Senate Bill No. 137
(By Senators Wagner and Bailey)
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[Introduced January 25, 1996; referred to the Committee
on Health and Human Resources; and then to the Committee on
Finance.]
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A BILL to amend and reenact section twenty, article twenty-nine-b,
chapter sixteen of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, relating to the criteria
for the health care cost review authority board's approval of
hospital rates; appropriateness of projected gross revenues
and net revenues over expenditures; factors relevant to
applying the criteria, wages, salaries and benefits of
employees; reimbursement only for capital and operating costs
with certificate of need approval; licensing; rate setting;
required approvals and expedited reviews for certain
hospitals; and requiring retroactive application of the rates
if not timely set.
Be it enacted by the Legislature of West Virginia:
That section twenty, article twenty-nine-b, chapter sixteen of
the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted to read as follows:
ARTICLE 29B. HEALTH CARE COST REVIEW AUTHORITY.
§16-29B-20. Rate determination.
(a) Upon commencement of review activities, no rates may be
approved by the board nor payment be made for services provided by
hospitals under the jurisdiction of the board by any purchaser or
third-party payor to or on behalf of any purchaser or class of
purchasers unless:
(1) The costs of the hospital's services are reasonably
related to the services provided and the rates are reasonably
related to the costs;
(2) The rates are equitably established among all purchasers
or classes of purchasers within a hospital without discrimination
unless federal or state statutes or regulations conflict with this
requirement. On and after the effective date of this section, a
summary of every proposed contract for the payment of patient care
services between a purchaser or third-party payor and a hospital
shall be filed by the hospital with its rate application for review
by the board. No contract for the payment of patient care services
between a purchaser or third-party payor and a hospital which
establishes discounts to the purchaser or third-party payor shall
take effect until it is approved by the board. The board shall
approve or deny the proposed contract within the overall rate
review period established in section twenty-one of this article.
No discount shall be approved by the board which constitutes an amount below the actual cost to the hospital.
The hospital shall demonstrate to the board that the cost of
any discount contained in the contract will not be shifted to any
other purchaser or third-party payor. The hospital shall further
demonstrate that the discount will not result in a decrease in its
proportion of medicare, medicaid or uncompensated care patients.
In addition, the hospital shall demonstrate to the board that the
discount is based upon criteria which constitutes a quantifiable
economic benefit to the hospital. All information submitted to the
board shall be certified by the hospital administrator as to its
accuracy and truthfulness;
(3) The rates of payment for medicaid are reasonable and
adequate to meet the costs which must be incurred by efficiently
and economically operated hospitals subject to the provisions of
this article. The rates shall take into account the situation of
hospitals which serve disproportionate numbers of low income
patients and assure that individuals eligible for medicaid have
reasonable access, taking into account geographic location and
reasonable travel time, to inpatient hospital services of adequate
quality;
(4) The rates are equitable in comparison to prevailing rates
for similar services in similar hospitals as determined by the
board; and
(5) In no event shall a hospital's receipt of emergency
disaster funds from the federal government be included in such hospital's gross revenues for either rate-setting or assessment
purposes.
(b) In the interest of promoting efficient and appropriate
utilization of hospital services, the board shall review and make
findings on the appropriateness of projected gross revenues for a
hospital as such revenues relate to charges for services and
anticipated incidence of service. The board shall further render
a decision as to the amount of net revenue over expenditures that
is appropriate for the effective operation of the hospital.
(c) When applying the criteria set forth above, the board
shall consider all relevant factors, including, but not limited to,
the following: The economic factors in the hospital's area; the
hospital's efforts to share services; the hospital's efforts to
employ less costly alternatives for delivering substantially
similar services or producing substantially similar or better
results in terms of the health status of those served; the
efficiency of the hospital as to cost and delivery of health care;
the quality of care; occupancy level; a fair return on invested
capital, not otherwise compensated for; whether the hospital is
operated for profit or not for profit; costs of education; and
income from any investments and assets not associated with patient
care, including, but not limited to, parking garages, residences,
office buildings, and income from related organizations and
restricted funds whether or not so associated.
(d) Wages, salaries and benefits paid to or on behalf of nonsupervisory employees of hospitals subject to this article shall
not be subject to review unless the board first determines that
such wages, salaries and benefits may be unreasonably or
uncustomarily high or low. Said exemption does not apply to
accounting and reporting requirements contained in this article,
nor to any that may be established by the board. "Nonsupervisory
personnel", for the purposes of this section, means, but is not
limited to, employees of hospitals subject to the provisions of
this article who are paid on an hourly basis.
(e) Reimbursement of capital and operating costs for new
services and capital projects subject to article two-d of this
chapter shall not be allowed by the board if such costs were
incurred subsequent to the eighth day of July, one thousand nine
hundred seventy-seven, unless they were exempt from review or
approved (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) Rates shall be set by the board in advance of the year during which they apply except for the procedure set forth in
subsection (c), section twenty-one of this article and shall not be
adjusted for costs actually incurred: Provided, That if the board
does not timely set the rates so that they can be put into effect
by the hospital at the beginning of its fiscal year, the rates
shall apply retroactively to the beginning of the fiscal year.
(h) All determinations, orders and decisions of the board with
respect to rates and revenues shall be prospective in nature:
Provided, That if the board does not timely set the rates so that
they can be put into effect by the hospital at the beginning of its
fiscal year, the rates shall apply retroactively to the beginning
of the fiscal year.
(i) No hospital may charge for services at rates in excess of
those established in accordance with the requirements of and
procedures set forth in this article.
(j) Notwithstanding any other provision of this article, the
board shall approve all requests for rate increases by hospitals
which are licensed for one hundred beds or less and which are not
located in a standard metropolitan statistical area where the rate
of increase is equal to or less than the lowest rate of inflation
as established by a recognized inflation index for either the
national or regional hospital industry. The board may, by
regulation, impose reporting requirements to ensure that a hospital
does not exceed the rate of increases permitted herein.
(k) Notwithstanding any other provision of this article, the board shall develop an expedited review process applicable to all
hospitals licensed for more than one hundred beds or that are
located in a standard metropolitan statistical area for rate
increase requests which may be based upon a recognized inflation
index for the national or regional hospital industry.
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(NOTE: The purpose of this bill is to require that, if the
Health Care Cost Review Authority Board does not timely set a
hospital's rates, so that they can be put into effect by the
hospital at the beginning of its fiscal year, the rates shall apply
retroactively to the beginning of the hospital's fiscal year.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.)
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FINANCE COMMITTEE AMENDMENTS
On page two, section twenty, line twelve, after the words "statutes
or" by inserting the words "rules and";
On page three, section twenty, line twenty-three, by striking
out the word "such" and inserting in lieu thereof the word "the";
On page four, section twenty, line three, by striking out the
word "such" and inserting in lieu thereof the word "the";
On page four, section twenty, line seven, by striking out the
word "above" and inserting in lieu thereof the words "in
subsections (a) and (b) of this section";
On page four, section twenty, line twenty-one, by striking out
the word "so";
On page four, section twenty, line twenty-two, after the word
"associated" by adding the words "with patient care";
On page four, section twenty, line twenty-five, by striking
out the word "shall" and inserting in lieu thereof the word "are";
On page four, section twenty, line twenty-five, by striking
out the word "be";
On page four, section twenty, line twenty-six, by striking out
the word "such" and inserting the word "the";
On page five, section twenty, line one, by striking out the
word "Said" and inserting in lieu thereof the word "This";
On page five, section twenty, line three, before the word
"Nonsupervisory" by inserting the words "The term";
On page five, section twenty, line nine, by striking out the
word "such" and inserting in lieu thereof the word "the";
On page five, section twenty, line twenty-three, by striking
out all of subsection (g) and inserting in lieu thereof a new
subsection (g) to read as follows:
"(g) A hospital shall file a complete rate application with
the board on an annual basis a minimum of sixty 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";
On page six, section twenty, line seven, after the word
"nature" by changing the colon to a comma, and by striking out the
remainder of the subsection and inserting in lieu thereof the
words "except as provided in subsection (g) of this section, when
rates are not timely set.";
On page six, section twenty, line twenty-one, by striking out
the word "regulation" and inserting in lieu thereof the word
"rule";
And,
On page six, section twenty, line twenty three, by striking
out the word "herein" and inserting in lieu thereof the words "in
this section".