NPR FPP request is 5.4% over their FY20 budget and request, which exceeds the 3.5% growth ceiling. The requested change in charge is at 4%. They do see this as a recovery budget as this is a hospital that is looking to navigate its way out of chapter 11 bankruptcy in the coming months. And the anticipated restructuring will begin in the fall of 2021 and carry them into the new calendar year. Their utilization as they noted assumes 100% as of October 1st pre COVID levels plus a 0.5% increase. And the justification continues with surgical cases affected by a new full-time surgeon. And they've made a $9 million expense reduction from 2018 actuals to the 2021 budget as they begin to restructure the organization. So, as you can tell at the top here on slide 60, this organization going into and coming out of bankruptcy is a different organization from when they went in. They were forced to reorganize some of their service lines, which obviously will impact services that support or are connected to some of those services as well. And they no longer carry the service with the birthing center, which would obviously in some way affect free and postnatal care at that hospital and in that region with those patients now being distributed to other area hospitals in the valley. And as we all know, their financial struggles have compounded over several years. However, this year they have reduced their operating loss. Some of that has been due to federal funding. Some of it has been due to state support, but in the coming 2021 budget, they are looking to make a small margin of 0.3%. So our request here at 5.4% staff believe we should reduce this to the 3.5% gross ceiling as they exit restructure and exit bankruptcy. Like we said, this is an organization that has changed quite a bit since it went into bankruptcy. And we think the 5.4% may be a little aspirational for this hospital as they come out of bankruptcy and into kind of a new role as a hospital. However, we would approve their 4% change in charge so that they could produce the very slim margin that they've budgeted for at this time. And the additional recommendations where we do need to have them improve the timely and accuracy of their submissions that is going to be more important than ever in the coming year with all of the unknowns out there. And we do really need every hospital to submit that information to us either by the deadline that we have on a monthly basis or within a couple of days that we can't really wait too much longer than that as we move into facility year 21. Included in that NPR reduction would be a commensurate reduction in the expenses. And should they fulfill their goal of exiting bankruptcy, any budget revisions that would be paused by some of the conditions of that bankruptcy, we would suggest be represented to the board at the appropriate time. So with that, we would turn it over to the board for discussion and dialogue on Springfield Hospital. Okay, board members. Yeah, I support what the staff has presented. I mean, this is also a hospital that did not ask for a commercial rate increase last year, so they had zero commercial rate increase. I do believe even the 3.5% is high because they were tracking down 3% through February pre COVID. So to be up that much, I think is high relative to what we've seen for other hospitals. But based on our discussions yesterday, you know, going, you know, taking below three and a half since that's in compliance, I can stick with the three and a half. I would just caution for the hospital to really be watching where their revenue is coming in because their expenses are tagged to even at three and a half what could be too high of a top line. And therefore, too high expenses and they continue to lose money, but I support their recommendation. Other board members. I would just echo what Maureen said. This is a hospital that's missed in 161718 and 19 their top line and I, you know, given where they were in February, I'm concerned. So I would be comfortable with a three and a half and with reduction in expenses commensurate with that. You know, concerns about their negative margins. So hoping this is really a turnaround, but I'm comfortable with the staff's recommendation. Thank you. Other board members. I agree with Jess and Maureen a little bit. It's a little bit like throwing darts at this time, get that they are in bankruptcy. You know, we, we found out yesterday that there was some state assistance that was kind of set aside hasn't been appropriated yet. So there's so many moving parts here that are kind of outside our purview that the staff recommendation seems to be, you know, a basic recommendation to until we know more about the outcome from the bankruptcy. Robin. I'm comfortable as well. And I am as well too. I think that I have very big concerns about after they emerge from bankruptcy. I think they should be very appreciative of the efforts made by the state to get them the dollars. The dollars aren't there yet, but it's in the budget as it proceeds. And this is one that Mike Halstead and his team stepped into a mess to try to clean this up and my fears are when he leaves if the hospital can continue on the path of correction, but there's nothing in here that is outside of our guidance and Maureen hit it accurately. I think we'd probably be happy if they even had a half a percent increase in their NPR, because it means that they're not continuing to fall. So with that, is there a board member that would like to make a motion. I can move that we approve Springfield hospitals budget with an MPR FPP increase of 3.5% from fiscal year 20 to 21 budget with commensurate reductions to expenses, a 4% increase to overall charges as submitted. Subject to the standard budget conditions that's outlined on slide 27 and improved timeliness and accuracy of data submission. And although it is part of the standard conditions that it's up to the board chair, this is one Patrick and team that we will definitely continue monthly monitoring on. Is there a second to the motion. Second. Okay. Is there further board discussion before I open it up to the public hearing none. The motion is to approve Springfield hospital budget with an MPR FPP increase of 3.5% from FY 20 to 21 with commensurate reductions and expenses and a 4% overall increase in charges. All those in favor of the motion signify by saying aye. Aye. Any opposed saying nay. Let the record indicate that this was a unanimous vote. Patrick before you go on to the next one, I just want to say a few words because we did receive a letter this morning. And I just wanted to have the board focus on what was actually in our guidance for this year. And it's our guidance said that factors considered during review the board may also consider the following factors when reviewing in PR FPP and change in charge requests. The first being the financial solvency of the hospitals. Including days cash on hand and other routinely collected metrics. Second, the hospital's expense reduction plans. The hospital's long term strategic financial plans for sustainability data and information provided by insurers and third party administrators regarding actual and projected utilization and price changes. And the next one gets to the point. There was an assertion that late in the game, the Green Mountain care board brought in consideration of government relief dollars. And it's very clearly in the guidance that says the amount to which the hospital was compensated through COVID related stimulus grants. Also impacts on Vermonters and employers in the commercial market, including self funded employers and other relevant factors proposed during the budget review process. So that's just an answer to the letter that will end up in as a public comment to us that alleged that this was a last minute consideration. And I just want to. It was always a consideration. So with that, Patrick, back to you. Thank you, Mr. Chair. Next up is Copley Hospital. Their FY 21 requests represent the 6.1% and VR FPP increase over fiscal year 20 budget. This is this request the 3.5% growth rate ceilings set forth by the board and the guidance their change in charge as submitted is 8%. The hospital has undergone some new leadership at CEO and CFO, most notably, and there are some changes being made as well. The hospital has undergone some new leadership at CEO and CFO, most notably, and there are some changes being made at hospital to make process improvements, find deficiencies and savings, et cetera, and make use of the resources they hand to control costs. This is a hospital that has had some negative operating margins the last couple of years and is looking to rebound and rebuild to make necessary capital improvements. As you can see here on slide 66, the negative margins have grown from 16 and 17 into 2018 and 2019. This year they are projecting a operating gain at the hospital and their budget offers up a 0.6% operating margin. Copley has done a lot to note some of the improvements they're doing and we'd like to see leadership take advantage of that. Lori, if you could navigate to the final slide. Thank you. We would like to see leadership efforts come to fruition and find cost savings on their income statements and throughout the organization as a whole. So this is a hospital that as of February was operating 3% over budget, which was encouraging at the time prior to COVID. However, we think the 6.1% increase is a bit high. And the history has not proven out that that's attainable yet and they do have new leadership. So it's still kind of unknown. We hope that that's something they can achieve and rebounding some of their growth. But however, time will tell for that. So we would reduce the change in charge and thereby reduce the submitted NPR. Again, the change in charge we feel should be reduced to 6.5%. They received a 9.8% last year. However, with the onset of COVID, it was not fully realized on their financial statements. So we think that with the 9.8% and a slightly reduced charge of 6.5%, they should have the opportunity to make good on some of those cost savings initiatives and produce an operating margin for the hospital. So again, this is another one where we'd like to see more timely and improved accuracy for submission of financial data and commensurate reductions and expenses to go with the reduced NPR FPP. And with that, we turn it back over to the board for discussion and dialogue on Copley Hospital. Thank you, Patrick. Board members, Copley. So this is Robin. So because the 9.8%, you mentioned, Patrick, that the 9.8% last year was not fully realized due to the drop in volumes to COVID, because of that, one of the ideas I wanted to throw out for discussion is whether to shift some of the change in chart into the COVID related temporary increase, because it seems to me like once volumes come back, which presumably they would, if they were COVID related, we don't know when, of course, which is why we have the COVID provisions in part. That, that because that's built into the base, it would become realized at some point, but in the meantime, I'd be open to a higher change in charge. But bifurcating it between the standard and the COVID, also recognizing that Copley has had some financial challenges and has had a fairly low rate increases prior to last year. Those are also factors for me. Other board members. Last year, I'll add a few things. One, I do think there, I actually think their top line request for NPR was not unreasonable, because they were trending ahead through February, I believe about 6% prior to COVID. And if we look at what their, their budget was 72.7 million for 20, and they're projecting to come in about 67.6. Yeah, that chart, the other chart that showed. So they're missing their projection by 5 million this year, although they had been tracking ahead by 6%. And now they're making up, if you will, the 5 million from 20 to 21. So even though, so those two years, you know, even though the overall increase shows a higher request over the two years average, you know, they would still be in compliance for what we had talked about for enforcement and things like that. So I think, you know, their request on the top line was not unreasonable. I do think when talking about their commercial rate ask, I also agree with Robin that one of the, maybe not principles, but one of the things going through is, is maybe there is a commercial ask that we look at as being, you know, acceptable, whether that's 4% or a number that we say is, is, you know, what we've done for the other budgets, and then a piece, if we go above that would be COVID related. And if we do that for some of these requests, that gives us the opportunity to be looking as either mid year or through the whole year next year, and maybe it will show that that rate needs to continue and that we can't adjust for it. Or maybe it will show that that that there's some flexibility, because, you know, one of the things that we are also looking at here is, you know, commercial rate impact on consumers and that that's, you know, one of the things when Kevin was just going through. I think it gets overlooked sometimes that we all are also needing to factor in, you know, as part of this process, what the commercial impact is, you know, on consumers. This is also a hospital that put in their numbers for they didn't ask for additional funding, because they were able to benefit from many of the federal programs, including the PPP program. The payroll protection program. And for now they are very conservatively assuming that they'll have to pay all of that back, which I know that I know we haven't gone through the process to assess, but I would have to imagine that that they qualify to some degree for many of their expenses that they have captured in that PPP. So that that will really strengthen their balance sheet, which is another one of the things when we look at liquidity that is a factor in here. So when people have talked about what they get in 20 shouldn't necessarily impact 21. If the financials we're looking at don't include the benefits of what they receive. That will dramatic could dramatically impact their, their financial statements, particularly their balance sheet and cash flow days cash on hand, which are all positive things. So I do appreciate that they've suffered at a loss for quite some time, but it looks like if that $5 million just drops to the bottom line, they will end up being over $6 million and and quite strong this year on their income statement. As well as their balance sheet. So the 8% still is is a high request. I would definitely want to bifurcate it to a COVID piece. I believe this hospital also seem to potentially put a higher number in for their provider tax of about 400,000 which would be equal to 1% on the calculation because their provider tax numbers are higher for 21 than 20. So that may also be a factor to consider. So I'll stop there and see whatever else comments on things other board members. Yeah, I'm happy to jump in. I, I really like the idea of bifurcating in particular for some of these hospitals that are asking for higher rate increases than we typically allow it allows us some flexibility going forward. And again, as we've been hearing these are recovery budgets. So how do we think about that? So one of the things I do want to point out a couple of things actually the, we, you know, slide seven Patrick, if you can go to slide seven early at the beginning and it's the average overall change in charge. One of the things I want to ask that I, you know, was sort of thinking about this chart this morning. And one of the things I want to ask the hospital budget team to do is actually redo this. Taking into account what the changes they made yesterday to UVM Porter and CVMC. Their, their overall change in charge, for example, Porter is listed at 3.3 on this chart, but the revised chart yesterday now shows them at 0.86 and UVM on this chart is at 2.9 the revised chart has them now at 1.1 and CVMC at 2.6. They're actually at 2.27. So the reason I bring that up is that I think it would be helpful as we're thinking about these changes in charge, but also to put into context Copley at 0.6%, which looks like an outlier. Now when we update this chart with the revised information from those other three hospitals, they're still low and they're still the lowest, but for example, Porter's at 0.86. So it's interesting to compare Porter over the last five years and Copley over the last five years and what's happened to both of those hospitals where Porter, you know, this is almost a tale of two hospitals. One hospital is seeing positive margins. The other hospital is seeing negative margins, even though the rate change in charge has is roughly the same. Whether that's the benefits of consolidation or expense management. I'm not sure we could dig into that at some point, but I just want to the outlier of Copley here is is is important, but it's not as stark as it will be. It was once we change this chart. But the other piece that I would just want to say is looking at the commercial to Medicare ratio, which I keep looking at, I think maybe the only one, but I think it's interesting to me. The Copley commercial to Medicare ratio is actually higher than Springfields and VRH as Scott needs Northwestern and Porter and it's about the same as CVMC and VMH. So I just want to also put that into context that actually makes more sense. Now that we're seeing the revised. Once that change in chart is revised it actually that you know the fact that Copley is actually higher than most of those hospitals now makes sense to me, but I just want to kind of lay that out there. I think it's important that said, you know, I do think that they have had these negative operating margins over the past four years their days cash on hand is low. You know their fiscal year 2021 they're only projecting 66 days cash on hand that's, you know, quite low and I'd like to see that higher so we do need to consider their financial position. So I like the idea of bifurcating. I would just say that their NPR of 6.1% hold on a second Jess we have somebody that in the background let's not muted. If people who are not speaking could mute themselves so they can hear the constant speaking. Okay. Okay, I just want to say, you know, the, the 6.1% NPR is all price driven so if you go to the chart there, Patrick where it's the percentage of, you know, the change in charge is a percent of NPR FPP increase. Basically, the entire, you know, amount of NPR, they're expecting decreased volumes but they're making up for it in a in a larger commercial charge. And so what troubles me a little bit is the expenses are increasing at 7%. So expenses increasing at 77%. If that was tracking a volume increase that would make sense to me. But this isn't a volume driven increase in NPR. This is a price driven increase in NPR. So expenses shouldn't be exceeding in my mind that NPR. So, you know, I'm comfortable with some sort of bifurcation here. I'm comfortable with with a rate increase that's perhaps even exceeds medical inflation because of their financial situation. I would like to ask Copley to reevaluate their expenses and really better, you know, have an expense reduction because I do think that this seems high. Much, you know, the average expense growth is higher here than most other hospitals and their NPR increase seems to be price driven, not volume driven. So that's, those are some of my thoughts at this moment. Other board members. So let me add that I, you know, I think that we've had a change in leadership at the hospital. And they haven't been there that long. And I think from our meetings and from the material that they sent in, they are trying to put themselves on a more stable foundation. I will note that the recommendation of the staff in terms of reducing the charge at one and a half point reduction, that's a total of a million dollars in terms of revenue that they've got to account for and their projected operating margin, given their request was only 438,000. So kind of from the math of it, we're, we're pushing them into into a position of having to find in their budget savings of over a million dollars in order to just get back to that operating margin, which was only six tenths of 1%. So they're operating on very, you know, on a very thin margin as it is. They do have this PVP this five million dollars, which I think they're going to find out in October, November, you know, how much of that they can keep. And I do agree that the provider tax is a little rich, but both of those are like one time events that that helped them a little bit. The ongoing issue in terms of the expense cut is a little different matter. And I would note that that's expense cut to in order to get back to an operating margin of $438,000. So the expense cut of a million dollars is equal to 1.3% of their operating expense. And I just I that doesn't sound like a huge number, but it's probably bigger to a smaller hospital like Copley than it is to a larger hospital that probably has more options to reduce their expenditures. One other comment I want to put on to is, you know, last year, this hospital did also get a 9.8% commercial rate increase, you know, to help correct for the issues. And I also agree with where what Jess was saying about their expense increases relative to their, their top line increases are high. And the other one of the other factors we're always looking at is cost efficiency and savings and making sure that those are optimized. And I think, you know, I think we should put some pressure there, particularly on this hospital to achieve that. Other board discussion. Well, like Maureen, I too support a bifurcated rate on this hospital. I think that it would be unfair to assume that any portion of the 5 million is going to be forgiven, but it's also likely to assume that all of it will be forgiven. And the uncertainty is the troubling part here. So placing a COVID related piece of this change in charge, I think is appropriate. I'll defer to others what they think the appropriate amount of the COVID related piece might be whether it's one and a half to or whatever. But I do support reducing the request from the 8 to the 6.5 overall. So other board members. Yeah, I would throw out reducing it to 6 and having 4% as a base rate and 2% as COVID to start a discussion and see where people net with that. But is that a motion Maureen? And part of the rationale for that is 1% looks to be in provider tax and then an additional 1% in cost savings relative to the increases that they're projecting. Jess is exactly right. The 5 million increase from their budget last year is all price. So going from the 67 to 72, yet their expenses are going from 72 to 77. So up the entire 5 million dollars. So to 1% rate, I think was 400,000 or so to put that amount as a cost savings, 383,000 was 1% on the commercial side, 673 in total because of what they're saying for Medicare, which we wouldn't be reducing what they would get for Medicare. So I think we're looking really at the commercial ratepiece is 483,000 per 1%. Is that a motion Maureen? Yes. And are you likewise reducing the NPR FPP by the equivalent of the half a percent that you reduce the change in charge? The change in charge reduction was 2%. Oh, sorry, in total, yes. I'm going off the staff. Yes, yes, yes. From what the staff had said it would be an additional 5%. And yes, reducing the NPR for that as well. So Patrick, maybe you could go to the slide with the suggested motion language and Maureen could fill in the numbers and we'll go from there. Maureen, if you do want to restate it with the suggested motion language. Yeah. Move to approve Papa's budget with an NPR increase of I'd have to calculate what an additional half a percent would do. It's probably about 4.3 or something. I think they would need to tell us what that calculation is. Patrick, can you give us that calculation? Because one and a half percent was 1.4. So it's probably about a four. The other way to do it. Sorry. No. We couldn't hear you. We're not really prepared to do calculations on on the fly. Maybe we could take a brief recess to make sure we get that number right. The other way to frame the motion would be to frame it around the change in charge with a with a commensurate decrease in the staff recommendation and then and not use a number. And then the staff can come back with the calculation. Yeah, I agree with that. So move to approves coply budget with commensurate reduction from fiscal 20 to fiscal year 21 budget. I'm going to go back to the NPR in a second with commensurate reductions to expense a 6% increase to overall charges 4% representing traditional commercial increase in 2% the COVID increase and reducing the requested 6.1% NPR by the impact of the adjusted change in charge from 8% to 6% subject to the standard budget conditions and outlined on slide 27 and approved timeliness and accuracy of data submissions to the board. I'll second. Board discussion hearing no further board discussion. I'm going to open it up to public comment on the motion for coply hospital to reduce the overall increase in change of charge to 6% with a 4% regular component and 2% COVID component in a commensurate reduction in the NPR FPP. In my mind I think that's literally one one third of what the change was between the request and the staff proposal, but we'll leave that open for the staff to confirm that. And it'll be subject to the standard budget conditions as outlined on slide 27 and improve timeliness and accuracy of data submissions to the board. So with that members of the public. Kevin this is Mike Del Treco. I'm sorry I couldn't raise my hand. That's okay Mike. Could you I'm trying to capture that motion I I understand sort of the sort of what you've outlined but did somebody document that so it could be read back potentially. So it will be part of the transcript. But again the motion is to reduce the requested coply hospital. Request for a change in charge from 8% to 6% with 4% of that being for a standard commercial increase with the other 2% being for a COVID related increase resulting in a 6% total change in charge and there'll be a commensurate reduction in the NPR FPP increase to reflect that reduction and it's subject to the standard budget conditions as outlined on slide 27 and improve timeliness and accuracy of data submissions to the board. And Kevin one other thing and also reduced expenses commiserate reduction in timeline. Thank you marine. Does that answer your question Mike. Yes it does. Thank you. Thank you. Other public comment. Other public comment. Is there further board discussion. If not the motion before the board is to reduce coply hospitals request for a change in charge from 8% to 6% made up of two components. A 6 4% commercial regular change in charge with an additional 2% bifurcated COVID change in charge resulting in a total of a 6% change in charge with a commensurate reduction in the NPR FPP. Along with decrease in expenses to reflect that decrease and subject to the standard budget conditions as outlined on slide 27 and improve timeliness and accuracy of data submissions to the board. All those in favor of the motion signify by saying aye. Aye. Any opposed. Let the record show that the motion carried unanimously Patrick. Thank you Mr. Chair. Next hospital up is Rutland regional. Their FY 21 request represents a 7.6% reduction in NPR FPP from their FY 20 budget. This is well below the 3.5% row ceiling set forth by the board and Rutland is also submitting a 6% change in charge. In their presentation and their justifications were a 12.7 million dollar reduction in costs they've negotiated with their nurses union to postpone salary increases in the coming year and have opted to not contribute $2 million to the pension which is currently appropriately funded. They are working off an average daily census budget of about 82. They're currently at 77. There did seem to be some hesitation of attaining that 82 in the coming year. And their utilization assumptions for inpatient volume were between 88 90% outpatient of 100% of 2020 budget for 95% utilization average. This is a hospital who has had historically low history of change in charges. Lori if you can navigate to the change in charge page please. So that has been overall the average has been approved at about 1.8% Lori if you could navigate up please. Right. Thank you. This is the hospital who has a history of strong budget management in the last several years they have produced relatively stable operating margins including their projected FY 20. And in fiscal year 21 they are budgeting for an operating margin in line with the past several years. They have been able to operate with lower than average changes in charges while at the same time continuing to produce a positive operating margin even though it may not be the operating margin that they would aspire to. It is of note that their NPR for 2021 is more aligned with 2016 and as you can see here on slide 72 and 16 they produced almost an 11 million dollar operating margin and five years later with costs having grown over several years that margin is being budgeted quite a bit lower at 1.7 million. This hospital also came in with requests for reductions in change in charges to lower that margin back in 2016. Our staff do feel that it is time for a change in charge increase to keep them on track and earning positive margins. So with that Lord if you can navigate to the motion slide. Thank you. We would approve the NPR fee as submitted and we would also approve the 6% change in charge as submitted and with that we turn it over to the board for discussion and dialogue on Rutland Regional Medical Center. Thank you Patrick board members. Sure I'll start on this one. Rutland certainly has put forward the most conservative of all the hospitals in what they're projecting for NPR in 2021 as you stated it's equal to about 2016. It's below it's the only hospital that's requesting numbers below 2019 and they were trending slightly they were trending about 4% below their budget through February and the commercial ask that they're asking for is $8 million. So I'm hoping that their top line numbers may actually be conservative. We you know every hospital has taken a different approach to what they believe their utilization will return to and this one seemed to take the most conservative approach and they've cut expenses accordingly. So what I would propose on this one is also bifurcating the change in charge to 4% and 2% as we just did on the prior hospital. And really looking at the potential that they may come in stronger for their NPR coming forward into 21 if they have more recovery. You know we don't we won't know and that's why I would put some of this change in charge in a COVID related piece. But you know other than that it would keep everything the same except separating that 6% to 4% to 2% would be what I would suggest. And I either make that motion or we could have further discussion with everybody else first comment however you want to handle it. Well board member can make a motion at any time and if you would like to hear from the other board members that's fine too. Would another board member like to jump into the conversation. I would just say that I thought Rutledge presentation was one of the best and that's in my view been a pattern over the few years that I've been here. They have well considered the risks that aren't accommodated in this budget of COVID reemerging or pay or make shifts or ACO risks. Now that they have a more wholehearted embracement of the ACO tension payment deferral for a year. Some liquidation of investments so they've done what they have to do to put themselves in a position going forward and I don't mind splitting the charge 6% and 2%. I do note that yesterday Mike Smith said that Rotlin was in line for a $13.1 million health care stabilization grant but you know in this situation I could also stay with the change in charge at 6% as it is just in terms of rewarding a hospital that I think has done the right thing. Other board members. I'll jump in since nobody else is this this one like Southwestern Vermont. I'm actually. Worried about some of the numbers in that you know when you look at whether it's 0.6 or 0.7% operating margin. With increased risk in health care reform. Those are things that concern me I also worry about. If workforce issues continue to persist how all the reductions across their staff are going to play out as far as being able to retain their best employees and. After the whole fiasco that we witnessed at Blue Cross even though I think that they can justify it based on the valuations in their pension fund. I do worry about anybody making decisions to not to to fund the pension so those are my concerns and like Tom I could approve it. With or without a COVID charge and I'll leave it to board members to find where their comfort levels are. So this is Robin. I'm I'm a little uncomfortable with the 6% change in charge but I think I can get there given the low margin. I do. I agree with Maureen that the 7.6% reduction in MPR seems. Quite a bit low considering what we're hearing in terms of volumes in other hospitals but balancing that out with the fact that they were down 4% in February. So I think I can get myself comfortable with bifurcating the change in charge to 4% and 2% and part of that quite frankly is because they have been very strong. In their budget management and when they've been running hot as was mentioned they came in and asked for an adjustment so I trust them to manage to it and if things are going differently than they expected. That they would you know let us know given their history so I think I'm I'm I'm there. Jess. So I am. I'm comfortable with the four and the two. I can also probably get to the six if needed. I think that you know they're we look at where their rate increases have been over time. They've been low and even if we gave them the full six their five year average would still be below the median. I say that though we're also saying that they are the third highest commercial to Medicare ratio. So you know their base was higher but their growth rate has been slower. I'm comfortable with that. I think they submitted this budget prior to the decision to join the ACO in Medicare that takes additional risk and also additional investment in primary prevention. So given the huge cost savings initiatives that this hospital has undertaken much more so than any other hospital. I'm comfortable that they are managing their budget well and you know could I would say that I could be convinced of the six. I'm comfortable with the four point four and the two. Would anybody wish to make a motion. Sure. I'll make a motion. Move to approve Rutland Regional Medical Centers budget as submitted with a seven point six decrease from fiscal year 2020 to fiscal year twenty one budgeted NPR FPP. Six percent increase to overall charges separated as four percent standard commercial rate increase and a two percent covid rate increase and subject to the standard budget conditions as outlined on slide twenty seven. Is there a second second further discussion from the board hearing none will open it up to public comment. Does any member of the public wish to comment on the proposed motion to approve Rutland Regional Medical Centers budget as submitted but slightly amended with a seven point six percent decrease from FY twenty to FY twenty one budgeted NPR FPP a four percent standard commercial increase a two percent covid related increase for a total increase and a two point six decrease from FY twenty one budget change in charges of six percent and subject to the standard budget conditions as outlined on slide twenty seven. Is there any public comment. If not all those in favor of the motion signify by saying aye. Aye. Aye. Aye. Those opposed signify by saying nay. Let the record show that the motion carried unanimously. Patrick. Okay. Moving into our next hospital is Brattleboro Memorial and yesterday you approved provider transfer and any accounting adjustments that were submitted along with this budget. So that has been squared away. Brattleboro's request is five point three percent by twenty one budget over FY twenty budget on this does exceed the three point five percent gross ceilings at force in guidance. They're changing charges four point nine percent total. That's two point nine percent standard and two percent covid their revenue. They stated was ninety five percent of their FY twenty budget was the new normal gross revenue. That is sorry FY twenty one budget. They assume they will maintain ninety five percent of old information is the new normal. I'm not sure what that means. I apologize. Two percent is driven by portion of the rate to cover increased covid expenses including 15 FT screeners to cover the hospital entrances. And they noted that they are the fourth art busiest hospital in terms of emergency department treating mental health and psychiatric patients and they do this in collaboration with Dartmouth and Cheshire hospitals. As of February twenty twenty Brattleboro was operating about point five percent over budget. We noted that they are projecting a two point six percent margin. Lori. Thank you for this year. So their budget and twenty one would bring them back down to a point five percent margin which is slightly under their actual twenty nineteen. This is a hospital to that has been showing signs of recovery from the twenty sixteen to twenty eighteen period and moving to the motion language slide please. Lori. Thank you. We would reduce the NPR growth to four point three with the accounting adjustments and provider transfers it would be four point eight. The change in charge we would reduce to two point nine percent which represents the standard rate and we are doing that based on the provider tax. So Lori if you could scroll down to slide one. I think it's one thirty five to kind of show some of the trend analysis we did. And I believe it was board member Pelham who asked them about their provider tax. Thank you Lori. At their hearing and it was stated in the transcript that they made a mistake and calculated off FY twenty one. And when the question was posed again they noted that they had received guidance from Diva. So we contacted Diva and Diva had noted to us that no guidance had been handed out to their knowledge. So we think there's probably room here to reduce the code portion of the rate and therefore allow the overage on overage overage on the provider tax to fall to the bottom line. And they would be able to cover COVID costs using a portion of that as well. So our rate reflects a reduction to two point nine standard with money is being found as part of that miscalculation leaving that expense structure in place there. But bringing it down slightly in coordination with the NPR FPP and additional recommendations as you've already acknowledged the provider transfer and accounting adjustment. But again another hospital where we need more timely and accurate submission of financial data so that we can better track each individual hospital moving into a year of uncertainty. So with that to recap four point three percent NPR FPP growth four point eight percent with the acknowledgement of the provider transfer and accounting adjustments yesterday and a two point nine percent change in charge for radical memorial hospital. We'll turn that over to the board for discussion. The board members. I'm sure I'll go ahead. Actually, you know on this one I would throw out to keep their four point nine percent change in charge with the COVID piece of two two percent. I do appreciate and like to look at the provider tax and that that's going to bring them favorability and I do think that's important and will be a factor as we look at many of the hospitals. Their operating margin requests for next year was point five percent and their total margin was was one point two and looking at this trend. They're a hospital that lost money in 1718 marginally made some money in 19. 20 they were able to benefit from the program the COVID programs and are going to end up looks like with some some a stronger much stronger cash position. But their request to be at point five is is very low relative to many of the other hospitals. And I think the fact that if we kept the two point nine percent as a straight commercial standard. If we continued with the other two percent as COVID will have time to assess that and what we've said with the COVID is we can look at it at six months and we can look at it as a year. And if we see that they are turning around more and then then we could adjust that so that that's where what I would put forward on this one other board members. I'm just looking at some of my notes here in the past and I have a note that they received more COVID money about 1.8 million the necessary to cover costs. And their responses in June July and August revenues were a bit weak against and so I think this was one of the hospitals that kind of move some of their COVID money into their balance sheet. And it's having it sit there until they know what an audience might reveal about whether or not it was eligible. But there does seem to be some kind of a COVID cushion in their balance sheet. I'd have to go back and look at it in detail but that's what my notes say. Other board members. I'm comfortable with Maureen's suggestion. I do think that given the low operating margin that they asked for and the financial issues the last few years that it makes sense to ensure they're in good financial health and like to the extent to Tom's point to the extent that the 20 balance sheet looks good because of the COVID money if that wasn't if it wasn't used then it'll have to be paid back which is probably why it's not reflected in the 21 margin would be my guess that so I'm comfortable with Maureen's recommendation. I'd also just add to the point that Brattleboro was not on Mike Smith's list yesterday. There is a second round but and I understand that we shouldn't be looking at Mike Smith's money as operating money it is to fill a gap due to the pandemic but Brattleboro was not on that list yesterday. And that's consistent with what we heard from Steve Gordon at the hearing that they didn't feel that they would be in a position to qualify for the state relief dollars based on the dollars that they had already received in federal relief. So it didn't surprise me but you're accurate Tom. So I can support Maureen's recommendation. Again this is a hospital with very low margins. They're trying to do the right thing by their staff. They're increasing their staff wages trying to impose a $15 minimum wage. They are all in in the all payer model trying to make investments in primary prevention so I think this is a hospital that needs a stronger margin and I'm comfortable with keeping it as is. Well it's not really keeping it as is. It's breaking that into two components is what I heard Maureen say but I haven't heard anybody make a motion. So perhaps somebody would like to make a motion. I can do it if you want Maureen or unless you want to. Oh you can do this. Okay. I moved to approve Brattle Memorial Hospital's budget with an NPR FPP increase of 5.3% from 20 to 21 with an effective NPR FPP increase. To be calculated by the staff reflecting the adjustments previously voted on with a 2.9% increase in standard overall charges and a 2% increase in COVID charges for a total of 4.9% increase to charge. Subject to standard budget conditions and improved timeliness and accuracy of data submission. So that should reflect the budget as proposed by Brattleboro. Is there a second to the motion? Second. Is there further board discussion? Hearing none we'll open it up to a public comment on the Brattleboro Memorial Hospital budget the proposed motion. Is there any public comment? Hearing none is there any further board discussion? Hearing none. The board will attempt to rephrase the motion and Robin correct me where I go astray. It actually might be easier if Laurie moves back to the previous slide because it's basically the budget as submitted by the hospital. Well, yes. But so as I understand the motion it's to approve the 2.9% standard component of change in charge along with a 2% COVID related change of charge for a total of 4.9% as requested in their budget submission. And after reflecting for the accounting changes I am still not positive of what the exact NPR FPP is. Patrick do you have that or should we just say commensurate with the change in charge? I would yeah I would say commensurate to be calculated by the staff. Thank you. Thank you. With the additions of improved timely and accurate submission of financial data and recognizing the standard budget conditions as outlined on slide 27. Did I accurately get that Robin? Yes. Thank you. Any further board discussion? If not all those in favor of the motion signify by saying aye. Aye. Those opposed signify by saying nay. Let the record show that the motion carried unanimously. Patrick. Thank you Mr. Chair. Next on the docket is Mount of Scutney. Thank you Lord. So Mount of Scutney's FY 21 request for NPR FPP represents 4.6% growth over their FY 20 budget. This is in excess of the 3.5% growth ceiling set forth in the 21 guidance with a submitted 4.6% total change in charge. This is another hospital that had requested a bifurcated rate and of that 4.6%, 2.4% is a standard rate and 2.2% is a COVID related rate. Their justifications were 94 to 95% of their normal volume for their FY 21 budget from 2020. Cost savings, limited retirement and termination of the pension obligation that will be the remainder of which will be transferred to insurance company. And they're keeping their benefits flat year to year. Also they were now this may not be fully accurate anymore. Now that they have intended to continue with all ACO programs, they're not booking $1.5 million in reserves at the time of the original budget. And the 2.2% COVID rate is related to ongoing expenses for supplies, staffing equipment, punishment of cash, urgent and deferred capital investments and the hiring of 7 to 10 new FTEs for COVID safety. And again, this is another hospital who has made an effort to add capacity for mental health treatment at their facility. Moving on to the NPR and operating margin slide, please. I think there's a delay with Patrick getting them. Yeah, they're in. Last week. Both last week. Okay. So this is a hospital who has had kind of an up and down operating margin over the last few years, dipping to a loss in 2019 and projecting an increased gain of this year of almost $900,000 and budgeting next year very slim margin at 0.03%, which is below some of the numbers that we've seen in the past on average. And so their margins have been pretty slim as of late. And in February, they were operating at 7.4% below budget. Their 4.3% change in charge is consistent with their five year average that 4.3% is now 4.6% with their resubmitted budget and increased by 0.3%. In the last couple of years, their change in charge averaged a little over 3% in the last three years at average about 3.67%. So this is a little higher than what they've requested the last few years. Again, as with several hospitals, just fiscal year 16 seem to either have a large submitted and approved rate or a very low submitted and approved rate. So tying that back to our conversations yesterday, when that drops off, it will have an impact on the five year average and all depending on what occurs this year. So to recap, because this was a resubmitted budget that didn't have a whole lot of movement in it, the overall change in charge is now 4.6%. And as opposed to what they put in prior to that. Lori, if you could move on to the motion language, please. Thank you. We would approve the request as submitted for NPR. We would also approve the change in charge at 4.6 as well with the 2.2% COVID rate with an additional recommendation around that the enhanced services that we ran through yesterday do not qualify under the guidelines of provider transfers. But our next part of the explanation for the increased NPR FDP, which accounts for 1.8% of that increase. And with that, we will turn it over to the board for discussion on Mount of Scutney. Thank you, Patrick board members. Comfortable approving as submitted. You know, they had separated the change in charge for the COVID piece. They've now added some more ACO participation. Their top line may still be high. They were tracking down 7.4% through February. And I know they're getting, you know, 1.8% is relative to the transfers. And they also have, you know, the change in charge that's going to contribute year over year. But I would just caution that, you know, they, they may have some top line issues. The other thing that's a little bit unique for me when I look at this hospital is they are affiliated with Dartmouth-Hitchcock and in prior years Dartmouth-Hitchcock has put some funding in. And then when they do well, they don't put that funding in. So it's, it's hard to look consistently across their performance bottom line. You know, they did talk about borders that they have. But in the past, they've received patients from Dartmouth that maybe they were losing money on. And so, you know, that was kind of part of that. So I don't, I'm not alarmed by their low operating margin that they're projecting for 21. It's, you know, it needs a little more to look at the backdrop of what's behind that. But I am supportive of the recommendation as stated. Yeah, I can support it. I can support it as well. I will note that there's, you know, they're well aware of some risks that they have in their operating statement. I think their provider tax is in there at 4%. So I think there's a little bit of upside risk there that could be, you know, looking at their 2020 projected could be almost a million dollars of risk. They have the risk of, I don't think they budgeted for their, for the reserve for one care. And they have that the borders risk where, you know, where, where they need to find more permanent homes for some of these folks. So there's, there's a lot of risk in the budget and to quote Maureen, I love Maureen's ending quote at the end of their discussion with, with, Maureen Scottney where Maureen concluded by saying time will tell, right. And, you know, so I, there's a time will tell element here. And, but I think that the staff recommendation, you know, strikes a happy medium. And just to jump in. You talked about not booking for risk, but the reality is, is that they did amend their, their budget after they changed their participation, and there is three tenths of a percent increase factored into here for that. So just want to, you know, clarify the record that it did increase what they originally submitted from the 4.3 to the 4.6 that you see in front of you today. Other board members. I'm comfortable with the request for all the reasons that other folks have spoken to. I mean, I guess I was comfortable with the original budget request and was thinking that the point three we typically don't allow for and historically we've not said that the increased risk associated with the ACO can be, you know, allocated in the change in charge. So I'm intrigued by everybody else seems to be very comfortable with this, including the point three adjustment for now the ACO participation. So I just wanted to throw that out there as a conversation point. Yeah, I could go with the 4.3 as well. The point three, you know, I, I agree with the 4.6, but I also agree that we don't want to look at putting the risk into the commercial rate. And so I could go with the 4.3 and go back to their original request. And that's really where I was headed when I was pointing out to Tom that it was factored in because I think that in my mind the 4.3 is more appropriate approval, but I'll leave it to the rest. This is Robin. I don't disagree with that either. I think the reason why I was comfortable with the 4.6 is because when you take out the COVID request is actually a pretty low standard rate request that's maybe even a tad under medical inflation. So that's why that point three didn't bother me so much, even though in, even though they articulated it as ACO, the underlying standard change in charge in my mind was still pretty low overall, but I'm, I'm comfortable either way. Would somebody like to make a motion? Shall I do it? I'll go ahead and do it. I would move to approve Mount of Skutney Hospital Health Center's budget as submitted with a 4.6% increase from 2020 to 2021 budgeted MPR FPP, a 2.1% standard increase to overall charges and a 2.2 COVID-19 related increase to overall charges subject to the standard budget conditions as outlined on slide 27. So my motion went with the overall 4.3% change in charge, but kept the MPR the same. Is there a second to the motion? I'll second. We got two seconds. So the motion before us is to approve Mount of Skutney Hospital and Health Center's budget as originally submitted with a 4.6% increase from FY 20 to fiscal year 21 budgeted in NPR FPP with a 2.1% standard commercial increase to overall charges and a 2.2% COVID-19 related increase to overall charges subject to the standard budget conditions as outlined on slide 27. Is there further board discussion? I would just like to say that, you know, I understand the discussion about the one care reserve. That makes sense to me and I agree that we should not be, you know, paying for that through higher commercial charges. I will also note that in this situation, which is not the general case that their provider tax, they budgeted at 4%. And that's almost a million dollars that if you calculated at the 6% rate, that's almost a million dollar increase. I could live with the 4.6% independent of the reserve issue, but just because they have so underfunded their provider tax. But given that there was the motion in two seconds, you know, I'm counting heads here and thinking maybe an amended approach wouldn't work. That's not necessarily true. I think the whole point when you second is to then have a discussion, you could still say no to it after. I do think you bring up a valid point about their tax and maybe Patrick and Lori can weigh in on that. You know, I know they had done some looking at some of the what people had put in and, you know, we're certainly looking at it from the other side if people have overfunded it, if they've underfunded it, you know, that should be a consideration as well. And then if we if we did keep the request as they had requested it, it would not be because of the ACL, it would be because of the provider tax piece. Patrick, Lori, we will have to look into that. Is this one that we should set aside till after lunch, Patrick? If you're going to hang it on the provider tax, then yes, we will need time. Ford, is it okay to set this one aside till after lunch? Absolutely with me. Sure. Yep. So, I mean, objection will pass over Mount of Scotland for now and move on to the next hospital, Patrick. Thank you, Mr. Chair. The hospital up is Northwestern Medical Center. Their FY 21 MPR FTP request represents a point 2% reduction from their FY 20, but the new request is within the 3.5% gross ceiling set forth and guidance. Their change in charge total change in charge 21.1% consisting of a 19.9% standard request 1.8% COVID-19 request. Their justification was seeking parity on change in charge with their peers in order to remain financially stable. They had service area growth volume continuing to improve in their service area in Northwestern Vermont. They are continuing to evaluate and repriorities capital capital spending and $217 million approved for a emergency department renovation that will be paid through cash reserves and not an increase in rates. They are making ongoing investments in primary care, pediatrics, OBGYN, and strengthening their intensive care and sleep services. Those were a couple of the items that we went yesterday. They have lifestyle and medicine into primary care. RiseVT has been resized for sustainability and alignment with the ACO, and they've transitioned away from their hope and recovery and outpatient neurology to other community partners. And that's another component that was discussed and acknowledged by the board yesterday. They have noted that they're not in compliance with their death service coverage ratio covenant on their bond. And historically they made their case as a low cost hospital in the state of Vermont. With that, as of February, they were operating about 7.3% below budget. This is a hospital whose financial difficulties in recent years have been well known. And also they came to the board back in April for a rate increase and were denied the state to feel glory. You can navigate to the motion language. We felt they made a compelling argument for being a low cost hospital. We felt they made a compelling argument that they took what the board said back in April. Seriously, we as staff were encouraged by the fact that they are taking efforts to mitigate the cost that they has been incurred by the hospital by the electronic medical record roll out. And that was not something that was apparent to us back in April, but it sounds like they have a roadmap to reduce those annual cost burdens that have been brought about by that EMR and turn that around in a way that doesn't impact the rate payer. That said, they do, we feel they do need a higher than normal request going into the next year. So the change in charge, we would fall in line with board member Holmes previous comments amount of Scott. We could not justify the 7.25% change in charge attributed to the ACO dues risk and reserve funding to be placed on commercial rate payers. However, we would accept the 12.67% standard rate left after that reduction of 7.25, which would be historically the highest rate approved by the board. And we would also prove their COVID rate component as well for a combined rate of 13.85% for the coming year. And that would, of course, reduce NPR growth rate to negative 3.8% with the account adjustments and provider transfers. It would be negative 3.5%. We'd like to see the continued work on their behalf to reduce expenses accordingly. We also improve timeliness of submissions and financial data. And we recognize yesterday at the enhanced services around the ICU, et cetera, do not qualify under the guidelines for provider transfers, but are an explanation of the increase NPR total in 1.5%. So with that, we would turn it over to the board for discussion and dialogue on Northwestern Medical Center's FY 21 budget requests. Thank you, Patrick board members. This is a hard one. For me, anyway. So one of my concerns that I would love to hear other people's thoughts on is, if you, Lori, if you could go back to the margin slide. It seems to me somewhat realistic to think they're going to go from negative 8% margin in 19 to 2.3 in 2021. And that what they're trying to do is basically recoup that through the change in charge. So I'm a little bit like as opposed to trying to make progress over a couple of years to recover. So I am comfortable with doing a change in charge that's higher than what I would consider sort of typical for what we're doing this year so far or typical in a normal year. I'm still concerned that it's that it's just not that it's just too much to try and push on to rate payers in one year and that maybe over a couple years it would make more sense. But I don't know. I'm am. Those are just my initial thoughts and I'm definitely open to being convinced by other folks. Thank you Rob and other board members. I'll jump in. One of the things I'll say is I think that the expense reduction efforts by Northwestern are laudable and I know that they worked very, very hard to to reduce their expenses and increase their sustainability. Their commercial rate is low and has been low their five year growth rate. It was 0.7% according to this change in charge chart that we have over the five years. And so their growth rate was low but also if you look at their commercial to Medicare ratio it's also quite low relative to other hospitals so their base is low and their growth rate has been low. So you know I do want to echo the sentiment that we said earlier at the hearing I mean largely that's driven in part by that minus 8% in fiscal year 16 that they submitted themselves so in part we approve what they submitted. But I will say it certainly is low and over over the five years. So if we take 17, 18, 19 and 20. You know the approved percentage change in charge is is you know 2.8 or so percent so if we take off 16 for a second we look at the last four years. So if we were to approve a 13.85 their five year average would be and they whatever about 5% so they would certainly be in line then and a five year average with their peers. And if we approved a 10 it would be a little bit lower to be at four and change. So the way I look at it is I think an adjustment between 10 and the 13.5 is where I sit in terms of what I'm comfortable with. I do think there has to be some adjustment for prior low growth rates and in fact their base was low they are a low cost hospital. So I'm also so I'm comfortable in that range and I do I am worried about their bottom line I am worried about their delivery of services that are needed in their community. I want to see them continue investments in primary prevention and chronic disease management. I am concerned about the tele you know ICU making sense given their low census there and I'm concerned that is the sleep center really addressing a community a pressing community need. Are there other needs in that community that are more pressing that those investment dollars might have a bigger impact on. So those are concerns that I have with this hospital but I do have to acknowledge that their change in charge has rate has been low and their base is low. So I'm comfortable in the 10 to 13.85 range that you know where the staff ended up at 13.5 and I even be comfortable going starting at 10 somewhere in there. Sure. I'll add some context to I think you know one thing just going to comment on the growth rate overall for for you know all these hospitals is and using that as a metric. One of the concerns there is that you know I think and Jess has alluded to many times is you know where people are starting from right and and this is a low cost hospital. And then I do look at where the rate increases are but the reason I say that about the rate increases and looking at these numbers where we have to be careful is many times. The reason the rate has been lowered like their minus 8% and 16 was because of their their huge overages in the prior year and so that then actually does of course factor into their five year average but I look at that. You know as certainly a factor and we're going to see that in other hospitals that we look at after this one as well that it's impacted by some of the over performance they've had in the prior years. But they also have shown and we've seen on reports that they are a lower cost provider and that has created some issues in managing their expenses when they're when their reimbursement tends to be a little bit lower than some of the other hospitals. So I would look at I'm also comfortable within in the range just talked about you know what I was thinking is you know we also do of course have the flexibility of using the covid piece. I would be comfortable with probably a 10% standard rate and a 4% covid it's rounded up a little to give them you know to the 14%. You know we did give Copley 10 9.8% last year. I think you know they have been impacted clearly by other things as well their medical record system that they put in created some issues, and they did show that they've tried to resolve that. And you know I think the the numbers they put in for the ACO you know that that shouldn't be supported by a commercial commercial rate. You know I don't know if they can work with the ACO to try to work with them on they've they've backed some of the hospitals in case things go go south but I don't think that should be at the commercial rate payers. So I'm comfortable within that between 10 to 14% range and looking to split some of it maybe a little more into the covid piece than what they than what was presented here by by the staff. Other thoughts. Well for me, this has been a bit of a buggy ride, because we go back last April and you know the issue was the travelers and the EMR system that they were implementing added up to a $9 million problem. And, and that was a real problem. When we came to this budget process. I couldn't find any evidence of that problem being referenced until we got to the slide presentation, but in the narrative it was all other stuff. I also kind of look at the change in charge, being worth $11 and a half million, but their NPR, but in terms of, but their NPR is only up 5.6 million. And it's actually down by $233,000, you know, at the bottom line line of all NPR and I'm not I'm not comfortable with that relationship. But you go back and yes, Northwest has had one of the lowest charge growth rates over the past five years. If you take where they were in 2015 and both play that simply up by 3.5%. You come to $112 million, which doesn't include any of the accounting changes or provider additions. So, you know, I'm, you know, they need help. I mean, there's obviously a big problem there and they need help. And I also notice that their, their provider tax looks like it might be a million dollars short. So, you know, I don't know where I land on this. I certainly, you know, think that, you know, trust the judgment of Marine and Jess in terms of kind of looking looking at this, probably more closely than I do because I can't resolve the fact that the change in charge is up $11.5 million. But their NPR, you know, overall is down by 233,000. But there's something in that their deductions from revenue are up 24%. And maybe we had a long discussion with Northwestern about the fact that they are kind of feeling bad about this requested increase in terms of co-pacing deductibles, you know, of their customers. And so there was a big increase in bad debt and free care. And so I wish I could be more clear than that, but I'm certainly at the low end of Marines range. And I would go higher than that. So thank you, Tom. And my thoughts on this hospital is that it is a hospital that is in trouble. That is slowly digging its way out. That has made some very strong strategic decisions to move forward to balance itself. And at the end of the day, I like Robin have concerns that trying to write the ship in a short period of time may be a little bit too much to do all at once. And where I came in, and I think we're all similar, but where I came in on this one was 10.5 standard and a 2% COVID for a total of 12.5. But I'm certainly, you know, listening very carefully to what my other board members are saying, because this one was probably the hardest hospital this year. Realizing the condition that the hospital is in and realizing that you can't ignore that they need a path forward, but also realizing that such a tremendously large increase on commercial rate payers is very difficult to justify, even given the historical record of their changes in charge. So that's where I fell. I don't know. Is anybody at a point that they desire to make a motion? Kevin, I'll just add a couple things to, I mean, the other thing we didn't bring up about this hospital is their days cash on hand is high. So they at least do have a strong days cash on hand where, you know, that has been well over 200 days cash on hand, even with what they've been through. And part of that was because of their over performances that they had back in like 15 and some of the prior years. So I do think that is a consideration when looking forward to what we do because, you know, that's not a driving force here where they only have 60 or 70 days cash on hand. They're also, I believe they had 5.2 million on the list yesterday from Mike Smith, which will help to improve that. And it's possible that since there's a second bite at the apple there that they may get more. So at least that part is good. But I do keep going back to, you know, they are the lower cost provider. And, you know, this is the catch 22 we've been in, we tend to focus a lot on on the rate increase itself and look at whether a 3% or 4% or whatever rate increase. But, you know, some of the hospitals have pointed out in the past, it really is where they start from. So if they're starting from a lower base and they get a whatever increase 4% increase, you know, they're never going to catch up to those hospitals that started a higher base and get a 4% increase every year. And so, you know, that's what was really swaying me to try to help, you know, correct some of that, you know, in whether it's a 10% and a 4% or, you know, a 10% and a 3% or of course we could shift more into a lower base rate if we wanted to. I think that's an option, you know, that maybe we want to talk about to some of the concerns that Kevin and Robin have brought up, you know, maybe it's an 8% standard rate and a 5% COVID rate with again the COVID rate can become a permanent rate adjustment. And we'll have more time to see what actually happens this year with the rest of any COVID funding that comes in and that what happens next year. So I would just throw out, you know, trying to discuss where do people want to go with that and the flexibility in putting something more in a COVID rate. Yeah, I would add a couple more things. Number one is that they are on the list for the health care stabilization fund for $5.22 million, which should help their bottom line. In terms of splitting the rate, I know that they are in a technical default of their bond covenant and that during the testimony, they were clear that they're living month to month with their underwriters in terms and looking at this process to decide what to do about it. Maybe we do have another year, you know, and can spread this over the recovery over a couple of years, but I do worry that they are currently in technical default and that their testimony was that they have to report in every 30 days now. They're on a short leash. And, you know, they did get some themselves and some issues with the replacement, the EMR replacement. And, you know, they weren't able to clearly articulate in all cases what happened and it did change. So it was some reimbursement by government payers that was an issue. And then there were some issues with losing volume at the practices that they had that was going to stay lost. And if that was the case, we said you need to, you know, then you need to reduce your expenses. So, you know, they're getting that together. But, you know, that that is going to influence then your bond bond requirements and things like that, but they are getting more money in maybe then what have been projected when they looked at at some of those things from the extra from the 5 million they're getting now from the state and some other things. So hopefully that will alleviate some of those concerns. So in hearing the discussion, I think, for me, I am comfortable with a 10 or 10 and a half percent standard based on. I feel convinced that especially given, you know, like what we did with Copley and some other things like that that that makes sense. And with the COVID amount, I think I would be comfortable with two to three percent. And that's in part influenced by the 5.2. And the fact that that they do have strong days cash on hand. So that gives them time to recover. Does anyone feel comfortable making a motion? I do. But can we go to the other language? I like the other language. Let's see. I said, can we go to the other page, Patrick? And the one that has the one that usually has your motion language on it? Wasn't it? Didn't you usually put it on the note? Yeah. Because of the provider transfers and the accounting adjustment, it's the third paragraph. Okay. So move to approve Northwestern's Medical Center, including acknowledged provider transfers and accounting with an NPR 50 decrease to be calculated based on the adjustments that we make to the commercial. So you're going to have to come back with that to a with a 10% increase to standard commercial rate and a 3% COVID increase related to the overall charges and subject to standard budget conditions as outlined on slide 27 and improved timeliness of data submission. So I think we're going to have to come back and get the NPR based on the reduction that we did on the commercial rate. Excuse me. Was that you, Robin? Jessica. Oh, Jessica. So let the record show that the motion was made by Maureen and seconded by Jessica. Is there board discussion hearing none? I'm going to open it up for public comment. And as the chair understands the motion, the motion is to approve a 13% overall increase in charges with a 10% standard component and a 3% COVID component. So the staff to calculate the commensurate NPR FPP decrease and subject to the standard budget conditions as outlined on slide 27 and improved timeliness of data submissions. Maureen, did I get that correct? Yes. Thank you. Hearing none, all those in favor of the motion signify by saying aye. Aye. Those opposed signify by saying nay. Let the record show that the motion passed unanimously. I am noting that it is now 1014 and it might be the best time to take the morning break. We'll break for 10 minutes and resume at 1025. See you at 1025, everyone. So a quick check. Joanne, are you back with us? Yes, I'm back and ready to go. Great. Thank you. And I see Tom, Maureen, and Robin, Jess, are you back with us? Super. So with that, we're going to reconvene and Patrick, if you could take us to the next hospital or Lori. I'm still trying to find it. I'll be right with you. Okay. Can you see it now? Not quite yet. We're just seeing your parachute. There we go. Okay. Thank you, Lori. You could go back up to the beginning slide for Porter, please. Thank you. Thank you. Thank you. Thank you. Governor Medical Center, their FY 21 request for NPR FPP represents 2.7% growth over their fiscal year 20 budget. Is the low, the 3.5% growth rate ceiling set forth by the board. Their change in charge represents a 0.0% overall change in charge request and a 5.75% commercial change in their effective rate. And that's what we're going to talk about. So the NPR and operating margin slide, please, Lori. This is a hospital who also has had some pretty solid budget management over the years. They've been working on this for a long time. They've been working on this for a long time. They've been working on this for a long time. They've been working on this for a long time. They've been working on this. This is a hospital who also has had some pretty solid budget management over the years and has produced some relative margins in recent years. Most notably, they had a 5.2% margin in their fiscal year 2019. This is a hospital that's affiliated with the network in fiscal year 2017. And the years leading up to that that are not visible on this had some financial difficulty, but has since rebounded from that. And in fiscal year 20 here, they are projecting a 2.8% or 2.8 million dollar excuse me, bottom line operating gain and their budget includes a 4.5% operating margin, which is equal to 4.37 million dollars. So moving on to the motion language, please, Lori. Thank you. The 2.7% request as previously stated is within the 3.5% guidelines. We would accept their overall change in charge of 0.0 but reduce their commercial effective rate to three, which would have an impact on MPR reduction to 1.8% in change in charge. We would look for the hospital to have commensurate reductions to expenses as we stated for other hospitals where we have recommended a reduced MPR. And I believe we ran some calculations late yesterday that with the staff's recommendation, this would bring their operating margin down from 4.5 to 3.8 just to give you some context around what that decision does for that margin. Because we do believe that the margin overall was not fully justified. So with that, we turn it over to the board for discussion on Porter Medical Center. Sure. Thank you, Patrick, and I'll jump in first your closing statement really focused on my concerns here in that. I worry about equity in the process when a number of hospitals come in with a budget that's requesting an operating margin in these uncertain times. That's just above zero. And here we have one that came in at 4.5. It was the highest one that I think I'd have to go back through and look at them all again. But it was the highest budgeted operating margin and even reducing to the 3.8, I think it still keeps it at the top of the list on that operating margin. So that's my biggest concern about this hospital in that I just worry about equity in the system. So with that, I'll turn it over to other board members. Everybody muted. Yeah, one of the things I'll point out is I do think that their top line number that they came in with maybe aggressive it is under the three and a half percent. So I'm not saying that we necessarily should adjust that but they were trending I believe 7% down through February. And their request year over year 2.7 seems low relative to that. And even with their change in charge requests, which I believe in total was 1.2 million. My concern would just be that they may not hit their top line. So I would just put that out as caveat. I'm not going to reduce their top line because it's within the three and a half percent, but it is a hospital that where they were trending was was below. The 5.75 commercial is, you know, on the higher side. They would look at talking about, you know, bifurcating the charge into potentially two pieces and whether or not it's as high as 5.75 or, you know, a reduction to the 3% that the staff put. And, you know, whether it's 3% base and a 1% COVID or something like that. I mean, I do think that the margins they're reporting are are high. And I know that they benefited from being with the with UVM and that's that that's good and they've reflected in the past, you know, lower rate requests because of that. But this year, the 5.75 is, you know, much higher than what they've requested over the past five years. And obviously there was discussion about, you know, Helen Porter and the need to to support that. I don't dispute that Helen Porter needs to be supported. It's just is that at the at the backs of the commercial rate payers in order to provide a higher margin that's then able to support support that that Helen Porter as well. Yeah, my, my observation is that orders presentation was a very good presentation and they have been and are probably out of a recovery mode at this point in time. The only wrinkle for me was the, the, the nursing home and and the kind of Kevin was talking about the equity between say Porter situation with their nursing home and South Vermont situation with their nursing home. I do note that the rich operating margin is a is offset to some extent, because it includes amounts that that do then flow to the nursing home and I think and we're reading the staff material that they looked at the order and the requirements of the nursing home in the hospital or the hospital for the last three years. And there's been an increasing amount of transfer to the nursing home I think the most recent one was over $3 million which is that the net operating margin for the hospital itself will will be diminished quite a, you know, quite a bit in 2021, but I do think that that is an equity issue that has to be sorted out, maybe not in this budget cycle but but there clearly isn't an equity there that that that needs to be be addressed but I can I can support the staff recommendation on this on Porter. I'll jump in here. A couple of things this one's an interesting hospital to be thinking about they have rebounded, but I would say that their days cash on hand are still below the state average so the rebound has taken some time but we're still not even at the state average. I think that the chart that you have up now is really an important one if we look at the approved commercial over time or over the approved overall but I think the more relevant one is the approved commercial it's 2.17% over the five years. So this actually has changed my mind a little bit on this hospital, given that the adjustment has been made to this chart, in the sense that this is you know well below the median change in charge and they are a low base hospital as well so their commercial to Medicare ratio is low. I think it's the third lowest of all the 14 hospitals so their base is low and their growth rate has been low. So, you know I do think that their margin is high it is your right Kevin it's the highest of any hospital. And it's I think the second highest would be UVM with 2.5 so it's a big delta between where Porter is coming in at and where the next closest hospitals margins coming in and that you know did stand out to me as well. I think the issue with the nursing home is something we have to grapple with and I think that there are every hospital has services within its mix that are cross subsidized. So hospitals that have mental health, you know in patient beds or those I'm sure are probably being cross subsidized by something like orthopedics. So we have to think differently. I think going forward about how we want to treat the nursing homes. It's a separate tax ID number if I understand correctly so it is treated as a separate entity but it is it is being funded largely by the by Porter hospital so I understand the equity concerns but I also would recognize that there's a lot of cross subsidization happening at many hospitals, depending upon their service mix. And it is a resource in our community here in Middlebury that I know people rely on so I would worry that if we cut them off this year because you know there may be some compromise of services offered there. But it's something we need to think about look at carefully and think about how we want to evaluate, but I think we need to do that in the next budget cycle I'm not sure this is the budget cycle to do that. So I guess what I'm landing is I think that you know their their base is low, their growth rates have been low and below the median. There, they have some room with their margin although it's not as large as as simply shown here because of Helen Porter, which we do need to address. I do think that the the NPR might be high. And so I would worry about them even making that margin if their expenses are being calculated based on an NPR that they may or may not hit to Maureen's point. So I also worry there. So where I'm landing is, I think you know we have been giving commercial rates of increases of 4% you know to many of these hospitals. I'm comfortable I would I would go above the staff's recommendation of a 3% commercial rate I might do three plus plus a COVID or straight up frankly 4% for this hospital for all the reasons that I outlined. Yeah, I feel a three and a one as well but I just just could you go back Patrick to the slide that was showing the commercial changes. I don't maybe somebody explained to me on 16 how we can have an approved overall and a submitted overall of 5.3% rate correct and then approve commercial of zero. That just seems to be inconsistent. I think I can probably explain that I think when Porter. So I, I don't think that Porter is reimbursed as a percentage of charge by the commercial payers. They're reimbursed on a negotiated schedule and so the change in charge may not actually impact the approved commercial at all. Right about that. And remember to this since they've joined the network they've begun to ask for that effective rate that medical center asked for. So, this is only taking into consideration if they broke that out and requested that specifically. That's it before they came under the affiliation with the network. They're requesting overall changes in charges. And as you can see, that is not been the case. They've instead. Change their their tactic to request a commercial effective rate. So that's just capturing that they don't bleed over into the other one. Yeah, I know that's why I thought maybe 16 and I was trying to go back and pull up the documents from 16 to see what they got because I don't recall. I wasn't here then but I'm not so would be surprised was zero if they had a 5.3 5.3% overall which is then factoring into that blended year five year average but I'm okay with what Jess had suggested, which was the 3% and 1% or 4%. But I think separating out of code with peace gives us more flexibility. And I'll just jump back in that. I think even at the staff recommended level there's still the highest approved budget with the highest operating margin and so anything over the staff recommend. I think I will oppose, but we are a five member board so that's what makes us beautiful. Can I just ask a quick question on that note the Patrick and Laurie if you could answer this or some other board member can answer this the the 4.5% margin. What is it once you include Helen Porter. I don't have it in the narrative and I don't have that in front of me I just want to make sure that I understand what that actually is the for what you mean included you mean the distributions they've been making. Well, there was I don't have it in front of me, but there was an adjustment or there was a there was a point that they made once they included the distributions right what what their margin would be that I don't recall. Again, this is where not being able to understand what's happening with the finances of the nursing home in 2021. Those distribute I mean it depends on what they need to cover the shortfall. In operations over there. So I see looks like Jen Bertrand just raised her hand so she may be able to weigh in on that. Good morning. Can you see me and hear me. We can hear you. If you don't mind I can speak to that it brings our margin down to two and a half percent. The budgeted subsidy to Helen Porter for FY 21 is approximately $2 million. And I can I can elaborate on that during public comment to for the board. Okay, other board conversation. Does anyone go ahead. I was thinking and this one's a little bit tough because I can see both sides of the issue and I am sympathetic given a lot of the nursing home issues we have in the state for the need to maintain those services in the community. I would however say that Medicaid does have processes where nursing homes can request modifications in their rate because of financial difficulties. I don't know how that plays out in this situation so I'm hesitant to rely on that and from that knowledge. Another thing that is a little bit problematic is we don't know the CRF funds that would fall or not fall to the bottom line. And we're quite frankly I don't think going to know that because I don't know that we want to wait on this budget until effectively next week. So, so I'm struggling a little bit I guess. With whether I would land with Kevin or whether I would land at the 3% plus 1% COVID. I'm definitely in that range I'm just going to continue thinking while other folks make comments and we hear from the public. Let's put a little context to so what was recorded in their charts is that the value of 1% charge on commercial is $278,000. So if we were to go to 4% that would be a $486,000 reduction and assuming for sake of argument that just fell to the bottom line that they didn't have cost savings which I think are available to look for more cost savings and efficiencies. But that would be half a percent on their operating margin, which would bring them down to their reported margin of four. And then where Jenna just said it would be, you know, $2 million to Porter that would bring them down to I think 2% operating margin and then a higher total margin. Just to put into context what a what it would be for a 4%. And, you know, I do think because of the uncertainty I understand what people are saying with potentially a 3%. But I think with the uncertainty of COVID, if we put in a COVID allowance, we then can review that next year. Again, I think we've said mid year and year end. And at that time, there'll be a lot more clarity on what happened, you know, for 2020, what type of funding they received, where they are on their balance sheet. And, you know, then we could look to make adjustments if necessary or continue with that. So, you know, I'm willing to go on the higher end because I think it gives us that flexibility on the COVID piece. And with just so much uncertainty with this whole process that, you know, 1% is $277,000. And, you know, they certainly, even though maybe they hadn't documented completely, there are COVID related increases, whether that was in PPE slower, you know, losing volume, etc. That's impacting that. So that's where I land. That's definitely helpful, Maureen. So thank you for sharing those thoughts. I think for me, now having thought about this for another minute or two, this is the hardest part for me during the deliberation is sometimes I need a little more time to think, but I don't want to slow the process down. I think I am have gotten myself comfortable to the two 3% and a 1% COVID for the reasons that Maureen and Jess have explained. And also, I would note, you know, Jen has done a fantastic job as CFO. She's been a leader in figuring out the critical access hospital issues. So I trust that she, if she sees something going differently than expected that she will communicate that because that has been the pattern in the past. So I think, I think I would be comfortable there. And I, people are ready, I can make a motion. Anytime you're ready. So I would move to approve Porter Medical Center's budget with a 3% standard increase to the effective commercial rate and a 1% COVID-19 increase to the effective commercial rate with commensurate modifications to the NPR FPP subject to the standard budget conditions on slide 27. Is there a second? I'll second it. It's been moved and seconded to approve Porter Medical Center's budget with a standard commercial change in charge of 3% and a COVID piece of 1% for a total of a 4% increase in the effective commercial rate. And commensurate with the appropriate NPR FPP that staff will calculate and subject to the standard budget conditions as outlined on slide 27. Did I accurately portray that Robin? Yes. Thank you. Further board discussion? Hearing none, I'm going to open it up for public comment. And I heard Jen say that she wanted to offer some additional comments and public comment. So Jen, the floor is yours. Thank you, Chairman Mullen. I appreciate that. I just do want to clarify a few things for the board and speak specifically to a couple of expense items as well as Helen Porter. And I know that there was maybe some discussion about our COLA or cost of living adjustment for our staff. And I did just want to make a couple of clarifications there that the total wage increase for Porter was actually 1.4 million and not 2.1 million. That 2.1, excuse me, includes all of our inflationary expense increases. That's benefits, supplies, and pharmaceuticals in that dollar amount. Our cost of living for the staff actually is $485,000. And we have some required market adjustments for our provider group per contract. That's about half a million dollars. So one of the biggest things that's in that dollar amount I wanted to touch on is our wage compression issues. And we have about 420,000 in our budget for that. So we are significantly behind market and our wages, I'll be honest. In 2018, our compensation consultants had reported that we are behind the market in Vermont by 5%. We've not been able to really adequately address that deficit. So our budget does attempt to incrementally do this and we're going to do this over a multi-year timeframe. But I just want to touch on cutting those expenses is really a need for this organization. That 2.5% cost of living adjustment for our employees. To talk about that in relationship with a margin target would really continue to put us further behind market. And that would perpetuate further, I'll be honest, a very strange recruitment and retention issue that we have here at Porter. So I just did want to touch on that for a moment. And secondly, I did want to mention as critical access hospitals for all of us, we build our budgets based on expenses and revenue working in tandem with one another due to our cost-based reimbursement. So when you're cutting expenses to balance, you know, any kind of commercial rate reductions or just expenses in general, that will have additional adverse impacts on revenue, especially on that Medicare reimbursement side. So I did just want to mention that. And lastly, actually, before I talk about Helen Porter for a moment, I just wanted to touch on the CFR piece of this for just a moment to shed some clarity. What Porter is requesting is for the fixed perspective payment reconciliation. And those dollars $778,000 that we've we're currently requesting. As you heard yesterday, it is still pending right now. And I wanted to mention that but just candidly that's already reflected in our current 2020 projection because we will essentially just be writing that check over to one care to pay CMS. So I just did want to make that clarification there too. And lastly, the conversation regarding Helen Porter, and I certainly appreciate and understand that this is not regulated this part of our business. And there are certainly reasons why we are separate EINs. And this is really from a cost reporting perspective, both both entities do have to file discrete cost reporting, especially when you have a parent organization. But the reality is that the hospital does have to subsidize them. In order to keep their doors open and I really wanted to kind of expound upon what the hospital what would happen at the hospital if we didn't leverage that current transition to care that is really candidly made more efficient by having them being part of our organization. And simply the cost of care to the system would increase with patient transfers, those would actually be delayed under a traditional transfer model. And this is a little shocking sometimes when you put these numbers to it. It's a 350% difference in the daily rate between the hospital and the nursing home. And if you look at that in dollars, it's $1400 per patient per day, which is why we've leveraged Helen Porter so much as part of our population health initiative and being part of our success in population health. And we talked about that last year during our presentation to about how we leveraged Helen Porter and that transition to care to save overall dollars to the system. And I just wanted to, you know, kind of point out to that this would actually have an unfavorable impact on the cost ship, because if we kept those patients in the hospital, there's certainly an impact to that on the cost of side of the equation. So I did want to mention that. And, you know, the last thing I think is the rate request that we have from a percent standpoint, I mentioned this during our hearing is certainly looks higher. But in fact, the dollar amount is relatively low and that does strictly cover the majority, not all of the hospitals and inflationary factors. So I did just want to mention that kind of give some real context to Helen Porter. And, you know, maybe there's some discussion that we can all have about how we can roll them and present them in the future, because it does bring our margin down significantly. And I will say they are a five-star nursing home. And it does take a lot to maintain that quality level from an expense standpoint. And thank you. I really appreciate you all letting me speak today. Thank you, Jen. I see that Thomas Thompson has his hand up as well. Chair Mullen, thank you. If you recall, I presently serve as the interim president and chief operating officer for Porter Medical Center. I raise my hand probably a little prematurely, because I know Jen covers every single topic, as you well know, and gotten acquainted with over the years. And as has been cited, we have a history here of submitting very responsible budgets. And the only one piece of Jen's that I want to build on is the one that's related to the workplace and the workforce planning requirements of our budget, which I think just start to capture the issue that we need relative to the marketplace and wage competitiveness. So as such, you know, with that 5.75 commercial rate request, that really is helping us support a budget that's just starting to get at our issues and why we submitted the level that we did. And again, appreciate the hard work you guys do. The only other thing I want to, I just want to add to her comment on Helen Porter just quickly, you know, we've just completed and our board just approved our strategy map for a three-year window to take us into the future here. And that Porter Medical Center and that plan has a very, very strong emphasis on value. And as you know, we have our I think the highest as far as percentage patients served on the value-based model in the state. It's something the organization has taken some pride in and will only continue to prove in. Jen can certainly get at, as she just did, the dollar impact of our long-term care and rehab service at Helen Porter upon value delivery here. But as far as obviously the patient and resident experience, it's also instrumental in serving the community. And so with that, thank you for your service and this opportunity to address the group this morning. Thank you, Thomas. Other public comment. Hearing none, the motion before the board is to approve Porter Medical Center's budget with a overall 4% increase in the effective commercial rate with 3% allocated to the standard change in charge and 1% to a COVID related change in charge with staff preparing the appropriate NPR FPP numbers for the change from FY 20 to 21 budget with this being subject to the standard budget conditions as outlined on slide 27. Is there further board discussion? If not, all those in favor signify by saying aye. Aye. All those opposed signify by saying nay, nay. Let the record indicate that it was a four to one vote. Patrick. Yeah, Kevin. Sorry, just. I think the record needs to reflect that the votes of each individual board member under the open meetings law. So that would be all four board members except for the chair voting in favor and the chair voting. No. Correct. Thanks. Okay. The next hospital up is central Vermont medical center. Their NPR request for fiscal year 21 represents 8.7% growth over their fiscal year 20 budget request, which is an excess of the 3.5% growth rate ceiling. They're changing charges. They're requesting a 6% overall change in charge and 8.5% commercial effective rate change in charge. They have justified this request by noting that their expenses that exceeded revenues since 2016. And the main drivers of this have been salary and pharmaceutical costs. A higher collection trend and increase in volume of 1.5% is driving this as well. In fiscal year 20, their margin was eroding due to a shift in payer mix growth and pharmaceutical and labor inflation and unpredictable volumes. As of February, 2020, they were operating at almost 3% above budget. And. Laura, if you could navigate to the. Thank you very much. So we see here that from last year of actuals in 2019. To the coming 2021 budget, they're looking to grow about $20 million in NPR over the course of those years with FY 20 being kind of the anomaly given what we know. This is a hospital also who has seen several years here of negative operating margins, including they are projecting to lose 4.5 million dollars as of this budget submission. And this request produces a nominal margin of 0.5% for a value of 1.2 million dollars. Next slide please, Lori. Brief history there. Go back please. Thank you. Again, we broke this out. We discussed it with Porter as member homes noted. So we figured we should probably spend a little more time here on that breakout as we kind of. Kind of addressed it pretty quickly yesterday. So. Approved and overall change in charges 2.4 and 2.5% proved to submitted respectively. And they have also shifted towards the commercial effective rate request. However, they do continue to ask for approved overall change in charges in coordination with those. And last year, you can see your approval was at 5.9%, which is what they requested and 3% overall change in charges, which is what they requested. So. Moving to the motion language, please, Lori. So here we focused on the change in charge and we did this as we expressed in the review of this hospital earlier. I believe that the provider tax was budgeted at a rate that's too high. And Laura, if you can navigate to slide 134 so we can spend some time on that. We did receive a response yesterday from the network, which does help clarify why the figure was budgeted where it was budgeted for essential Vermont. And this also applies to the medical center. And what they've said is that they've received advice from their auditors that they haven't been a proper. They haven't been appropriately accounting for it. With the accrual method of accounting, which tells them that they need to realize the tax. At the same time, they realize the revenue upon which the tax is based. So if they earn $100 million in the month of October 21, then their tax will be essentially 6% of that or $6 million that month. Which is fine and appropriate because they need to do their accounting in accordance with guidance from their auditors and gap, etc. However, we still disagree with the increase here because diva is going to assess their tax differently than the way they are going to account for it from our perspective. Diva is going to look back at the month of October 2019 through March 2020. They're going to take those revenues multiplied by two divided by 12 and they're going to assess a nine month tax based on what the hospital brought in during that time. And then in the spring, April through June, when they receive the audited financials for fiscal year 2020, they're going to true that up. And they're going to base their tax for the rest of the year, either up or down on the revenues that were actually generated from the medical center. And this one specifically central Vermont. So they are accounting for it in a way that is appropriate and they factored that into their budget. But the actual tax they're going to realize is still going to be on 2020 so that we believe there's still going to be a discrepancy there between budget and what they actually pay. And we are willing to back away from any hard number suggestion for the board, but when we're looking at the trend analysis here. It also does not connect the dots for us and we respect the accounting methodology and the explanation that they've provided, but we still don't feel that that is actually going to come to realization. So we think there's room for a cut here in that rate. Allow them to keep that expense structure to fall to their bottom line. So that they can maintain a bottom line relative to what they need because with all due respect, it's pretty slim at 0.5%. So with that, we turn it over to the board for discussion on central Vermont medical center. Thank you, Patrick board members. Patrick, I just want a little more clarification on the provider tax as far as what number you're saying it should be. I went back and was reading some of the transcripts and some of the other information about what the hospital had said at the time. And then looked at what they sent us where it does seem, as you said, they're changing their accounting methodology that they've been doing it wrong. I've been through many audits and it's surprising that an accounting firm as well as the staff would be doing it wrong every year and that it wouldn't be noticed or talked about. Usually you show your work papers and that's a fairly straightforward calculation. You either did it on the prior year or you did it on the current year and I would imagine they would have work papers to show that. And if now they're changing that methodology to reflect a change in 21 budget, which I believe I know for the for UVM would have been about a 2% relative would equate to about a 2% in the tax rate. And I'd like to get that for CBMC as well because either they're going to get the benefit then in 20, which they haven't fully reflected, or they're going to get it in 21. Although now they're going to, it seems like they're changing how they do this and someone had to have calculations on how this was done. And it was either clearly done off because they said it was delayed three to six months on the lag on the provider tax because of the information that they would then receive from from diva. So it seemed like they were always chewing it up to what they owed in that year. And so therefore they were accruing for when the taxes were owed and paid, which was the year after. So I do have an issue with a change in methodology at this point doesn't seem like that's the time to to make that change. And if they've been doing it wrong all along, that is surprising that their work papers wouldn't have been reviewed by their auditors because it is stated in the audit the provider tax. You know, there is a comment in the audit about provider tax as well. So, you know, I guess maybe Mark wants to respond to that he's got his hand up. Yeah, if possible I'd like to keep discussion to the board until we open it up to public comment. Actually Kevin, I was just going to speak to the specific accounting component that Marine had not public comment, but I'll follow whatever practice you would like to take. Yeah, I think Mark, if you could hold off because I'm I am confused on this and just if to prepare you for when you speak under public comment. We did receive a letter from the network today, acknowledging a $430,000 reduction in the calculation for that. So if you could address all of that during the public comment period, it would be good. Okay. Thank you, Kevin. Thank you, Mark. Board member comments. I think relative to the provider tax. There is, you know, there are some hospitals that don't even do it in conjunction with diva Northwestern when we, you know, talk to their CFO. And that said that she was totally unaware of the ever, you know, being involved in, in giving a prospective amount for a future fiscal year. And I worry a lot about taking one accounting method and inserting it surgically into this process where that same accounting methods might apply to other elements of the hospital budget process. And we're on a budgetary basis. There's been a traditional approach across most hospitals as to how to calculate that tax and it's 6% of the prior years. And, you know, if you kind of look retrospectively, that's what the numbers come out with when you kind of look at what hospitals have been paying under 2019 tax. So I worry that we're kind of we get into a situation here mixing and matching methodologies for one particular item but not kind of scrubbing the whole process to make sure that everything is perfectly aligned. So just to jump in on that. My point of view is a little bit different. I think that all hospitals should be doing it on an accrual basis and the tax should be applicable to the period in which it was literally incurred because it's based on the revenues for a given year. And I would prefer if all hospitals did accrue it so that's a simple 6% of the the revenue that it's based on that's that's in the budget. But with that being said, this is very confusing because it still seems even with that to be beyond what that is. So we'll we'll get further explanation in the public comment period, but it is troubling other board members. If not, then I'm going to go to the public comment because I think a lot of board members really want to hear what you have to say mark as we try to grapple with this issue. So the first person I'll call on is Mark Stanislaus. Okay, thank you, Kevin. I will speak specifically to the provider tax and you know reserve the right to come back based upon further conversation. But as it relates to the provider tax. The reason why this is so glaring in the FY 21 budget is is because the revenues have been more stable previously. And the impact that COVID has had on the NPR in FY 20 has raised this to a materiality level that would fall within an auditors will review threshold. Okay, because when auditors do the annual review, it falls within thresholds and dollar amounts. And so, so like we had said before, previously, we haven't been using the accrual methodology but because the revenue flow has been so stable and consistent, the materiality level of the difference hasn't raised to the threshold. Given the impact on COVID or the impact of COVID on the hospitals and how it has impacted NPR, which is the driver behind the provider tax, like so many other things this year. We had to sharpen our pencils on a lot of calculations, like the debt service calculation, we had to sharpen our pencil on that like we had never had had before. So, you know, what we do acknowledge that this has been a change in accounting practice has not been a material impact that would be flagged under audit. The decrease in NPR for FY 21 based upon the accrual accounting methodology, and like you had said, Kevin, with a matching principle, you know, the downstream of the provider tax decrease would be recognized in FY 20. Okay, and so hopefully that speaks to some of the components that Maureen had had. The reason why CVMC, if you just look at the FY 21 budget numbers, appears to be slightly over 6% if you just did that calculation. I think it was Tom or Kevin that had mentioned it, is because that includes the provider tax, well, for Woodridge, which is about $750,000. So, if you were to remove both components of the revenue and the tax related, well, to Woodridge, you would see that it falls within that 6% corridor that we had discussed earlier. So, I will stop there. This section of the public comment that I was only using to respond to the provider tax question, but I would like to end by saying, you know, booking the provider tax in the year that it was assessed, versus the period that it's billed, because that's what the difference is, is there's about, and I'm using very, very broad, you know, references, but there's about a 12 month lag in which Diva bills on. That's the cash basis accounted methodology on when you pay the bill. It is booked in your statements on the accrual methodology, you know, to stay consistent with our overall accounting practice is under the accrual methodology. You know, we believe in FY 21, the provider tax is stated correctly based upon those accrual accounting methodologies, and we also are reporting FY 20, FY 21 in the same manner. So, you know, that's going to be subject to audit by our accountants. So that's where, you know, that's where our perspective stand on the provider tax. So, Mark, I appreciate the explanation and maybe I'm just thick, but I'm trying to reconcile it to the letter that came in this morning from Dr. Brumsted. And in that letter, there is the statement that as requested, we met with Green Mountain Care Board staff and came to the conclusion that our fiscal year 21 provider tax should be reduced by approximately 1,000. Okay, help me understand that. No, well, I mean, in all of these conversations, I think like what we said before under public comment was that we would speak with staff and we would recheck our FY 21 calculation. And when we recheck the FY 21 calculation based upon that accrual accounting methodology and the actual revenues in the FY 21 budget, the number would be 430,000 less Kevin. Okay. So this probably is one that maybe the staff may need some time over lunch to do some crunching on because it's clear that you're in agreement that it was overstated by 430,000. So, Board members, do you have further questions or Mark on this on this issue? Okay, hearing none. I do see Thomas Golonka's hand up. Yeah, can you hear me, Chair? Yes, we can. Yes. Hi, welcome. I became chair of central medical center in January, so I figured it would be good to help give the board some perspective or my perspective from a board level in regards to where we are at with central medical center and our affiliation with the network. You know, I'll start off by saying, you know, the numbers mark mark and answer any of those specifics, but I really wanted to give the board some some understanding of the impact that moving away from You know, our budgeted presentation would have on the local community. You know, we're being asked in essence, you know, we're at a critical phase, I believe here in the turnaround phase for central medical center. You know, we're looking to really just break even at this stage. I think getting back to the Porter discussion in regards to nursing home, we absorb that under our own TIN. And we've turned that around in the first phase of this turnaround story. The last numbers I saw where they're break even so you know to go from losing $3 million a year on a nursing home platform to really being break even now I think that really impacts our overall number. The second aspect of it is our pair mix, you know, moving away, you know, we really have a significantly different pair mix from Porter and I think that really affects our budgeting, you know, process. I really think affiliated with the network as we have over the past number of years and has really prevented central medical center from being a really disaster story over the past couple of years we could have been facing huge margin losses, significantly more than we're showing here. I think the turnaround over the past couple of years really is a testament of the work that has been done. And I'd hate to see that momentum, you know, and if we're if we're asked from a board perspective to come up with $2 million, it's going to seriously impact access to care, it's going to seriously impact our ability to participate in the psychiatric inpatient facility planning. It's going to really impact our ability, you know, in regards to budgeting for that margin level so so I would really ask the board to seriously consider that where we're at in this process. Give us another year really look at what the network has put together here. Our rate request, I feel was reasonable. I feel if the board goes with the staff recommendation, it's going to weaken our position to really participate and it's going to make health care and central much worse. So, with that, I thank you and would be happy to answer any questions from the board perspective. Any questions for Thomas. Thomas, how long have you have you been on the board. I've been on the board for since 2000 2014 2015. I really started in as chair of the board this year though so I've I've just recently joined the UVM Health Network Board on this current year so I am chair of the Network Investment Committee and I've been chair of the CVMC board for the past seven months. It's tough in COVID to have physical meetings we had we had a meeting this morning to discuss this. It's not the same as being together I think Anna and team has put together with Todd's help. We've had some struggles, you know, getting in a long term CFO so we've been relying on, you know, Todd's work in dissecting some of these issues but I think we're really at that phase where a year from now two years from now three years from now we can really show significant improvement and then we can be really good partners with the state on helping with the psychiatric inpatient issue. So that that's our goal, but I'm excited where we're at I just would hate to see us, you know, go back, you know and have to cut cut access. Well, I hope that you can somehow shorten the timeframe on starting to address the psychiatric inpatient issue but I understand these are trying times and unfortunately much of what will happen depends on what happens with COVID so. Well understand we're committed to working with the network to help solve in partnership with the state the psychiatric issue because it is a significant issue for our emergency room and we are committed we just from a from a financial perspective. We we partners in that with the network as well as with the state. And so to take on 100 million dollar project from a negative margin perspective would be very difficult for our board to really go after so I'm, I'm hopeful that we can re re re re institute those discussions on the site center. But without the margin, I just think CVMC really has to look at other areas and I'd be very it'd be very difficult for our board to push that. However, we are significant we are committed to working with the care board and the state on that topic. Thank you, Thomas. Other members of the public who wish to comment on Central Vermont Medical Senator's budget hearing none board members. Is this something that you would prefer that staff get some time over lunch to crunch what the numbers might be with at least the 430,000 agreed to amount from the network or do you feel you have enough information to proceed now. I think, you know, when when I look at the 433, I believe if we look at it as 1% value of commercial charges $621,000. And so 433,000 or 430 it's that would be about a 0.7 reduction to the commercial rate ask just for that component. I'm not sure that the staff is going to do any more, you know, any more than that with it. You know, that's what it translates to I tend to agree with you Maureen, but yeah, I don't know. I don't know. Well, I think the rain, I mean, it's 430,000 and we have that number so I think from, you know, I don't need anything more from the staff right now on that to continue discussion, you know, relative to that one component. It would be 0.7, which would be a factor in the discussion, but I think we haven't really talked about looking at the commercial rate, you know, bifurcating it as we have other hospitals. I think for the most part for other hospitals, the barring 1, you know, 4% was the highest that we've done as the base rate bar in Northwestern. And then adding a COVID component on top of that, you know, I think their total rate request would have been what 8.5. So if we took away the 0.7, you know, we would reduce that component and then, you know, is there additional that people would want to look at? So that would bring us down to 7.8. You know, I mean, I think my 4% is where I'd want to go for the base commercial rate and then put a COVID rate on top knowing that, you know, certainly that could carry forward. This hospital has been a hospital that historically has exceed, has missed their top line and exceeded their expenses in the past several years. I think it was in 19, their actual was the 228 expenses. Well, let's go to the top. Their budget for NPR was 211. They came in at 208. Their expenses were budgeted at 221. They came in at 228. In 18, their NPR was budgeted at 198. They came in at 194. Their expenses were budgeted at 208. They came in at 216. Now, if we just look at their expense growth from 19, a 228 to what was the budget of 234 and now in 21, a 253, their expenses have increased significantly year over year. They continue to miss their budget, missing top line and exceeding expenses. I don't know what to do about that, but I just want to lay that out there. And that's really the reason for those large declines in 18 and 19 was that combination of missing the top line and then having significant overages and their expenses. Questions for Patrick? Before you go, Robin, a question for Patrick that I have, and you may want to work on this while Robin speaking, but I just want to to make sure that the .7 is accurate. And what I'm concerned about is that with the breakout between the overall change in charge being requested at 6, but effective commercial at 8.5, I just want to make sure that we're getting these numbers accurate. So I'm just throwing that out there and I'll turn it over to Robin. So wait one moment. What is it you want? So what we're talking about in their request was a 6% overall change in charge with an 8.5 effective commercial. With that reduction of the 430,000, what do those two numbers end up with and are you in agreement with Maureen's calculation? Okay, and I want to clarify too about the 430,000 because it sounds like it's being stated that the staff agree with the network on that. We don't. We were not actively involved in calculating that. We actively listened to their explanations and encouraged them to submit their written response. So I just want to clear that up that we were not in agreement with it because we didn't walk through the calculations with them. So we have really no way of verifying that 430,000 mentioned. But we will certainly walk through what the reduction would be with the 430 as the network laid it out and also Maureen's conversation as well. Well, I'd be interested and then also, and I think we're going to end up coming back to this after lunch on this one. I'd like to know the differences between your disagreement and trying to get to the core of this matter so that, I mean, if there's no basis for the 430,000 number, then that's troubling too. I took Mark's explanation at its words, but again, I have not seen the math behind that calculation, so. And Kevin, I can just clarify, you know, on the, the dollar value that was put in for commercial was 5,283,000 and the value of 1% was 621 and that does work out to be 8.5%. So if you take 5,283 divided by the 8.5, so those were the calculations that we had before, so. Did you calculate in the overall what it reduces the 6 to? No, but we're approving the commercial rate, correct? Well, it all depends on what the motion is. Yeah, but I think we're focusing on the commercial. But any analysis of the system does look at the overall. Change as well, so I just want to make sure that for years now, somebody's not looking back at this and scratching their heads on on what was done here. Kevin, I'm just going to make a suggestion. If we're, if we are going to break for lunch and the hospital budget team is going to kind of look more deeply into this for CVMC. I guess I would suggest that they could also do the same calculations for UVM to the extent that there was also I believe wasn't there a reduction in what the UVM and Dr. Bromstead's letter or in the calculations, which I don't have in front of me, but I think that there was, am I right? Yes, I have to pull up the letter. We just received it this morning. That's the trouble with this last minute. I guess if there was an adjustment as well for the medical center, then it might help if they're going to be making some calculations. Yeah, there was an adjustment in the letter 570,000. Yeah, so I'm just thinking if they could do the same thing, it may be food for thought for our conversation about the medical center. I'm not sure. So I'm actually going to suggest then that we break now and give staff some extra time and come back at 115. And hopefully at that time we can go back to Mount of Scott knee and then proceed with central Vermont and UVM. Does that make sense to everyone? It does. Can I say one thing before we break? Yeah, I think it may need Mark or someone to do a public comment later, which is I'd be interested to understand the impact of the 8 million and CRF funds that they'll be getting to the bottom line. And whether Jen had mentioned that some of their CRF funds were already included in their 20 budget and I just don't know whether these fall to the bottom line or whether these are already accounted for. And do you want that for UVM as well as CVMC? Yeah, that makes sense. And so for giving Mark things to explain public comment this afternoon, I certainly will be looking for an explanation of why in the budget hearing, they were expecting about 12 million and CRF and they got 32 million, which was $20 million higher. So, you know, just some homework for Mark and some homework for our staff. And at that point we'll come back at 15. Usually I'm the one who gives homework, Kevin. What's that? Usually I'm the professor who gives homework. Well, I know that Mark is often called the professor so it's a lot of fun giving the professor homework. See everybody at 115. Thank you.