Hospitals gear up for fight over regulation

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The 2017 General Assembly is expected to be a battleground for medical providers divided over the state’s tight regulation of medical start-ups.

Some physicians say they should have the right to open a surgery center or other facility without having state regulators weigh the need. Hospitals say the current controls work well to ensure care for everyone.

As legislators returned to Richmond, the two sides of the regulation debate openly jousted over the financial health of hospitals and the need for reform.

Hospitals urged delay on any significant change, citing uncertainty about the future of the Affordable Care Act.

A joint legislative working group produced a list of principles, starting with the proposition that the current Certificate of Public Need system is broken and needs “significant reform.”

“The status quo is not acceptable,” said Del. John O’Bannon, R-Henrico, in an interview. O’Bannon, a neurologist, proposed to end COPN requirements for many medical facilities and projects in highly populated regions. His House Bill 2337 was assigned to a subcommittee he co chairs.

Principles listed

The COPN battle has been simmering for years. A 2015 study recommended a streamlined process with more transparency.

In recent months, a group of legislators from both parties and both chambers of the Assembly produced a list of principles of COPN reform:

1. Virginia’s Certificate of Public Need system is broken as it currently exists and needs significant reform.
2. The current system has left many Virginians with only a single source for many medical treatments.
3. Any new system should have more transparency in pricing and quality, two of the fundamental aspects of patient choice.
4. The current system does not fully recognize the varied economic, demographic, and patient access issues within our health care system.
5. The current system acts as an impediment to efficient implementation of new health modalities, and developments.
6. The fundamental premise is to ensure a comprehensive patient care system ensuring reasonable access and focused on lower patient costs and optimum convenience.
7. There are a number of process revisions that would prove beneficial to the current system, however, they should be part of a comprehensive reform package.
8. Given the above, the group feels it is incumbent on the physician community, the hospital industry and others to recognize the need for change and present to the General Assembly their recommendations to do so during the 2017 session.
9. Hospitals are the backbone of our medical treatment system and we want and need reform that will lead to strong hospitals throughout Virginia.

Two-tiered system proposed

O’Bannon’s legislation – backed by physicians and others organized as the Coalition to Reform COPN – would set up five “Health Innovation Districts” covering urban areas of Virginia. The five regions are centered on the Washington suburbs, the Richmond region, Tidewater, Roanoke and Lynchburg.

Outside of those densely populated areas, nothing would change, according to the Coalition, which published a one-page explanation of the O’Bannon proposal.

Inside the high population areas, most providers would face a new permitting process. Rather than asking COPN regulators for permission to provide services, providers would ask for a permit conditioned on their willingness to provide a level of charity care. The level of charity care required would be based on that provided by others in the region.

In the high density areas, COPN requirements would be phased out over two years for projects like capital improvements, ambulatory surgery centers and imaging.

Some services, such as transplants and open heart surgery, would still require a COPN, even in the high population regions.

Advocates say the new permitting process will have stricter charity care requirements than the current COPN program, stronger enforcement mechanisms and “strong quality of care standards.”

Hospitals urge caution

Virginia hospitals – represented by the Virginia Hospital and Healthcare Association – did not directly address the O’Bannon legislation. Instead, at a Jan. 18 news conference, leaders simply urged against quick action on COPN and similar structural reforms.

“Our hope and our message to elected leaders is to please be careful and deliberate as you consider healthcare policy,” said Toni R. Ardabell, CEO for Bon Secours Virginia Health System and a VHHA board member.

Health care is not a free market, considering that hospitals are reimbursed below cost for treating Medicare and Medicaid patients, Ardabell said.

She noted that hospitals are required by law to provide emergency care to all patients, regardless of ability to pay. “Certificate of Public Need helps offset the charity care inherent in our system, while supporting access to essential health services and helping to control costs,” Ardabell said.

Hospitals say COPN repeal would allow start-ups to “cherry pick profitable services,” leaving hospitals to bear the burden of government charity care mandates.

The VHHA lobbies on behalf of 107 hospitals and 30 health delivery systems.

Senate is target

O’Bannon said without some reform in regulation of new medical services, the legislature is likely to revert to its past practice of approving special exceptions to the COPN process on a one-at-a-time basis.

The system would be “picked apart piecemeal,” O’Bannon said.

O’Bannon said the House of Delegates backed reform last year.

“The fight’s in the Senate,” he said.