February 20, 2023
Ms. Kim Beazley
Director
Virginia Department of Health
James Madison Building
109 Governor Street
Richmond, VA 23219
Email: Kimberly.beazley@vdh.virginia.gov
Re: 12 Va. Admin. Code §5-221, Notice of Periodic Review Posted 1/3/2023
Dear Ms. Beazley:
On behalf of Ballad Health (“Ballad”), a not-for-profit health system which exists to serve the citizens of a 29-county region of Southwest Virginia and Northeast Tennessee, thank you for the opportunity to provide comments On 12 Va. Admin. Code §5-221 as part of the periodic review of regulations pursuant to Executive Order 19 (2022) and §§2.2-4407.1 and 2.2-4017 of the Code of Virginia.
We understand the purpose of this periodic review is to determine whether 12 Va. Admin. Code §5-221 should be repealed, amended, or retained in its current form. For the reasons explained below, we believe certain sections of 12 Va. Admin. Code §5-221 should be amended. We wish to note that this particular section of the Virginia Administrative Code applies to Cooperative Agreements granted under Virginia Code §15.2-5384.1. Ballad is the only organization that is currently operating under a Virginia Cooperative Agreement. As a result, Ballad is uniquely positioned to provide comments on this section of the Virginia Administrative Code and we offer the following suggestions for the consideration of the Virginia Department of Health (“VDH”).
Section 5-221-120 of Title 12 contemplates the creation of the Virginia Technical Advisory Panel (“TAP”) to provide the commissioner with (i) initial recommendations as to the quality, cost, and access measures and benchmarks to be considered to objectively track the benefits and disadvantages of a cooperative agreement and (ii) ongoing input to the commissioner on the evolution of these and other new measures and the progress of the parties with respect to achievement of commitments with respect to these measures. The TAP is composed of 10+ individuals who hold specific positions at organizations inside and outside of Virginia. The TAP is required to meet at least annually but we understand the TAP has not met since 2019. While we believe the TAP may serve a valuable role in advising the commissioner on initial recommendations regarding how to objectively track the benefits and disadvantages of a cooperative agreement, the ongoing role of the TAP established by Section 5-221-120 places an unnecessary burden on numerous individuals to serve on an advisory panel. VDH is equipped to monitor the progress of the parties with respect achievement of commitments with respect to these measures without placing an undue burden on executives and leaders from outside organizations. For this reason, we are proposing the following revisions to focus the TAP’s role on initial recommendations and remove the requirement that the TAP meet at least annually and provide ongoing input. Of course, the commissioner may seek input from any of these individuals on an ongoing basis, but the need for the TAP to meet regularly and advise on measures once they are established places a regulatory burden on the individuals who are required to serve on this panel. To address this, Ballad is proposing the following changes:
12VAC5-221-120
A. The commissioner shall appoint a technical advisory panel to provide (i) initial recommendations to the commissioner as to the quality, cost, and access measures and benchmarks to be considered to objectively track the benefits and disadvantages of a cooperative agreement and (ii) ongoing input to the commissioner on the evolution of these and other new measures and the progress of the parties with respect to achievement of commitments with respect to these measures.
B. The technical advisory panel shall consist of:
1. A representative of the Commissioner of Health who shall serve as chair of the panel;
2. The chief medical or quality officer or officers of the parties;
3. A chief medical or quality officer of a hospital or health system from other state market areas with no affiliation with the parties;
4. A chief medical or quality officer of a health plan that has subscribers in the affected area;
5. Experts in the area of health quality measurement and performance;
6. A consumer and employer representative from the affected area;
7. A representative from the Bureau of Insurance of the State Corporation Commission;
8. The chief financial officer or officers of the parties;
9. A chief financial officer of a hospital or health system from other state market areas with no affiliation with the parties; and
10. A chief financial officer of a health plan that has subscribers in the affected area.
C. The technical advisory panel shall meet at least on an annual basis.
DC. The technical advisory panel shall identify evidence-based cost, quality, and access measures in areas, including population health, patient safety, health outcomes, patient satisfaction, access to care, and any other areas identified by the panel. The panel shall also make recommendations regarding how to best report performance on quality metrics.
ED. The technical advisory panel meetings shall be staffed by the Virginia Department of Health Office of Licensure and Certification.
Section 5-221-100(F) of Title 12 requires that complaints received by VDH with regard to noncompliance with the cooperative agreement or the letter authorizing cooperative agreement be investigated. However, this Section does not specify who should conduct the investigation and whether the person conducting the investigation should have formal training in how to conduct an investigation.
Ballad believes it is important that any individual who is tasked with investigating a complaint of noncompliance be properly trained in how to conduct investigations. There may also be situations where the compliance officer within an organization operating under a cooperative agreement may be the most logical and appropriate person to conduct the initial investigation due to their knowledge of the organization’s operations. We believe VDH should be permitted to ask the compliance officer to perform such investigations if he/she is properly trained in how to conduct investigations and is free of any actual or potential conflicts of interest related to the subject matter of the investigation. To address this, Ballad is proposing the following changes:
12VAC-221-100(F)
F. Complaints received by the department with regard to noncompliance with the cooperative agreement or the letter authorizing cooperative agreement shall be investigated by an individual with training in investigation methods who is free of actual or potential conflicts of interest. When appropriate, the department may request the compliance officer within an organization operating under a cooperative agreement or a letter authorizing cooperative agreement perform the initial investigation of a complaint of noncompliance so long as that individual meets the requirements of this section. When the investigation is complete, the parties and the complainant, if known, shall be notified of the findings of the investigation.
Section 5-221-100 outlines the ongoing and active supervision that the commissioner shall maintain to ensure compliance with the cooperative agreement and the letter authorizing cooperative agreement. This section does not address the time period in which VDH has to respond to items that are required to be submitted by the organization. There have been a few situations where Ballad has been required to submit plans for approval and did not receive a response from VDH for several months (or at all). For example, Ballad was required to submit spending plans for FY23 through FY25 by April 1 of 2022. Ballad’s FY23 began on July 1, 2022 and as of today, two-thirds of the way through the fiscal year, Ballad has still not received a response from VDH approving or not approving the proposed spending plans. This has created operational issues for Ballad because Ballad is required to spend a certain amount of money each year towards the $308 million of monetary commitments but does not have clarity on whether the spending set forth in the submitted plans will be counted. To address this, Ballad is proposing to add the following subsection to §5-221-100:
H. To the extent the parties are required to submit plans to the department for approval under any terms and conditions placed on their letter authorizing cooperative agreement, the department shall notify the parties within thirty (30) days of receipt of the plans whether any additional information is required. The department shall accept, decline, or propose modifications to the plan within sixty (60) days after all information has been received.
Section 5-221-110(B) requires the parties operating under a cooperative agreement to update the plan of separation annually and submit the updated plan of separation to VDH. The rules also require the parties to provide an independent opinion from a qualified organization stating that the plan of separation may be operationally implemented without undue disruption to essential health services.
As noted previously, Ballad is the only organization that has ever operated under a Virginia Cooperative Agreement. Ballad’s plan of separation was submitted in 2017 for approval as part of the application for a cooperative agreement. For various reasons, parties may need to revise the plan of separation over time. Some of these revisions may be substantive and warrant an opinion from a third party, but there may also be non-substantive or minor revisions that do not warrant the engagement of a third party. Requiring organizations operating under a cooperative agreement to update their plan of separation annually and hire a third party to opine on the plan of separation annually is costly and completely unnecessary when no changes have been made to the plan of separation or the changes are non-substantive or minor. To address this, Ballad is proposing that any organization operating under a cooperative agreement be required to submit an updated plan of separation only if the plan of separation changes following initial approval. VDH would have the discretion to require the parties to provide a third-party opinion if the updated plan of separation includes significant modifications. To incorporate these concepts, Ballad is proposing the following changes:
12VAC5-221-110(B)
B. The parties shall be required to update the parties' plan of separation annually and submit the any updatesd to the plan of separation to the department. The parties shalldepartment may require the parties to provide an independent opinion from a qualified organization that states the updated plan of separation may be operationally implemented without undue disruption to essential health services provided by the parties if the updates to the plan of separation significantly modify the existing plan of separation.
Section 5-221-110(A) requires the organization operating under a cooperative agreement to report annually on the benefits realized and compliance with any terms and conditions placed on the letter authorizing cooperative agreement. The rule then lists various items that must be included in the annual report. In Ballad’s experience, this list does not align with the specific terms and conditions placed on the letter authorizing cooperative agreement and has caused confusion about what is actually required to be included in the annual report. To eliminate the confusion, Ballad is proposing to make the following revisions:
12VAC5-221-110(A)
A. The parties shall report annually to the commissioner on the extent of the benefits realized and compliance with any terms and conditions placed on their letter authorizing cooperative agreement. The report shall include all of the information required to be submitted annually as set forth in the terms and conditions placed on the letter authorizing cooperative agreement. :
1. Describe the activities conducted pursuant to the cooperative agreement;
2. Include any actions taken in furtherance of commitments made by the parties or terms imposed by the commissioner as a condition for approval of the cooperative agreement;
3. Include information related to changes in price, cost, quality, access to care, and population health improvement;
4. Include actual costs, revenues, profit margins, and operating costs;
5. Include a charge master;
6. Include information reflecting the contracted rates negotiated with nonphysician providers, allied health professionals, and others;
7. Include any measures requested by the department based on the recommendations of the technical advisory panel appointed pursuant to 12VAC5-221-120; and
8. Include the current status of the quantitative measures established under subsection C of 12VAC5-221-100 and the information requested by the department for benchmarks established in subsection B of 12VAC5-221-100.
Section 5-221-110(D) stipulates that all annual reports submitted by an organization operating under a cooperative agreement be certified by a third-party auditor. While it may be appropriate for VDH, or an agent of VDH, to periodically perform audits on information provided by the organization to ensure compliance with the Conditions governing a cooperative agreement, requiring the organization to hire a third-party auditor to audit each annual report seems to create unnecessary regulatory cost. To ensure VDH receives accurate and complete information in the annual reports, we believe it is more appropriate to have the Chief Executive Officer and Chief Financial Officer of the organization certify each annual report as true and correct to the best of their knowledge. To accomplish this, Ballad is proposing the following change:
12VAC5-221-110(D)
D. All annual reports submitted pursuant to this section shall be certified audited by a third-party auditor.the Chief Executive Officer and Chief Financial Officer of the organization as true and correct to the best knowledge of such person.
We appreciate the opportunity to provide these comments. Should you have any questions or require any additional information regarding our comments please do not hesitate to contact me at JKilgore@cozen.com at your convenience.
Sincerely,
Jerry W. Kilgore