SJR 496

Special Joint Subcommittee Studying Virginia's Medical Care Facilities COPN Program

July 1, 1999, Richmond


During the 1998 Session of the General Assembly, the Senate Committee on Education and Health made a commitment to examine certain certificate of public need issues, which resulted in the convening of the Special Joint Subcommittee to Study Certificate of Public Need. Upon concluding the 1998 special study, the special joint subcommittee decided to recommend a resolution to add six citizen members representing the health care community and to publish a report on its work.

This first 1999 meeting focused on providing the new citizen members with a review of the 1998 study and the 1999 legislation of the special subcommittee. Much information was presented to the joint subcommittee in 1998 concerning the history of certificate of public need in Virginia, COPN statistics, the process of certificate of public need in Virginia, the role of the regional health systems agencies, and expert opinions concerning COPN's effects on access to and availability of care, quality of care, and health care costs. In addition, issues relating to alternative regulatory mechanisms were discussed, including accreditation processes and organizations, licensure, and deemed status. COPN's relationship to cost containment in the Virginia Medicaid program was mentioned. The health care community and the public at large were invited to respond to a call for proposals on the issues relating to certificate of public need. The responses to this invitation were summarized and used in the decision-making process.

History

The issues related to COPN include costs, quality, access to care (including charity care), and technical competence. The supplier-driven, fee-for-service reimbursement systems of the 1970s were credited with providing incentives for delivery and development of services that may not have been needed. Most observers agree that the COPN laws initiated in the 1970s influenced the rate of growth in the health care industry. Agreement on other issues is more elusive.

Virginia first enacted a certificate of public need law in 1973, one year prior to the federal law requiring state COPN programs. The legislative intent statement included in this first Virginia COPN law noted that enactment of COPN was an effort to provide for necessary services, to ensure the orderly development of the health care industry, and to curtail the development of duplicative services.

The federal requirement for state COPN laws was repealed in 1986. In 1989, Virginia's law was amended to provide for the 1991 sunsetting of COPN on hospitals, including ambulatory surgery centers. However, in 1991, the proposed deregulation of hospitals was delayed to 1993 and then, in 1992, the proposed deregulation was repealed. Over the intervening years between 1992 and 1999, the Virginia COPN law has evolved and has continued to be the subject of much legislative activity and considerable controversy.

1999 Changes

For the 1999 Session, the special joint subcommittee recommended that COPN be eliminated for all replacement equipment and registration of all new equipment purchases be required. The subcommittee also recommended the streamlining and delineation of the timelines and procedures for COPN applications. The subcommittee's recommendations were enacted as HB 2369 (Chapter 922) and SB 1282 (Chapter 899).

Among the revisions to the administrative procedures for review of applications for certificate of public need were requirements that the Board of Health establish concise procedures for prompt review of applications and that applicants transmit the application by certified mail or a delivery service, return receipt requested, or deliver the document by hand, with signed receipt to be provided. The 120-calendar-day review period is reinforced through the imposition of timelines for the health systems agencies and the Commissioner of Health for completing application reviews and closing the record.

For example, if the health systems agency does not complete its review within the 60-calendar-day period or the period requested by the applicant and submit its recommendations within the 10 calendar days after the completion of its review, the Department of Health, on the 11th calendar day after the expiration of the health systems agency's review period, must proceed as though the health systems agency has recommended project approval without conditions or revision. Further, if the commissioner's determination is not made within 40 calendar days after the closing of the record, the department must refund 50 percent of the fee, the application will be deemed approved, and the certificate must be granted.

Issues

The special joint subcommittee is directed by its 1999 enabling resolution (SJR 496) to examine the following issues in its 1999 study:
  1. Whether the certificate of public need program fulfills the goals of ensuring quality and access to health care services and containing costs by preventing the duplication of costly and unnecessary services;

  2. The effects of elimination of any certificate of public need requirements on access to care for the uninsured and underinsured in the Commonwealth;

  3. The interaction of modern health care financing, specifically various forms of managed care with the certificate of public need program;

  4. Alternative regulatory or legal mechanisms that could be developed to provide accountability, access to care, quality assurances, and public input in the development of health care services, and to prevent redundant capitalization;

  5. Whether any part or all of the certificate of public need law should be repealed or if any segment of the health care industry that is presently covered by this law should be treated in a different manner; and

  6. Any other issues relating to the certificate of public need law and its relationship to the health care industry and patient needs.

Among other activities, the plans for the 1999 study include monitoring the implementation of the 1999 legislation; obtaining data on the actions taken on applications for new ambulatory surgery centers by the health systems agencies and the commissioner; obtaining data on other states' 1999 COPN and alternative regulatory legislation; requesting videotapes or the coordination of site visits to various facilities; conducting a 50-state telephone survey relating to COPN programs/elimination or other related regulatory mechanisms; receiving presentations from representatives of national health policy agencies on certificate of public need in a national context; and requesting the Department of Health to provide a report on COPN that will include compliance with the new timelines and review procedures. Other experts or health community representatives may be asked to speak on the relationship of COPN to quality, access, and costs.

Future Meetings

The special joint subcommittee plans to hold at least four more meetings, three of which will be to receive information before convening for a work session for dialogue and decision making.


The Honorable Jane H. Woods, Chair
Legislative Services contact: Norma E. Szakal

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