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Number 26                   December 2001

2002 SESSION: General Assembly Issues

Business - Campaigns/Elections - Constitutional Amendments - Courts -
- Finance/Taxation - Health - Local Government -
Mental Health
- Natural Resources - Transportation - Virginians with Disabilities


Prescription Assistance Programs

The recent presidential and gubernatorial elections included in their agendas support for prescription assistance programs for the elderly. In Virginia, the Medicare-eligible population is approximately 930,000, with about 400,000 of those without any form of prescription assistance plan to help with medical costs. Approximately 530,000 Virginians have some form of prescription coverage, either through Medigap policies, managed care coverage, employer sponsored coverage, or Medicaid, but many of these policies cover only a fraction of costs.

Because of their age and accompanying physical ailments, Medicare beneficiaries are more vulnerable to high prescription costs because of their disproportionate use of prescription medication. For persons without any coverage, one catastrophic illness can wipe out life savings. Many of these persons make daily decisions about choosing between medication and food, shelter or utilities. A survey in Virginia found that one of six persons said that they spend more than $100 a month out-of-pocket on prescription drugs, and, in 1999, more than one-third of adults ages 50-64 without health insurance or prescription drug coverage let a prescription go unfilled because they could not afford to fill it.

Medicaid is a health insurance entitlement program funded jointly by federal and state governments for certain low-income populations, including about 12 percent of Medicare beneficiaries nationwide. In Virginia, the state share of the program is about 49 percent, with a 51 percent match by the federal government. Most of the participants receive prescription drug assistance, but the program is limited to those eligible persons whose income is 80 percent of the federal poverty level or less.

Virginia, in Fiscal Year 2000, spent approximately $223 million, 2.2 percent of its total general fund budget, on prescription drugs, an 86 percent increase over what was spent in 1996. (This figure covers expenditures for the Departments of Medical Assistance Services, Mental Health, Mental Retardation and Substance Abuse Services, Health, Corrections, Juvenile Justice, and Human Resource Management.) Reasons for rising costs include increased utilization of drugs because of advancements in medical science, the increasing number of elderly individuals, changes in accepted medical practices, and direct consumer advertising. The average price per prescription has risen as well. It must be mentioned, though, that some of the increased pharmacy costs are anticipated to be offset by avoidance of expensive institutional or hospital care.

Although the federal government has made some preliminary commitments towards instituting a Medicare prescription program or providing funds to enable states to initiate their own program, the events of recent months have preempted such efforts. Many states have long been addressing this issue, with additional states weighing in each year. The approaches run the gamut of solutions, including: (i) programs with income limits, many of which have been expanded to include middle-class consumers; (ii) minimum age limits with limited coverage to others with certain disabilities; (iii) programs tailored to those persons with certain conditions; (iv) funding for programs from a variety of sources including cigarette taxes, casino revenues, lottery proceeds, and special trusts such as the tobacco settlement; (v) requiring cost-sharing, such as co-payments, a deductible, a monthly fee, or maximum yearly benefits; (vi) basing the program on the requirement that if pharmaceutical companies do Medicaid business in the state they must provide the same prices to other individuals in the assistance program; (vii) establishing multi-state purchasing pool programs in order to negotiate drug discounts enjoyed by HMOs and other organizations; and (viii) price controls.

In the 2001 Session of the General Assembly, a number of bills were offered to set up a prescription assistance program for the elderly. A lack of consensus about the best way to approach such a program and how best to establish a dedicated source of funding led to the formation of a study committee that has examined all of these issues during the interim. With the state facing an anticipated $1 billion shortfall in revenues and a recognized need to adopt a plan that would offer a composite solution that would utilize a variety of approaches in order to maximize the number of persons that the state can help, the joint committee has tentatively made four recommendations:

1. In order to assist those with the least amount of resources and leverage maximum federal dollars, the subcommittee is considering recommending that the eligibility level for Medicaid for the elderly and disabled be raised from 80 to 100 percent of the federal poverty level. This can be accomplished by an amendment to the state plan for Medicaid services since the federal plan already allows states to include persons up to 100 percent of poverty. The cost for this recommendation to the state is estimated to be $29.6 million in FY 2002-2003, with the federal government contributing $31.6 million, plus some additional administrative expenses. Total potential eligible individuals would be 27,191.

2. Expand the Pharmacy Connect Program to all area agencies on aging, including software and other materials and training, to maximize the use of the compassionate drug programs offered by various pharmaceutical companies that provide free drugs to eligible populations. Total cost per year is estimated to be $4.8 million in addition to the $371,000 per annum already in the budget.

3. Amend the provision adopted in the 2001 Session of the General Assembly that provides for the Virginia Department of Health to set up a hotline to advertise and facilitate the use of the free drug programs to also provide information about the various discount cards currently being developed by the drug companies.

4. Extend the study for an additional year to finalize the recommendations on the design and funding of a state prescription drug program.

Gayle Vergara

Certificate of Public Need

For some years, the certificate of public need (COPN) requirements have been the subject of controversy in Virginia. Although the strength of and support for the law has waxed and waned, Virginia has continuously had a certificate of need law in effect since 1973. Virginia's comprehensive law requires the Commissioner of Health to determine that a need exists for the medical or health care services before the implementation of a project. The law defines "project" as including the purchases of certain major medical equipment, the building of a new health care facility, and the introduction of certain high tech or complex services.

The original rationale for certificate of need laws in the early 1970s was to control redundant capitalization (i.e., over-bedding and excess services) and thereby to contain health care costs under a retrospective fee-for-service system and to ensure access to care and quality services. Over the last 20 years, the reimbursement systems have undergone a revolution, with managed care now being the norm. Health benefits programs usually place restrictions on where, from whom, and for how long treatment and care can be obtained and calculate the reimbursement prospectively. Further, medical technology has increased phenomenally and scopes of practice have evolved, both of which have contributed to changes in health care delivery patterns. At the federal and state levels, government programs such as Medicare and Medicaid have aggressively implemented cost containment. Thus, competition for patients and revenues has been fostered among various sectors of the health care system.

In the 2000 Session, SB 337 was approved, requiring a transition for elimination of the COPN requirements for determination of need for certain health care facilities and services. The deregulation was to be accomplished through a plan developed by the Joint Commission on Health Care and submitted to the General Assembly in 2001, was to begin on July 1, 2001, and was to be completed by July 2, 2004. During the 2000 interim, the joint commission worked with a facilitator and various work groups and developed a three-phased plan for COPN deregulation. The plan was premised on the following goals:

  • To offer more choices to patients while simultaneously providing consumers with better information about the value of services in all settings;
  • To ensure that access to essential health care services for all Virginians, particularly the indigent and the uninsured, is preserved and improved, in so far as possible;
  • To provide strong quality protections that correspond to service intensity and patient risk and apply similarly across all health care settings;
  • To support indigent care and medical education costs at the academic health centers; and
  • To ensure that the Commonwealth's health care financing programs reimburse at a level that covers the allowable costs of care and that the Commonwealth meets its obligations as a responsible business partner.

Two identical bills were introduced to accomplish these goals and to establish the three-phased plan as follows:

  • Phase I of the joint commission's plan proposed elimination of certain equipment purchases and introduction of new services, including computed tomographic (CT) scanning, lithotripsy, magnetic resonance imaging (MRI), magnetic source imaging (MSI), positron emission tomographic (PET) scanning, and all nuclear medicine imaging.
  • Phase II proposed to deregulate equipment purchases and the introduction of new services for cardiac catheterization, gamma knife surgery, and radiation therapy.
  • Phase III proposed to deregulate ambulatory surgery centers and neonatal special care, obstetric services, open-heart surgery, and organ transplantation services.

Each of the three deregulation phases was contingent upon the appropriations of funds to support such services as indigent care and increases in Medicaid reimbursement. Simultaneously with the elimination of the COPN requirements, the providers of the COPN-deregulated services would have been required to comply with licensure requirements promulgated and administered by the board, consistent with appropriate existing, nationally recognized accreditation standards. In addition, the various providers would have been required to report claims data, certain quality outcome information for selected high-risk procedures, where applicable, and annual financial information on indigent care. Studies of the effects of the deregulation and various related issues such as the funding of medical education would have been mandated throughout the deregulation phases.

The cost of implementing the joint commission's plan was very large—$135 million over the three phases. Therefore, in a year in which money was an overwhelming issue, the plan bills did not get beyond the House Committee on Appropriations and the Senate Committee on Finance. Several bills were also introduced to eliminate various components of COPN or to carry out the plan without funding conditions; however, these bills were similarly defeated.

The joint commission fulfilled its responsibilities under the law to develop the plan to deregulate COPN beginning on July 1 of this year. Few, if any, criticisms were voiced about the content of the plan or the process by which it was developed. Both the proponents and the opponents of COPN were highly complimentary. However, as the nation and the state face economic downturns and the expenses of increased security and public health efforts impact the Commonwealth, the health care competition issues surrounding COPN will continue to be debated and to generate controversy.

Norma E. Szakal

ADHD and Ritalin

One of the most common mental disorders among children, Attention Deficit Hyperactivity Disorder (ADHD) affects an estimated three to five percent of all children in the United States. Today, specialists agree that ADHD is not a single condition but may be classified in subtypes reflecting the behaviors typically associated with the condition: inattentiveness, impulsivity, and hyperactivity that are excessive, pervasive, and long-term. Distinguishable from ADHD are certain classroom behaviors that may be addressed through adjustments in instruction, recognition of learning style, or acknowledgment of individual student emotional or social needs.

Although considered safe when administered under medical supervision, medications treating ADHD—such as Ritalin—can be addictive if misused by adolescents and adults. Abuse of Ritalin has become a national concern. While there is little hard data regarding specific Ritalin-related crimes, anecdotal information reveals incidences of abuse, theft, and diversion by dispensing school officials, sales among students, and threats against students on the medication to sell their pills. A September 2001 report of the U.S. General Accounting Office indicated that there is no data directly indicating either the degree of drug diversion or abuse in American public schools or the effect of state laws and regulations guiding schools in the administration of these medications. Concluding that the diversion of attention deficit disorder medications is not "a major problem at middle or high schools," the report noted that the development of nonstimulant medications and increased use of once-a-day attention deficit disorder medications may ameliorate the possibility of abuse or diversion in schools.

Also fueling the Ritalin debate is concern regarding cases in which children who do not suffer from ADHD, but whose disruptive behavior prompted by other conditions or causes may be classified as impulsive or inattentive, are medicated unnecessarily. Expressing similar concerns are some physicians and educators who question the validity of describing ADHD as a disease or disability. Furthering the controversy are escalating Ritalin prescriptions.

Responding to the concerns, the 2001 Session of the General Assembly created a joint subcommittee to investigate the improper prescription and illegal use and diversion of Ritalin, as well as the effects of ADHD on student performance. Included within the comprehensive study was an examination of the number, treatment, and academic performance of students diagnosed with ADHD in Virginia public schools, school practices in managing medications, and special education programs and related services for these students.

Virginia ranks in the highest quartile in the nation for Ritalin prescription. Within the Commonwealth, higher concentrations are seen in Tidewater, Richmond, and Northern Virginia. In response to a Virginia Department of Education survey conducted in September 2001, 129 school divisions (95.5 percent response rate), indicated that 16,521 students—or 1.52 percent of the student population—received ADHD medication at school in 2000-2001. Of these students, 55 percent receive Ritalin, and 45 percent are receiving other ADHD medication. These numbers are not indicative of the numbers of public school children with ADHD, as some children may not receiving medication or may be taking medication at home. The highest rates were noted in grades four and five; the lowest in kindergarten and in grade 12. Boys comprised 76 percent of students receiving ADHD medication at school; students with disabilities accounted for 59 percent of pupils receiving ADHD medication at school.

The work of the joint subcommittee and the results of recent state and national reports may prompt the introduction of legislation targeting school board policies governing possession and self-administration of student medications, school dispensing practices and security measures, and the involvement of educators and public schools in recommending prescribing psychotropic medications for students; the work of the Virginia Attorney General's Prescription Drug Abuse Task Force; continued drug education and appropriate interventions for college students; and prescription drug monitoring programs.

Kathleen G. Harris

Business - Campaigns/Elections - Constitutional Amendments - Courts -
- Finance/Taxation - Health - Local Government -
Mental Health
- Natural Resources - Transportation - Virginians with Disabilities


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