Senate Bill No. 138
(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; prospective rate setting; required approvals and
expedited reviews for certain hospitals; excluding swing
beds and respite and personal care services from rate determination; requiring the health care cost review
authority board to approve requests for rate increases by
low-volume private-pay hospitals and defining low-volume
private-pay hospitals; and requiring submission of
information to the health care cost review authority.
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.
(h) All determinations, orders and decisions of the board
with respect to rates and revenues shall be prospective in
nature.
(i) No hospital may charge for services at rates in excess
of those established in accordance with the requirements of and
procedures set forth in this article.
(j) Notwithstanding any other provision of this article, the
board shall approve all requests for rate increases by hospitals
which are licensed for one hundred beds or less and which are not
located in a standard metropolitan statistical area where the
rate of increase is equal to or less than the lowest rate of
inflation as established by a recognized inflation index for either the national or regional hospital industry. The board
may, by regulation, impose reporting requirements to ensure that
a hospital does not exceed the rate of increases permitted
herein.
(k) Notwithstanding any other provision of this article, the
board shall develop an expedited review process applicable to all
hospitals licensed for more than one hundred beds or that are
located in a standard metropolitan statistical area for rate
increase requests which may be based upon a recognized inflation
index for the national or regional hospital industry.
(l) Notwithstanding any other provision of this article to
the contrary, any acute care beds that a hospital has designated
as swing beds and any respite or personal care services provided
by a hospital shall be excluded by the board for rate
determination purposes. For the purposes of this subsection,
swing beds are as defined in the state health plan.
(m) Notwithstanding any other provision of this article to
the contrary, the board shall approve any request for a rate
increase by a low-volume private-pay hospital: Provided, That
the rate of increase requested shall be 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. For
the purposes of this section, "low-volume private-pay hospital"
means a hospital that receives seventy-five percent or more of
its gross patient revenues from (i) medicare, medicaid and other
governmental payors and (ii) nongovernmental payors pursuant to
contracts providing for capitated, per diem or other payments not
related to the hospital's charges. Low-volume private-pay
hospitals shall be required to file rate application forms under
the cost-based rate methodology once every three years but shall
be entitled to receive rate increases less than the rate of
inflation without undergoing the rate determination process. Any
hospital subject to rate increases pursuant to this provision
shall be required to submit all information required to be
submitted with the annual report to the board.
NOTE: The purpose of this bill is to exclude swing beds and
respite and personal care services from rate determination by the
Health Care Cost Review Authority and to require HCCRA to approve
rate increases less than or equal to inflation by low-volume
private-pay hospitals, which are nevertheless required to submit
all information with their annual reports to HCCRA.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language that would be added.