H. B. 2713
(By Mr. Speaker, Mr. Kiss, and Delegate Ashley)
[By Request of the Executive]
[Introduced March 25, 1997; referred to the
Committee on Government Organization then Finance.]
A BILL to repeal section sixteen, article twenty-nine-b, chapter
sixteen of the code of West Virginia, one thousand nine
hundred thirty-one, as amended; and to amend and reenact
sections one, two, three, five, six, eight, nine, eleven,
seventeen, eighteen, nineteen, nineteen-a, twenty, twenty- three, twenty-five, twenty-six, twenty-seven and twenty- eight, article twenty-nine-b of said chapter, all relating
to the West Virginia health care authority; including
additional legislative findings and purpose; changing the
agency's title; amending certain definitions; amending
conflicting employment prohibition for board members and
former board members to comply with the governmental ethics
act; deleting the review council; authorizing, information
gathering and coordination; creating a data advisory group, and expanding the board's powers generally; changing annual
reporting requirements; related programs and priorities;
including utilization reporting with uniform system of
accounts and financing; defining entities subject to annual
reporting requirements; requiring review and reporting for
alternatives to present rate-setting; legislative
directives, studies, findings and recommendations;
explaining discount and risk-bearing contract review and
authorizing promulgation of rules; creating a quality
assurance advisory group; modifying public disclosure,
exemptions from state antitrust laws and penalties for
violations to include health care provider; and extending
termination date.
Be it enacted by the Legislature of West Virginia:
That section sixteen, article twenty-nine-b, chapter sixteen
of the code of West Virginia, one thousand nine hundred thirty- one, as amended, be repealed; and that sections one, two, three,
five, six, eight, nine, eleven, seventeen, eighteen, nineteen,
nineteen-a, twenty, twenty-three, twenty-five, twenty-six,
twenty-seven and twenty-eight, article twenty-nine-b of said
chapter be amended and reenacted, all to read as follows:
ARTICLE 29B. HEALTH CARE AUTHORITY.
§16-29B-1. Legislative findings; purpose.
The Legislature hereby finds and declares that the health
and welfare of the citizens of this state is being threatened by
unreasonable increases in the cost of acute health care hospital
services, a fragmented system of health care, lack of integration
and coordination of health care services, unequal access to
primary and preventative care, lack of a comprehensive and
coordinated health information system to gather and disseminate
data to promote the availability of cost-effective, high quality
services and to permit effective health planning and analysis of
utilization, clinical outcomes and cost and risk factors. In
order to alleviate this threat, these threats: (1) Information
on hospital health care costs must be gathered; (2) a system of
cost control must be developed; and (3) an entity of state
government must be given authority to ensure the containment of
acute health care hospital costs, to gather and disseminate
health care information; to analyze and report on changes in the
health care delivery system as a result of evolving market
forces, including the implementation of managed care; and to
assure that the state health plan, certificate of need program,
rate regulation program, and information systems serve to promote
cost containment, access to care, quality of services and
prevention. Therefore, the purpose of this article is to protect
the health and well-being of the citizens of this state by
guarding against unreasonable loss of economic resources as well as to ensure the continuation of appropriate acute access to cost
effective, high quality health care hospital services.
§16-29B-2. Short title.
This article may be cited as the "West Virginia Health Care
Cost Review Authority."
§16-29B-3. Definitions.
Definitions of words and terms defined in articles two-d and
five-f of this chapter are incorporated in this section unless
this section has different definitions.
As used in this article, unless a different meaning clearly
appears from the context:
(a) "Charges" means the economic value established for
accounting purposes of the goods and services a hospital provides
for all classes of purchasers;
(b) "Class of purchaser" means a group of potential hospital
patients with common characteristics affecting the way in which
their hospital care is financed. Examples of classes of
purchasers are medicare beneficiaries, welfare recipients,
subscribers of corporations established and operated pursuant to
article twenty-four, chapter thirty-three of this code, members
of health maintenance organizations and other groups as defined
by the board;
(c) "Board" means the three-member board of directors of the West Virginia health care cost review authority, an autonomous
division within the state department of health and human
resources;
(d) "Health care provider" means a person, partnership,
corporation, facility, hospital, or institution licensed,
certified or authorized by law to provide professional health
care service in this state to an individual during this
individual's medical, remedial, or behavioral health care,
treatment or confinement;
(e) "Hospital" means a facility subject to licensure as such
under the provisions of article five-b of this chapter, and any
acute care facility operated by the state government which is
primarily engaged in providing to inpatients, by or under the
supervision of physicians, diagnostic and therapeutic services
for medical diagnosis, treatment and care of injured, disabled or
sick persons, and does not include state mental health facilities
or state long-term care facilities;
(f) "Person" means an individual, trust, estate,
partnership, committee, corporation, association or other
organization such as a joint stock company and insurance company,
estate a state or political subdivision or instrumentality
thereof or any legal entity recognized by the state;
(g) "Purchaser" means a consumer of patient care services,
a natural person who is directly or indirectly responsible for payment for such patient care services rendered by a hospital,
health care provider, but does not include third-party payors;
(h) "Rates" means all value given or money payable to
hospitals health care providers for health care services,
including fees, charges and cost reimbursements;
(i) "Records" means accounts, books and other data related
to health care costs at health care facilities subject to the
provisions of this article which do not include privileged
medical information, individual personal data, confidential
information, the disclosure of which is prohibited by other
provisions of this code and the laws enacted by the federal
government, and information, the disclosure of which would be an
invasion of privacy;
(j) "Third-party payor" means any natural person, person,
corporation or government entity responsible for payment for
patient care services rendered by hospitals health care
providers; and
(k) "Related organization" means an organization, whether
publicly owned, nonprofit, tax-exempt or for profit, related to
a hospital health care provider through common membership,
governing bodies, trustees, officers, stock ownership, family
members, partners or limited partners including, but not limited
to, subsidiaries, foundations, related corporations and joint
ventures. For the purposes of this subsection family members shall mean brothers and sisters, whether by the whole or half
blood, spouse, ancestors and lineal descendants.
§16-29B-5. West Virginia health care authority; composition of
the board; qualifications; terms; oath;
compensation and expenses of members; vacancies;
appointment of chairman, and meetings of the board.
The "West Virginia Health Care Cost Review Authority,"
heretofore created as an autonomous division of the department of
health, hereinafter referred to as the board, is hereby continued
as an autonomous division of the department of health and human
resources and shall be known as the "West Virginia Health Care
Authority," hereinafter referred to as the board. Any references
in this code to the West Virginia Health Care Cost Review
Authority shall mean the West Virginia Health Care Authority.
(a) The board shall consist of three members, appointed by
the governor, with the advice and consent of the Senate. The
board members shall be citizens and residents of this state. No
more than two of said board members may be members of the same
political party. One board member shall have a background in
health care finance or economics, one board member shall have
previous employment experience in human services, business
administration or substantially related fields and one board
member shall be a consumer of health services with a demonstrated interest in health care issues.
(b) Each board member shall, before entering upon the duties
of his or her office, take and subscribe to the oath provided by
section five, article IV of the constitution of the state of West
Virginia, which oath shall be filed in the office of the
secretary of state. The governor shall designate one of the
board members to serve as chairman at the governor's will and
pleasure. The chairman shall be the chief administrative officer
of the board. The governor may remove any board member only for
incompetency, neglect of duty, gross immorality, malfeasance in
office or violation of the provisions of this article. The
governor shall appoint three board members, one for a term of two
years, one for a term of four years and one for a term of six
years, with all the terms beginning on the effective date of this
article the twelfth day of March, one thousand nine hundred
eighty-three. All future appointments shall be for terms of six
years, except that an appointment to fill a vacancy shall be for
the unexpired term only.
(c) No person while in the employ of, or holding any
official relation to, any hospital or health care provider
subject to the provisions of this article, or who has any
pecuniary interest therein, may serve as a member of the board or
as an employee thereof. Nor may any such board member be a
candidate for or hold public office or be a member of any political committee while acting as such board member; nor may
any board member or employee of said board receive anything of
value, either directly or indirectly, from any hospital subject
to the provisions of this article, third party payor or health
care provider. Should any of the board members become a
candidate for any public office or for membership on any
political committee, the governor shall remove said board member
from the board and shall appoint a new board member to fill the
vacancy created. No board member or former board member may
accept employment with any hospital or health care provider
subject to the jurisdiction of the board within two years after
said board member ceases to be a board member in violation of the
West Virginia Governmental Ethics Act, chapter six-b of this
code: Provided, That such Act shall not apply to employment
accepted after termination of the board.
(d) The concurrent judgment of two of the board members when
in session as the board shall be deemed the action of the board.
A vacancy in the board shall not affect the right or duty of the
remaining board members to function as a board.
(e) In order to adequately compensate the chairman of the
board and other members of the board for additional duties newly
imposed by law and not heretofore required by law, the annual
salary of the chairman of the board shall be fifty-five sixty-five thousand dollars and the annual salary of the other board
members shall be thirty-six sixty thousand five hundred dollars.
Provided, That effective the first day of July, one thousand nine
hundred ninety-one, the annual salary of other board members
shall be fifty-one thousand two hundred dollars
§16-29B-6. Information gathering and coordination; data advisory
group.
There is created the West Virginia health care cost review
council, hereinafter referred to as the council.
(a) The council is composed of thirteen members. Five of
the members shall be defined as government members, those members
being the secretary of the department of health and human
resources, the workers' compensation commissioner or the
successor to his or her duties and responsibilities, the director
of the public employees insurance agency, the commissioner of
insurance, and the director of the division of vocational
rehabilitation, or their respective designated representatives.
Eight members shall be defined as nongovernment members who shall
be appointed by the governor, with the advice and consent of the
Senate, and shall be selected as follows: One representative of
the health insurance industry, one administrator of a small
hospital, one administrator of a large hospital, one physician,
and four members who are consumers of health services. When selecting the members who are consumers of health services, in
addition to other factors, consideration shall be given to
constituencies of organized labor, major purchasers of health
insurance, and senior citizens.
(b) No more than five of the nongovernment members of the
council may belong to the same political party, and at least two
but no more than four may reside in the same congressional
district. Selection of all nongovernment members of the council
shall be made with due diligence to ensure membership thereon by
persons representing all cultural, demographic, and ethnic
segments of the population of the state. Nongovernment members
of the council shall be appointed for terms of three years each,
except that of the members first appointed, three members shall
be appointed for terms of one year, three members for terms of
two years, and two members for terms of three years. Members
shall be eligible for reappointment for a second three-year term.
Vacancies shall be filled in the same manner as the original
appointments for the duration of the unexpired term.
(c) The presence of a majority of the members of the council
shall constitute a quorum for the transaction of business. The
council shall elect from among its members a vice-chairman and
such other officers as are necessary. The council shall meet no
less than four times during the calendar year, and additional
meetings shall be held upon a call of the chairman or a majority of the members, or the board.
(d) The council shall serve as an advisory body to the board
on the development of health care cost containment policy,
strategies and methods, and shall review and from time to time
make recommendations in regard thereto and on state-of-the-art
concepts in health care policy at the national, state and local
level and their application to the deliberations of the board.
The council shall serve as a conduit for the collection and
transmission of information to the board regarding the
consequences of board policy upon health care cost containment
and upon hospitals that are subject to the provisions of this
article. The council shall serve as a means of coordinating
health care cost containment policy among departments of state
government. The council shall review decisions of the board and
make public comments thereon as it sees fit.
(a) The board shall: Coordinate and oversee the health data
collection of state agencies; lead state agencies' efforts to
make the best use of emerging technology to effect the expedient
and appropriate exchange of health care information and data,
including patient records and reports; and coordinate data base
development, analysis and reporting to facilitate cost
management, utilization review and quality assurance efforts by
state payor and regulatory agencies, insurers, consumers,
providers and other interested parties. Agencies of the state collecting health data shall work together through the board to
develop an integrated system for the efficient collection,
responsible use and dissemination of such data and to facilitate
and support the development of statewide health information
systems that will allow for the electronic transmittal of all
health information and claims processing activities within the
state and that will coordinate the development and use of
electronic health information systems within state government.
The board shall establish minimum requirements and issue reports
relating to information systems of all state health programs,
including simplifying and standardizing forms, establishing
information standards and reports for capitated managed care
programs to be managed by the insurance commission, and shall
develop a comprehensive system to collect ambulatory health care
data. The board is authorized to gain access to any health- related data base in state government for the purposes of
fulfilling its duties: Provided, That, for any data base to
which the board gains access, the use and dissemination of
information from the data base shall be subject to the
confidentiality provisions applicable to such data base.
(b) To advise the board in its efforts under this section,
the board shall create a data advisory group and appoint one of
the board's members as chair of the group. The group shall be composed of representatives of consumers, providers, payors and
state agencies. The data advisory group shall assist the board
in developing priorities and protocols for data collection and
the development and reform of health information systems provided
under this section.
(e) (c) In order to assist with the council's deliberations,
The board's staff shall gather information on cost containment
efforts, including, but not limited to, the provision of
alternative delivery systems, prospective payment systems,
alternative rate-making methods, and programs of consumer
education. The council board shall pay particular attention to
the economic, quality of care and health status impact of such
efforts on purchasers or classes of purchasers, particularly the
elderly and those on low or fixed incomes.
(f) (d) The board staff shall further gather information on
state-of-the-art advances in medical technology, the cost
effectiveness of such advances and their impact on health care
advances in hospital and health care services and management
practices, and any other state-of-the-art concepts relating to
health care cost containment, health care improvement or other
issues the council board finds relevant and directs staff to
investigate. The board staff shall prepare and keep a register
of such information and update it on an annual basis.
(g) The board shall consider any recommendations of the council regarding additions or modifications to the board's rate
setting and cost containment responsibilities as well as other
responsibilities under the board's purview.
(h) The council shall make its own report to the board, the
governor and the Legislature within thirty days of the close of
each fiscal year. This report shall include summaries of all
meetings of the council and any public comments on board
decisions, together with any suggestions and policy
recommendations.
(i) (e) Council The data advisory group members shall be
reimbursed from the board funds for sums necessary to carry out
its responsibilities and for reasonable travel expenses to attend
council meetings.
§16-29B-8. Powers generally; budget expenses of the board.
(a) In addition to the powers granted to the board elsewhere
in this article, the board may:
(1) Adopt, amend and repeal necessary, appropriate and
lawful policy guidelines, rules and regulations in accordance
with article three, chapter twenty-nine-a of this code:
Provided, That subsequent amendments and modifications to any
rule promulgated pursuant to this article and not exempt from the
provisions of article three, chapter twenty-nine-a of this code
may be implemented by emergency rule;
(2) Hold public hearings, conduct investigations and require
the filing of information relating to matters affecting the costs
of health care services in hospitals subject to the provisions of
this article and may subpoena witnesses, papers, records,
documents and all other data in connection therewith. The board
may administer oaths or affirmations in any hearing or
investigation;
(3) Apply for, receive and accept gifts, payments and other
funds and advances from the United States, the state or any other
governmental body, agency or agencies or from any other private
or public corporation or person (with the exception of hospitals
subject to the provisions of this article, or associations
representing them, doing business in the state of West Virginia,
except in accordance with subsection (c) of this section), and
enter into agreements with respect thereto, including the
undertaking of studies, plans, demonstrations or projects. Any
such gifts or payments that may be received or any such
agreements that may be entered into shall be used or formulated
only so as to pursue legitimate, lawful purposes of the board,
and shall in no respect inure to the private benefit of a board
member, staff member, donor or contracting party;
(4) Lease, rent, acquire, purchase, own, hold, construct,
equip, maintain, operate, sell, encumber and assign rights or
dispose of any property, real or personal, consistent with the objectives of the board as set forth in this article: Provided,
That such acquisition or purchase of real property or
construction of facilities shall be consistent with planning by
the state building commissioner and subject to the approval of
the Legislature;
(5) Contract and be contracted with and execute all
instruments necessary or convenient in carrying out the board's
functions and duties; and
(6) Exercise, subject to limitations or restrictions herein
imposed, all other powers which are reasonably necessary or
essential to effect the express objectives and purposes of this
article.
(b) The board shall annually prepare a budget for the next
fiscal year for submission to the governor and the Legislature
which shall include all sums necessary to support the activities
of the board and its staff.
(c) Each hospital subject to the provisions of this article
shall be assessed by the board on a pro rata basis using the
gross revenues of each hospital as reported under the authority
of section eighteen of this article as the measure of the
hospital's obligation. The amount of such fee shall be
determined by the board except that in no case shall the
hospital's obligation exceed one tenth of one percent of its gross revenue. Such fees shall be paid on or before the first
day of July in each year and shall be paid into the state
treasury and kept as a special revolving fund designated "health
care cost review fund," with the moneys in such fund being
expendable after appropriation by the Legislature for purposes
consistent with this article. Any balance remaining in said fund
at the end of any fiscal year shall not revert to the treasury,
but shall remain in said fund and such moneys shall be expendable
after appropriation by the Legislature in ensuing fiscal years.
(d) During the board's start-up period, before the first day
of July, one thousand nine hundred eighty-four, each hospital
subject to the provisions of this article shall be assessed by
the board on a pro rata basis using the gross revenues of each
hospital as reported under the provisions of article five-f,
chapter sixteen of this code. Within sixty days of passage of
this article, the department of health shall notify each hospital
of the amount of such fee, which in no case shall exceed one
tenth of one percent of the gross revenue of each hospital, the
total amount of which fees shall not in any event exceed five
hundred thousand dollars during said start-up period. Such fees
shall be paid into the aforementioned special fund in two equal
installments, the first of which shall be paid on the first day
of April, one thousand nine hundred eighty-three, the second of
which shall be paid on the first day of January, one thousand nine hundred eighty-four.
(e) (d) Each hospital's assessment shall be treated as an
allowable expense by the board.
(f) (e) The board is empowered to withhold rate approvals,
certificates of need and rural health system loans and grants if
any such fees remain unpaid, unless exempted under subsection
(g), section four, article two-d of this chapter.
§16-29B-9. Annual report.
The board shall, within thirty days of the close of the
fiscal year, or from time to time as requested by the
Legislature, prepare and transmit to the governor and the
Legislature legislative oversight commission on health and human
resources accountability a report of its operations and
activities for the preceding fiscal year. This report shall
include summaries of all reports made by the hospitals subject to
this article, together with facts, suggestions and policy
recommendations the board considers necessary. The board shall,
after rate review and determination in accordance with the
provisions of this article, include such rate schedules in its
annual report or other reports as may be requested by the
Legislature.
§16-29B-11. Related programs.
In addition to carrying out its duties under this article, the board shall carry out and perform all its information
disclosure functions set forth in article five-f of this chapter
and its functions set forth in article two-d of this chapter,
including health planning, issuing grants and loans to
financially vulnerable health care entities located in
underserved areas, and the review and approval or disapproval of
capital expenditures for health care facilities or services. In
making decisions in the certificate of need review process, the
board shall be guided by the state health plan approved by the
governor.
§16-29B-17. Uniform system of financial reporting.
(a) The board shall develop and specify a uniform system of
reporting utilization, accounting and financial reporting,
including cost allocation methods by which hospitals shall record
their revenues, income, expenses, capital outlays, assets,
liabilities and units of service. The development and
specification process aforementioned shall be conducted in a
manner determined by the board to be most efficient for that
purpose notwithstanding the provisions of chapter twenty-nine-a
of this code. Each hospital shall adopt this uniform system for
the purpose of reporting utilization, costs and revenues to the
board effective for the fiscal year beginning on or after twelve
months from the effective date of this article.
(b) The board may provide for modification in the accounting
and reporting system in order to correctly reflect differences in
the scope or type of services and financial structures of the
various categories, sizes and types of hospitals and in a manner
consistent with the purposes of this article.
(c) The board may provide technical assistance to those
hospitals which request it and which evidence sufficient need for
assistance in the establishment of a data collection system to
the extent that funds are available to the board for this
purpose.
(d) The board shall, after consultation with health care
providers, purchasers, classes of purchasers and third-party
payors, adopt a mandatory form for reporting to the board, at its
request, medical diagnosis, treatment and other services rendered
to each purchaser by health care providers subject to the
provisions of this article.
(e) Following a public hearing, the board shall establish a
program to minimize the administrative burden on hospitals by
eliminating unnecessary duplication of financial and operational
reports; and to the extent possible, notwithstanding any other
law, coordinate reviews, reports and inspections performed by
federal, state, local and private agencies.
§16-29B-18. Health care providers' and related organizations' annual reporting.
(a) It shall be the duty of every hospital health care
provider which comes under the jurisdiction of this article or
article five-f of this chapter to file with the board the reports
required by such article five-f and the following financial
statements or reports in a form and at intervals specified by the
board, but at least annually:
(1) A balance sheet detailing the assets, liabilities and
net worth of the hospital for its preceding fiscal year;
(2) A statement of income and expenses for the preceding
fiscal year;
(3) A statement of services rendered and services available;
and
(4) Such other reports as the board may prescribe.
Where more than one licensed hospital is operated by the
reporting organization, the information required by this section
shall be reported for each hospital separately.
(b) It shall be the duty of every related organization to
file with the board, within thirty days from the effective date
of this section, the following financial statements or reports
for each of its three prior fiscal years:
(1) A balance sheet detailing the assets, liabilities and
net worth of the related organization;
(2) A statement of income and expenses;
(3) A statement of cash flows; and
(4) Such other information as the board may prescribe.
After the initial filing of the financial information
required by this subsection, every related organization shall
thereafter file annual financial reports with the board in a form
specified by the board.
(c) The annual financial statements filed pursuant to this
section shall be prepared in accordance with the system of
accounting and reporting adopted under section seventeen of this
article. The board may require attestations from responsible
officials of the hospitals or related organizations that such
reports have to the best of their knowledge been prepared
truthfully and in accordance with the prescribed system of
accounting and reporting.
(d) All reports filed under any provisions of this article,
except personal medical information personally identifiable to a
purchaser and any tax return, shall be open to public inspection
and shall be available for examination at the offices of the
board during regular business hours.
(e) Whenever a further investigation is deemed necessary or
desirable to verify the accuracy of any information set forth in
any statement, schedule or report filed by a hospital health care
provider or related organization under the provisions of this section, the board may require a full or partial audit of the
records of the hospital health care provider or related
organization.
§16-29B-19. Rate-setting powers generally.
(a) The board shall have power: (1) To initiate reviews and
investigations of hospital rates and establish and approve such
rates; (2) to initiate reviews and investigations of hospital
rates for specific services and the component factors which
determine such rates; (3) to initiate reviews and investigations
of hospital budgets and the specific components of such budgets;
and (4) to approve or disapprove hospital rates and budgets
taking into consideration the criteria set forth in section
twenty of this article.
(b) In the interest of promoting the most efficient and
effective use of hospital service, the board may adopt and
approve alternative methods of rate determination. The board may
also adopt methods of charges and payments of an experimental
nature which are in the public interest and consistent with the
purpose of this article.
(c) The board shall examine the need for an alternative to
the current rate-setting method as a means of controlling
hospital costs and submit the findings, recommendations and any
proposed drafts of legislation, if necessary, in a report to the legislative oversight commission on health and human resources
accountability and the governor on or before the first day of
August, one thousand nine hundred ninety-eight.
§16-29B-19a. Additional legislative directives; studies, finds and recommendations.
The board shall study, evaluate and analyze the health care
delivery system and the impact of emerging market forces and the
development of managed care on the delivery system and the impact
on cost, availability, access, utilization, quality and
coordination of care. The board shall also evaluate the impact
of changes in market forces and the delivery system on the
board's regulatory functions, particularly with regard to
certificate of need and rate regulation. On or before the first
day of November, one thousand nine hundred ninety-seven, the
board shall present to the governor and the Legislature a plan
outlining the method by which it will address the following
issues and will present its final findings and recommendations on
or before the first day of January, one thousand nine hundred
ninety-eight, addressing the following issues:
(a) The anticipated future cost of health care, the need for
services, the nature and type of services and the allocation of
such need for the general population;
(b) The impact of current regulatory and reimbursement practices on the development of managed care and an integrated
and coordinated health care delivery system, particularly on
primary and preventative care and access in rural areas;
(c) Whether the further development of regional and
community-based integrated and coordinated health care delivery
networks would be promoted by exemptions from certificate of need
and rate regulation authority of the board on a full or limited
basis and a description of special conditions that would
accompany any such exemptions;
(d) If the board finds that the exemptions described in
subdivision (c) above would promote regional networks, the
conditions, consideration and process for certification of those
networks and for addressing primary care, prevention, access in
rural areas, use of technology, long-term care and the special
needs of the elderly and disabled;
(e) The appropriateness of continuing the certificate of
need program beyond the thirtieth day of June, one thousand nine
hundred ninety-nine;
(f) The appropriate role, if any, of a certificate of need
or similar program in a competitive managed care environment;
(g) Barriers or obstacles, if any, presented by the
certificate of need program or standards in the state health
plan, or both, to health care providers' need to reduce excess
capacity, restructure and integrate the delivery of services in a competitive managed care environment;
(h) Certificate of need and similar programs in other states
and the current status of those programs;
(i) Alternatives for discontinuing, phasing-out or
continuing the certificate of need program;
(j) The effect, if any, that discontinuing the certificate
of need program would have on access to health care in rural
areas and by persons who are uninsured;
(k) The threshold at which managed care enrollment would
effect cost containment incentives and integrated systems
development sufficient to replace regulatory oversight through
the certificate of need or a similar program;
(l) The need to develop outcome data targeted to tertiary
services currently subject to the certificate of need program;
(m) If the board recommends that the certificate of need or
a similar program continues, the health care services and capital
expenditures that should be excluded from the program;
(n) The managed care enrollment threshold and any other
appropriate threshold at which the cost containment and
competition of a market-driven health care system would be
sufficient to replace rate review for hospitals; and
(o) How, under a market-driven system in which rates are
freely negotiated between third-party payors and health care
providers, fair reimbursement for serving persons who are uninsured or underinsured and for providing graduate medical
education can be ensured.
§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 rules and regulations
conflict with this requirement. On and after the effective date
of this section, a summary of every proposed contract, or
amendment to any existing 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, which reviews shall occur no less
frequently than each calendar quarter: (A) No If the contract
for the payment of patient care services between a purchaser or
third-party payor and a hospital which establishes discounts a discount to the purchaser or third-party payor, it shall not 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.
For purposes of this article, a risk-bearing contract is
reviewable as a discount contract and the amount computed as the
discount percentage by the provider on the board shall be the
approved amount of the discount. The difference, if any, between
the actual discount percentage and amount and the approved
amount, shall not be considered for rate-setting purposes; (B)
the board may promulgate rules, in accordance with the provisions
of section eight of this article, that establish the criteria for
review of discount contracts, which shall include that: (i) No
discount shall be approved by the board which constitutes an
amount below the actual cost to the hospital; The hospital shall
demonstrate to the board that (ii) 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 (iii) the discount will not result in a decrease
in its proportion the hospital's average number of medicare,
medicaid or uncompensated care patients served during the
previous three fiscal years; and In addition, the hospital shall
demonstrate to the board that (iv) the discount is based upon
criteria which constitutes a quantifiable economic benefit to the hospital. The board may define by rule what constitutes "cost"
in subparagraphs (i) and (ii); "purchaser" in subparagraph (iii);
and "economic benefit" in subparagraph (iv) of this paragraph.
Any rules promulgated pursuant to this subsection may be filed as
emergency rules. All information submitted to the board shall be
certified by the hospital administrator hospital's chief
executive officer and chief financial officer 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 a hospital's receipt of emergency
disaster funds from the federal government be included in the
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 the 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 in subsections (a)
and (b) of this section, 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 associated with patient care.
(d) Wages, salaries and benefits paid to or on behalf of nonsupervisory employees of hospitals subject to this article are
not subject to review unless the board first determines that the
wages, salaries and benefits may be unreasonably or uncustomarily
high or low. This exemption does not apply to accounting and
reporting requirements contained in this article, nor to any that
may be established by the board. The term "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 not be allowed by the board if the costs were
incurred subsequent to the eighth day of July, one thousand nine
hundred seventy-seven, unless they were exempt from review or
approved: (i) By the state health planning and development
agency prior to the first day of July, one thousand nine
hundred eighty-four; or (ii) thereafter, 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) A hospital shall file a complete rate application with
the board on an annual basis a minimum of sixty seventy-five days
prior to the beginning of its fiscal year. If the application is
filed and determined to be complete by the board sixty days prior
to the beginning of the hospital's fiscal year, and no hearing is
requested on the application, the board shall set the rates in
advance of the year during which they apply and shall not adjust
the rates for costs actually incurred: Provided, That if the
board does not establish rates by the beginning of the hospital's
fiscal year, and a hearing has not been requested, the board
shall establish rates retroactively to the beginning of the
hospital's fiscal year: Provided, however, That if the board
does not establish rates by the beginning of the hospital's
fiscal year, and a hearing has been requested, the board may
establish rates retroactively to the beginning of the fiscal
year. This subsection shall not apply to the procedure set forth
in subsection (c), section twenty-one of this article.
(h) All determinations, orders and decisions of the board
with respect to rates and revenues shall be prospective in
nature, except as provided in subsection (g) of this section,
when rates are not timely set.
(i) (h) 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) (i) 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 rule, impose reporting requirements to ensure that a
hospital does not exceed the rate of increases permitted in this
section.
(k) (j) 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.
(k) The board may require hospitals to file such additional
information as it deems necessary to evaluate a market-driven
system of rate setting.
§16-29B-23. Utilization review and quality assurance; quality
assurance advisory group.
(a) In order to avoid unnecessary or inappropriate
utilization of hospital health care services and to ensure high
quality hospital health care, the board shall establish a
utilization review and quality assurance program. The board
shall coordinate this program with utilization review and peer
review programs presently established in state agencies, hospital
services and health service corporations, hospitals or other
organizations.
(b) With the assistance of the above-mentioned entities, and
after public hearings, the board shall develop a plan for the
review, on a sampling basis, of the necessity of admissions,
length of stay and quality of care rendered at said hospitals.
(c) The board shall monitor identified problem areas and
shall impose such sanctions and provide such incentives as
necessary to ensure high quality and appropriate services and
utilization in hospitals under the jurisdiction of this article.
(d) To assist the board in its efforts under this section,
the board shall create a quality assurance advisory group and
appoint one of the board's members as chairman of the group. The
group shall be composed of representatives of consumers,
providers, payors and regulating agencies.
§16-29B-25. Public disclosure.
From time to time, the board shall engage in or carry out analyses and studies relating to health care costs, the financial
status of any health care provider subject to the provisions of
this article or any other appropriate related matters, and it
shall be empowered to publish and disseminate any information
which would be useful to members of the general public in making
informed choices about hospitals health care providers.
§16-29B-26. Exemptions from state antitrust laws.
Actions of the board shall be exempt from antitrust action
as provided in section five, article eighteen, chapter forty- seven of this code. Any actions of hospitals health care
providers under the board's jurisdiction, when made in compliance
with orders, directives, rules or regulations issued or
promulgated by the board, shall likewise be exempt.
§16-29B-27. Penalties for violations.
In addition to civil remedies set forth, any person or
hospital health care provider violating any provision of this
article or any valid order or rule and regulation lawfully
established hereunder shall be guilty of a misdemeanor and, upon
conviction thereof, shall be punished by a fine of not more than
one thousand dollars. Each day of a continuing violation after
conviction shall be considered a separate offense. No fines
assessed may be considered part of the hospital's costs in the
regulation of its rates.
§ 16-29B-28. Termination date.
Pursuant to the provisions of section four, article ten,
chapter four of this code, the health care cost review authority
shall continue to exist until the first day of July, one thousand
nine hundred ninety-seven ninety-nine, to allow for a completion
of an audit by the joint committee on government operations.
NOTE: The purpose of this bill is to change the name of
the Health Care Cost Review Authority to the Health Care
Authority and change its responsibilities in reaction to the
trends in the health care industry that may allow the development
of competitive markets in the delivery of health care services.
This bill increases efforts in the coordination of data
collection for use in utilization review and quality assurance.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.
§16-29B-19a has been completely rewritten; therefore,
underscoring and strike-throughs have been omitted.