2015 General Assembly Hospital Issues

2015 – a “Short Session” 1,865 Bills Introduced from Senate 1,143 Bills Introduced in House 3,008 Bills Reviewed in 6 Weeks!

Significant Legislative Issues in 2015 General Assembly  Certificate of Public Need (COPN) HB2177 Orrock SB1283 Martin  COPN would not be required for the following: New Beds or new ORs to an existing general hospital, psychiatric or rehab hospital beds Open heart surgery in hospitals performing 1,100 adult cardiac catheterizations or discharged at least 800 patients with principal diagnosis of ischemic heart disease Neonatal special care services at an existing medical facility delivering more than 1000 infants (effective January 2017 pending secretary review) Capital expenditures by general hospitals

HCA  For profit chain of hospitals (largest chain by revenue)  Tremendous economic success (Medicaid expansion states)  Added to S&P 500 on January 23, 2015 Share price rose by 50% due to 2014 performance Significant event - $68.64/share  $29.6 billion capitalization New markets: index funds and exchange traded funds  165 hospitals, 115 free standing surgery centers  6 hospitals, over 70 outpatient centers in Virginia

Issues Relevant to Hospitals  If COPN is eliminated, new providers will enter market and compete for high margin services: Imaging Centers ASC’s Cancer Cardiac  Hospitals will be the providers for indigent patients and poor payer patients  Hospitals will be compromised in their ability to provide safety net services, fund charity care, drive economic growth (employer)  Currently 1/3 of Virginia hospitals operated in the red for 2014, mostly in rural areas

Issues Relevant to Hospitals  Will impact quality in those services where high volumes are required for proficiency  VA will lose the opportunity to impose charity care conditions on new COPN projects approved by the Commissioner of Health  Could impact Virginia hospitals credit rating

Final Legislation approved by House and Senate Eliminates definition of “reviewable project” for a capital expenditure of $15 million or more for hospitals when no other COPN reviewable project is involved Mandates a study of COPN to evaluate deregulation with study results by November 2015

“Responsible Deregulation”  Augusta Health is not opposed to competition – as long as there is a level playing field  Augusta Health supports a pathway to deregulation as long as key factors addressed, key actions implemented and outcomes are measured

“Comprehensive Approach” IssueFramework Access to Care for Uninsured Expand coverage Availability of Essential Services Correct Medicaid Underpayment Readiness for Public Health/Disaster Care Training of Future Healthcare Workforce Support Healthcare Workforce Adequate funding for Graduate Med Education Training programs Quality of Care Oversight Level Playing Field Licensure, Accreditation, Mandatory Outcomes Data Reporting Charity Care Requirements

Provider Tax

Why Provider Tax?  Based on a scheme that if the providers pay into an assessment levied by the state, it will increase the pool of state dollars eligible for the federal match  This increases the pool of Medicaid dollars paid back to providers in the form of enhanced base rates  These programs are used in 40 states

Provider Tax  Based on federal financial participation in state Medicaid expenditures  Federal Medical Assistance Percentages (FMAP) are determined for every state Compares state income to continental US income No state ratio goes below 50% or above 83%  Virginia FMAP is 50% or $1  For every dollar the state puts into Medicaid, the federal government matches with $1  There is a cap known as the Upper Payment Limit (UPL)

Current Situation  No Medicaid expansion in Virginia  Sentara, INOVA, and Carilion formed a coalition to address inequity of indigent care payments in VA  State teaching hospitals (VCU & UVA) receive majority of state’s allocation of Medicaid and Indigent Care Funding  State teaching hospitals receive majority of state funds for other supplemental payments GMED Trauma

Current Status of Provider Tax Issue Senate and House passed budget language to study the provider tax issue, with a study and design recommendation due in November 2015

Questions?