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

PWF Consulting A Review of JCHC’s 2000 COPN Deregulation Plan Legislative Authority and Directive Process Deregulation Plan Proposed Legislation and Budget Amendments 2

PWF Consulting Legislative Authority and Directive Senate Bill 337 (Martin), as introduced, would have repealed most of COPN program Approved legislation directed JCHC to develop a “transition plan” to eliminate COPN program –“shall begin on July 1, 2001, and be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 3

PWF Consulting A Review of JCHC’s 2000 COPN Deregulation Plan 4 Legislative Authority and Directive Process Deregulation Plan Proposed Legislation and Budget Amendments

PWF 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 5

PWF Consulting Facilitation Workgroups WorkgroupAreas 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 6

PWF Consulting A Review of JCHC’s 2000 COPN Deregulation Plan 7 Legislative Authority and Directive Process Deregulation Plan Proposed Legislation and Budget Amendments

PWF 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 8

PWF Consulting Deregulation Plan to be Completed in Three Phases 9 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

PWF Consulting Deregulation Plan Retained COPN Requirements for Certain Facilities Nursing Homes Hospital beds Mental Health and Substance Use Disorder Facilities 10

PWF 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 11

PWF 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 12 Note: Items shown above reflect only the major provisions to be accomplished

PWF Consulting 13 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) 2 nd phase of improving adequacy of Medicaid hospital reimbursement (2000 JLARC study) –$12 million (GF) (additional cost of above Phase I) 2 nd 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

PWF Consulting 14 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

PWF Consulting Summary of Fiscal Impact of Deregulation Plan General Funds (Millions) Incremental Amounts Funding ProvisionPhase IPhase IIPhase III Indigent Care (AHCs)$22.0 Full funding continues (Amt. unknown) Medicaid (Caretaker Adult Coverage)$27.0 Medicaid (ABD Coverage)$11.0 Undergraduate Medical Education$6.5 Medicaid Reimbursement (Hospitals)$12.0 Medicaid Reimbursement (Physicians)Amt. Unknown Total$40.5$56.5$

PWF Consulting A Review of JCHC’s 2000 COPN Deregulation Plan 16 Legislative Authority and Directive Process Deregulation Plan Proposed Legislation and Budget Amendments

PWF 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 17