68th Annual Mtg

VOS 69th Annual Meeting
April 15-17, 2016



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Legislative News

Dr. Byrd Appointed to COPN Review Work Group

Dr. ByrdVirginia Secretary of Health and Human Resources Bill Hazel, MD has appointed J. Abbott Byrd III, MD to a stakeholder workgroup that will review the Commonwealth’s Certificate of Public Need (COPN) laws and processes and make recommendations for any changes to the system.  Dr. Byrd is a partner with Atlantic Orthopaedic Specialists, an independent practice with locations throughout Hampton Roads. 

The creation of the workgroup was a compromise result of Senate Bill 1283, an HCA-backed measure that would have made major changes to what “projects” are exempt from COPN requirements.  Most hospital systems vehemently defend COPN requirements to control health care services in a region. 

Many orthopaedic surgeons and other physicians argue that COPN laws only protect hospital monopolies, resulting in fewer options for patients and higher prices for services.  VOS will report on the workgroup’s progress.  The legislative charge for the COPN work group is below.

From Senate Bill 1283 (2015, Martin)
The Secretary of Health and Human Resources shall convene a workgroup that shall include health care providers, consumers of health care services, representatives of the business community, and other stakeholders to review the current certificate of public need process and the impact of such process on health care services in the Commonwealth, and the need for changes to the current certificate of public need process.  In conducting such review, the workgroup shall evaluate: (i) the process by which applications for certificates of public need are reviewed, the criteria upon which decisions about issuance of certificates of public need are based, and barriers to issuance of a certificate of public need; (ii) the frequency with which applications for a certificate are approved or denied; (iii) fees charged for review of applications for a certificate of public need and the cost to the Commonwealth of processing applications for a certificate of public need; (iv) applications for and the impact of the current certificate of public need process on establishment of new health care services, including the establishment of new intermediate-level or specialty-level neonatal special care services and open heart surgery services and the addition of new beds or operating rooms at existing medical care facilities; (v) the relationship between the certificate of public need process and the provision of charity care in the Commonwealth and the impact of the certificate of public need process on the provision of charity care in the Commonwealth; (vi) the impact of the  certificate of public need process on graduate medical education programs and teaching hospitals in the Commonwealth; (vii) the efficacy of regional health planning agencies, the role of regional health planning agencies in the certificate of public need process, and barriers to the continued role of regional health planning agencies in the certificate of public need process; and (viii) the frequency with which the State Medical Facilities Plan is updated and whether such plan should be updated more frequently. The work group shall develop specific recommendations for changes to the certificate of public need process to address any problems or challenges identified during such review, which shall include recommendations for changes to the process to be introduced during the 2016 Session of the General Assembly and any additional changes that may require further study or review. In conducting its review and developing its recommendations, the workgroup shall consider data and information about the current certificate of public need process in the Commonwealth, the impact of such process, and any data or information about similar processes in other states. The Secretary shall report on the recommendations developed by the work group by December 1, 2015.


Report From the Front: Virginia Workers’ Compensation Commission Committee of Stakeholders to Define Prevailing Community Rate

By Stephen Leibovic, M.D.
Virginia Hand Center

During the 2014 General Assembly session in Richmond, Virginia there continued to be debate over payment for workers’ compensation care in the Commonwealth.  For years, insurers and employers’ groups have been urging the General Assembly to modify the statute governing payment of workers’ compensation medical care.  They claim that the cost of medical care for workers’ compensation in Virginia is too high, and spiraling ever higher.

It is important to understand that the cost of workers’ compensation in Virginia is the third lowest among the 50 states (2014 data).  Bi-annual surveys are done for all 50 states by the State of Oregon, and in the last five surveys performed Virginia was the second, third or fourth lowest cost state in the country.  This helps us attract business to our Commonwealth.  Parties disagree over why our costs are so low, but clearly the cost of medical care is a significant contributor to this superb statistic, of which we should be proud.  Nevertheless, insurers and employers have repeatedly gone to the General Assembly seeking statutory regulation to decrease their costs for medical care by reducing payment to the very medical providers that contribute to our already enviable position of being the third lowest cost state for workers’ compensation in the nation.

Payment for medical services is regulated according to Va. Code 65.2-605 which states in part:

“The pecuniary liability of the employer for medical, surgical and hospital service(s) … shall be limited to such charges as prevail in the same community for similar treatment when such treatment is paid for by the injured person.”

This statute has given rise to the term “prevailing community rate” or PCR.  The Virginia Workers’ Compensation Commission is the appropriate jurisdiction for resolving any payment issues for workers’ compensation care. If a physician, hospital or other medical provider charges a rate greater than the PCR, the insurer may choose not to pay it, and if the case reaches adjudication at the Workers’ Compensation Commission, it will presumably find that the insurer needs to pay no more than the PCR. Similarly, if a medical provider feels that they have been underpaid for medical services delivered for a compensable injury, they too may seek redress at the Workers’ Compensation Commission.   If the Commission finds that the rate paid was less than the PCR, it may order the insurer to pay more for the services delivered.

It is true that some medical providers have abused workers’ compensation billing rules and overcharged for services.  I have been asked on a number of occasions to review cases where an insurer suspected that bills submitted were too high, or services rendered were unnecessary or improperly described for the purpose of inflating the medical bill.  Unfortunately I have to report that our profession has at times been guilty of such over-billing or over-utilization.

Similarly it is true that some insurers have elected to underpay for some services provided under workers’ compensation.  They have sometimes “bundled” services together inappropriately, underpaid specific services, or denied services that were clearly needed and prudent.

Defining the PCR is not always easy.  Statistical arguments have been used both by insurers and medical providers to make their case regarding appropriate payments.  Statistical argument is based upon appropriate data, and it is not always clear that the data is available to support the argument.  It is difficult for medical providers to obtain statistical data, as they typically do not have access to large amounts of charge data.  Insurers do have access to lots of data, as they receive claims from medical providers across the state.

Prior to 2009, the largest provider of statistical data regarding medical charges was Ingenix, a wholly owned subsidiary of United Health Care.  Ingenix provided charge data which they claimed was statistically validated for all geographic regions of the country.  Insurers often used Ingenix data to set their “usual and customary reimbursement” (UCR), and it was this UCR that determined what medical providers were paid under contract with insurance companies.  However, in 2009 the attorney general of New York state investigated Ingenix and found that they were systematically underestimating physician charges and systematically excluding higher prices found in their dataset, leading to underpayment for physician and hospital services.  The attorney general further found that Ingenix’s close ties to a major insurance company resulted in a biased analysis of medical charges which inured to the benefit of United Health Care, as well as other insurers.

United Health Care agreed to a settlement order with New York state which required them to scrap their Ingenix unit and pay $50 million to help set up a truly independent free-standing nonprofit database to aggregate and analyze medical charges.  Separately, United Health Care settled a class action suit brought by the American Medical Association on behalf of its members on the same issues, paying $350 million.

The 2014 General Assembly, after considering the debate surrounding payment for workers’ compensation medical services, modified Va. Code 65.2-605 to codify that:

"All coding, and in particular coding for multiple surgical procedures, will follow current CPT rules and will be paid according to National Correct Coding Initiative (NCCI) rules.  In addition, ICD-9 or ICD-10 diagnosis coding will be used as appropriate.

Payment for services of a nurse practitioner or physician assistant assisting at surgery will be paid at no more than 20% of the appropriate surgeon’s fee."

Payment for an assistant surgeon shall be paid at no more than 50% of the appropriate surgeon’s fee.

In addition, the 2014 General Assembly ordered the Virginia Workers’ Compensation Commission to set up a committee of stakeholders consisting of representatives from insurers, employers, claimant’s lawyers, hospitals and physicians, in order to explore ways to define the PCR for the purposes of workers’ compensation medical care payments.  I am the representative of the physicians on this committee, and we had our first meeting on May 20, 2015.  Delegate Peter Farrell (R-56th district) chaired the meeting.  We were introduced to the Virginia All Claims Payer Database (APCD), a database of physician charges and payments set up in 1993 in order to administer health care data reporting initiatives in Virginia.  Michael Lundberg, its executive director, introduced the APCD and helped us understand its mission and what data it could provide.  This is an encompassing database which is designed to aggregate data on quality, satisfaction, costs and efficiency of hospitals, nursing homes, assisted living, health insurance plans and inpatient and outpatient surgery centers.  They collect discharge data for over 850,000 discharges per year, hospital satisfaction data, financial information from ambulatory surgical centers, hospitals and nursing homes, HMO data and data from the National Committee on Quality Assurance, data on long-term care and psychiatric care, pricing information from health insurance companies, and safety information.

Currently the APCD operates under legal guidelines that may make it impossible for it to provide the charge data that our committee is charged with obtaining.  Delegate Farrell and other lawmakers are looking into whether that legal framework can be modified.  In addition, the APCD was not set up specifically to aggregate charge data and its systems may not be streamlined to provide this data.

I introduced the database to the committee in a preliminary fashion.  I am currently working with to further investigate the data that they have available and see whether it may be appropriate to help determine PCR in Virginia localities.  Fairhealth has a much more defined mission than the APCD, and it is much more closely aligned with the mission of our committee:  to define the PCR and codify it.  I intend to report on my preliminary findings at our next meeting.

The meetings are open to the public (as observers).  The next meeting is in House Room D in the General Assembly Building on July 1 at 10 AM.  I intend to report further after our next meeting.

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