Virginias Certificate of Public Need Program Essay

This essay has a total of 1412 words and 8 pages.


Virginias Certificate of Public Need Program





Virginia’s Certificate of Public Need Program
In the early 1970’s, there was a lot of concern about the rising costs of Medicaid and
Medicare. In 1972, the Social Security Act began regulations to try to reign in these
costs. The National Health Planning and Resources Development Act was passed in 1974.
This Act required states to operate Certificate of Public Need (COPN) programs as a
condition of receiving federal funding for health care. The federal COPN requirements
were premised on providing orderly planning of health systems to meet the “needs” of the
defined population and restricting the overbuilding of facilities, which was perceived as
responsible for the high costs of medical services. The issues at the time of the
issuance of this legislation were access to primary care, distribution of services in
medically under-served areas, prevention, costs, utilization review, and education of the
public in personal care and in use of the health care system.

Virginia first enacted a COPN law in 1973, one year prior to the federal law requiring
state COPN programs. The adoption of the COPN legislation marked the beginning of a new
role for the Commonwealth in health care regulation. The State became the regulator of
development for all nonfederal medical facilities. For the first time, owners of such
facilities were required to obtain prior state approval before undertaking large capital
expenditures, an alteration in bed capacity, or a change in service. The Virginia COPN’s
objectives included promotion of comprehensive health planning, promotion of the highest
quality of health care at the lowest possible cost, the avoidance of unnecessary
duplication of medical care facilities, and the provision of an orderly administrative
procedure for resolving questions concerning the necessity of construction or modification
of medical care facilities.

The Virginia COPN process begins with the applicant filling out an extensive application.
An application must be processed for a capital improvement over $400,000, any new
institutional services over $250,000, and any modification to the number of beds. The
preparation and filing of a COPN application is the most time consuming part of the review
process. The applicant must provide extension information about their company and its
financial standing. They must prove there is a need for the project and that they can
acquire sufficient financing for it. Most importantly, the applicant must present a
detailed plan on how their project will be the most cost efficient for the government. It
is difficult to ascertain with any certainty the cost of preparing a COPN application.
The Virginia Hospital Association estimates that the fee for just applying for a COPN can
range anywhere from $500 to $10,000 depending on the project type and size.

Once the application is finished, it is sent to the Bureau of Resources Development (BRD)
which is a department within the State Department of Health. BRD then forwards a copy to
the Health Systems Agency (HSA) where the proposed project is located. BRD and the HSA
must jointly agree that the application is complete before the formal review process is
triggered. Once this has occurred, there is an initial public hearing. At this hearing,
people are allowed to voice their opinion on the need for the project and make
recommendations for the project. After the public hearing, the HSA Board may receive
recommendations on a project from two other bodies: the Sub-Area Council and the Project
Review Committee. Both the Sub-Area Council and the Project Review Committee is made up
of HSA members. The final recommendation of the Board must be forwarded to the Health
Commissioner within sixty days of the time an application is accepted for review.
Following the HSA review, the Facilities Review Committee holds another public hearing at
which the applicant and the HSA each testify. The Committee then formulates a formal
recommendation that is submitted to the Commissioner of Health. The Commissioner then
approves or denies the application. Once the Commissioner has approved or denied an
application, his decision is communicated by letter to the applicant. From start to
finish, the COPN process takes about one year.

If an applicant is not pleased with the Commissioner’s decision, they have thirty days to
appeal. The appeal process has four levels. The first level has the Commission
reconsider his decision. Level II is a formal evidentiary hearing. The third level of
appeal for the COPN process is a formal independent hearing. The last appeal option open
to the applicant is to have a court to review the Commissioner’s decision. Appeals are
usually based on the complaint that the Commissioner had some sort of favoritism in his
ruling.

The COPN process has brought a better distribution of health resources, but it hasn’t
controlled the rising health care rates. It has not slowed inappropriate utilization of
facilities and services. The COPN process was flawed from the beginning. One defect was
the way the process put emphasis on high-cost technologies with no attention to low-cost
technologies. The high volume use of low-cost technology has caused a continuing rise in
health care cost. The COPN process also does not consider operating costs associated with
installing and using the technology. Medical facilities have gotten around the COPN
process as it evidenced by their rise in total assets per bed.

The inability of the COPN process to achieve its fundamental goal, the slowing of capital
expansion and overall cost growth, ultimately led to its decline. In 1986, the federal
government repealed its requirement for states to have COPN programs. In 1991, only 39
states still had these programs. During the 2000 Virginia General Assembly Session, a
large number of bills were introduced either repealing COPN outright or repealing COPNs
for a specific service. Senate Bill 337 passed the Assembly as a compromise measure
agreed to by physicians, who conducted an all-out fight to repeal COPN, and hospitals who
fought to keep COPN. The legislation, which still must be signed by the Governor,
requires a transition to eliminate COPN. The transition will begin on July 1, 2001 and
must be completed by July 1, 2004. Between now and the 2001 General Assembly Session, the
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