ENGROSSED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 458
(By Senators Tomblin, Mr. President, and Buckalew,
By Request of the Executive)
____________
[Originating in the Committee on Health and Human Resources;
reported April 1, l997.]
____________
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 of said article, all relating to the West Virginia
health care authority; including additional legislative
findings and purpose; changing the agency's title; amending
and adding 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 providers; 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of the code of West Virginia, one thousand nine hundred thirty- one, as amended, be repealed; and that sections one, two, three,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. For purposes of this article, "health
care provider" shall not include the private office practice of
one or more health care professionals licensed to practice in
this state pursuant to the provisions of chapter thirty of this
code.
(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
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 payers;
(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. Advisory council.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 of state
agencies 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. Certificate of need program. 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 accounts and financing: 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. Hospital and related organizations' Financial
Annual reporting.
(a) It shall be the duty of every
hospital health care
provider which comes under the jurisdiction of this article and
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 findings and directives
Additional legislative directives; studies,
findings and recommendations.
The Legislature hereby finds and declares that a cost-based
rate review system is more effective in containing the cost of
acute care hospital services than a revenue-based system.
Accordingly, the Legislature directs the board to create a task
force to advise the board on the development of a methodology to
implement a cost-based rate review system. One member of the
task force shall be designated by the governor, one member shall
be designated by the president of the Senate, one member shall be designated by the speaker of the House of Delegates, and six
members of the task force shall be appointed by the board. The
board shall develop a cost-based rate review system and shall
adopt regulations to implement the cost-based rate review
methodology by the first day of July, one thousand nine hundred
ninety-two: Provided, That the board shall file a report with
the governor, the president of the Senate, and the speaker of the
House of Delegates by the first day of December, one thousand
nine hundred ninety-one, which shall outline the status of the
development of the cost-based rate review methodology.
Regulations promulgated by the board to implement the cost-based
rate review system shall be exempt from the requirements of
article three, chapter twenty-nine-a of this code. Upon
implementation of the regulations, the task force shall be
dissolved.
The Legislature further directs the board to implement the
utilization review and quality assurance program established by
section twenty-three of this article.
The Legislature further finds and directs that the hospital
cost containment methodology - phase one adopted by the board
effective the twenty-eighth day of May, one thousand nine hundred
eighty-five, and approved by the Legislature effective the eighth
day of March, one thousand nine hundred eighty-six, shall remain in effect during the development period of the cost based rate
review system.
The Legislature further finds and declares that discounts to
third-party payers by hospitals have contributed to cost shifting
thereby increasing the cost of acute care hospital services to
purchasers and other third-party payers. Accordingly, the
Legislature directs that every hospital who contracts with a
third-party payor for the payment of patient care services shall
file with the board a copy of every contract in force on the
first day of January, one thousand nine hundred ninety-one. No
third-party payor shall be entitled to a greater discount than
the discount specified in any contract in effect on the first day
of January, one thousand nine hundred ninety-one, unless a
subsequent contract is approved by the board pursuant to the
provisions of section twenty of this article.
The Legislature further directs the board to examine the
problems associated with health care costs in this state,
including those associated with discount contracts and the
shifting of costs, and file a report with the governor, the
president of the Senate, and the speaker of House of Delegates on
or before the first day of January, one thousand nine hundred
ninety-two, which outlines the problems and which includes
recommendations for legislative action to resolve the problems
identified. This report shall include a separate examination of those problems associated with hospitals located within twenty
miles of the borders of this state and separate recommendations
on resolving those problems.
(a) The Legislature finds and declares that changing market
forces require periodic changes in the regulatory structure for
health care providers and hereby directs the board to study the
following:
(1) The certificate of need program, including the effect of
any changes on managed care and access for uninsured and rural
consumers; determining which services or capital expenditures
should be exempt and why; and the status of similar programs in
other states;
(2) The hospital rate-setting methodology, including the
need for hospital rate-setting and the development of
alternatives to the cost-based reimbursement methodology;
(3) Managed care markets, including the need for regulatory
programs in managed care markets; and
(4) Barriers or obstacles, if any, presented by the
certificate of need program or standards in the state health plan
to health care providers' need to reduce excess capacity,
restructure services and integrate the delivery of services.
(b) The board may form task forces to assist it in
addressing these issues and it shall prepare a report on its
findings and recommendations, which is to be filed with the governor, the president of the Senate and the speaker of the
House of Delegates on or before the first day of October, one
thousand nine hundred ninety-eight, identifying each problem and
recommendation with specificity and the effect of each
recommendation on cost, access and quality of care.
(c) The board shall report quarterly to the legislative
oversight commission on health and human resources accountability
regarding the appointment, direction and progress of the studies.
§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
hospital 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.
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