PWF Consulting

A Review of the Joint Commission on Health Care’s 2000 Certificate of Public Need Deregulation Plan

Certificate of Public Need Task Force July 1, 2015

2PWF Consulting

A Review of JCHC’s 2000 COPN Deregulation Plan

• Legislative Authority and Directive

• Process

• Deregulation Plan

• Proposed Legislation and Budget Amendments

3PWF Consulting

Legislative Authority and Directive

• Senate Bill 337 (Martin), as introduced, would have repealed most of COPN program

• Approved legislation directed JCHC to develop a “transition plan” to eliminate COPN program – “shall begin on July 1, 2001, and be completed by July 1, 2004”

• Key provisions of plan to include:– Meeting health care needs of indigent and uninsured populations;– Establishing licensure standards and providing adequate oversight for

deregulated services;– Determining effect of deregulation on academic health centers, long-term

care facilities, rural hospitals; and– Monitoring effect of deregulation during and after transition period

4PWF Consulting

A Review of JCHC’s 2000 COPN Deregulation Plan

• Legislative Authority and Directive

• Process

• Deregulation Plan

• Proposed Legislation and Budget Amendments

5PWF Consulting

JCHC Process for Developing COPN Deregulation Plan • COPN Subcommittee formed, chaired by Senator Bolling

– 12 other members– Five Subcommittee meetings during summer and fall of 2000

• Facilitation process used to involve stakeholders in addressing key issues and developing deregulation plan– Three “key” stakeholders (MSV, VHHA, VHCA)– Independent Facilitator hired by JCHC and jointly paid by JCHC

and three key stakeholder groups– Numerous other groups participated in the facilitation, including

VCU, UVA, various physician specialty societies, Virginia Association of Health Plans, Virginia Poverty Law Center, Virginia Association of Regional Health Planning Agencies

• Approximately 40 meetings were held to develop plan

6PWF Consulting

Facilitation Workgroups

Workgroup Areas of Focus

Access• Access to care for uninsured and indigent citizens• All health care providers share in meeting the needs

of indigent citizens

Quality• Licensure standards for deregulated services• Adequate oversight of deregulated services to

protect public health and safety

Medical Education • Impact of deregulation on academic health centers

Fair Payment/Funding Workgroup

• Impact of deregulation on state-funded health care financing programs

• Market rates paid by state-funded health care financing programs

7PWF Consulting

A Review of JCHC’s 2000 COPN Deregulation Plan

• Legislative Authority and Directive

• Process

• Deregulation Plan

• Proposed Legislation and Budget Amendments

8PWF Consulting

Five Overall Goals of Deregulation Plan Adopted by Workgroup & JCHC

1. Offer more choices to patients with better information about the value of services in all care settings

2. Ensure access to essential health services for all Virginians, especially indigent and uninsured, is preserved

3. Provide strong quality protections that correspond to service intensity and/or patient risk, and apply similarly across all settings

4. Provide financial support for indigent care and medical education costs at the academic health centers

5. Ensure Commonwealth’s financing programs pay market rates

9PWF Consulting

Deregulation Plan to be Completed in Three Phases

Cost Impact

Complexity/Risk

Phase I• MRI• CT• PET• Non-cardiac nuclear

imaging• Lithotripsy

Phase II• Cardiac catheterization• Radiation therapy• Gamma knife surgery

Phase III• Ambulatory surgery

centers• OB Services• Neonatal special care• Organ transplants• Open-heart surgery

10PWF Consulting

Deregulation Plan Retained COPN Requirements for Certain Facilities

• Nursing Homes

• Hospital beds

• Mental Health and Substance Use Disorder Facilities

11PWF Consulting

Implementation of Each Phase Contingent on Specific Actions

• Certain Quality and Data Reporting provisions are applicable in all three phases– New licensure systems for each deregulated service must be in

place and applied equally across all care settings– Providers of newly deregulated services are required to submit

claims data, additional quality outcome information for selected high risk procedures (if applicable), and annual financial information on level of indigent care

12PWF Consulting

Phase I• MRI• CT• PET• Non-cardiac

nuclear imaging• Lithotripsy

Specific Actions to be Accomplished in Phase I

• Legislation codifies state policy to fully fund indigent care at academic health centers– VCU: $12.5 million (GF) – UVA: $2.3 million (GF)– EVMS: $7.1 million (GF)

• Initial phase of improving adequacy of Medicaid hospital reimbursement (2000 JLARC study)– $12 million (GF)

• Initial phase of eliminating faculty-earned clinical revenues to fund core cost of undergraduate medical education– $6.5 million (GF)

• JLARC study of Medicaid physician reimbursement

Note: Items shown above reflect only the major provisions to be accomplished

13PWF Consulting

Phase I• MRI• CT• PET• Non-cardiac

nuclear imaging• Lithotripsy

Specific Actions to be Accomplished in Phase II• Continued action to fully fund indigent care at academic

health centers• Initial phase of increasing Medicaid eligibility for caretaker

adults (from 32%-66% FPL)– $27 million (GF)

• Initial phase of increasing Medicaid eligibility for ABDs (from 80%-90% FPL)– $11 million (GF)

• 2nd phase of improving adequacy of Medicaid hospital reimbursement (2000 JLARC study)– $12 million (GF) (additional cost of above Phase I)

• 2nd phase of eliminating faculty-earned clinical revenues to fund core cost of undergraduate medical education– $6.5 million (GF) (additional cost above Phase I)

Note: Items shown above reflect only the major provisions to be accomplished

Phase II• Cardiac

catheterization• Radiation therapy• Gamma knife

surgery

14PWF Consulting

Phase I• MRI• CT• PET• Non-cardiac

nuclear imaging• Lithotripsy

Specific Actions to be Accomplished in Phase III• Continued action to fully fund indigent care

at academic health centers• 2nd phase of increasing Medicaid eligibility

for caretaker adults (from 66%-100% FPL)– $27 million (GF) (additional costs above Phase II)

• 2nd phase of increasing Medicaid eligibility for ABDs (from 90%-100% FPL)– $11 million (GF) (additional costs above Phase II)

Note: Items shown above reflect only the major provisions to be accomplished

Phase III• Ambulatory surgery

centers• OB Services• Neonatal special

care• Organ transplants• Open-heart surgery

15PWF Consulting

Summary of Fiscal Impact of Deregulation Plan

General Funds (Millions)Incremental Amounts

Funding Provision Phase I Phase II Phase III

Indigent Care (AHCs) $22.0Full funding continues

(Amt. unknown)Full funding continues

(Amt. unknown)

Medicaid (Caretaker Adult Coverage) $27.0 $27.0

Medicaid (ABD Coverage) $11.0 $11.0

Undergraduate Medical Education $6.5 $6.5

Medicaid Reimbursement

(Hospitals) $12.0 $12.0

Medicaid Reimbursement

(Physicians) Amt. Unknown Amt. Unknown

Total $40.5 $56.5 $38.0

16PWF Consulting

A Review of JCHC’s 2000 COPN Deregulation Plan

• Legislative Authority and Directive

• Process

• Deregulation Plan

• Proposed Legislation and Budget Amendments

17PWF Consulting

JCHC Proposed Legislation to Implement Deregulation Plan; Companion Bills Failed

• Public comments, received from 308 individuals and organizations, generally supported the JCHC Deregulation Plan; no clear opposition

• House Bill 2155 (Morgan) and SB 1084 (Bolling) were introduced to implement deregulation plan– Budget amendments to fund each component of the plan were submitted in

both houses

• Legislation was reported and re-referred by House HWI (20-2) and Senate Education & Health (10-0-2); bills were left in Appropriations and Finance

• Deregulation plan was not implemented