Vermont House weighs ‘guardrails’ on state retirees’ health benefits

By Kristen Fountain

Mar 28 2023, 4:59 PM

For six months, retired Vermont state employees have been furiously protesting Gov. Phil Scott’s administration’s proposal to turn their Medicare supplemental health benefit over to management by a commercial insurance company. 

Earlier this legislative session, they came to Montpelier asking elected representatives for help preventing the shift to a Medicare Advantage plan. 

Now the House has an answer. Deep inside its 258-page appropriations bill, H.494, is language that would give the Vermont Retired State Employees’ Association, a group that does not have a role in formal labor negotiations, a veto over alterations to retirees’ health benefits. 

The changes would also clarify that the state’s more than 8,000 retirees could be offered health insurance that is not exactly the same as what is provided to active state employees. That point has been the subject of ongoing disagreements among the executive and legislative branches and the Vermont State Employees’ Association over what the law currently allows. 

“We’re not completely closing the door, but we want the parties to all agree,” said Rep. Mike McCarthy, D-St. Albans, chair of the House Government Operations and Military Affairs Committee, where the language was crafted. 

The House budget bill states that any “alternative health coverage” for retirees must be “substantially equivalent” to the union-negotiated active employee benefit. It must also be agreed to not just by the Vermont State Employees’ Association, the labor union for active members, but also by the retirees’ group. 

If passed into law, the wording would make a switch to a Medicare Advantage plan possible, but unlikely, given the widespread opposition to that proposal among retirees.

The protests began in September when Commissioner Beth Fastiggi of the Department of Human Resources and her staff presented the Medicare Advantage plan from Cigna as what would be on offer for Medicare-eligible retirees starting in 2023. They said benefits would be the same or better than their current plan, with savings shared between the state and retirees of at least $9 million annually.

But since February, after a reaction that Fastiggi called “fairly hostile” in her committee testimony, Scott administration officials say they do not intend to impose a new health insurance plan on retirees. 

“The state has said in many forums that we are not unilaterally forcing a Medicare Advantage plan on retirees,” Fastiggi told McCarthy’s committee again last week. 

However, they do expect it to be part of the next round of collective bargaining with the state employees’ union, which begins this fall for contracts starting in mid-2024. 

Significantly, the budget language would make retiree health benefits off limits during any final-offer arbitration process between the administration and the state employees union. That means it can’t be forced on the union after a stalemate.

Shelley Martin, president of the Vermont Retired State Employees’ Association, said her board and 2,100-plus members are thankful for the legislative action. They would prefer it if the language did not allow any alternatives to what existing employees now have, but the veto clause would give them a say in what occurs. Plus, the arbitration component of the bill “really protects us,” she said. 

The association is the official representative of all retired state employees, both those eligible to join the union and those who held ineligible managerial jobs. 

Martin said she has heard from several hundred retirees since the fall. All of them say they are happy with their current health benefit, and many are upset and extremely fearful of what might happen. 

The current benefit is supplemental to traditional Medicare. Self-funded by the state and managed by BlueCross BlueShield of Vermont, it pays for co-payments, deductibles, prescription drugs and other treatments not otherwise covered by the federal program. The Cigna plan would replace both a retiree’s traditional Medicare and the supplemental coverage.

Retirees and the state employees union objected to the choice of Cigna, which was recently sued by the U.S. Department of Justice for health care fraud. The company is accused of overstating the chronic illnesses of enrollees between 2013 and 2018 in order to inflate the government’s per-member annual payments.

But more broadly, the union and retirees oppose the shift to any Medicare Advantage plan. They point to health analysts who say the program incentivizes commercial insurers to delay approvals for treatment and deny claims. (A recent federal audit of the 15 largest Medicare Advantage providers found that a significant percentage of prior authorization denials — 13% — and payment denials — 18% — should have been approved under Medicare rules.) 

Fastiggi and others have said that this would not happen in this case because Cigna has specifically tailored the proposed state plan to mimic active employee benefits. But the longtime director of Vermont’s employee benefits program, Kathy Callaghan, now a retiree, said that thinking is naive, at best. 

The state benefits office can effectively advocate for employees and retirees to reverse denials under the current plan precisely because it is self-funded, Callaghan said. With a commercial insurer controlling the purse-strings, state staff won’t have any special pull.

“Once you get down that rabbit hole of appeals and denials, the state has lost its leverage over retirees’ benefits,” she said in an interview earlier this month. 

Martin hopes Scott will tell his administration to give up its focus on Medicare Advantage. “I’d like to see him just suddenly say, ‘It’s not worth it.’ Then people would stop worrying.”

The Vermont State Employees’ Association also finds the legislative language not ideal. 

President Aimee Towne told the House committee that it was unsettling to have an outside group, the retiree association, have veto power over the result of bargaining. The union represents only non-managerial active employees, though it has a retiree chapter with a seat on its board.

Steve Howard, the employees’ association’s executive director, called the budget bill add-on a promising step, and said union members looked forward to fine-tuning the language in the Senate. “We think it’s vital … that there be language in the budget that does put guardrails around this issue,” he told the committee. 

STATE OF VERMONT GENERAL ASSEMBLY

March 3, 2023

The Honorable Philip B. Scott

Governor of Vermont

109 State Street, Pavilion

Montpelier, VT 05609

Dear Governor Scott:

On behalf of our retired constituents who served Vermont as State employees, we write with deep concern over your proposal to force them into risky Medicare Advantage plans against their will.

These dedicated public servants spent their careers keeping our State running, and were promised that they would be members of the State retirement plan when they retired— a promise that is guaranteed by statute (3 VSA §479).

That these retirees would now be faced with the prospect of being pulled out of their health insurance and placed in Medicare Advantage plans— plans that have been sued across the country for failing to deliver promised benefits— creates great stress on people at a time of life when they should be enjoying the benefits that they earned.

We urge you in the strongest possible terms to abandon this proposal and to reassure these retirees that their coverage under the State Employees’ Health Plan will continue. Thank you for your consideration.

Respectfully,

Legislative Members of the Working Vermonters’ Caucus of the Vermont General Assembly

Rep. Brian Cina, co-chair

Rep. Mary Howard, co-chair

Sen. Tanya Vyhovsky, co-chair

Rep. Peter Anthony

Rep. Elizabeth Burrows

Sen. Andrew Perchlik

Rep. Michelle Bos-Lun

Rep. Robin Chesnut-Tangerman

Sen. Irene Wrenner

Rep. Mari Cordes

Rep. Troy Headrick

Rep. Bob Hooper

Rep. Emilie Krasnow

Rep. Dennis Labounty

Rep. Kate Logan

Rep. Kate McCann

Rep. Emma Mulvaney-Stanak

Rep. Logan Nicoll

Rep. Carol Ode

Rep. Larry Satcowitz

Rep. Taylor Small

Rep. Heather Surprenant

Rep. Chip Troiano

Rep. Theresa Wood

STATEMENT FROM SENATE PRESIDENT PRO TEMPORE & HOUSE SPEAKER JILL KROWINSKI ON ADMINISTRATION’S PLAN TO MOVE STATE RETIREES INTO PRIVATE MEDICARE ADVANTAGE PLANS

Montpelier, VT - Today Senate President Pro Tempore Philip Baruth and Speaker of the House Jill Krowinski issued the following statement:

“We are deeply concerned about the Administration’s stated intention to move Medicare-eligible state retirees from the State of Vermont’s insurance plan into Medicare Advantage plans without the support of state retirees. We are particularly concerned about the potential legal, financial and health implications and believe this shift undermines collective bargaining rights.

“In November 2022, the Vermont’s Retired Employees Committee on Insurance (RECI), established by 3 V.S.A. § 636 to advise and make recommendations to the Secretary of Administration on state employee retiree health insurance benefits, voted to oppose the Administration’s proposal. Additionally, the Vermont State Employees Association (VSEA) and the Vermont Retired State Employees Association (VRSEA) have publicly opposed this shift.

“We share the concerns raised by many state retirees that access to essential health care services could be threatened. In April 2022, the Office of Inspector General for the U.S. Department of Health and Human Services (HHS) released a report highlighting a pattern of delayed or denied coverage for services through a Medicare Advantage plan. Investigators estimated that, in 2019, approximately 85,000 requests for prior authorization of care were likely to have been improperly denied and approximately 1.5 million payments for services were improperly denied. 

“Additionally, we are concerned about the legality of such a shift. 3 V.S.A. § 479(a) is clear that Medicare-eligible state retirees must be covered by the same medical plan as current state employees, stating that ‘a member who is insured by the respective group insurance plans immediately preceding the member's effective date of retirement shall be entitled to continuation of group insurance…in the group medical benefit plan provided by the State of Vermont for active State Employees.’

“Shifting the decision-making power to the private insurance industry, without support of state retirees, undermines the decades of protections that state retirees have enjoyed as a result of the state employees’ collectively bargained contract. We share the concerns of many retired state employees about the legality and the financial and health implications for our state’s retired public servants. State retirees have dedicated years of service to the State of Vermont and they deserve the assurance that the healthcare benefits they were promised will be protected.”

State Retirees Would Lose Under Scott’s CIGNA “Medicare Advantage” Proposal

Fact Sheet #1

VRSEA represents 8,000+ State retirees and their dependents.  On their behalf, we oppose the Administration’s proposal to move State retirees into a Medicare Advantage plan.   We believe this issue may be taken up in the 2023 Legislative session.  We are asking legislators who represent State retirees and their families, to understand the adverse impacts this proposal would have on these elderly constituents.  Please support your constituents against any change in their retiree health care benefits without their knowledge or agreement.   

Loss of Current Protections 

• ·         The State believes it can save money by substituting a Medicare Advantage plan for state retirees and still remain in compliance current statute.  VRSEA disagrees.  3 VSA ss631 requires the State to keep retirees in the same health plan as State employees.    3 VSA ss479 states that retirees are entitled to continuation of group insurance in the group medical benefit provided by the State of Vermont for active State employees. 

• ·         Under the State’s proposal, State retirees age 65+ would no longer receive Medicare Part A & B benefits directly from the Federal Government.  “Medicare Advantage” is not Medicare.  The State would carve out 65+ retirees from their bargained State Employees Health Plan wraparound plan.  The State would replace all State retiree health benefits with an insurance product managed by CIGNA.
• ·         State retirees would lose decades of protection under the negotiated State/VSEA labor contract.  Retirees would be on their own, relying solely upon changing Administrations and budget priorities for their future health care benefits. 
• ·         The State would have no control over the operation of a CIGNA’s Medicare Advantage Plan; legally this control cedes to CIGNA. Cigna would have total decision-making power over retirees’ claim denials, prior authorizations, and access to health care, including prescription drugs.  Retirees would have to appeal to CIGNA for relief.  They would be on their own with no health plan protection or oversight by the VSEA.   
• ·         State retirees have given years of dedicated service to the citizens and State of Vermont, receiving less pay for the guarantee of keeping their same health care benefits in retirement.    This has been a long-standing condition of employment with the State.

Contact:         

Shelley Martin, VRSEA President, at (802) 595-1888, or 2020VRSEAwork@gmail.com

Bridget Morris, VRSEA Lobbyist, at bmorris@vtlobbyist.com

State Retirees Would Lose Under Scott’s CIGNA “Medicare Advantage” Proposal

Fact Sheet #2

VRSEA represents 8,000+ State retirees and their families.  On their behalf we assert that moving State retirees into a Medicare Advantage plan is a violation of State retirees’ statutory rights.   We understand that this issue may be taken up in the 2023 Legislative session.  We ask legislators who represent State retirees and their families, to understand the impacts this proposal would have on their elderly constituents.  Please support your constituents against changes to their current health plan without their knowledge or agreement. 

• The State Retirees’ Health Care Plan Is Guaranteed in Statute
• ·         State retirees have given years of dedicated service to the citizens and State of Vermont.  While employees, retirees agreed to lesser pay increases for the guarantee of keeping their same health care plan in retirement. This guarantee has been a long-standing condition of employment with State government.
• ·         For decades, and by design, state employees and retirees have been covered by the same health care plans. The benefits and conditions of coverage under the plans are negotiated through collective bargaining between the State and the VSEA.  When a person retires, he or she keeps their same plan, wrapping around Medicare.  This is a common understanding as a condition of employment when a person goes to work for the State.
• ·         The State now proposes to move State retirees out of the State/VSEA negotiated benefit plans into a standalone Medicare Advantage Plan.   In addition to other detrimental effects, VRSEA believes this would be a violation of current statute.
• ·         State retirees are entitled to keep the same health care plan they had as state employees.  3VSA 21 ss631 states, “For purposes of hospital-surgical-medical insurance, the term “employees” shall include employees as defined in subdivision (2)(A) and former employees as defined in this subdivision who are retired and who are receiving a retirement allowance from the Vermont State Retirement system…”. 
• ·         3VSA 16 ss479 (a) states, “As provided under Section 631 of this title, a member who is insured by the respective group insurance plans immediately preceding the member’s effective date of retirement shall be entitled to continuation of group insurance as follows: (1)(A) coverage in the group medical plan provided by the State of Vermont for active employees;…”

Contact:         

Shelley Martin, VRSEA President, at (802) 595-1888, or 2020VRSEAwork@gmail.com

Bridget Morris, VRSEA Lobbyist, at bmorris@vtlobbyist.com

State Retirees Would Lose Under Scott’s CIGNA “Medicare Advantage” Proposal

Fact Sheet #3

VRSEA represents 8,000+ State retirees and their dependents.  On their behalf, we oppose the Administration’s proposal to move State retirees into a Medicare Advantage plan.   We believe this issue may be taken up in the 2023 Legislative session.  We are asking legislators who represent State retirees and their families to understand the adverse impacts this proposal would have on these elderly constituents.  Please support your constituents against any change in their retiree health care benefits without their knowledge or consent.   

Medicare Advantage Plans Are Being Sued

CIGNA is currently being sued by the U.S. Department of Justice for fraud.  Medicare Advantage plans are under fire nationally for lying to regulators, using restrictive utilization management practices, stinting on care, and fraudulent practices. 

United States Files Civil Fraud Lawsuit against Cigna for Artificially Inflating Its Medicare Advantage Payments: “As alleged, CIGNA obtained tens of millions of dollars in Medicare funds by submitting to the Government false and invalid diagnoses for its Medicare Advantage plan members.” (Southern District of New York United States attorney’s Office Press Release October 17, 2022)

The Cash Monster Was Insatiable’: How Insurers Exploited Medicare for Billions

“By next year, half of Medicare beneficiaries will have a private Medicare Advantage plan. Most large insurers in the program have been accused in court of fraud. . .  New York Times review of dozens of fraud lawsuits, inspector general audits and investigations by watchdogs shows how major health insurers exploited the program to inflate their profits by billions of dollars.” (New York Times October 8, 2022)

“Is Medicare Advantage really “better” than traditional Medicare?  According to the Kaiser Family Fund report published (9/6/2022) and its analysis of recent studies, coupled with our own experience serving Medicare beneficiaries who need care for significant illnesses or injuries, the answer is an unequivocal “no”.  (The Center for Medicare Advocacy 9/21/22 https://medicareadvocacy.org/kaiser-family-foundation-releases-report-regarding-differences-between-traditional-medicare-and-medicare-advantage/)

Contact:          Shelley Martin, VRSEA President, at (802) 595-1888, or 2020VRSEAwork@gmail.com

                        Bridget Morris, VRSEA Lobbyist, at bmorris@vtlobbyist.com

URGENT ANNOUNCEMENT FOR RETIRED STATE EMPLOYEES

The VRSEA Board of Trustees unanimously voted to

STRONGLY OPPOSE ANY CHANGES TO OUR MEDICAL PLAN

Unless you hear it from us, consider it a rumor. We plan to keep you informed & will have more details in our next newsletter —

Your Board is working with the State Dept of Human Resources and their consultant - who have proposed a change in your insurance plan - to understand in detail what this plan represents. Questions still remain. But this is what we know:

•      Currently your bargained health care plan makes sure that all members - both employees and retirees - are treated equally through the State Employee’s Health Plan.

•      VRSEA has expressed our concerns and the State understands that we oppose moving retirees from the legal protection of a collectively bargained health plan - to a separate “Medicare Advantage” Insurance plan.

•      Currently, the State Benefits Office resolves any issues or concerns about your retiree health plan locally. The terms and conditions of your health plan has been collectively bargained - and the State has authority over how your benefits are administered. This proposed Medicare Advantage plan has CIGNA as that authority.

•      The initial proposal by the state was for implementation 1/1/2023 but is now postponed.

•      It is clear that the state is not ready for any implementation or plan to educate all retirees who would be affected by this proposed plan.

•      Legislators are now asking about this proposal. VRSEA lobbyists are already working hard to monitor and stop any proposed legislation to take away your rights regarding your health care benefits - now and during the legislative session.

This is election season. We ask that you talk with your legislative representatives to express your concerns, hear how they would vote on issues regarding your retiree health care benefits, and VOTE for those who support your best interests!

Stay tuned.

NOTE: If you have already paid your VRSEA 2023 dues, please ignore the membership enrollment form coming in our next newsletter. You are already set for membership in 2023. We thank you for your ongoing support.

Vermont Retired State Employees Association, Inc.

“Working for Retired State Employees and Beneficiaries”

www.vrsea.org

August 11, 2021

The 2021 Annual Meeting of the Vermont Retired State Employees’ Association, Inc. was held by Zoom on August 11, 2021.  President Shelley Martin called the meeting to order at 12:02 p.m.  The following officers and trustees were present:  Shelley Martin, President; Kathy Callaghan, Secretary; Roger Dumas, Treasurer; Judy Hurley, Charly Dickerson, Allen Blake, Bruce Hyde, Jerry Schwarz, Vern Mackey, Mary Lou Bolt and Marc Metayer.  Nominating Committee Chair Bert Smith also attended.

President Shelley Martin officially welcomed everyone, explaining that the Annual Meeting was held by Zoom this year for everyone’s safety.  She opined that we hope to have an in-person meeting next year.  The President called for a moment of silence for those we have lost this year and members of their families.  She then introduced VRSEA Board members and Mr. Smith.

Secretary’s Report:   President Martin explained that normally the Secretary’s Report consists of the minutes of the prior year’s Annual Meeting.  Since the 2020 Annual Meeting was cancelled due to Covid-19, there was no Secretary’s Report this year.

Treasurer’s Report:   Treasurer Roger Dumas presented a comparison of the VRSEA budgets for the last three years.  He shared that the VRSEA Audit Committee of Helen Weed and Marie Maclay confirmed that the FY 2019 to 2020 records were in good financial order.  Roger presented the FY 2020-2021 year-to-date budget, and indicated that there may be a slight surplus at year end.  On the FY 2021-2022 budget, he explained that it has increased due to two new budget lines.  The Board has decided to have a Data Entry Processing individual to handle the hundreds of memberships and renewals we receive by mail each year.  In addition, there is a new 2022 budget line for Special Events.  Finally, the Treasurer reported that the 2022 pension COLA will be reported in the October 2021 VRSEA newsletter, which will be sent to all State retirees.

Nominating Committee Report:  Nominating Committee Chairman Bert Smith reported that no VRSEA members had contacted him to be considered for VRSEA Board membership in 2022.  He reviewed the fact that in 2020, no Annual Meeting was held due to Covid-19, and the existing slate of Trustees agreed to serve another year.  Bert then presented the Nominating Committee’s recommendation that five VRSEA Trustees be elected to serve a 1-year term, and five Trustees to serve a regular 2-year term.  This will bring the Board elections back into compliance with our By-Laws, which state that Trustees are elected for two-year terms.  The Annual Meeting attendees then voted by online ballot.  The attendees voted unanimously to re-elect all 10 of the current VRSEA Trustees, as follows:  Serving a 1-year term:  Allen Blake, Kathy Callaghan, Shelley Martin, Bruce Hyde and Judy Hurley.  Serving a 2-year term:  Charly Dickerson, Roger Dumas, Vern Mackey, Marc Metayer and Jerry Schwarz. 

Appreciation:  Roger moved and Charly seconded a motion to thank Bert Smith for his many years of exemplary service on the VRSEA Nominating Committee.  Along with Committee members Mike Wiater and Susan Hudson, Bert has faithfully executed the Committee’s duties for many years.  The Committee has produced excellent Trustee candidates when there were Board openings, which has greatly enhanced the VRSEA Board.  We owe Bert and his team a debt of gratitude.

President’s Report:   President Shelley Martin reviewed the fact that there is currently a Legislative Pension Task Force meeting to consider changes to the pension system.  She expressed appreciation for Vermont Treasurer Beth Pearce’s position that no changes should be made to the pension benefits for existing retirees.  Treasurer Pearce has reiterated this position many times to the VRSEA Board and to members of the Legislature.  The Pension Task Force must produce a preliminary report of their findings to the Legislature by October 15 and a final report by December 2.  VRSEA employs a professional lobbyist, Bridget Morris, who has done an excellent job on following the Task Force.  Legislative Chair Roger Dumas keeps the VRSEA Board informed on pension issues weekly and also does an excellent job.  

Next, President Martin explained the important differences between the VSEA retiree group (VSEA-RC), and our organization, VRSEA.  The VSEA-RC chapter is not an independent organization.  It is one of the many chapters of the VSEA union and answers to the VSEA Board.  VSEA-RC has no authority to act on behalf of their retiree members.  In contrast, VRSEA is a fully independent organization with full authority to act on behalf of its members. We answer only to our membership, and no other entity.   VRSEA exists to protect our members’ pension and retiree health care benefits and has no other agenda or affiliation. 

President Martin updated the group on the new Special Events that VRSEA is offering its members.  VRSEA is embarking on a series of Special Events for our members, beginning with the first one on August 19 at Lake Bomoseen State Park.  On Saturday, October 2, VRSEA will be participating in the Barre Fall Festival with a table and activities.  A member asked if anyone was car- pooling to Lake Bomoseen; Judy Hurley will be in touch with the member.  The President reminded members that VRSEA needs their emails to communicate more easily.  We do not share them.  

Lastly, President Martin expressed her appreciation to the VRSEA Board of Trustees and Committees for all their hard work throughout the year, and thanked VRSEA members for their support and trust in VRSEA.

President Martin adjourned the meeting at 12:30 p.m.

Respectfully submitted,

                                                            Kathy Callaghan

VRSEA Secretary

Topic: VRSEA Annual Meeting - 2022

Time:  August 24, 2022 at 12:00 pm EDT

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The State and the VSEA recently negotiated a new hearing aids benefit for State employees and retirees.  Effective January 1, 2023, State retirees and their dependents covered by the State Employees Health Plan, will each have a $1,500 benefit toward hearing aids – per ear – every 5 years.  The new benefit applies to the cost of the hearing aids only.  Audiologist visits and hearing tests continue to be covered as specialist visits under the health plan’s regular medical benefits.   VRSEA applauds the State for finally taking this step, as we have been asking for hearing aids coverage for many years.