On behalf of the Virginia Hospital & Healthcare Association, thank you for the opportunity to comment on the Virginia Board of Health periodic review and small business impact review of 12 VAC 5-220, Virginia Medical Care Facilities Certificate of Public Need Rules and Regulations.  As discussed in greater detail below, VHHA submits that this regulation should be retained and has provided suggestions for how the regulation could be further improved.

I.The Regulation is Necessary for the Protection of the Public Health, Safety, and Welfare and for the Economical Performance of Important Governmental Functions

Certificate of Public Need (“COPN”) regulations are necessary for the economical performance of important governmental functions and protect the public health and safety in several ways: through ensuring access to care for the indigent; supporting the availability of essential health services across the Commonwealth; limiting duplication of services and overutilization; maintaining competency levels and quality for complex medical services; and supporting graduate medical education and health care workforce development.

Since Virginia does not have an extensive public hospital system and relies heavily on private providers to meet the health care needs of the low-income uninsured and medically needy, charity care conditions are one mechanism by which the Commonwealth is able to maintain an adequate safety net.  Based on information from the Division of Certificate of Public Need, $1.34 billion in direct care in 2013 was reported by providers subject to charity care conditions. An additional $34.8 million in direct cash contributions to safety net providers (free clinics) was reported in lieu of direct care to meet charity care conditions. 

Through the application of the State Medical Facilities Plan standards found in corresponding regulations at 12 VAC 5-230, the COPN regulations also limit the unnecessary duplication of services and help to disperse access to services across geographic regions in the Commonwealth.  In the absence of regulations to ensure the appropriate distribution of medical care facilities, services could cluster around areas of high population, high income, and high rates of commercial insurance, and those smaller communities, rural settings, and inner cities could see access reduced or experience increased drive times to access care.

The COPN regulations also play a role in protecting safety.  Many of the more complex medical services that are regulated by COPN rely on a well-trained and technically competent workforce of physicians, nurses, and other support staff.  To recruit providers and maintain these skills, a certain volume of procedures is necessary in order to provide proficiency, quality and cost-efficient delivery of care.  There are multiple peer-reviewed studies included in medical literature that demonstrate how concentration of these complex medical services to maintain minimum volumes produces improvement in quality outcomes.  The COPN regulations help to achieve this goal.  

There is broad consensus among policymakers that Virginia faces current and projected maldistributions and shortages of physicians and advanced practice professionals in the state.  In the absence of a policy to fully fund the costs of undergraduate medical education and ensuring adequate resources to support graduate medical education, the COPN regulations, including provisions that take into consideration the effects on academic medical centers, plays an important role in addressing the workforce shortage.  Private teaching hospitals, which have ongoing relationships with the academic medical centers serve as training sites for medical education and are supported in this role by the COPN regulations.

II .COPN Regulations Minimize the Economic Impact on Small Businesses in a Manner Consistent with the Stated Objectives of Applicable Law

Va. Code § 32.1-102.2 charges the Board of Health with establishing the COPN regulations.  The stated objective of the COPN regulations is “to set forth an orderly administrative process for making public need decisions.” 12 VAC 5-220-30.  Consistent with the underlying authority and objective, the COPN regulations minimize the economic impact on small businesses in several ways.  Limiting economic impact is particularly important for small businesses that comprise a significant percentage of the workforce, yet have fewer employees and tend to be located in rural and medically underserved areas.  

Specific examples of how COPN regulations minimize the economic impact on small businesses include:

1. The COPN regulations provide for a preconsultation process for COPN applicants to assess health resource needs.  This process can help to confirm the feasibility of undertaking COPN projects and potentially eliminate unnecessary expenditures.  12 VAC 5-220-170.
2. The COPN regulations establish concise procedures for organizing applications in batches and the prompt review of applications for certificates, including a process for combined certificates.  12 VAC 5-220-200, 230.
3. The COPN regulations include specific criteria for determining need in rural areas.  Specifically, the Commissioner is granted authority to waive State Medical Facilities Plan (“SMFP”) requirements that are not relevant to a rural locality's needs or are inaccurate, outdated, inadequate, or otherwise inapplicable.  12 VAC 5-220-270.
4. The COPN regulations establish application fees based upon the proposed expenditure on the project with a cap on the total fee.  12 VAC 5-220-180.
5. The COPN regulations include an expedited review process for certain projects. 12 VAC 5-220-280, 290.
6. The COPN regulations allow for alternative plans of compliance for charity care conditions. 12 VAC 5-220-270.

There are, however, areas where COPN regulations or related sub-regulatory guidance or procedures could be improved to further minimize the economic impact of the regulations.  Current application forms required by 12 VAC 5-220-180 request information that is not needed to process applications or evaluate statutory considerations and SMFP requirements.  At the same time, the application form does not include information that is routinely requested by staff for purposes of completeness review.  The 2016 COPN Workgroup established by Secretary of Health and Human Resources William A. Hazel, Jr., M.D. pursuant to Item 278D of the 2015 Appropriation Act (the “Secretary’s Workgroup”) acknowledged this by including in its Final Report, Recommendation 3b. to “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.”

Similarly, the Secretary’s Work Group included Recommendation 5b to implement “a real-time automated/electronic tracking and posting mechanism for Letter of Intent (LOI) filings . . . to make LOIs available to the public as soon as they are received” and Recommendation 5c to create “an online library . . . where all relevant COPN information and documents are posted and easily available to the public.” Making this information available through an online portal should produce cost-savings and greater efficiencies for applicants, as well as, for the state.  

III.COPN Regulations are Clearly Written and Easily Understandable

Generally speaking, the COPN regulations are concise, clearly written and easily understandable.  The COPN process is fairly complex and detail-oriented, yet the COPN regulations describe the process in an organized fashion providing detailed definitions of key terms to assist in interpretation.  There are, however, areas where technical amendments would be appropriate or additional clarification would be helpful:

1. 12 VAC 5-220-10 The definition of “public hearing” could be revised to clarify who conducts the public hearing in health planning regions that do not have a regional health planning agency.
2. 12 VAC 5-220-50 The citation to the Virginia Code section for the Freedom of Information Act is incorrect.  It should be § 2.2-3700 et seq.
3. 12 VAC 5-220-70 The citation to the Virginia Code section for the Administrative Process Act is incorrect.  It should be § 2.2-4000 et seq.
4. 12 VAC 5-220-90 The Virginia Code section referenced in this regulation, § 32.1-102.12, has been repealed.  
5. 12 VAC 5-220-130 The regulations specify that the regional health planning agency reviews the proposed change; however, it is unclear from the regulation by whom this review is completed or if this review is even required for projects in health planning regions that do not have a regional health planning agency.
6. 12 VAC 5-220-160 The Virginia Code section referenced in this regulation appears to be incorrect.  The eight statutory considerations are enumerated in § 32.1-102.3.
7. 12 VAC 5-220-200 The terms “mental hospital” “psychiatric hospital” “intermediate care facility established primarily for the medical, psychiatric or psychological treatment and rehabilitation of alcoholics or drug addicts” and “mental retardation facility” could be defined in the description of Batch Group C to provide further clarification. 
8. 12 VAC 5-220-230 The regulations do not specify who is responsible for holding public hearings in health planning regions that do not have a regional health planning agency.
9. 12 VAC 5-220-270 It appears that the citation to 12 VAC 5-220-230(B) in Section (B) should be to 12 VAC 5-220-230 (C) instead.
10. 12 VAC 5-220-440 Section (D) discusses regional health planning agency review of extension requests, but does not specify who is responsible for review of requests in health planning regions that do not have a regional health planning agency.

Lastly, we note that in 2015, VHHA developed a series of recommendations for COPN process improvements.  With limited exceptions, those recommendations were consistent with similar recommendations coming out of the Secretary’s Workgroup.  Implementing many of these recommendations would require not only changes to the COPN regulations, but corresponding changes to the related statutory authority as well.  Accordingly, we are not repeating those recommendations here.  Outside of this regulatory review process, VHHA continues to support efforts to streamline the COPN process and improve transparency, accountability, and uniformity in COPN review consistent with those previous recommendations. 

Thank you again for this opportunity to comment.