COPN Counterpoint
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62 responses to “COPN Counterpoint”
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Great work, Dick, and I mean it. I will add to the conversation as you have framed it relying not on my research and conclusions, but rather on the research, experience and recommendations of the Federal Trade Commission and the United States Department of Justice.
1. One of the most compelling treatises on COPN was the 13-page Joint Statement of the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice to the Virginia Certificate of Public Need Work Group October 26, 2015. See it at https://www.justice.gov/atr/f318500/318549. All quotes in this paragraph are from that letter.
The letter was requested by Del. Kathy Byron, the Chairperson of that working group, to “develop specific recommendations for changes to the certificate of public need process to address any problems or challenges identified during [its] review.”
“CON laws, when enacted, had the laudable goals of reducing health care costs and improving access to care. However, it is now apparent that CON laws can prevent the efficient functioning of health care markets in several ways that may undermine those goals. First, CON laws create barriers to entry and expansion, limit consumer choice, and stifle innovation. Second, incumbent firms seeking to thwart or delay entry by new competitors may use CON laws to achieve that end. Third, as illustrated by the FTC’s recent experience in the Phoebe Putney case, CON laws can deny consumers the benefit of an effective remedy following the consummation of an anticompetitive merger. Finally, the evidence to date does not suggest that CON laws have generally succeeded in controlling costs or improving quality. For these reasons, explained more fully below, the Agencies (FTC and Antitrust Division) historically have suggested that states consider repeal or retrenchment of their CON laws and, in this case, respectfully suggest that the Work Group and the General Assembly consider whether repeal or retrenchment of Virginia’s COPN laws would best serve its citizens.”
Later in the letter “CON laws, such as Virginia’s COPN laws, require new entrants to obtain a state-issued approval before offering certain health care services. By interfering with the market forces that normally determine supply of services, CON laws can suppress competition and shield incumbent health care providers from competition from new entrants. As a result, they can:
• Delay, and raise the cost of, entry by firms that are potentially able to offer new, lower cost, more convenient, or higher quality services;
• Reduce the ability of the market to respond to consumer demand for different treatment options, settings, or prices; and
• Remove or delay the competitive pressures that typically incentivize incumbent firms to innovate, improve existing services, or introduce new ones.”
“We urge the Work Group and the General Assembly to consider that Virginia’s COPN law may be causing these results in Virginia to the detriment of health care consumers and to consider the benefit to patients if new facilities and services would be able to enter the market more easily. This new entry – and the threat of entry – could restrain the price of health care, improve the quality of care, incentivize innovation in the delivery of care, and improve access to care.”
Later: “In addition to disrupting the market forces that typically determine the supply of services, CON laws may further harm competition because competitors may take advantage of the CON process to protect their revenues. For instance, an incumbent firm may file challenges or comments to a potential competitor’s CON application merely to thwart or delay competition. As noted in an FTC-DOJ report, existing firms can use the CON process “to forestall competitors from entering an incumbent’s market.”23 This use of the CON process by competitors can not only cause delay, 24 but can also divert scarce resources away from health care innovation as potential entrants incur legal, consulting, and lobbying expenses responding to competitor challenges.”
See also in that letter “CON Laws Can Impede Effective Antitrust Remedies and Can Facilitate Anticompetitive Agreements” and “CON Laws Appear to Have Failed to Control Costs” in which the Agencies wrote “CON laws are likely to increase, rather than constrain, health care costs. ” And “CON laws may restrict investments that would benefit consumers and lower costs in the long run. Because CON laws raise the cost of investment for everyone, they make it less likely that beneficial investment will occur.” … “there is evidence suggesting that repealing or narrowing CON laws can reduce the per-patient cost of health care.”
2. The COPN provisions requiring free treatment for the uninsured poor can be made a part of the state licensing procedure. They need not be enforced by COPN. See “More Targeted Policies May Be More Effective at Ensuring Access to Care and Would Not Inflict Anticompetitive Costs” from the Agencies’ 2015 letter.
In the Conclusion of the letter:
“The Agencies recognize that states must weigh a variety of policy objectives when considering health care legislation. But, as described above, CON laws raise considerable competitive concerns and generally do not appear to have achieved their intended benefits for health care consumers. For these reasons, the Agencies historically have suggested that states consider repeal or retrenchment of their CON laws. We respectfully suggest that the Work Group and the General Assembly consider whether Virginia’s citizens are well served by its COPN laws and, if not, whether they would benefit from the repeal or retrenchment of those laws.”
I urge all to read the letter in its entirety.-
I saw references to the FTC letter and quotes from it. It is probably the strongest expression of the criticism that COPN limits competition, without offsetting advantages. I did not go into it in my discussion because my post was already a lot longer than I had anticipated.
It is interesting that the report of the work group that requested this FTC opinion did not adopt its recommendations. For the most part, the work group’s recommendations dealt with streamlining the COPN process, not getting rid of it. It did recommend exempting a limited number of specialized fa(cilities.
There was a lot of legislation introduced in the 2016 session incorporating the work group’s recommendations. Most of it went nowhere. The one that went the furthest was introduced by Del. Byron, who requested the FTC letter. Her bill (HB 350) originally went beyond the work group recommendation and called for a phasing out of the COPN process. A substitute for that bill seems to have jettisoned that approach and incorporated most of the work group recommendations. It passed the House by a large margin. It got out the Senate committee with only two dissenting votes. But, it met opposition on the Senate floor, was rereferred to Senate Finance, which carried it over to the 2017 session. It died a quiet death in Senate Finance.
You are right about being able to provide for indigent care through means other than COPN. However, that does not address another justification for COPN–the need for hospitals to generate revenue to cover services that are money-losers, such as burn units and neonatal intensive care units.
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Great work, Dick, and I mean it. I will add to the conversation as you have framed it relying not on my research and conclusions, but rather on the research, experience and recommendations of the Federal Trade Commission and the United States Department of Justice.
1. One of the most compelling treatises on COPN was the 13-page Joint Statement of the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice to the Virginia Certificate of Public Need Work Group October 26, 2015. See it at https://www.justice.gov/atr/f318500/318549. All quotes in this paragraph are from that letter.
The letter was requested by Del. Kathy Byron, the Chairperson of that working group, to “develop specific recommendations for changes to the certificate of public need process to address any problems or challenges identified during [its] review.”
“CON laws, when enacted, had the laudable goals of reducing health care costs and improving access to care. However, it is now apparent that CON laws can prevent the efficient functioning of health care markets in several ways that may undermine those goals. First, CON laws create barriers to entry and expansion, limit consumer choice, and stifle innovation. Second, incumbent firms seeking to thwart or delay entry by new competitors may use CON laws to achieve that end. Third, as illustrated by the FTC’s recent experience in the Phoebe Putney case, CON laws can deny consumers the benefit of an effective remedy following the consummation of an anticompetitive merger. Finally, the evidence to date does not suggest that CON laws have generally succeeded in controlling costs or improving quality. For these reasons, explained more fully below, the Agencies (FTC and Antitrust Division) historically have suggested that states consider repeal or retrenchment of their CON laws and, in this case, respectfully suggest that the Work Group and the General Assembly consider whether repeal or retrenchment of Virginia’s COPN laws would best serve its citizens.”
Later in the letter “CON laws, such as Virginia’s COPN laws, require new entrants to obtain a state-issued approval before offering certain health care services. By interfering with the market forces that normally determine supply of services, CON laws can suppress competition and shield incumbent health care providers from competition from new entrants. As a result, they can:
• Delay, and raise the cost of, entry by firms that are potentially able to offer new, lower cost, more convenient, or higher quality services;
• Reduce the ability of the market to respond to consumer demand for different treatment options, settings, or prices; and
• Remove or delay the competitive pressures that typically incentivize incumbent firms to innovate, improve existing services, or introduce new ones.”
“We urge the Work Group and the General Assembly to consider that Virginia’s COPN law may be causing these results in Virginia to the detriment of health care consumers and to consider the benefit to patients if new facilities and services would be able to enter the market more easily. This new entry – and the threat of entry – could restrain the price of health care, improve the quality of care, incentivize innovation in the delivery of care, and improve access to care.”
Later: “In addition to disrupting the market forces that typically determine the supply of services, CON laws may further harm competition because competitors may take advantage of the CON process to protect their revenues. For instance, an incumbent firm may file challenges or comments to a potential competitor’s CON application merely to thwart or delay competition. As noted in an FTC-DOJ report, existing firms can use the CON process “to forestall competitors from entering an incumbent’s market.”23 This use of the CON process by competitors can not only cause delay, 24 but can also divert scarce resources away from health care innovation as potential entrants incur legal, consulting, and lobbying expenses responding to competitor challenges.”
See also in that letter “CON Laws Can Impede Effective Antitrust Remedies and Can Facilitate Anticompetitive Agreements” and “CON Laws Appear to Have Failed to Control Costs” in which the Agencies wrote “CON laws are likely to increase, rather than constrain, health care costs. ” And “CON laws may restrict investments that would benefit consumers and lower costs in the long run. Because CON laws raise the cost of investment for everyone, they make it less likely that beneficial investment will occur.” … “there is evidence suggesting that repealing or narrowing CON laws can reduce the per-patient cost of health care.”
2. The COPN provisions requiring free treatment for the uninsured poor can be made a part of the state licensing procedure. They need not be enforced by COPN. See “More Targeted Policies May Be More Effective at Ensuring Access to Care and Would Not Inflict Anticompetitive Costs” from the Agencies’ 2015 letter.
In the Conclusion of the letter:
“The Agencies recognize that states must weigh a variety of policy objectives when considering health care legislation. But, as described above, CON laws raise considerable competitive concerns and generally do not appear to have achieved their intended benefits for health care consumers. For these reasons, the Agencies historically have suggested that states consider repeal or retrenchment of their CON laws. We respectfully suggest that the Work Group and the General Assembly consider whether Virginia’s citizens are well served by its COPN laws and, if not, whether they would benefit from the repeal or retrenchment of those laws.”
I urge all to read the letter in its entirety.-
I saw references to the FTC letter and quotes from it. It is probably the strongest expression of the criticism that COPN limits competition, without offsetting advantages. I did not go into it in my discussion because my post was already a lot longer than I had anticipated.
It is interesting that the report of the work group that requested this FTC opinion did not adopt its recommendations. For the most part, the work group’s recommendations dealt with streamlining the COPN process, not getting rid of it. It did recommend exempting a limited number of specialized fa(cilities.
There was a lot of legislation introduced in the 2016 session incorporating the work group’s recommendations. Most of it went nowhere. The one that went the furthest was introduced by Del. Byron, who requested the FTC letter. Her bill (HB 350) originally went beyond the work group recommendation and called for a phasing out of the COPN process. A substitute for that bill seems to have jettisoned that approach and incorporated most of the work group recommendations. It passed the House by a large margin. It got out the Senate committee with only two dissenting votes. But, it met opposition on the Senate floor, was rereferred to Senate Finance, which carried it over to the 2017 session. It died a quiet death in Senate Finance.
You are right about being able to provide for indigent care through means other than COPN. However, that does not address another justification for COPN–the need for hospitals to generate revenue to cover services that are money-losers, such as burn units and neonatal intensive care units.
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One more note, Dick. The U.S. Department of Justice is discouraged by the federal “state action doctrine” to sue Virginia’s regional monopolies that were created and are protected under COPN. It is a sovereignty issue. But Virginia’s Attorney General can go into federal court and file cases under federal antitrust laws not to object to the fact of the monopolies, but rather their anticompetitive behavior. Cases involving vertical agreements or attempts by a vertically integrated firm to harm upstream or downstream rivals can be challenged under Sections 1 or 2 of the Sherman Act. The Act prohibits activities that restrict interstate commerce and competition in the marketplace. Corporations may be fined up to $10 million per violation. Civil lawsuits may also be filed in federal court under the Sherman Act by parties injured by prohibited conduct. Treble damages are available under the Act.
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One more note, Dick. The U.S. Department of Justice is discouraged by the federal “state action doctrine” to sue Virginia’s regional monopolies that were created and are protected under COPN. It is a sovereignty issue. But Virginia’s Attorney General can go into federal court and file cases under federal antitrust laws not to object to the fact of the monopolies, but rather their anticompetitive behavior. Cases involving vertical agreements or attempts by a vertically integrated firm to harm upstream or downstream rivals can be challenged under Sections 1 or 2 of the Sherman Act. The Act prohibits activities that restrict interstate commerce and competition in the marketplace. Corporations may be fined up to $10 million per violation. Civil lawsuits may also be filed in federal court under the Sherman Act by parties injured by prohibited conduct. Treble damages are available under the Act.
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Dick, Well done. Thank you for providing an intelligent, sober-minded look at the “other side” of the COPN debate. You raise numerous excellent points that warrant deeper investigation. Obvious ones that leap to mind are (a) the requirement that hospitals provide broad access to health care services as a condition of being granted a COPN, and (b) the related point that competitors and interlopers would “skim the cream” of the most profitable patients.
I’m astonished to see that JLARC has not looked at COPN since 1979. Given the fact that Virginia now has the highest health care costs in the nation (as measured by insurance premiums), I’d say another close look is way overdue — along with closer looks at mandated insurance benefits and the regulation of health professions.
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I think you will find that in 2015, the General Assembly’s Virginia Certificate of Public Need Work Group considered the decades-long work on the issues and outcomes of CON laws by the FTC and Justice Departments to be a better and quicker route to the truth than a JLARC study. That is Kathy Byron requested and received the letter from which I have quoted above. Certainly the more recent health insurance cost data add to the case. I don’t another JLARC study would change a single vote. Only state campaign finance reform can do that.
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Dick, Well done. Thank you for providing an intelligent, sober-minded look at the “other side” of the COPN debate. You raise numerous excellent points that warrant deeper investigation. Obvious ones that leap to mind are (a) the requirement that hospitals provide broad access to health care services as a condition of being granted a COPN, and (b) the related point that competitors and interlopers would “skim the cream” of the most profitable patients.
I’m astonished to see that JLARC has not looked at COPN since 1979. Given the fact that Virginia now has the highest health care costs in the nation (as measured by insurance premiums), I’d say another close look is way overdue — along with closer looks at mandated insurance benefits and the regulation of health professions.
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I think you will find that in 2015, the General Assembly’s Virginia Certificate of Public Need Work Group considered the decades-long work on the issues and outcomes of CON laws by the FTC and Justice Departments to be a better and quicker route to the truth than a JLARC study. That is Kathy Byron requested and received the letter from which I have quoted above. Certainly the more recent health insurance cost data add to the case. I don’t another JLARC study would change a single vote. Only state campaign finance reform can do that.
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Jim –
Thank you for extract of detailed letter from Federal Trade Commission and the United States Department of Justice on this subject to the Virginia Certificate of Public Need Work Group October 26, 2015. The concerns expressed in that letter re COPN’s impacts on Virginia health system’s supply, demand, and service readiness to serve the public’s health in Virginia are likely to be put to the test in the field in near future. Hence this debate likely will be played out in real time quite soon.
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Jim –
Thank you for extract of detailed letter from Federal Trade Commission and the United States Department of Justice on this subject to the Virginia Certificate of Public Need Work Group October 26, 2015. The concerns expressed in that letter re COPN’s impacts on Virginia health system’s supply, demand, and service readiness to serve the public’s health in Virginia are likely to be put to the test in the field in near future. Hence this debate likely will be played out in real time quite soon.
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Dick, outstanding job. I too appreciate hearing the opposite arguments. Too bad “climate science” is except from such rigor.
A COPN makes sense in a less competitive environment where the producer has market power. Market power is often defined as the ability of a firm to profitably raise the market price of a good or service over marginal cost. Where a business has market power, it is often subject to some form of price regulation. As most price regulation has some relationship to investment and expenses, the regulated company has an incentive to be a high-investment, high-expense operator (Dominion anyone?).
In theory, the COPN process limits investment directly and expenses indirectly. Of course, the incumbent operator has a desire to limit competition by keeping other competitors out of the market through the COPN process. I’d argue that, except where we believe a single provider is likely to lose money because of the nature of the market, the COPN process should be eliminated by law. That should cover most geographic markets in Virginia.
It may, however, make sense to use the COPN in very low-income markets that need a subsidy to survive. Don’t let the amount of subsidy grow beyond what is truly needed to keep the medical facility open. Ditto for very rural markets that also need a subsidy to operate.
As far as the state action doctrine is concerned, I don’t see it as limiting as Mr. Sherlock suggests. AT&T and the Bell System defended their monopoly in part based on the state action doctrine (Parker v. Brown). Judge Harold Greene rejected that argument. U.S. v. AT&T, 552 F. Supp. 131 (D.D.C. 1982).
The court wrote: “In any event, the Parker v. Brown line of cases does not establish that all state regulation per se serves to immunize activities from the federal antitrust laws. Such an immunity exists only if (1) the restraint is clearly articulated and affirmatively expressed as state policy, and (2) the policy is actively supervised by the State.” I suspect that Virginia could argue the restraint is “clearly articulated and affirmatively expressed as state policy.” However, is the policy actively supervised by the state? Or does the state really just assist the “regulated parties’s” effort to control the market?
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Two points.
1. COPN to my knowledge has done nothing for low income areas. First, it need not use the process to limit facilities and equipment where no one wishes to provide them. Second, 12VAC5-220-335 Request for Applications (Rfa), has a provision to increase beds, but in my research I have been unable to find an instance of it ever having been used. The language in the law is:
“Pursuant to § 32.1-102.3:2 A, B, and C of the Code of Virginia, the commissioner shall periodically issue a Request for Applications (RFA). An RFA shall be issued at least annually.”
“A RFA from project applicants proposing projects which would result in an increase in the number of beds are provided shall be based on analyses of the need for increases in the bed supply in each of Virginia’s planning districts in accordance with the applicable standards included in the State Medical Facilities Plan. ”
The primary tool the state has used to prop up providers in low income areas was Medicaid expansion.
2. State Action Doctrine.
Cornell Law School’s summary of the state action doctrine is “Under the state-action doctrine elucidated in Parker v. Brown, 317 U.S. 341 (1943), state and municipal authorities are immune from federal antitrust lawsuits for actions taken pursuant to a clearly expressed state policy that, when legislated, had foreseeable anticompetitive effects. When a state approves and regulates certain conduct, even if it is anticompetitive under FTC or DOJ standards, the federal government must respect the decision of the state. Therefore, if a state sanctions anticompetitive conduct, the state is immune from investigation and possible prosecution by the FTC.”
“This doctrine can apply to provide immunity to non-state actors as well if a two-pronged requirement is met: (1) there must be a clearly articulated policy to displace competition; and (2) there must be active supervision by the state of the policy or activity.”
State action doctrine immunity exists only if (1) the restraint is clearly articulated and affirmatively expressed as state policy (it is), and (2) the policy is actively supervised by the State. COPN compliance is actively supervised, but the business activities of the state-created monopolies are not.
Under the doctrine, private parties receive state action immunity only if their anticompetitive actions are pursuant to a clearly articulated state policy and are actively supervised by the state.
I argue that it is demonstrable that the Commonwealth makes no attempt to oversee the anticompetitive actions of the state-created monopolies, so that an antitrust suit in federal court, whether by filed the DOJ, the state Attorney General or private injured parties could clear that hurdle with relative ease.
Yet the Department of Justice remains gun shy and Virginia Attorneys General have shown no interest so it appears that a class action suit by injured parties in federal court is the most likely way that miscreants will be before a judge on antitrust charges.
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Dick, outstanding job. I too appreciate hearing the opposite arguments. Too bad “climate science” is except from such rigor.
A COPN makes sense in a less competitive environment where the producer has market power. Market power is often defined as the ability of a firm to profitably raise the market price of a good or service over marginal cost. Where a business has market power, it is often subject to some form of price regulation. As most price regulation has some relationship to investment and expenses, the regulated company has an incentive to be a high-investment, high-expense operator (Dominion anyone?).
In theory, the COPN process limits investment directly and expenses indirectly. Of course, the incumbent operator has a desire to limit competition by keeping other competitors out of the market through the COPN process. I’d argue that, except where we believe a single provider is likely to lose money because of the nature of the market, the COPN process should be eliminated by law. That should cover most geographic markets in Virginia.
It may, however, make sense to use the COPN in very low-income markets that need a subsidy to survive. Don’t let the amount of subsidy grow beyond what is truly needed to keep the medical facility open. Ditto for very rural markets that also need a subsidy to operate.
As far as the state action doctrine is concerned, I don’t see it as limiting as Mr. Sherlock suggests. AT&T and the Bell System defended their monopoly in part based on the state action doctrine (Parker v. Brown). Judge Harold Greene rejected that argument. U.S. v. AT&T, 552 F. Supp. 131 (D.D.C. 1982).
The court wrote: “In any event, the Parker v. Brown line of cases does not establish that all state regulation per se serves to immunize activities from the federal antitrust laws. Such an immunity exists only if (1) the restraint is clearly articulated and affirmatively expressed as state policy, and (2) the policy is actively supervised by the State.” I suspect that Virginia could argue the restraint is “clearly articulated and affirmatively expressed as state policy.” However, is the policy actively supervised by the state? Or does the state really just assist the “regulated parties’s” effort to control the market?
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Two points.
1. COPN to my knowledge has done nothing for low income areas. First, it need not use the process to limit facilities and equipment where no one wishes to provide them. Second, 12VAC5-220-335 Request for Applications (Rfa), has a provision to increase beds, but in my research I have been unable to find an instance of it ever having been used. The language in the law is:
“Pursuant to § 32.1-102.3:2 A, B, and C of the Code of Virginia, the commissioner shall periodically issue a Request for Applications (RFA). An RFA shall be issued at least annually.”
“A RFA from project applicants proposing projects which would result in an increase in the number of beds are provided shall be based on analyses of the need for increases in the bed supply in each of Virginia’s planning districts in accordance with the applicable standards included in the State Medical Facilities Plan. ”
The primary tool the state has used to prop up providers in low income areas was Medicaid expansion.
2. State Action Doctrine.
Cornell Law School’s summary of the state action doctrine is “Under the state-action doctrine elucidated in Parker v. Brown, 317 U.S. 341 (1943), state and municipal authorities are immune from federal antitrust lawsuits for actions taken pursuant to a clearly expressed state policy that, when legislated, had foreseeable anticompetitive effects. When a state approves and regulates certain conduct, even if it is anticompetitive under FTC or DOJ standards, the federal government must respect the decision of the state. Therefore, if a state sanctions anticompetitive conduct, the state is immune from investigation and possible prosecution by the FTC.”
“This doctrine can apply to provide immunity to non-state actors as well if a two-pronged requirement is met: (1) there must be a clearly articulated policy to displace competition; and (2) there must be active supervision by the state of the policy or activity.”
State action doctrine immunity exists only if (1) the restraint is clearly articulated and affirmatively expressed as state policy (it is), and (2) the policy is actively supervised by the State. COPN compliance is actively supervised, but the business activities of the state-created monopolies are not.
Under the doctrine, private parties receive state action immunity only if their anticompetitive actions are pursuant to a clearly articulated state policy and are actively supervised by the state.
I argue that it is demonstrable that the Commonwealth makes no attempt to oversee the anticompetitive actions of the state-created monopolies, so that an antitrust suit in federal court, whether by filed the DOJ, the state Attorney General or private injured parties could clear that hurdle with relative ease.
Yet the Department of Justice remains gun shy and Virginia Attorneys General have shown no interest so it appears that a class action suit by injured parties in federal court is the most likely way that miscreants will be before a judge on antitrust charges.
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” … there are still over 300,000 Virginians without insurance …”
Why?
We were told that if we’d only agree to pay higher taxes under Obamacare then we could tackle the problem of uninsured people. Then we were told if we would only accept taxing health care providers (with those taxes passed on to the public) then we could expand Medicaid for the working poor who weren’t being covered.
Now we still have 300,000 uninsured Virginians? That’s 3.5% of the population.
What additional tax increases are needed to cover this?
Uninsured people seems like transportation in Virginia. No matter how much we tax and spend we just can’t solve the problem.
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This was an estimate in the summer of 2018. From what I can gather, the group is comprised of folks who make too much to qualify for even the expanded Medicaid but not enough that they can afford health insurance. I would have thought that the Obamacare subsidies would enable these folks to get insurance, but apparently not. Because that was not the major idea of my post, I decided not to go down that rabbit hole.
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If subsidies are available for individuals to purchase Obamacare coverage, don’t these people have a moral obligation to purchase coverage? If not, why not? A lot of people are paying higher taxes on investment income to provide the subsidy.
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Ah, they USED to with the “mandate” but then the GOP gutted that part of the law, people no longer had to.
Then they cut the re-insurance, which is what kept the premiums low.
So we end up with a lot of people who simply cannot afford insurance, even Obamacare because the subsidies are not sufficient for it to be affordable.
A lot of service workers fall in that middle area – too much for MedicAid and no way they can afford Obamacare after it’s been damaged by the changes made to it.
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I know several of “these people” who would be glad, moral obligation aside, to purchase health coverage on the ACA exchange if they could afford it but cannot. They would be glad to purchase catastrophic coverage, but the ACA made its availability extremely limited.
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Obamacare is too expensive for many people no question – but when the GOP killed the reinsurance premiums skyrocketed. The GOP has steadily tried to harm it – to MAKE it unaffordable.
But again – it’s not just those folks who impose costs on hospitals. Even employer-provided these days has high co-pays and deductibles to the point where a big hospital bill may be too much for their finances.
Medicare also. Basic Medicare pays 80%. You have an 80,000 bill and your sole income is 20K in social security – you can’t pay or you can but it will take 10-20 years and you’re 75.
The number one leading cause of bankruptcies IS Medical debt.
Hospitals cannot turn away anyone and they cannot do a “credit check” before they are admitted and require an up-front payment. We’ve ignored this problem for a long time and left it up to hospitals to figure out.
NOW, we come back with this “great” idea of more competition for medical services and they turn out to be exactly the ones the hospitals had expressly developed to help them pay for uncompensated care.
The pro COPN folks seem to not care about this. They just want what they want and leave it to the hospitals how to figure out things if COPON goes away.
It’s no wonder the Hospitals have built a powerful lobby to defend this.
Until the pro-COPN folks get involved in an equitable solution – it will continue this way.
The more profitable hospitals only need to look around at the less profitable hospitals that are hanging by a thread or have closed to remind them of what happens if they lose their profit centers.
We need an equitable solution.
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” … there are still over 300,000 Virginians without insurance …”
Why?
We were told that if we’d only agree to pay higher taxes under Obamacare then we could tackle the problem of uninsured people. Then we were told if we would only accept taxing health care providers (with those taxes passed on to the public) then we could expand Medicaid for the working poor who weren’t being covered.
Now we still have 300,000 uninsured Virginians? That’s 3.5% of the population.
What additional tax increases are needed to cover this?
Uninsured people seems like transportation in Virginia. No matter how much we tax and spend we just can’t solve the problem.
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This was an estimate in the summer of 2018. From what I can gather, the group is comprised of folks who make too much to qualify for even the expanded Medicaid but not enough that they can afford health insurance. I would have thought that the Obamacare subsidies would enable these folks to get insurance, but apparently not. Because that was not the major idea of my post, I decided not to go down that rabbit hole.
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If subsidies are available for individuals to purchase Obamacare coverage, don’t these people have a moral obligation to purchase coverage? If not, why not? A lot of people are paying higher taxes on investment income to provide the subsidy.
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Ah, they USED to with the “mandate” but then the GOP gutted that part of the law, people no longer had to.
Then they cut the re-insurance, which is what kept the premiums low.
So we end up with a lot of people who simply cannot afford insurance, even Obamacare because the subsidies are not sufficient for it to be affordable.
A lot of service workers fall in that middle area – too much for MedicAid and no way they can afford Obamacare after it’s been damaged by the changes made to it.
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I know several of “these people” who would be glad, moral obligation aside, to purchase health coverage on the ACA exchange if they could afford it but cannot. They would be glad to purchase catastrophic coverage, but the ACA made its availability extremely limited.
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Obamacare is too expensive for many people no question – but when the GOP killed the reinsurance premiums skyrocketed. The GOP has steadily tried to harm it – to MAKE it unaffordable.
But again – it’s not just those folks who impose costs on hospitals. Even employer-provided these days has high co-pays and deductibles to the point where a big hospital bill may be too much for their finances.
Medicare also. Basic Medicare pays 80%. You have an 80,000 bill and your sole income is 20K in social security – you can’t pay or you can but it will take 10-20 years and you’re 75.
The number one leading cause of bankruptcies IS Medical debt.
Hospitals cannot turn away anyone and they cannot do a “credit check” before they are admitted and require an up-front payment. We’ve ignored this problem for a long time and left it up to hospitals to figure out.
NOW, we come back with this “great” idea of more competition for medical services and they turn out to be exactly the ones the hospitals had expressly developed to help them pay for uncompensated care.
The pro COPN folks seem to not care about this. They just want what they want and leave it to the hospitals how to figure out things if COPON goes away.
It’s no wonder the Hospitals have built a powerful lobby to defend this.
Until the pro-COPN folks get involved in an equitable solution – it will continue this way.
The more profitable hospitals only need to look around at the less profitable hospitals that are hanging by a thread or have closed to remind them of what happens if they lose their profit centers.
We need an equitable solution.
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There are about 100,000 births in Virginia every year. About 37% of them are paid for by Medicaid at about 10K or so per.
Uncompensated care dropped from a billion to 600 million after the Medicaid Expansion.
Keep in mind that neither Medicare nor employer-provided cover all costs and some folks with high costs end up not being able to pay the difference.
Medicare covers only 80% and believe it or not , some people don’t have Medicare unless Medicaid pays the premiums…of $164 a month – that give you insight to the financial status of a lot of folks of Medicare age.Seems to me that either the hospitals have to be compensated for their losses in a no-COPN world OR the competitors have to take their share of the uncompensated costs.
What you can’t do is let the for-profit folks skim the profitable services and dump even more of the charitable care on the hospitals.
I think that’s always going to be a compelling argument in the COPN world.
I’m all for the competition – but it’s also irresponsible to continue to let the hospitals figure out how to cover their losses.
folks have to bring solutions to the table.
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There are about 100,000 births in Virginia every year. About 37% of them are paid for by Medicaid at about 10K or so per.
Uncompensated care dropped from a billion to 600 million after the Medicaid Expansion.
Keep in mind that neither Medicare nor employer-provided cover all costs and some folks with high costs end up not being able to pay the difference.
Medicare covers only 80% and believe it or not , some people don’t have Medicare unless Medicaid pays the premiums…of $164 a month – that give you insight to the financial status of a lot of folks of Medicare age.Seems to me that either the hospitals have to be compensated for their losses in a no-COPN world OR the competitors have to take their share of the uncompensated costs.
What you can’t do is let the for-profit folks skim the profitable services and dump even more of the charitable care on the hospitals.
I think that’s always going to be a compelling argument in the COPN world.
I’m all for the competition – but it’s also irresponsible to continue to let the hospitals figure out how to cover their losses.
folks have to bring solutions to the table.
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Larry, now that Bon Secours has bought the three hospitals in Southside from CHS, all of Virginia’s current hospitals systems were profitable in 2018 even before the hugely positive impact of Medicaid expansion and Medicaid rate increases effective 1 Jan. 2019.
As far as I can detect, the only 501c3 “not-for-profit public charity” hospital system in Virginia that acts like one is Bon Secours. To the rest, not-for-profit means “not-for-tax” while they chase profits with ever bit the fervor of their for-profit brethren. Their CEO’s bonuses depend upon increasing revenue and margins. Revenue times margin is profit in any business.
If we repealed COPN tomorrow the regional monopolies it created would remain, still with no one at the state government monitoring their business activities. In point of fact, the pockets of those companies are so deep that COPN repeal or reform legislation will have to make provisions that prevent them from using their cash to expand those monopolies. -
Larry, now that Bon Secours has bought the three hospitals in Southside from CHS, all of Virginia’s current hospitals systems were profitable in 2018 even before the hugely positive impact of Medicaid expansion and Medicaid rate increases effective 1 Jan. 2019.
As far as I can detect, the only 501c3 “not-for-profit public charity” hospital system in Virginia that acts like one is Bon Secours. To the rest, not-for-profit means “not-for-tax” while they chase profits with ever bit the fervor of their for-profit brethren. Their CEO’s bonuses depend upon increasing revenue and margins. Revenue times margin is profit in any business.
If we repealed COPN tomorrow the regional monopolies it created would remain, still with no one at the state government monitoring their business activities. In point of fact, the pockets of those companies are so deep that COPN repeal or reform legislation will have to make provisions that prevent them from using their cash to expand those monopolies. -
Larry, the hospitals did not create a powerful lobby to defend COPN, they used their powerful lobby to create it.
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okay – but either way – they had to do something to pay for uncompensated care because no one else was helping to do it. They were left to their own devices and they did what they did. Now we want to undo it and of course they’re not going to have to start again on how to pay for uncompensated care.
I think it’s actually irresponsible for the govt to stand aside and watch the hospitals have to figure out how to deal with uncompensated care then when they do – scream about “profitable services” !
we need a holistic approach to this – not one where we push costs off on others.
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Larry, the hospitals did not create a powerful lobby to defend COPN, they used their powerful lobby to create it.
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okay – but either way – they had to do something to pay for uncompensated care because no one else was helping to do it. They were left to their own devices and they did what they did. Now we want to undo it and of course they’re not going to have to start again on how to pay for uncompensated care.
I think it’s actually irresponsible for the govt to stand aside and watch the hospitals have to figure out how to deal with uncompensated care then when they do – scream about “profitable services” !
we need a holistic approach to this – not one where we push costs off on others.
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I think as a start, I would like to know how much uncompensated care these hospitals now have and how they cover it.
and I’m curious how some hospitals are so profitable while others are closing.
health care is complicated and I certainly do not understand it all but I’d certainly support COPN if it could be shown it has no effect on all hospitals , not just the profitable ones.
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I think as a start, I would like to know how much uncompensated care these hospitals now have and how they cover it.
and I’m curious how some hospitals are so profitable while others are closing.
health care is complicated and I certainly do not understand it all but I’d certainly support COPN if it could be shown it has no effect on all hospitals , not just the profitable ones.
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Would I be wrong to characterize the core argument as the hospitals claiming they have to accept all, cannot turn away, and thus absorb uncompensated costs and the anti-COPN folks as saying that hospitals are making too much profit regardless of their other “costs” because their net profit is what they had left over after they accounted for their uncompensated care costs?
Do the anti-COPN folks have various compromise options besides doing away with COPN entirely and across all of Virginia?
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Your first assumption is correct.
All in, all the revenue and costs accounted for, including bad debts and charity care, the profit margins of Virginia’s hospitals when measured as systems of hospitals owned by the same corporations are at least three standard deviations above the national norm. I also could easily make the case from state statistics that the best corporate citizens of all of the hospital systems in Virginia are Bon Secours, a Catholic charity, and HCA, the largest for-profit hospital system in America. HCA not only provides charity care and treats an above average percentage of Medicaid patients but also contributes an amazing amount of tax revenue because they are honest about their mission.As for compromise options,
I drafted and my Delegate, Jason Miyares (R-Virginia Beach) introduced two bills of which the first would have improved primary care access for the poorest Virginians. The second would have exempted physician-owned surgical centers of up to two ORs each from COPN but would have made them comply with COPN rules for treating the poor.
The first one, based on Maryland data, saved Maryland Medicaid more than $80 million in reduced inpatient admissions over a five year trial in only five very small communities in Maryland at a cost to the government of $15 million. In the 2020 General Assembly, that one won nearly unanimously in the Health committee of the House but lost the next day in an Appropriations (yes, Appropriations) subcommittee. Two of the Democrats were on both committees. After and long night of lobbying, those two changed their votes to no.
The second offered to save Virginians $500 million a year in reduced surgical costs. You would recognize the details of those bills as more liberal than conservative. Yet each lost with a majority of Democratic no votes because of fierce opposition by the hospital lobbyists. That in turn is due to Virginia’s lack of limits on campaign donations. Many of the Democrats and a few of the Republicans have accepted six figure donations from the hospital and health system lobbyists. Money talks, and in this case demands.
End of story. I truly hate to report it, but my experience over a number of years is that the General Assembly may have to pass campaign finance reform before we will get COPN reform. The current Black Swan event may intervene.
The horrible shortfall that COVID 19 has exposed in Virginia’s number of medical personnel and facilities relative to most states is clearly traceable to COPN. That I think may be its downfall.
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Would I be wrong to characterize the core argument as the hospitals claiming they have to accept all, cannot turn away, and thus absorb uncompensated costs and the anti-COPN folks as saying that hospitals are making too much profit regardless of their other “costs” because their net profit is what they had left over after they accounted for their uncompensated care costs?
Do the anti-COPN folks have various compromise options besides doing away with COPN entirely and across all of Virginia?
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Your first assumption is correct.
All in, all the revenue and costs accounted for, including bad debts and charity care, the profit margins of Virginia’s hospitals when measured as systems of hospitals owned by the same corporations are at least three standard deviations above the national norm. I also could easily make the case from state statistics that the best corporate citizens of all of the hospital systems in Virginia are Bon Secours, a Catholic charity, and HCA, the largest for-profit hospital system in America. HCA not only provides charity care and treats an above average percentage of Medicaid patients but also contributes an amazing amount of tax revenue because they are honest about their mission.As for compromise options,
I drafted and my Delegate, Jason Miyares (R-Virginia Beach) introduced two bills of which the first would have improved primary care access for the poorest Virginians. The second would have exempted physician-owned surgical centers of up to two ORs each from COPN but would have made them comply with COPN rules for treating the poor.
The first one, based on Maryland data, saved Maryland Medicaid more than $80 million in reduced inpatient admissions over a five year trial in only five very small communities in Maryland at a cost to the government of $15 million. In the 2020 General Assembly, that one won nearly unanimously in the Health committee of the House but lost the next day in an Appropriations (yes, Appropriations) subcommittee. Two of the Democrats were on both committees. After and long night of lobbying, those two changed their votes to no.
The second offered to save Virginians $500 million a year in reduced surgical costs. You would recognize the details of those bills as more liberal than conservative. Yet each lost with a majority of Democratic no votes because of fierce opposition by the hospital lobbyists. That in turn is due to Virginia’s lack of limits on campaign donations. Many of the Democrats and a few of the Republicans have accepted six figure donations from the hospital and health system lobbyists. Money talks, and in this case demands.
End of story. I truly hate to report it, but my experience over a number of years is that the General Assembly may have to pass campaign finance reform before we will get COPN reform. The current Black Swan event may intervene.
The horrible shortfall that COVID 19 has exposed in Virginia’s number of medical personnel and facilities relative to most states is clearly traceable to COPN. That I think may be its downfall.
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Thanks Jim – if the proposals actually save Medicaid money, I can support that.
I don’t doubt that they have very good and well paid lobbyists. If in addition is moving at the time votes are changing to no – I would hope voters see that.
I don’t care even if an elected shares and represents my interests but if they take money for no votes , they’ll not get mine any more.
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Thanks Jim – if the proposals actually save Medicaid money, I can support that.
I don’t doubt that they have very good and well paid lobbyists. If in addition is moving at the time votes are changing to no – I would hope voters see that.
I don’t care even if an elected shares and represents my interests but if they take money for no votes , they’ll not get mine any more.
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Thank you Larry. We have to find a way to get large numbers of voters informed and angry enough to vote them out. That is tough sledding. No choice but to try.
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Thank you Larry. We have to find a way to get large numbers of voters informed and angry enough to vote them out. That is tough sledding. No choice but to try.
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Jim, I admire your commitment to this issue and your initiative in actually drafting legislation and then persuading your delegate to introduce the bills. More citizens need to be this involved. If this were your first experience with the General Assembly, it was probably an eye-opening experience and, based on the results and your comments, a disappointing and somewhat disheartening one. Don’t give up. It often takes multiple attempts before new ideas are adopted by the legislature.
Based on my experience with the legislature and the budget process, here are my comments, for what they are worth:
Your delegate is in the minority party and does not have a lot of seniority. That is always a problem, but it was an even bigger problem in this last session with the Democrats dizzy with excitement over finally having the majority.
Miyares introduced 35 bills, a lot for anyone, but especially so for someone so junior and in the minority party. To make it worse, the bills covered the waterfront: K-12 education, criminal justice, health, tax, agriculture, higher ed, building codes, insurance, etc. It probably smacked of arrogance, as far as the Democrats were concerned. But, regardless of any kind of impression it created, having that many bills meant that he was running all over the place trying to cover them. I don’t know how high your bills were on his priority list, but, if they were not very high, he would not have had much time to work to build support among delegates for them.
The ambulatory surgical center bill—(HB 1094). There is nothing in the bill’s language that would have required these centers exempted from COPN to comply with COPN rules for treating the poor. (From what I could tell, there are no specific COPN “rules” relating to indigent care. The specific conditions are written into the individual applications.) Also, there is nothing in the bill’s language that would limit the size of such exempted facilities to two ORs. Finally, although these would be “physician-owned”, the definition of that term requires only 51% ownership by physicians. The remaining 49% could be lawyers or bankers or mobsters looking for a good return on their investment.
The health enterprise zone bill (HB 608)—This one has promise. I like the original bill better than the substitute. When I read the substitute first, it was not clear what the purpose of the bill was. It seemed to be a fuzzy, half-baked idea. Then, when I read the original bill, the purpose and intended results were much clearer. I like spelling out the parameters of the program in statute, rather than letting DOH set it up.
As for referring it to the House Appropriations Committee, the fiscal impact statement showed a cost and, under those circumstances, it is normal to refer a bill to HAC. Some comments on that process:
• Technically, Sickles and Krizek did not “switch” votes. When a bill is in a subject area committee (HWI, in this case), it is supposed to be considered on its substance or merits. When a bill is in HAC, the consideration is not supposed to be on substance or merits, but cost alone.
• The bill got done in by the cost.
• The fiscal impact statement showed a cost of $152,000. This impact statement has all the hallmarks of having being written by DOH. Normally, DPB would not list the costs of a partial FTE (0.1 program manager and 0.4 epidemiologist; that is ridiculous). In DPB’s defense, they were overwhelmed with bills and fiscal impact statements and were doing anything just to get them out the door and thus were using whatever the agencies provided them.
• Even without that cost, however, there was the matter of the HEZ Fund. Without money in the Fund, the program is moot. With the costs of student loan forgiveness and capital grants, there was a need for a significant amount. There was no one on HAC to push the funding needed for the Fund.
• Miyares did put in a budget amendment request for $50,000, which would not have been enough to cover the DOH costs on the FIS, but, that would not have stopped HAC if the Fund had been funded.
• You raised the issue of Medicaid savings. First, those are speculative and that is hard to show in a FIS. At the most, the drafter of the FIS can only note that there is the possibility of savings down the road after the up-front money is provided. Second, that would have been savings for Medicaid, which is administered by DMAS, not DOH. Agencies are very self-focused. If DOH wrote this FIS, as I suspect, its perspective would have been its costs as an agency; it would not have realized any savings and thus did not list any. If the DPB analyst had had as much time to analyze this bill as she needed, she would have noted the Medicaid savings possibility.This should be an issue that appeals to Democrats. Furthermore, the hospitals should not be in opposition, at least not fighting it as much as they would a COPN bill. If you want to continue to push for it, I recommend that you meet with legislators to explain it to them. That meeting or meetings should be before the next session begins, so they will have time to focus on what you are telling them. (Of course, the coronavirus crisis is going to make such meetings impossible to arrange now.)
Sickles is the key. He is chairman of HWI, where the bill would first go; co-chairman of HAC; and chairman of the HAC subcommittee on health and human services. HAC meets, in normal times, in Richmond once a month. It would be ideal if you and Miyares could arrange to have a meeting with him and explain the bill, along with the results of a similar program in Maryland. If Miyares cannot make such a meeting, it would be good if he could pave the way for you.
I would recommend that you have a similar meeting with folks in the administration. If you get the Governor’s office on board, you are in good shape. They usually respond to requests from legislators for a meeting. If you can’t get a meeting with the Secretary of Health and Human Services, try one of his deputies.One other suggestion. It always helps if you can provide a source of revenue for any new fund that is being established. There already exists something called the Virginia Health Care Fund. A lot of money gets dumped into that fund. According to the Code, the money is to be used “solely for the provision of health care services,” including community health services. Any bill you draft could provide for a transfer of $XXXXX from the Virginia Health Care Fund to the Health Enterprise Zone Fund. With that approach, you would not have to ask for additional general fund support of the Health Enterprise Zone Fund.
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Dick, I am not a lobbyist and have no intention of becoming one. We both know that the actual problem with legislation on health care subjects is Virginia’s unlimited campaign donations and the political power of the hospitals. No amount of scurrying around in the General Assembly will move any bill the hospitals don’t want.
Del. Miyares’ ambulatory surgical bill had everything you suggest in it when it was submitted. Others changed it. There was never enough information available while it was being processed and amended to intervene, which neither I nor Del. Miyares could done any way. He is on neither the House Committee on Health, Welfare and Institutions nor Appropriations. Those are is the leadership’s and committee’s jobs assuming they support any bill. The Democrats did not.
Finally, it is not true that costs did these bills in. The Governor “found” an extra $300 million in budget authority in mid session. The Assembly adopted a $135 billion dollar two year budget. If these bills were of any priority at all to the Democrats, the money was available.
The $500 million dollars in annual savings to Virginians if the ambulatory surgical bill had been passed is based on the roughly 50% lower costs in that setting and the number of physician-owned surgery centers in Maryland, with a smaller population and the same exemption from their CON law. The patient revenue realized in 2018 by Virginia’s hospitals was $22 billion. Subtract a billion in revenue without even recognizing the lower costs would have still left them at an average of 5% operating margins, still well above the national average. There should have been zero budget costs in this exemption. The physician-owned centers would still have to be licensed and inspected like every other Medicaid certified facility. The math suggests that the bill would lower Medicaid costs by a $100 million a year and would pay taxes. But the hospitals won’t hear of it and most Democrats and a few Republicans won’t buck them.
As for the Health Enterprise Zone bill, it also emulates a proven program in Maryland. It was a model of liberal legislation. The House Committee on Health, Welfare and Institutions voted 21-1 to approve it. The Appropriations committee defeated it the next day after relentless all night lobbying against it by hospital interests. The costs in Maryland over five years were $15 million, all costs included. The savings there were assessed by Johns Hopkins School of Business. Their study linked the five small Maryland Health Enterprise Zones in the test program to a decline of more than 18,000 inpatient stays in the four years of the initiative, and an overall health care cost reduction of about $93 million, most of that in Medicaid. Perhaps the reduced inpatient stays statistic provoked some of the negative feelings on the part of the hospital lobby. Perhaps the Democrats did not want a junior Republican to get the credit. It lost.
As for any possibilities of misunderstandings, I provided that Johns Hopkins study to the health and appropriations committee members personally.
I also went to Richmond and personally briefed senior leaders before the session on both bills.
Hospitals 2, citizens 0. All the inside baseball in the world would not have changed the outcome.
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I am surprised to hear about the “relentless overnight lobbying by the hospital interests.” It is difficult to understand how they were threatened by the hospital enterprise zone bill.
You need to keep trying. Somebody has to lobby. As for providing material to members, I don’t know what you mean by “provided”. If you just handed them some material, that is not going to do much good. They get tons of stuff during the session, and this past session was worst than most. Also, I am not sure what senior leaders you briefed, but, just before the session, there was so much going on, it probably went in one ear and out the other. It is best to catch them between sessions–that is when the professional lobbyists do their best work, building familiarity.
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Jim, I admire your commitment to this issue and your initiative in actually drafting legislation and then persuading your delegate to introduce the bills. More citizens need to be this involved. If this were your first experience with the General Assembly, it was probably an eye-opening experience and, based on the results and your comments, a disappointing and somewhat disheartening one. Don’t give up. It often takes multiple attempts before new ideas are adopted by the legislature.
Based on my experience with the legislature and the budget process, here are my comments, for what they are worth:
Your delegate is in the minority party and does not have a lot of seniority. That is always a problem, but it was an even bigger problem in this last session with the Democrats dizzy with excitement over finally having the majority.
Miyares introduced 35 bills, a lot for anyone, but especially so for someone so junior and in the minority party. To make it worse, the bills covered the waterfront: K-12 education, criminal justice, health, tax, agriculture, higher ed, building codes, insurance, etc. It probably smacked of arrogance, as far as the Democrats were concerned. But, regardless of any kind of impression it created, having that many bills meant that he was running all over the place trying to cover them. I don’t know how high your bills were on his priority list, but, if they were not very high, he would not have had much time to work to build support among delegates for them.
The ambulatory surgical center bill—(HB 1094). There is nothing in the bill’s language that would have required these centers exempted from COPN to comply with COPN rules for treating the poor. (From what I could tell, there are no specific COPN “rules” relating to indigent care. The specific conditions are written into the individual applications.) Also, there is nothing in the bill’s language that would limit the size of such exempted facilities to two ORs. Finally, although these would be “physician-owned”, the definition of that term requires only 51% ownership by physicians. The remaining 49% could be lawyers or bankers or mobsters looking for a good return on their investment.
The health enterprise zone bill (HB 608)—This one has promise. I like the original bill better than the substitute. When I read the substitute first, it was not clear what the purpose of the bill was. It seemed to be a fuzzy, half-baked idea. Then, when I read the original bill, the purpose and intended results were much clearer. I like spelling out the parameters of the program in statute, rather than letting DOH set it up.
As for referring it to the House Appropriations Committee, the fiscal impact statement showed a cost and, under those circumstances, it is normal to refer a bill to HAC. Some comments on that process:
• Technically, Sickles and Krizek did not “switch” votes. When a bill is in a subject area committee (HWI, in this case), it is supposed to be considered on its substance or merits. When a bill is in HAC, the consideration is not supposed to be on substance or merits, but cost alone.
• The bill got done in by the cost.
• The fiscal impact statement showed a cost of $152,000. This impact statement has all the hallmarks of having being written by DOH. Normally, DPB would not list the costs of a partial FTE (0.1 program manager and 0.4 epidemiologist; that is ridiculous). In DPB’s defense, they were overwhelmed with bills and fiscal impact statements and were doing anything just to get them out the door and thus were using whatever the agencies provided them.
• Even without that cost, however, there was the matter of the HEZ Fund. Without money in the Fund, the program is moot. With the costs of student loan forgiveness and capital grants, there was a need for a significant amount. There was no one on HAC to push the funding needed for the Fund.
• Miyares did put in a budget amendment request for $50,000, which would not have been enough to cover the DOH costs on the FIS, but, that would not have stopped HAC if the Fund had been funded.
• You raised the issue of Medicaid savings. First, those are speculative and that is hard to show in a FIS. At the most, the drafter of the FIS can only note that there is the possibility of savings down the road after the up-front money is provided. Second, that would have been savings for Medicaid, which is administered by DMAS, not DOH. Agencies are very self-focused. If DOH wrote this FIS, as I suspect, its perspective would have been its costs as an agency; it would not have realized any savings and thus did not list any. If the DPB analyst had had as much time to analyze this bill as she needed, she would have noted the Medicaid savings possibility.This should be an issue that appeals to Democrats. Furthermore, the hospitals should not be in opposition, at least not fighting it as much as they would a COPN bill. If you want to continue to push for it, I recommend that you meet with legislators to explain it to them. That meeting or meetings should be before the next session begins, so they will have time to focus on what you are telling them. (Of course, the coronavirus crisis is going to make such meetings impossible to arrange now.)
Sickles is the key. He is chairman of HWI, where the bill would first go; co-chairman of HAC; and chairman of the HAC subcommittee on health and human services. HAC meets, in normal times, in Richmond once a month. It would be ideal if you and Miyares could arrange to have a meeting with him and explain the bill, along with the results of a similar program in Maryland. If Miyares cannot make such a meeting, it would be good if he could pave the way for you.
I would recommend that you have a similar meeting with folks in the administration. If you get the Governor’s office on board, you are in good shape. They usually respond to requests from legislators for a meeting. If you can’t get a meeting with the Secretary of Health and Human Services, try one of his deputies.One other suggestion. It always helps if you can provide a source of revenue for any new fund that is being established. There already exists something called the Virginia Health Care Fund. A lot of money gets dumped into that fund. According to the Code, the money is to be used “solely for the provision of health care services,” including community health services. Any bill you draft could provide for a transfer of $XXXXX from the Virginia Health Care Fund to the Health Enterprise Zone Fund. With that approach, you would not have to ask for additional general fund support of the Health Enterprise Zone Fund.
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Dick, I am not a lobbyist and have no intention of becoming one. We both know that the actual problem with legislation on health care subjects is Virginia’s unlimited campaign donations and the political power of the hospitals. No amount of scurrying around in the General Assembly will move any bill the hospitals don’t want.
Del. Miyares’ ambulatory surgical bill had everything you suggest in it when it was submitted. Others changed it. There was never enough information available while it was being processed and amended to intervene, which neither I nor Del. Miyares could done any way. He is on neither the House Committee on Health, Welfare and Institutions nor Appropriations. Those are is the leadership’s and committee’s jobs assuming they support any bill. The Democrats did not.
Finally, it is not true that costs did these bills in. The Governor “found” an extra $300 million in budget authority in mid session. The Assembly adopted a $135 billion dollar two year budget. If these bills were of any priority at all to the Democrats, the money was available.
The $500 million dollars in annual savings to Virginians if the ambulatory surgical bill had been passed is based on the roughly 50% lower costs in that setting and the number of physician-owned surgery centers in Maryland, with a smaller population and the same exemption from their CON law. The patient revenue realized in 2018 by Virginia’s hospitals was $22 billion. Subtract a billion in revenue without even recognizing the lower costs would have still left them at an average of 5% operating margins, still well above the national average. There should have been zero budget costs in this exemption. The physician-owned centers would still have to be licensed and inspected like every other Medicaid certified facility. The math suggests that the bill would lower Medicaid costs by a $100 million a year and would pay taxes. But the hospitals won’t hear of it and most Democrats and a few Republicans won’t buck them.
As for the Health Enterprise Zone bill, it also emulates a proven program in Maryland. It was a model of liberal legislation. The House Committee on Health, Welfare and Institutions voted 21-1 to approve it. The Appropriations committee defeated it the next day after relentless all night lobbying against it by hospital interests. The costs in Maryland over five years were $15 million, all costs included. The savings there were assessed by Johns Hopkins School of Business. Their study linked the five small Maryland Health Enterprise Zones in the test program to a decline of more than 18,000 inpatient stays in the four years of the initiative, and an overall health care cost reduction of about $93 million, most of that in Medicaid. Perhaps the reduced inpatient stays statistic provoked some of the negative feelings on the part of the hospital lobby. Perhaps the Democrats did not want a junior Republican to get the credit. It lost.
As for any possibilities of misunderstandings, I provided that Johns Hopkins study to the health and appropriations committee members personally.
I also went to Richmond and personally briefed senior leaders before the session on both bills.
Hospitals 2, citizens 0. All the inside baseball in the world would not have changed the outcome.
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I am surprised to hear about the “relentless overnight lobbying by the hospital interests.” It is difficult to understand how they were threatened by the hospital enterprise zone bill.
You need to keep trying. Somebody has to lobby. As for providing material to members, I don’t know what you mean by “provided”. If you just handed them some material, that is not going to do much good. They get tons of stuff during the session, and this past session was worst than most. Also, I am not sure what senior leaders you briefed, but, just before the session, there was so much going on, it probably went in one ear and out the other. It is best to catch them between sessions–that is when the professional lobbyists do their best work, building familiarity.
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Whatever
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Whatever
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sounds like Northam DID try:
” Northam was the latest leader to tackle a lofty goal — convincing Virginia’s doctors, hospitals and health care plans to agree on what Carey described as “commonsense reforms” to the COPN program. Opponents argue that the system has gone too far, protecting hospitals that — in many cases — have become monopolistic health care systems, while squeezing out practices that could offer lower-cost services to patients. The problem is that none of the parties have ever been able to agree on what “commonsense reforms” actually look like.
Carey said that he and the governor were interested in streamlining the application process and adding language that would require the state to update its state medical facilities plan — a document that projects the need and availability of services — at least once every two years. Participants in the 2019 mediation said there’s generally broad consensus on those changes, which are thought to benefit all providers affected by the COPN process.
This time, though, Carey and Northam were hoping to ease some of the stringency within the COPN process, something Carey likened to opening the aperture of a camera. For years, the essential debate on COPN in Virginia has boiled down to imaging and ambulatory surgery centers, and whether those services should be regulated under the program.”
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Why do they need language in the Code requiring DOH to update the state facilities plan every two years? If that is something that needs to be done, there is nothing stopping DOH from doing it.
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sounds like Northam DID try:
” Northam was the latest leader to tackle a lofty goal — convincing Virginia’s doctors, hospitals and health care plans to agree on what Carey described as “commonsense reforms” to the COPN program. Opponents argue that the system has gone too far, protecting hospitals that — in many cases — have become monopolistic health care systems, while squeezing out practices that could offer lower-cost services to patients. The problem is that none of the parties have ever been able to agree on what “commonsense reforms” actually look like.
Carey said that he and the governor were interested in streamlining the application process and adding language that would require the state to update its state medical facilities plan — a document that projects the need and availability of services — at least once every two years. Participants in the 2019 mediation said there’s generally broad consensus on those changes, which are thought to benefit all providers affected by the COPN process.
This time, though, Carey and Northam were hoping to ease some of the stringency within the COPN process, something Carey likened to opening the aperture of a camera. For years, the essential debate on COPN in Virginia has boiled down to imaging and ambulatory surgery centers, and whether those services should be regulated under the program.”
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Why do they need language in the Code requiring DOH to update the state facilities plan every two years? If that is something that needs to be done, there is nothing stopping DOH from doing it.
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The hospital reps walked out. Tells you everything you need to know about who is in charge of health policy.
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The hospital reps walked out. Tells you everything you need to know about who is in charge of health policy.
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