RD467 - Certificate of Public Need Workgroup – Final Report

Executive Summary:
In order for certain types of medical facilities to be built, the Commonwealth of Virginia has utilized the Certificate of Public Need (COPN) program to review, analyze and determine what services and facilities are authorized. This program, which Virginia adopted in 1973, has been studied extensively in the past by Governors, the Virginia General Assembly including the Joint Commission on Health Care, and the Virginia Department of Health (VDH). While health care has changed dramatically in the last two decades, the COPN program, though serving a purpose in terms of the establishment and siting of hospitals and services, has remained largely unchanged. The charge of the workgroup appointed by the Secretary of Health and Human Resources has been to review and make recommendations for immediate improvements to the COPN process, and to carefully plan for future significant long term changes that would improve access to healthcare services while establishing strong guidelines for indigent care.

The provisions of Virginia’s COPN program, and the process by which it is administered, are set forth in statute and regulation. The COPN program is administered by VDH. A key component of the program is development and maintenance of the State Medical Facilities Plan (SMFP). A total of 35 states administer COPN programs.

The 2015 General Assembly directed the Secretary of Health and Human Resources to convene a workgroup of key stakeholders in order to “review the current certificate of public need process and the impact of such process on health care services in the Commonwealth, and the need for changes to the current certificate of public need process.” There have been prior efforts to substantially eliminate the program, but those prior efforts were not fully implemented. Programs in other states have been subject to various studies and evaluations, over a period of many years, concerning their impact and effect.

The workgroup met five times between July and November of 2015. The workgroup received numerous informational presentations and received extensive written and verbal comments. Through its discussions and deliberations, the workgroup focused in particular on the following issues and topics within the context of the study mandate:

• Purpose and Objectives of the Program,
• Review and Update of the SMFP,
• Process for Submission and Review of Applications,
• Conditioning of Certificates,
• Transparency of the Program,
• Process for Evaluating Whether Certain Facilities and Projects Should Remain Subject to COPN Requirements, and
• VDH Resources to Administer the Program.

Purpose and Objectives. The program does not have a statement of purpose in either statute or regulation. The following recommendation is made:

1. The Code of Virginia should be amended to establish a statement of purpose for COPN that reflects the components of the Institute for Healthcare Improvement’s Triple Aim (patient experience of care, population health and cost), and that is also reflective of promoting access to care.

Review and Update of the SMFP. The process by which the SMFP is reviewed and updated needs to be more timely and rigorous. The following recommendations are made:

2a The SMFP should be reviewed and updated in a timely and rigorous manner.

2b The SMFP task force should be convened to review SMFP and propose restructuring of plan, consider additional criteria, and recommend other changes.

2c VDH should determine the type and amount of any additional required resources necessary to comply with statutory requirements for review and update of the SMFP.

2d The SMFP should be aligned with the goals and metrics of the State Health Improvement Plan and be renamed the State Health Services Plan.

2e The Code of Virginia should be amended to establish statutory requirements for the process by which the SMFP is reviewed and updated.

2f The Code of Virginia should be amended to exempt the SMFP from the provisions of the Administrative Process Act, subject to requirements that a Notice of Intended Regulatory Action be published, and a public comment period including a public hearing be held prior to the effective date of the revised SMFP.

2g VDH should adopt the practice of preparing and submitting all future amendments to the SMFP as Fast Track Regulatory Actions.

2h The Code of Virginia should be amended to require annual review of the SMFP and an update of the SMFP every 2 years

2i The State Health Commissioner should assess the current organization and composition of the SMFP Task Force and make recommendations to the State Board of Health if any changes in the organization, composition or manner of appointment are deemed advisable. The assessment should also address any need for a defined quorum for meetings of the SMFP Task Force.

Process for Submission and Review of Applications. The process for application submission and review needs to be more efficient and streamlined. The following recommendations are made:

3a The process for submission and review of COPN applications should be streamlined.

3b VDH should evaluate COPN application forms to ensure that only data necessary for review of an application is required to be submitted and that the forms reflect statutory requirements. VDH should make all necessary revisions to the forms.

3c The Code of Virginia and the COPN regulations should be amended to require that a COPN application be substantially complete at the time of submission.

3d VDH should develop recommendations to reduce the standard review process to not more than 120 days from the receipt of the letter of intent. VDH shall consider changes in the current process to effect such a reduction in the length of the review process, including but not limited to changes reflected in other study recommendations as well as: elimination or reduction of the "completeness" period between the submittal of an application and its acceptance as "complete," reduction of the current 70-day period for DCOPN review of an application, and earlier scheduling of a public hearing.

3e VDH should: i) assess projects that may be appropriate for a 45-day expedited review process, which may include projects that are generally non-contested and/or raise comparatively few health planning concerns; ii) develop a process for reviewing such applications in a 45-day review period and identify the conditions under which such applications would require transition to a standard review cycle, and; iii) establish requirements for COPNs issued pursuant to a 45-day expedited review process, including conditions for indigent care and quality assurance. The analytical framework described in Recommendation 6b should be applied to determine whether any project type should be eligible for expedited review.

3f The role of the SMFP in COPN decisions should be clarified to allow the Division of Certificate of Public Need (DCOPN) to recommend approval of an application that is in general agreement with the SMFP.

3g VDH should work with Virginia Health Information (VHI) to develop a process for the collection of data, as part of required utilization reporting, concerning the specific type of equipment utilized.

3h The filing timeline for good cause petitions should be clarified to resolve the discrepancy between the statutory and regulatory requirement.

Conditioning of Certificates. The manner in which conditions are determined, and the process by which compliance with conditions is enforced, needs to be clarified and standardized.

The following recommendations are made:

4a Rules regarding the conditioning of COPNs, including the process for defining and calculating charity care, should be clarified, standardized and enforced.

4b The Secretary of Health and Human Resources and VDH should study and review charity care services delivered throughout the Commonwealth and recommend changes to the definition of charity care imposed across providers. A report shall be submitted to the General Assembly prior to the 2017 Session.

4c The Secretary of Health and Human Resources should convene stakeholders to explore appropriate authority for the Commissioner to impose additional conditions on COPNs consistent with the SMFP and the Virginia State Population Health Plan.

4d VDH should assess the capacity of DCOPN to monitor compliance with conditions imposed on COPNs. Based on that assessment, VDH should determine if additional resources are needed to support administration of this function.

Transparency of the Program. A wide range of program-related information needs to be made more readily available to the public. The following recommendations are made:

5a The transparency of the COPN program to the public should be increased.

5b A real-time automated/electronic tracking and posting mechanism for Letter of Intent (LOI) filings should be implemented to make LOIs available to the public as soon as they are received.

5c An online library should be created where all relevant COPN information and documents are posted and easily available to the public.

5d The collection of COPN-relevant data and the availability of such data should be improved and standardized by:

• Clarifying rules for reporting utilization of operating rooms and procedure rooms.
• Expediting publication of VHI reports.
• Maintaining an accessible inventory of all COPN-authorized (operational and not yet operational) providers/beds/units for all COPN-reviewable services.

5e VDH should assess the cost of implementing 1) a real-time automated/electronic tracking and posting mechanism for LOI filings, 2) creating an online library of all relevant COPN applications and documents, 3) maintaining an accessible inventory of all COPN authorized providers/beds/units and 4) on-line publishing of charity care conditions, compliance reporting status, details on the exact amount provided and/or contributed, and to whom. Based on that assessment, VDH should determine if additional resources are needed to fund the cost of implementation.

Process for Evaluating Whether Certain Facilities and Projects Should Remain Subject to COPN Requirements. The workgroup discussed the extent to which certain medical facilities and projects should continue to remain subject to COPN requirements. The workgroup’s discussions revealed the absence of an adequate data-driven, analytical framework to support the development of specific recommendations for the elimination of COPN requirements for certain types of facilities and projects. Prior to 2012, a semblance of such a framework existed at the state level in the form of the COPN Annual Report required by the Code of Virginia. Those reports, prepared by the VDH, contained recommendations concerning the continued appropriateness of COPN requirements for various types of medical facilities and projects. The following recommendations are made:

6a The General Assembly should consider amending the definition of “Project” to no longer include the following: lithotripsy, obstetrical services, magnetic source imaging, nuclear medicine imaging services, and replacement of a medical facility within the same primary service area.

6b The Virginia Department of Health should develop an analytical framework that incorporates review of the SMFP to support development of recommendations concerning the appropriateness of continuing to impose COPN requirements on specific medical facilities and projects or whether such projects should be subject to expedited review. The analytical framework should be aligned with the goals and metrics of Virginia’s State Health Improvement Plan. The analytical framework should also take into consideration components of the approach utilized prior to 2012 in development of the COPN Annual Report. The analytical framework should include a recurrent three-year schedule for analysis of all COPN project categories, with procedures for analysis of at least three project categories per year. The recurrent three-year schedule should be developed such that COPN projects that are of relatively low complexity and low cost are analyzed first, and projects that are of relatively high complexity and high cost are analyzed subsequently. VDH should develop recommendations based on the results of its analysis and transmit those recommendations to the General Assembly, Governor and Secretary of Health and Human Resources. The analytical framework should also include appropriate metrics to evaluate the impact of introducing a more competitive health care framework that could reduce costs and increase access to health care services. The analytical framework will include a process for stakeholder involvement in review and public comment on any recommendations.

6c Providers of services that are no longer required to obtain a COPN should be required to provide a specified level of charity care in services or funds that matches the average percentage of indigent care provided in the appropriate health planning region and to participate in Medicaid.

6d Providers of services that are no longer required to obtain a COPN, along with all prospective COPN holders, should be required to obtain accreditation from a nationally-recognized accrediting organization for the purposes of quality assurance, as approved by the Virginia Department of Health.

6e VDH should provide a status report on implementation and impact of workgroup’s recommended reforms to the Governor and General Assembly by December 1, 2017.

VDH Resources to Administer the Program. The program is funded solely by application fees. There are no general funds authorized or appropriated for the COPN program. DCOPN’s fee-based funding varies year-to-year based on the number and types of COPN projects. The following recommendations are made:

7a VDH should have adequate resources to administer the COPN program in costeffective manner.

7b VDH should assess the amount of funding required to administer the statutory and regulatory requirements of the COPN program in a cost-effective manner. This assessment should take into account the need for timely and rigorous updates of the SMFP, monitoring of compliance with COPN conditions, and use of technology to support the submission and processing of applications. Based on that assessment, VDH should determine if additional resources are needed for cost-effective administration. If additional resources are determined to be necessary, COPN application fees should be increased in order to provide additional funding to support cost effective administration of the program.