H. B. 2723
(By Delegates Walters, Amores, Seacrist
Hunt, Kelley, Hall and Miller)
[Introduced January 14, 1998; referred to the
Committee on Finance.]
A BILL to amend and reenact section four, article two-d, chapter
sixteen of the code of West Virginia, one thousand nine
hundred thirty-one, as amended; to amend section ten,
article twenty-nine-b of said chapter; and to further amend
said article by adding thereto a new section, designated
section ten-a, all relating to exemption from certificate of
need program; exempting acute care facilities from the
jurisdiction of the health care cost review authority;
providing for the appointment of a consultant to monitor and
analyze the effects of deregulation of exempted acute care
facilities; duties of the consultant; requiring the
consultant to submit a detailed report to the joint
committee on government and finance.
Be it enacted by the Legislature of West Virginia:
That section four, article two-d, chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted; that section ten, article
twenty-nine-b of said chapter be amended and reenacted; and that
said article twenty-nine-b be further amended by adding thereto
a new section, designated section ten-a, all to read as follows:
ARTICLE 2D. CERTIFICATE OF NEED.
§16-2D-4. Exemptions from certificate of need program.
(a) Except as provided in subdivision (h), section three of
this article, nothing in this article or the rules and
regulations adopted pursuant to the provisions of this article
may be construed to authorize the licensure, supervision,
regulation or control in any manner of the following:
(1) Private office practice of any one or more health
professionals licensed to practice in this state pursuant to the
provisions of chapter thirty of this code: Provided, That such
the exemption from review of private office practice shall may
not be construed to include such practices where major medical
equipment otherwise subject to review under the provisions of
this article is acquired, offered or developed: Provided,
however, That such the exemption from review of private office
practice shall may not be construed to include the acquisition,
offering or development of one or more health services, including
ambulatory surgical facilities or centers, lithotripsy, magnetic resonance imaging and radiation therapy by one or more health
professionals. The state agency shall adopt rules pursuant to
section eight of this article which specify the health services
acquired, offered or developed by health professionals which are
subject to certificate of need review;
(2) Dispensaries and first-aid stations located within
business or industrial establishments maintained solely for the
use of employees: Provided, That such the facility does not
contain inpatient or resident beds for patients or employees who
generally remain in the facility for more than twenty-four hours;
(3) Establishments, such as motels, hotels and
boardinghouses, which provide medical, nursing personnel and
health related services;
(4) The remedial care or treatment of residents or patients
in any home or institution conducted only for those who rely
solely upon treatment by prayer or spiritual means in accordance
with the creed or tenets of any recognized church or religious
denomination;
(5) The creation of new primary care services located in
communities that are underserved with respect to primary care
services: Provided, That to qualify for this exemption, an
applicant must be a community-based nonprofit organization with
a community board that provides or will provide primary care services to people without regard to ability to pay: Provided,
however, That the exemption from certificate of need review of
new primary care services provided by this subdivision shall may
not include the acquisition, offering or development of major
medical equipment otherwise subject to review under the
provisions of this article or to include the acquisition,
offering or development of CT scanners, ambulatory surgical
facilities, lithotripsy, magnetic resonance imaging or radiation
therapy. The office of community and rural health services shall
define which services constitute primary care services for
purposes of this subdivision, and shall, to prevent duplication
of primary care services, determine whether a community is
underserved with respect to certain primary care services within
the meaning of this subdivision. Any organization planning to
qualify for an exemption pursuant to this subdivision shall
submit to the state agency a letter of intent describing the
proposed new services and area of service; and
(6) The creation of birthing centers by nonprofit primary
care centers that have a community board and provide primary care
services to people in their community without regard to ability
to pay, or by nonprofit hospitals with less than one hundred
licensed acute care beds: Provided, That to qualify for this
exemption, an applicant must be located in an area that is underserved with respect to low-risk obstetrical services:
Provided, however, That if a primary care center attempting to
qualify for this exemption is located in the same county as a
hospital that is also eligible for this exemption, or if a
hospital attempting to qualify for this exemption is located in
the same county as a primary care center that is also eligible
for this exemption, then at least one primary care center and at
least one hospital from said the county shall be is required to
collaborate for the provision of services at a birthing center in
order to qualify for this exemption: Provided further, That for
purposes of this subsection, a "birthing center" is a short-stay
ambulatory health care facility designed for low-risk births
following normal uncomplicated pregnancy. Any primary care
center or hospital planning to qualify for an exemption pursuant
to this subdivision shall submit to the state agency a letter of
intent describing the proposed birthing center and area of
service; and
(7) Beginning on the first day of July, one thousand nine
hundred ninety-seven, all acute care facilities operating in any
metropolitan statistical area, as defined by the federal health
care finance administration, in this state, in which one or more
counties in the metropolitan statistical area has four or more
acute care hospitals, and the counties wherein they are situated: Provided, That the exemption provided for hereunder shall
terminate on the first day of July, two thousand two, unless
further authorized by the Legislature: Provided, however, That
nothing contained in this subdivision may be construed as
exempting any mental health facility from the provisions of this
article.
(b) (1) A certificate of need is not required for the
offering of an inpatient institutional health service or the
acquisition of major medical equipment for the provision of an
inpatient institutional health service or the obligation of a
capital expenditure for the provisions of an inpatient
institutional health service, if with respect to such the
offering, acquisition or obligation, the state agency has, upon
application under subdivision (2) of this subsection, granted an
exemption to:
(A) A health maintenance organization or a combination of
health maintenance organizations if: (i) The organization or
combination of organizations has, in the service area of the
organization or the service areas of the organizations in the
combination, an enrollment of at least fifty thousand
individuals; (ii) the facility in which the service will be
provided is or will be geographically located so that the service
will be reasonably accessible to such the enrolled individuals; and (iii) at least seventy-five percent of the patients who can
reasonably be expected to receive the institutional health
service will be individuals enrolled with such the organization
or organizations in the combination;
(B) A health care facility if: (i) The facility primarily
provides or will provide inpatient health services; (ii) the
facility is or will be controlled, directly or indirectly, by a
health maintenance organization or a combination of health
maintenance organizations which has, in the service area of the
organization or service areas of the organizations in the
combination, an enrollment of at least fifty thousand
individuals; (iii) the facility is or will be geographically
located so that the service will be reasonably accessible to such
the enrolled individuals; and (iv) at least seventy-five percent
of the patients who can reasonably be expected to receive the
institutional health service will be individuals enrolled with
such the organization or organizations in the combination; or
(C) A health care facility, or portion thereof, if: (i) The
facility is or will be leased by a health maintenance
organization or combination of health maintenance organizations
which has, in the service area of the organization or the service
areas of the organizations in the combination, an enrollment of
at least fifty thousand individuals and on the date the application is submitted under subdivision (2) of this
subsection, at least fifteen years remain in the term of the
lease; (ii) the facility is or will be geographically located so
that the service will be reasonably accessible to such the
enrolled individuals; and (iii) at least seventy-five percent of
the patients who can reasonably be expected to receive the new
institutional health service will be individuals enrolled with
such the organization.
(2) (A) A health maintenance organization, combination of
health maintenance organizations or other health care facility is
not exempt under subdivision (1) of this subsection from
obtaining a certificate of need unless:
(i) It has submitted, at such a time and in such a form and
manner as the state agency shall prescribe, an application for
such the exemption to the state agency;
(ii) The application contains such information respecting
the organization, combination or facility and the proposed
offering, acquisition or obligation as the state agency may
require to determine if the organization or combination meets the
requirements of subdivision (1) of this subsection or the
facility meets or will meet such the requirements; and
(iii) The state agency approves such the application.
(B) The state agency shall approve an application submitted under paragraph (A) of this subdivision, if it determines that
the applicable requirements of subdivision (1) of this subsection
are met or will be met on the date the proposed activity for
which an exemption was requested will be undertaken.
(3) A health care facility, or any part thereof, or medical
equipment with respect to which an exemption was granted under
subdivision (1) of this subsection, may not be sold or leased and
a controlling interest in such the facility or equipment or in a
lease of such the facility or equipment may not be acquired and
a health care facility described in paragraph (C) of said
subdivision (1) of this subsection, which was granted an
exemption under said subdivision, may not be used by any person
other than the lessee described in paragraph (C) of said
subdivision (1) of this subsection, unless:
(A) The state agency issues a certificate of need approving
the sale, lease, acquisition or use; or
(B) The state agency determines, upon application, that the
entity to which the facility or equipment is proposed to be sold
or leased, which intends to acquire the controlling interest in
or to use the facility is:
(i) A health maintenance organization or a combination of
health maintenance organizations which meets the enrollment
requirements of subparagraph (i), paragraph (A), subdivision (1) of this subsection, and with respect to such the facility or
equipment, the entity meets the accessibility and patient
enrollment requirements of subparagraphs (ii) and (iii) of said
paragraph (B), subdivision (1) of this subsection; or
(ii) A health care facility which meets the inpatient,
enrollment and accessibility requirements of subparagraphs (i),
(ii) and (iii), paragraph (B), subdivision (1) of this subsection
and with respect to its patients meets the enrollment
requirements of subparagraph (iv) of said paragraph (B).
(4) In the case of a health maintenance organization or an
ambulatory care facility or health care facility which ambulatory
or health care facility is controlled, directly or indirectly, by
a health maintenance organization or a combination of health
maintenance organizations, the certificate of need requirements
apply only to the offering of inpatient institutional health
services, the acquisition of major medical equipment, and the
obligation of capital expenditures for the offering of inpatient
institutional health services and then only to the extent that
such offering, acquisition or obligation is not exempt under
subdivision (1) of this subsection.
(5) The state agency shall establish the period within which
approval or disapproval by the state agency of applications for
exemptions under subdivision (1) of this subsection shall be made.
(c) (1) A health care facility is not required to obtain a
certificate of need for the acquisition of major medical
equipment to be used solely for research, the addition of health
services to be offered solely for research, or the obligation of
a capital expenditure to be made solely for research if the
health care facility provides the notice required in subdivision
(2) of this subsection, and the state agency does not find,
within sixty days after it receives such the notice, that the
acquisition, offering or obligation will, or will have the effect
to:
(A) Affect the charges of the facility for the provision of
medical or other patient care services other than the services
which are included in the research;
(B) Result in a substantial change to the bed capacity of
the facility; or
(C) Result in a substantial change to the health services of
the facility.
(2) Before a health care facility acquires major medical
equipment to be used solely for research, offers a health service
solely for research or obligates a capital expenditure solely for
research, such the health care facility shall notify in writing
the state agency of such the facility's intent and the use to be made of such the medical equipment, health service or capital
expenditure.
(3) If major medical equipment is acquired, a health service
is offered or a capital expenditure is obligated and a
certificate of need is not required for such the acquisition,
offering or obligation as provided in subdivision (1) of this
subsection, such the equipment or service or equipment or
facilities acquired through the obligation of such capital
expenditure may not be used in such a manner as to have the
effect or to make a change described in paragraphs (A), (B) and
(C) of said subdivision (1) of this subsection unless the state
agency issues a certificate of need approving such the use.
(4) For purposes of this subsection, the term "solely for
research" includes patient care provided on an occasional and
irregular basis and not as part of a research program.
(d) (1) The state agency may adopt regulations pursuant to
section eight of this article to specify the circumstances under
which a certificate of need may not be required for the
obligation of a capital expenditure to acquire, either by
purchase or under lease or comparable arrangement, an existing
health care facility: Provided, That a certificate of need shall
be required for the obligation of a capital expenditure to
acquire, either by purchase or under lease or comparable arrangement, an existing health care facility if:
(A) The notice required by subdivision (2) of this
subsection is not filed in accordance with that subdivision with
respect to such the acquisition; or
(B) The state agency finds, within thirty days after the
date it receives a notice in accordance with subdivision (2) of
this subsection, with respect to such the acquisition, that the
services or bed capacity of the facility will be changed by
reason of said the acquisition.
(2) Before any person enters into a contractual arrangement
to acquire an existing health care facility, such the person
shall notify the state agency of his or her intent to acquire the
facility and of the services to be offered in the facility and
its bed capacity. Such The notice shall be made in writing and
shall be made at least thirty days before contractual
arrangements are entered into to acquire the facility with
respect to which the notice is given. The notice shall contain
all information the state agency requires in accordance with
subsections (e) and (s), section seven of this article.
(e) The state agency shall adopt regulations, pursuant to
section eight of this article, wherein criteria are established
to exempt from review the addition of certain health services,
not associated with a capital expenditure, that are projected to entail annual operating costs of less than the expenditure
minimum for annual operating costs. For purposes of this
subsection, "expenditure minimum for annual operating costs"
means three hundred thousand dollars for the first twelve months
following the effective date of this section and for each
twelve-month period thereafter, the state agency may, by
regulations adopted pursuant to section eight of this article,
adjust the expenditure minimum for annual operating costs to
reflect the impact of inflation.
(f) The state agency shall adopt rules within ninety days of
the effective date of the amendment of this section in the year
one thousand nine hundred ninety, pursuant to section eight of
this article to specify the circumstances under which and the
procedures by which a certificate of need may not be required for
shared services between two or more acute care facilities
providing services made available through existing technology
that can reasonably be mobile. The state agency shall specify
the types of items in the regulations and under what
circumstances mobile MRI and mobile lithotripsy may be so
exempted from review. In no case, however, will mobile cardiac
catheterization be exempted from certificate of need review. In
addition, if the shared services mobile unit proves less cost
effective than a fixed unit, the acute care facility will not be exempted from certificate of need review.
On a yearly basis, the state agency shall review existing
technologies to determine if other shared services should be
included under this exemption.
(g) This subsection applies only to hospitals designated as
rural primary care hospitals by West Virginia office of rural
health policy in conformance with requirements of the health care
financing administration of the federal department of health and
human services under Section 1920 of Public Law 101-239, Section
6000(g) of the federal Omnibus Budget Reconciliation Act of 1989.
A hospital, designated as a rural primary care hospital, in
accordance with final rules issued by the health care financing
administration, shall undergo a reduction in its number of
licensed acute care beds as determined by the office of rural
health policy.
The office of rural health policy shall notify the health
care cost review authority of such the designation including the
number of staffed and operated beds immediately prior to
designation and the number of acute care beds certified by the
health care financing administration.
A rural primary care hospital may reject this designation
any time within twenty-four calendar months, beginning from the
date of designation by the office of rural health policy. If a hospital chooses to reject this designation, it may do so upon
written notification to the office of rural health policy and the
health care cost review authority. If such the designation is
rejected by a rural primary care hospital, license restoration,
not to exceed the number of acute care beds staffed and operated
by the hospital immediately prior to receiving designation as a
rural primary care hospital, shall be exempt from the certificate
of need program review.
Within twenty-five months from designating rural primary
care hospitals, the office of rural health policy shall notify
the health care cost review authority of the status of the
designated hospitals including the number of licensed beds.
The state agency shall promulgate rules within ninety days
of the effective date of this amendment in order to carry out the
purpose of this subsection.
ARTICLE 29B. HEALTH CARE COST REVIEW AUTHORITY.
§16-29B-10. Jurisdiction of the board.
(a) Notwithstanding any other provision of state law, after
the first day of July, one thousand nine hundred eighty-four, the
jurisdiction of the board as to rates for health services care
shall extend to all hospitals as defined herein doing business in
the state of West Virginia (with the exception of hospitals owned
and operated by the federal government).
(b) Those costs or charges associated with individual health
care providers or health care provider groups providing inpatient
or outpatient services under a contractual agreement with
hospitals (excluding simple admitting privileges) shall be under
the jurisdiction of the board. The jurisdiction of the board
shall may not extend to the regulation of rates of private health
care providers or health care groups providing inpatient or
outpatient services under a contractual agreement with hospitals
when the provision of such the service is outside the hospital
setting, and shall may not extend to the regulation of rates of
all other private health care providers practicing outside the
hospital setting: Provided, That such the practice outside of
the hospital setting is not found to be an evasion of the
purposes of this article.
(c) Beginning on the first day of July, one thousand nine
hundred ninety-seven, the jurisdiction of the board does not
extend to acute care facilities operating in any metropolitan
statistical area, as defined by the federal health care finance
administration, in this state in which one or more counties in
the metropolitan statistical area has four or more acute care
hospitals, or to the counties wherein they are situated:
Provided, That the exemption from jurisdiction provided for
hereunder shall terminate on the first day of July, two thousand two, unless further authorized by the Legislature: Provided,
however, That nothing contained in this subdivision may be
construed as exempting any mental health facility from the
jurisdiction of the board.
§16-29B-10a. Independent consultant; five-year review of
unregulated acute care medical facilities; report to Legislature on effect of deregulation;
contents of report.
(a) Independent and unbiased consultant. -- No later than
the first day of May, one thousand nine hundred ninety-seven, the
governor shall appoint, with the advice and consent of the
president of the Senate and the speaker of the House of
Delegates, a consultant, who shall commence service under the
provisions of this section by the first day of July, one thousand
nine hundred ninety-seven. He or she is not answerable to the
health care cost review authority, the advisory council, or any
state governmental agency or entity, other than the governor and
the Legislature. In no event may any person be appointed to act
as consultant who has, in the immediately preceding three years
from the date of his or her appointment, contracted with, been
employed by, affiliated with, or otherwise had any pecuniary,
political or substantial interest in, the health care cost review
authority.
(b) Duties of consultant. --
The consultant shall closely monitor and evaluate the costs
of medical care at acute care facilities that have been exempted
from the provisions of article two-d pursuant to subdivision (7),
subsection (a), section four of article two-d of this chapter
and which are, additionally, exempted from the jurisdiction of
the health care cost review authority pursuant to the provisions
of subsection (b), section ten of this article. At a minimum,
the consultant's monitoring and evaluative activities shall
include analysis of the exempted acute care facilities' costs in
comparison to nonexempted acute care facilities' costs, with
particular focus in the following areas:
(1) Any changes in the level of hospital costs and total
health care costs per capita in the exempted acute care
facilities in relation to nonexempted facilities elsewhere in the
state. The consultant shall also compare the levels of the
costs in acute care facilities in surrounding states and
elsewhere in the United States, adjusted for wage levels,
demographics and other factors considered relevant.
(2) Changes in average length of inpatient stays, and
casemix-adjusted average length of stays, and in hospital
admissions and days per one-thousand residents, for other payors
and for other classes of payors, compared to the levels and changes elsewhere in this state, the surrounding states and the
United States, with special attention to the experiences of areas
with relatively high levels of managed care penetration:
Provided, That for the purpose of this subsection, "other
payors" means nonmedicare, nonmedicaid and nonpublic employees
insurance agency medical payment providers.
(3) Changes in the level of payments per casemix-adjusted
admission by other payors and in the overall per member month
health care costs and premiums borne by employers, employees and
their dependents compared to the levels and changes in the
geographic areas specified in subdivision (2) of this subsection.
(4) Changes in the level of health care quality, as measured
by the scores, ratings, assessments rendered by external
assessment bodies, including JCAHO, NCQA and other similar
organizations, to hospitals and managed care plans, as
appropriate, that are operating in the counties wherein acute
care facilities are exempted from the provisions of article two-d
of this chapter and this article, and as measured by other
quality standards, as hospital nosocomial infection rates,
unplanned readmission rates, C-section rates and other standards
available to the consultant; and
(5) Changes in the level of satisfaction of health care
consumers, patients, physicians and other providers with the costs, efficiency, availability, affordability, quality,
convenience and responsiveness of the health care system, as
assessed by interviews, surveys or other studies conducted by or
made available to the consultant by interested persons.
(c) Submission of report. --
The consultant shall submit a detailed written report which
addresses those items set forth in subsection (b) of this
section, that he or she is specifically obligated to monitor and
evaluate, to the joint committee on government and finance. Upon
the completion of five years of service, from the inception
thereof, as provided for by this section, the consultant shall
have ninety days in which to complete the report, which shall be
provided to all members of the joint committee on government and
finance. In addition to the items set forth in subsection (b) of
this section, he or she shall report specifically concerning the
competitiveness and effectiveness of the exempted acute care
facilities in relation to those to which he or she has conducted
a comparative analysis as to cost and efficiency in the delivery
of health care services. The cost of this consultant shall be
paid by the Health Care Cost Review Authority.
NOTE: The purpose of this bill is to exempt counties and
acute care medical facilities from certification of need
requirements and from mandatory rate setting in counties where
three or more acute care medical facilities exist. The bill also provides that mental health facilities would not share the
exemption. The bill further would initiate a five-year pilot
project in the counties wherein the exemptions were granted to be
directed by a hired, unbiased consultant who would study the
effect of the deregulation brought about by the exemptions, on
the cost of health care and the competitiveness of the market- place for medical care. At the end of the five-year period the
consultant would submit a detailed written report to the joint
committee on government and finance concerning the resulting
effects after granting the exemptions to the medical costs in the
counties that were granted the exemptions in relation to the
counties and other acute care facilities that were not granted
the exemptions.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.
§16-29B-10a is new; therefore, strike-throughs and
underscoring have been omitted.