Senate Bill No. 403
(By Senators Wagner and Bailey)
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[Introduced February 17, 1995; referred to the Committee
on Health and Human Resources; and then to the Committee
on Finance.]
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A BILL to amend and reenact section twenty, article
twenty-nine-b, chapter sixteen of the code of West Virginia,
one thousand nine hundred thirty-one, as amended, relating
to exempting from the rate review process hospitals
designated as rural primary care hospitals under the
essential access community hospital program; exempting from
the rate determination certain swing beds and respite beds;
preventing penalties for operating swing beds and respite
beds; requiring the health care cost review authority to
approve interim requests for rate increases by hospitals
which are licensed for less than seventy-five acute care
beds and which receive more than fifty percent of the
hospital's gross patient revenues from governmental payors;
and requiring submission of annual financial audits.
Be it enacted by the Legislature of West Virginia:
That section twenty, article twenty-nine-b, chapter sixteen of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended and reenacted to read as
follows:
ARTICLE 29B. HEALTH CARE COST REVIEW AUTHORITY.
§16-29B-20. Rate determination.
(a) Upon commencement of review activities, no rates may be
approved by the board nor payment be made for services provided
by hospitals under the jurisdiction of the board by any purchaser
or third-party payor to or on behalf of any purchaser or class of
purchasers unless:
(1) The costs of the hospital's services are reasonably
related to the services provided and the rates are reasonably
related to the costs;
(2) The rates are equitably established among all purchasers
or classes of purchasers within a hospital without discrimination
unless federal or state statutes or regulations conflict with
this requirement. On and after the effective date of this
section, a summary of every proposed contract for the payment of
patient care services between a purchaser or third-party payor
and a hospital shall be filed by the hospital with its rate
application for review by the board. No contract for the payment
of patient care services between a purchaser or third-party payor
and a hospital which establishes discounts to the purchaser or
third-party payor shall take effect until it is approved by the
board. The board shall approve or deny the proposed contract within the overall rate review period established in section
twenty-one of this article. No discount shall may be approved by
the board which constitutes an amount below the actual cost to
the hospital.
The hospital shall demonstrate to the board that the cost of
any discount contained in the contract will not be shifted to any
other purchaser or third-party payor. The hospital shall further
demonstrate that the discount will not result in a decrease in
its proportion of medicare, medicaid or uncompensated care
patients. In addition, the hospital shall demonstrate to the
board that the discount is based upon criteria which constitutes
a quantifiable economic benefit to the hospital. All information
submitted to the board shall be certified by the hospital
administrator as to its accuracy and truthfulness;
(3) The rates of payment for medicaid are reasonable and
adequate to meet the costs which must be incurred by efficiently
and economically operated hospitals subject to the provisions of
this article. The rates shall take into account the situation of
hospitals which serve disproportionate numbers of low income
patients and assure that individuals eligible for medicaid have
reasonable access, taking into account geographic location and
reasonable travel time, to inpatient hospital services of
adequate quality;
(4) The rates are equitable in comparison to prevailing
rates for similar services in similar hospitals as determined by the board; and
(5) In no event shall may a hospital's receipt of emergency
disaster funds from the federal government be included in such
hospital's gross revenues for either rate-setting or assessment
purposes.
(b) In the interest of promoting efficient and appropriate
utilization of hospital services, the board shall review and make
findings on the appropriateness of projected gross revenues for
a hospital as such revenues relate to charges for services and
anticipated incidence of service. The board shall further render
a decision as to the amount of net revenue over expenditures that
is appropriate for the effective operation of the hospital.
(c) When applying the criteria set forth above, the board
shall consider all relevant factors, including, but not limited
to, the following: The economic factors in the hospital's area;
the hospital's efforts to share services; the hospital's efforts
to employ less costly alternatives for delivering substantially
similar services or producing substantially similar or better
results in terms of the health status of those served; the
efficiency of the hospital as to cost and delivery of health
care; the quality of care; occupancy level; a fair return on
invested capital, not otherwise compensated for; whether the
hospital is operated for profit or not for profit; costs of
education; and income from any investments and assets not
associated with patient care, including, but not limited to, parking garages, residences, office buildings, and income from
related organizations and restricted funds whether or not so
associated.
(d) Wages, salaries and benefits paid to or on behalf of
nonsupervisory employees of hospitals subject to this article
shall may not be subject to review unless the board first
determines that such wages, salaries and benefits may be
unreasonably or uncustomarily high or low. Said exemption does
not apply to accounting and reporting requirements contained in
this article, nor to any that may be established by the board.
"Nonsupervisory personnel," for the purposes of this section,
means, but is not limited to, employees of hospitals subject to
the provisions of this article who are paid on an hourly basis.
(e) Reimbursement of capital and operating costs for new
services and capital projects subject to article two-d of this
chapter shall may not be allowed by the board if such costs were
incurred subsequent to the eighth day of July, one thousand nine
hundred seventy-seven, unless they were exempt from review or
approved by the state health planning and development agency
prior to the first day of July, one thousand nine hundred
eighty-four, pursuant to the provisions of article two-d of this
chapter.
(f) The board shall consult with relevant licensing agencies
and may require them to provide written findings with regard to
their statutory functions and information obtained by them in the pursuit of those functions. Any licensing agency empowered to
suggest or mandate changes in buildings or operations of
hospitals shall give notice to the board together with any
findings.
(g) Rates shall be set by the board in advance of the year
during which they apply except for the procedure set forth in
subsection (c), section twenty-one of this article and shall may
not be adjusted for costs actually incurred.
(h) All determinations, orders and decisions of the board
with respect to rates and revenues shall be prospective in
nature.
(i) No hospital may charge for services at rates in excess
of those established in accordance with the requirements of and
procedures set forth in this article.
(j) Notwithstanding any other provision of this article, the
board shall approve all requests for rate increases by hospitals
which are licensed for one hundred beds or less and which are not
located in a standard metropolitan statistical area where the
rate of increase is equal to or less than the lowest rate of
inflation as established by a recognized inflation index for
either the national or regional hospital industry. The board
may, by regulation, impose reporting requirements to ensure that
a hospital does not exceed the rate of increases permitted
herein.
(k) Notwithstanding any other provision of this article, the board shall develop an expedited review process applicable to all
hospitals licensed for more than one hundred beds or that are
located in a standard metropolitan statistical area for rate
increase requests which may be based upon a recognized inflation
index for the national or regional hospital industry.
(l) Notwithstanding any other provision of this article to
the contrary, the board shall exempt from the rate review process
any hospital designated as a rural primary care hospital under
the essential access community hospital and rural primary care
hospital program during the period that the hospital meets the
requirements to be designated as a rural primary care hospital.
Any rural primary care hospital is exempt from rate setting under
this section. In the event a hospital loses its status as a
rural primary care hospital, the hospital will become subject to
rate review the next succeeding fiscal year following the loss of
status. Any hospital which was formerly a rural primary care
hospital and becomes subject to rate review as provided in this
subsection, shall have its rates set at a level equivalent to
first time consideration under the cost-based rate methodology
and may not be penalized for any overage in excess of previously
established rates.
(m) Notwithstanding any other provision of this article to
the contrary, any hospital which uses designated acute care beds
as swing beds as defined in the state health plan and which are
subject to rate determination shall be exempt from rate determination for swing beds. The costs for swing beds shall be
included within the hospital's costs for rate determination
purposes, but the hospital may not be penalized for swing bed
utilization and revenues in the rate determination process.
Notwithstanding any other provision of this article to the
contrary, any hospital which provides respite care services is
exempt from rate determination for respite care services. The
costs for respite care services shall be included within the
hospital's costs for rate determination purposes, but the
hospital may not be penalized for respite care utilization and
revenues in the rate determination process. Revenues and
utilization statistics for swing beds and for respite care shall
be separately aggregated under the rate determination process,
and may not be taken into account in establishing the rates for
hospitals with swing beds and respite services.
(n) Notwithstanding any other provision of this article to
the contrary, the board shall approve any interim request for a
rate increase by any hospital which is licensed for less than
seventy-five acute care beds and which receives more than fifty
percent of its gross patient revenues from governmental payors:
Provided, That the rate of increase requested is less than or
equal to the lowest rate of inflation as established by a
recognized inflation index for either the national or regional
hospital industry. Any hospital eligible to receive an interim
rate increase shall file a rate application form under the cost-based rate methodology once every three years and is
entitled to receive an interim rate increase less than the rate
of inflation without undergoing the rate determination process.
Any hospital subject to interim rate increases pursuant to this
section is only required to submit audited financial statements
annually.
NOTE: The purpose of this bill is to exempt from the rate
review process hospitals designated as rural primary care
hospitals under the essential access community hospital program
and to exempt from the rate determination process certain swing
beds and respite beds.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.