Barriers to Public Records Thwart Civic Engagement

Broadcast on Vermont Public Radio 

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Laura Ziegler filed her first public records request because she wanted to weigh in on a proposed rule change about how and when psychiatric patients could be forcibly medicated.

File photo by Hilary A. Niles ©

Since that first request 18 years ago, anything Ziegler may have learned hasn’t necessarily made accessing public records easier. Through her work as a citizen activist for patients’ rights — especially psychiatric patients and prisoners — Ziegler says she continually gets the run-around: Agencies redacting records that historically have been public. Delaying responses to her requests. Even respondents saying records don’t exist, when she knows they do.

// Listen here and read the full story.

Ongoing Investigation of EB-5 Fraud Charges at Jay Peak

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The Situation

The plan was grand: Half a billion dollars of private money invested in Vermont’s Northeast Kingdom, the state’s most rural — and most economically challenged — region. Four-season destination resorts, year-round manufacturing jobs, an international airport, a veritable “Renaissance” to revive the economy on the shores of Lake Memphremagog, which spans the Canadian border.

This black cat slipped beneath a chain link fence that cordons off the city block razed for a development that never came. © Hilary A. Niles

Some of those projects did get built: Jay Peak Resort, formerly a sleepy ski area with renowned slopes, now also boasts an indoor water park, golf course, hockey arena, hotels, penthouse suites and condominiums galore. Burke Mountain Resort likewise got its first hotel, and an on-site conference center.

But in Newport, Vt., the Canadian border town, an empty hole the size of a city block gapes where commercial buildings and apartments were razed to make room for the Renaissance project that isn’t to be. At the state-owned airport, an extended runway awaits international flights that can’t land without U.S. Customs operations in the new terminal that’s not built. Those manufacturing projects? Never begun.

And roughly 700 immigrant investors from 74 countries, who collectively poured about $350 million into the master vision, are yet unpaid. Some have received the green cards offered in exchange for their investments, through the federal EB-5 Immigrant Investor program. Others’ immigration status hovers in limbo, while federal and state lawsuits play out against Jay Peak owner Ariel Quiros and longtime resort president Bill Stenger.

The U.S. Securities and Exchange Commission and Vermont’s financial regulators allege the two men perpetrated a “massive” securities fraud in which they illegally pooled and misappropriated investor money for years. Quiros, they charge, also leveraged the funds through unauthorized loans, which he then used to help amass his own personal fortune.

Also implicated in the saga: state officials, from governors to department heads to employees charged with overseeing the state’s EB-5 program since 1997.

The coverage

Bill Stenger surveys construction developments at Jay Peak Resort. © Hilary A. Niles

Did Quiros really do it? Did Stenger know and help? Should or could the state have prevented the alleged fraud, or stopped it sooner? If this happened at Jay Peak — and in Vermont, where the state government itself oversees EB-5 developments — what’s occurring in places with less accountability?

My ongoing investigation, in partnership with Vermont Public Radio, tells the unfolding tale of Jay Peak, of the hundreds of immigrant investors who trusted its leaders with their money, and of the state officials who kept giving their developments green lights — until announcing in April 2016 sweeping fraud charges against them.

My EB-5 coverage has also aired on National Public Radio’s All Things Considered:

in The Montreal Gazette and Boston Globe:

and prior to the charges, on the Vermont-based nonprofit news website VTDigger.org as a staff reporter:

I have also been featured on radio and television news programs (VPR, Vermont PBS, CBC) to discuss the ongoing situation and my reporting on it.

The Semantics and Economics of ‘Natural’ Food

Broadcast on The Food Chain, BBC World Service
Follow-up business feature on BBC News website

Meet the cows going natural

What is “natural” food, and is it better for us? For their half-hour radio documentary exploring the language of food labeling, The Food Chain commissioned me to bring in an American perspective.

Hormone-free feeder cattle from Cream Hill Stock Farm in Shoreham, Vt., are sold mostly to local packers who market the meat as “natural.” (© photo by Hilary Niles)

In this sound-rich segment, voices from a Vermont cattle farm, a livestock specialist and a grocery store shopper tell a story of the farm finances, food policy and consumer assumptions driving demand for nebulously defined “natural” food.

// Listen to the full episode here. 

US farmers go ‘natural’ for profits

Thirty-five years ago, a professor moved to a historic farm on 600 acres of rolling hills overlooking the sparkling Lake Champlain in Vermont.

His family built the largest beef cattle feedlot (a place where cattle are fattened for slaughter) in the northeast United States — a crowning achievement in its time.

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Wallace Greenwalt switched to “natural” farming when he took over operations at Cream Hill Stock Farm in Shoreham, Vt.

Months before he died at the age of 59, Paul Saenger passed that farm on to the son of one of his former college students.

Today, 29-year-old Wallace Greenwalt is also finding success on Cream Hill by running the farm his own way, in line with changing consumer demand.

Where Paul Saenger had raised about 1,000 head of cattle and used artificial growth hormones to do it, now Wallace raises just 600 cattle, free of hormones and antibiotics.

// Read the full story here.

Vermont Police Are Rarely De-Certified, Even For Crimes And Misconduct

Broadcast on Vermont Public Radio

In December 2015, the City of Rutland, Vermont, settled a nearly $1 million lawsuit with a former police officer. Andrew Todd had alleged that two of his colleagues on the police force engaged in racial discrimination and multiple instances of improper conduct — including racial slurs and physical threats against him, racial profiling, and sometimes getting drunk or having sex while on duty.

Law enforcement officers look on as lawmakers discuss a bill making it easier to de-certify police in Vermont for crimes and misconduct. (Photo by Hilary Niles)

By the time of the settlement, Sergeant John Johnson had retired and officer Earl “Frank” Post had already resigned. Although the two were never charged with any crimes, the civil settlement certainly was damning.

And despite the severity of the accusations against them, Johnson and Post walked away from their jobs with their police certification intact. That’s because, in Vermont, it’s really hard to lose your right to wear a badge.

This spring, state lawmakers are tackling a bill that would sharpen their teeth when it comes to dealing with bad cops.

// Listen here and read the full story

Traffic-Stop Race Data Remain Elusive in Vermont

Published by Seven Days

When they stop motorists in Vermont, cops don’t just collect licenses and registrations. As of September 1, 2014, all police officers in the state must record the race of every driver they pull over.

image courtesy Beachfront B-Roll
image courtesy Beachfront B-Roll

The new mandate for “roadside stop” data collection is just one step in a national movement to halt discriminatory law enforcement. “Throughout the country, there’s a crisis of legitimacy in policing,” said Burlington Police Chief Brandon del Pozo. “Part of that crisis stems from a belief that the police are biased in the way they use their discretion. And traffic stops are something that police have immense discretion over.”

But Vermonters are still waiting to see what the new statewide data collection reveals. That’s because, while technically public, the information remains largely inaccessible. In 16 months, no one has compiled the raw data — a necessary first step before analysis. In fact, no one even knows if all of law enforcement is complying with the mandate to collect the data in the first place.

// Read the full story

// Watch my WCAX television interview about the story

Delays and Debt Plague Vermont’s $1B+ IT Upgrades

Broadcast in two parts on Vermont Public Radio:

Vermont’s state government is contemplating at least $1 billion of information technology projects in the coming years. The wish list is long, and some projects — even important ones — are likely to stay on it for a long time.

graphic by aleksangel / istock.com
graphic by aleksangel / istock.com

Consider the Medicaid information system: A big upgrade scheduled several years ago has been put off, a couple times, and it’s still on hold into the foreseeable future.

Meanwhile, the core system is not set up to compute all the information that policymakers need to build an accurate budget. This year, state officials are scrambling to fund $36 million more in Medicaid charges than they budgeted for — although they don’t have the data they need to understand how expenses ballooned the way they did, or how much the program will cost in the future.

Information technology projects like Medicaid’s get put off for various reasons, and throughout state government. Vermont’s Judiciary, its Departments of Motor Vehicles and Public Safety, the Public Service Board, the state’s accounting and procurement offices are all home to IT projects that face continual delays.

And as it turns out, when projects are funded, debt for Vermont’s state IT projects often outlasts the technology. That’s because state funds for IT projects currently are coming from selling bonds — a form of long-term financing that leaves taxpayers paying for technology even years after it’s obsolete.

Vermont’s Lake Champlain Cleanup Plan, Explained

Published by Vermont Public Radio

With a surface area of 435 square miles stretched over a length of 120 miles, Lake Champlain is one of the largest lakes in North America. Its waters support aquatic ecosystems, recreation, agriculture and public water supplies.

Percent phosphorous reductions required for each lake segment: The proportional percent of phosphorus reduction required for a lake segment may be quite different from the volume reduction required. For example, in a segment with low phosphorus loads, a small volume may represent a large percentage of that segment’s reduction — and vice versa.

But high levels of phosphorus in the water threaten all these uses of the lake. A plan to clean up Lake Champlain proposes limiting phosphorous runoff, which causes potentially toxic blue-green algae to proliferate. The plan is called the Total Daily Maximum Load, or TMDL.

The limits apply not just to farms and developments (although those are the leading contributors of phosphorus to Lake Champlain), but also to wastewater treatment plants, back roads and even forests and streams. Runoff from all these sources throughout a 8,234-square-mile watershed in Vermont, New York and Quebec ends up in the lake.

A new proposal, referred to as Total Maximum Daily Loads (TMDL), is a choice between scenarios that allow different amounts of pollution from various sources to enter specific parts of the lake. It’s a long and technical document; this series of interactive graphs and charts explains the basics of the official plan — which is not without controversy.

// See the data project.

// Read the story the data accompanied.

Huge Money, Small Oversight: State IT Spending In Vermont

$1 Billion+ ... The most accurate available information shows that the state could spend this amount on IT projects over the next five years.
$1 Billion+ ... The most accurate available information shows that the state could spend this amount on IT projects over the next five years.
Illustration: Amanda Shepard/VPR. Data source: Vermont Department of Information and Innovation.

story by Taylor Dobbs, data by Hilary Niles / Vermont Public Radio

The use of technology in Vermont state government went from a background concern to a political flashpoint throughout the troubled rollout of Vermont Health Connect, the state’s online health insurance exchange. None of the state’s IT projects receive the same level of public scrutiny, but information technology in state government is ubiquitous and makes up a significant — yet unknown — portion of the state’s budget every year.

A Vermont Public Radio investigation has found that it’s nearly impossible for Vermonters to know how much of their tax money goes toward IT operations in the state, how successful IT projects are in meeting state needs, or how well state agencies follow defined protocols for state contracts.

Using available records, interviews and dozens of documents released in response to multiple records requests, VPR built a comprehensive data base of IT projects across state government. The documents and interviews showed:

  • Despite efforts to improve transparency, there is no way for state officials or the public to track the total amount of money spent by the state government on information technology. The most accurate available information shows that the state could spend nearly $1 billion or more on IT projects over the next five years.
  • The state has increased oversight for IT projects in recent years, allowing the Department of Information and Innovation (DII) to monitor and even cancel projects from the time a department launches the procurement process to the finished product.
  • Although increased oversight provides more opportunities for DII officials to identify problems with an IT project, there’s still no way to know how successful these projects are in meeting their stated goals.
  • Specific protocols for state purchasing have been in place since 2008. Yet the state agencies tasked with ensuring those protocols are followed have never used their authority to audit compliance, making it difficult to know if agencies are following best practices as defined by the state itself.

// Listen Here and Read More

Vermont Mulls Pros & Cons of Privatizing Liquor Sales

story by Ken Picard, data by Hilary Niles / Seven Days

Graphics by Seven Days staff.
Graphics by Seven Days staff.

“Anyone who’s ever had a margarita, Manhattan or mai tai in the Green Mountain State has drunk from the river of booze that flows through Vermont’s Department of Liquor Control warehouse, the only one of its kind in the state. Vermont is one of 17 ‘control states’ in which unelected state officials direct the distribution and sale of all high-proof spirits — vodka, gin, rum, whisky, tequila, etc.” -Ken Picard

As part of Ken Picard’s investigation into the byzantine business of state liquor control, the alt-weekly Seven Days hired me to find out which types of alcohol the state’s liquor outlets sell the most of, and how much cash they rake in each year.

I sliced and diced five years worth of monthly inventory and sales data for 80 liquor outlets — 359,534 records in all — and folded in additional fields to determine the top-selling brands, locations and seasons throughout the year. Subsequent analysis revealed the meteoric ascendance of Vermont distilleries, among other insights. Data wrangling involved transfer of text to structured data files for analysis in MySQL using a Navicat database manager. I then exported queries for upload to a Google spreadsheet for shared access, and produced memos to summarize and explain my analyses for the editorial and graphics teams.

// Check it out

What Explains It: The Cost of Medical Supplies

Published in Vermont Business Magazine (print edition)

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If you’ve heard that Tylenol in a hospital may cost 100 times more than it would if you bought the pills yourself, you heard right.

If you’ve read that hip replacements or cardiac surgery cost more at some hospitals than the procedures would at others, you read that right, too.

And if you know that private insurers pay more for services than Medicare or Medicaid, and that uninsured patients (except those on charity care) pay even higher rates for the same treatments, this may aid your understanding of the Tylenol phenomenon, which plays out in different ways on virtually every facet of health care costs.

Alternately referred to as cost-shifts or cross-subsidizations, the transactions leave charges for health care, including medical supplies, all but untethered from their line-item costs. Like a prism spinning in a window on a sunny day, what shows after financial models are applied to medical services looks like anything but the surface costs they’re comprised of. What’s refracted, instead, is a menagerie of ever-shifting, oddly shaped rainbows — but much, much less pretty.

Cost shifts and cross-subsidization

1chart_salnonsalThe so-called “cost shift” at the heart of much debate over health care reform typically refers to disparities among different kinds of payers. The theory is that private payers (mostly insurance companies, on behalf of their subscribers) reimburse hospitals at higher rates than Medicaid and Medicare, to make up for the government payers’ lower rates.

Not all economists buy the cost-shift theory of price variation among payers. Some studies in recent years indicate that wildly divergent reimbursement rates are more a function of marketplace competition and negotiating prowess, and less about private burdens amplified by government underfunding. Reimbursement rates, after all, vary not just between public and private payers, but also among different insurance companies servicing the same market.

But whatever the reason, one thing is clear: Different payers pay different rates for the same service.

A related transaction that’s undisputed, if not widely understood, is when hospitals up-charge for basic procedures to recover their losses from more complicated care. Such “cross-subsidization,” as it’s known, extends beyond services to the gamut of medical supplies, from pills to gauze pads to knee braces.

Amy Vaughan is Director of Revenue, Finance and Reimbursement at the University of Vermont Medical Center. When asked to explain the relationship between a hospital’s costs and the charges passed along to patients, she laughed.

“Well, it’s —,” she stopped and tried again. “That’s complicated,” Vaughan said.

Vaughan explained that medical supplies get marked up not just to cover the regulatory overhead associated with each one, but also to help make up for what the other cost shifts and cross-subsidizations don’t.

In the case of the Tylenol phenomenon, made notorious in the 2013 TIME Magazine article “Bitter Pill” by Steven Brill, the drug costs patients outrageously more than it costs hospitals not only because there’s a lot of work and red tape associated with administering it. The hospital also up-charges one patient’s Tylenol, for example, because it’s losing money on another patient’s psychiatric services. 

Specific profit-drivers and loss-leaders vary from hospital to hospital, and their algorithms are far more complicated than to imply a one-to-one ratio anywhere within the mix. But the concept is simple: Hospitals mark up medical supplies to help make up for losses elsewhere in their business models. This rings true in profit- and non-profit facilities, alike.

Cory Gustafson, Director of Government and Public Relations for Blue Cross and Blue Shield of Vermont, said it takes a paradigm shift to understand the proposition.

“It doesn’t make sense when it’s lined up against our own common sense of supply and demand,” Gustafson said. But pricing in a highly regulated environment like Vermont isn’t determined by classical free market principles, he said. This is, in part, because hospitals are obliged to provide complex services on-demand, even when the demand for those services is not sufficient to sustain the business. 

A small hospital’s emergency room is a good example, Gustafson said. “The community needs that ER, so (the hospital) ends up needing to make revenue in other places to subsidize it,” he said.

This is why BCBSVT, in its rate negotiations with hospitals, doesn’t fixate on how much it’s asked to pay for a knee brace, for example. The insurer agrees to pay the price it does because it knows the knee brace is carrying part of the facility’s overall financial weight, he said. Making sure the hospital is adequately funded is the insurer’s way of making sure the whole health care system is there when members need it.

Cross-subsidization: seen, not touched

2chart_nonsalcats-revised2The fact that you can’t hold a rainbow doesn’t make it any less real. Likewise, cross-subsidization is a very definite part of the health care cost equation, though its exact size and shape are all but impossible to quantify.

Vaughan said she doubts the UVM Medical Center could even figure out how much of its hospitals’ revenues are comprised of reimbursements for medical supplies, because reimbursement for services is so divorced from any system of line-item charges. 

The UVM Medical Center and Central Vermont Medical Center, the health network’s two hospitals in Vermont, are both designated by the Centers for Medicare & Medicaid Services as “prospective payment system” hospitals. This means billing — at its most basic level for inpatient care — is based not on the cost of specific services provided to any particular patient, but on that patient’s diagnostic code. (Reimbursement works somewhat differently for some of Vermont’s smaller, more rural hospitals.) 

For example: Imagine if two patients, we’ll call them Ginger and Fred, both had the same health care plan with the same insurer, and were admitted to UVM Medical Center for an appendectomy the same day. Ginger stays only three days, while Fred stays six (but with no complicating factors that result in a second diagnostic code). Ginger and Fred’s insurance company would pay the hospital the same amount for both patients, even though clearly more medical supplies (and labor) would have been used in the process of caring for the patient who stayed twice as long. 

Vaughan cautions that such an example is an oversimplification, but it gets the point across: The hospital may clear a profit from Ginger’s payment, but lose money on Fred’s treatment. Either way, its budgetary goal is not for each service to pay for itself, but for all payments to cover the cost of all services, with some left over to reinvest in the organization’s people, programs and facilities. 

“We look at it in totality,” Vaughan said. “We’re looking at covering (our costs) at the global level, not from a line-item level. We’re not saying whenever we do X procedure, we need to cover X cost.”

The Green Mountain Care Board, with regulatory authority over hospital budgets, likewise focuses on the forest, not the trees. Mike Davis, GMCB Director of Health System Finances, said the board’s priority in hospital budgeting is to curb overall cost growth, not to micromanage spending.

“Whether medical supplies are going up 15 percent or down 15 percent, we don’t try to manage at that level,” Davis said. However hospitals piece together their budgets to stay within certain targets for overall growth is up to them, as long as quality of care is maintained, Davis said. 

The Green Mountain Care Board collects categorized spending projections from all of Vermont’s hospitals, so the rough outline of each facility’s equation is visible. Medical supplies, including pharmaceuticals, account for almost 10 percent of Vermont hospitals’ overall budgets. At individual hospitals, that proportion ranges from less than one percent at Mt. Ascutney Hospital and Health Center, a rural Critical Access Hospital, to 13 percent at the UVM Medical Center, a Level 1 Trauma Center. Davis cautioned that these numbers are a good place to start, but reporting nuances among hospitals complicate direct comparison.

Among the complications: Different hospitals have different overhead and different payer mixes to compensate for. Plus, the Board’s reporting instructions include general definitions for medical or surgical supplies sold, drugs sold, and other related expenses — as granular as it gets, he said. But each hospital may apply these definitions somewhat differently, and the Board has never conducted a reporting audit, he said.

Teasing apart the dollar value of cross-subsidized medical supplies also is complicated by a proprietary veil: Each hospital and insurance company negotiates reimbursement rates separately, and privately. Insurance companies get a discount off the full-price charges, but neither hospitals nor insurers want their competition to know how much (or how little) it’s worth.

The art of the bargain

3chart_medsuppercenttotalIt’s up to the Green Mountain Care Board to make sure hospitals and insurance companies set fair rates that keep health care reliable, hospitals solvent and health insurance affordable. Inside the hospitals, it’s up to supply chain managers to find good deals. 

Charlie Miceli, C.P.M., Vice-President and Network Chief Supply Chain Officer at the UVM Health Network, said medical supplies procurement has evolved from a back-office function to an integral part of the network’s financial strategy. 

“It’s not just three bids and a cloud of dust anymore,” Miceli said. “In the old days, you just went for the lowest bid. You were on a hamster wheel of repetitive, non-critical processes.” 

Today, Miceli said, physicians and nurses are pulled into the procurement process and even into bargaining sessions, both to get them invested in savings and for their expertise. He said in some cases, “procurement stiffs” can only get negotiations so far, but practitioners who work with the supplies in question can push a good deal across the finish line.

The UVM Health Network also has signed on with several “third-party decision support providers.” Miceli said the cost of these contracts is more than offset by the savings they facilitate through specialized consulting, analytical tools and group purchasing power. 

The UVM Medical Center buys about 30 percent of its medical-surgical supplies through a consortium of 116 academic medical centers that comprise about $52 billion of annual buying power. The University HealthSystem Consortium’s benchmarking data show that UVM Medical Center just makes it into the top one-third of all academic medical centers for price competitiveness on med-surge supplies. Miceli said the benchmarking data help his team identify where they could be getting better deals by giving them a sense of the prices being paid by others in the hospital’s peer group. 

And with four hospitals under its umbrella, the UVM Health Network claims a group purchasing power of its own. 

“We’ve taken over $6 million out of the system,” Miceli said, just by contracting together for a few high-ticket items, including cardiology, orthopedic implants, imaging services and pharmaceutical distribution. 

Miceli said the network is about two years away from having all its supply chain management aligned on one computer system, and that it’s already taken over supplies ordering and delivery for almost all its primary care clinics, as well. 

“Maybe you can get two more appointments in per week, because you don’t have to count sutures or supplies to order,” he said. Their strategy with supply chain management is not just to save money, but time. “It’s the time that’s even more scarce,” he said. 

The health network’s growing heft also helps when it gets into procurement negotiations with medical supply companies, many of which are undergoing their own rounds of consolidation that let them throw new weight around the bargaining table. But it can only get them so far. Case in point: One of the only major national suppliers of IV solution, Hospira, was recently bought out by Pfizer. Not interested in leveraging the product as a loss leader, as Hospira had done, the new owner — with a mandate for shareholder return, not affordable community health — is making up for lost profits. 

“I understand what they’re doing,” Miceli said. But he said the hit to UHC members alone is about $600 million from the Hospira acquisition and a change in another company’s distribution of key cancer-fighting drugs. “(A)t the end of the day, we’ve got to figure out something else. That’s why supply chain management has risen from a back-office function like it was when I started in the ’80s,” he said.

Mike Del Trecco, Vice-President of Finance at the Vermont Association of Hospitals and Health Systems, said the health care system is complex partly because of such shifting market forces as any business faces, but also because hospitals negotiate those market forces while delivering extremely specialized care to individuals with unique situations. The best way to manage that complexity, he said, lies in current efforts to reform health care delivery away from a fee-for-service system.

“You come up with an aggregate approach for paying for that population,” Del Trecco said. “The status quo is gone from our mind. It’s not even an option.”

Again, it’s a paradigm shift. One that’s already underway, where the concept of services comprised of line-item charges may mean even less than it does today.