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Virginia Administrative Code
Title 12. Health
Agency 5. Department of Health
Chapter 221. Regulations Governing Cooperative Agreements

12VAC5-221-70. Commissioner's request for information.

A. Upon receipt of the authority's recommendation for approval, the commissioner and department may request supplemental information from the applicants.

B. To the extent the information is not present within the application, the commissioner shall request the following information:

1. A report or reports used for public information and education about the proposed cooperative agreement prior to the parties' submission of the application. The applicants shall document the efforts used to disseminate the report or reports. The report or reports shall include:

a. A description of the proposed primary service area (PSA) and secondary service areas (SSA) and the services and facilities to be included in the cooperative agreement;

b. A description of how health services will change if the letter authorizing cooperative agreement is issued;

c. A description of improvements in patient access to health care including prevention services for all categories of payers and advantages patients will experience across the entire service area regarding costs, availability, and accessibility upon implementation of the cooperative agreement or findings from studies conducted by hospitals and other external entities, including health economists, and clinical services and population health experts, that describe how implementation of the proposed cooperative agreement will be effective with respect to resource allocation implications; efficient with respect to fostering cost containment, including eliminating duplicative services; and equitable with respect to maintaining quality and competition in health services within the service area and assuring patient access to and choice of insurers and providers within the health care system;

d. A description of any plans by the parties regarding existing or planned facilities that will impact access for patients to the services currently offered by the parties at their respective facilities, including expansions, closures, reductions in capacity, consolidation, and reduction or elimination of any services;

e. A description of the findings from community or population health assessments for the service areas regarding major health issues, trends, and health disparities, including comparisons to measures for the state and similar regional areas, and a description of how the health of the population will change if the letter authorizing cooperative agreement is issued; and

f. A description of the impact on the health professions workforce, including long-term employment, wage levels, retirement, benefits, recruitment, and retention of health professionals.

2. A record of community stakeholder and consumer views of the proposed cooperative agreement collected through a public participatory process including meetings and correspondence. Transcripts or minutes of any meetings held during the public participatory process shall be included in the report.

3. A summary of the nature of the proposed cooperative agreement between the parties.

4. A signed copy of the cooperative agreement and a copy of the following:

a. A description of any consideration passing to any party, individual, or entity under the cooperative agreement, including the amount, nature, source, and recipient;

b. A detailed description of any merger, lease, operating or management contract, change of control or other acquisition or change, direct or indirect, in ownership of any party or of the assets of any party to the cooperative agreement;

c. A list of all services and products and of all hospitals and other service locations that are a subject of the cooperative agreement, including those not located or provided within the boundaries of the Commonwealth of Virginia, and including hospitals or other inpatient facilities, insurance products, physician practices, pharmacies, accountable care organizations, psychiatric facilities, nursing homes, physical therapy and rehabilitation units, home care agencies, wellness centers or services, surgical centers or services, dialysis centers or services, cancer centers or services, imaging centers or services, support services, and any other product, facility, or service; and

d. A description of each party's contribution of capital, equipment, labor, services, or other contribution of value to the transaction.

5. A detailed description of the current and proposed PSA and SSA for the parties, including the PSA and SSA of each party's hospitals, not limited to the boundaries of the Commonwealth of Virginia. If the proposed PSA and SSA differ from the service areas where the parties have conducted business over the five years preceding the application, a description of how and why the proposed PSA or SSA differs and why changes are proposed.

6. A description of the prior history of dealings between the parties for the last five years, including their relationship as competitors and any prior joint ventures, affiliations, or other collaborative agreements between the parties.

7. Documents sufficient to show the financial performance of each party to the transaction for each of the preceding five fiscal years, including tax returns, debt, bond rating, and debt service; and copies of offering materials, subsequent filings such as continuing disclosure agreements and material event disclosures, and financial statements prepared by external certified public accountants, including management reports.

8. A copy of the current annual budget and budgets for the last five years for each party to the cooperative agreement. The budgets shall be in sufficient detail so as to determine the fiscal impact of the cooperative agreement on each party. The budgets shall be prepared in conformity with generally accepted accounting principles and all assumptions used shall be documented.

9. Projected budgets, including projected costs, revenues, profit margins, and operating ratios, of each party for each year for a period of five years after a letter authorizing cooperative agreement is issued. The budgets shall be prepared in conformity with generally accepted accounting principles and all assumptions used shall be documented.

10. A detailed explanation of the projected effects, including expected change in volume, price, and revenue as a result of the cooperative agreement, including:

a. Identification of all insurance contracts and payer agreements in place at the time of the application and a description of pending or anticipated changes that would require or enable the parties to amend their current insurance and payer agreements;

b. A description of how pricing for provider insurance contracts are calculated and the financial advantages accruing to insurers, insured consumers, and the parties to the cooperative agreement if the letter authorizing cooperative agreement is issued, including changes in percentage of risk-bearing contracts; and

c. Identification of existing and future business plans, reports, studies, or other documents of each party that:

(1) Discuss each party's projected performance in the market, business strategies, capital investment plans, competitive analyses, and financial projections, including any documents prepared in anticipation of the cooperative agreement; and

(2) Identify plans that will be altered, eliminated, or combined under the cooperative agreement.

11. A copy of the following policies under the proposed cooperative agreement:

a. A policy that assures no restrictions to Medicare or Medicaid patients;

b. Policies for free or reduced fee care for the uninsured and indigent;

c. Policies for bad debt write-off; and

d. Policies that require the parties to the cooperative agreement to maintain or exceed the existing level of charitable programs and services.

12. A description of the plan to systematically integrate health care and preventive health services among the parties to the cooperative agreement in the proposed geographic service area that addresses the following:

a. A streamlined management structure, including a description of a single board of directors, centralized leadership, and operating structure;

b. Alignment of the care delivery decisions of the system with the interests of the community;

c. Clinical standardization;

d. Alignment of the cultural identities of the parties to the cooperative agreement;

e. Any planned expansions, closures, reductions in capacity, consolidation, and reduction or elimination of any services;

f. Any plan for integration regarding health professions workforce development and the recruitment and retention of health professionals; and

g. Any plan for implementation of innovative or value-based payment models.

13. A description of the plan, including economic metrics, that details anticipated efficiencies in operating costs and shared services that can be gained only through the cooperative agreement, including:

a. Proposed use of any cost saving to reduce prices borne by insurers and consumers;

b. Proposed use of cost savings to fund low-cost or no-cost services designed to achieve long-term population health improvements; and

c. Other proposed uses of savings to benefit advancement of health and quality of care and outcomes.

14. A description of the market and the competitive dynamics for health care services in the parties' respective service areas, including at a minimum:

a. The identity of any nonparty hospital located in the PSA and SSA and any nonparty hospital outside of the PSA and SSA that also serves patients in the parties' PSA and SSA;

b. Estimates of the share of hospital services furnished by each of the parties and any nonparty hospitals;

c. Identification of whether any services or products of the proposed cooperative agreement are currently being offered or capable of being offered by any nonparty hospitals in the PSA and SSA and a description of how the proposed cooperative agreement will not exclude such nonparty hospitals from continued competitive and independent operation in the PSA and SSA;

d. A listing of the physicians employed by or under contract with each of the parties' hospitals in the PSA and SSA, including their specialties and office locations;

e. The identity of any potential entrants in the parties' PSA and SSA and the basis for any belief that such entry is likely within the two calendar years immediately following the date of the letter authorizing cooperative agreement is issued by the department; and

f. A list of each party's top 10 commercial insurance payers by revenue within the PSA and SSA.

15. A detailed description of each of the benefits that the parties propose will be achieved through the cooperative agreement. For each benefit include:

a. A description specifically describing how the parties intend to achieve the benefit;

b. A description of what the parties have done in the past with respect to achieving or attempting to achieve the benefits independently or through collaboration and how this may change if the cooperative agreement is granted;

c. An explanation of why the benefit can only be achieved through a cooperative agreement and not through other less restrictive arrangements; and

d. A description of how the parties propose that the commissioner measure and monitor achievement of the proposed benefit, including:

(1) Proposed measures and suggested baseline values with rationale for each measure to be considered by the commissioner in developing a plan to monitor achievement of the benefit;

(2) The current and projected levels and the trajectory for each measure that would be achieved over the next five years under the cooperative agreement;

(3) The projected levels for each measure in five years in the absence of the cooperative agreement; and

(4) A plan for how the requisite data for assessing the benefit will be obtained.

16. A description of any potential adverse impact of the proposed cooperative agreement on (i) population health or (ii) quality, availability, cost, or price of health care services to patients or payers.

17. A description of any commitments the parties are willing to make to address any potential adverse impacts resulting from the cooperative agreement. Each such commitment shall at a minimum include:

a. The parties' proposed benchmarks and metrics to measure achievement of the proposed commitments;

b. The parties' proposed plan to obtain and analyze data to evaluate the extent to which the commitments have been met, including how data shall be obtained from entities other than the parties; and

c. The parties' proposed consequences if they do not meet a commitment.

18. A plan of separation. The parties shall provide an independent opinion from a qualified organization verifying the plan of separation can be operationally implemented without undue disruption to essential health services provided by the parties.

19. A statement regarding the requirements for any certificate or certificates of public need resulting from the cooperative agreement.

20. A detailed description of the total cost to the parties resulting from the application for the cooperative agreement. Cost estimates should include costs for consultant, legal, and professional services; capital costs; financing costs; and management costs. The description should identify costs associated with the implementation of the cooperative agreement, including documentation of the availability of necessary funds. The description should identify which costs will be borne by each party.

21. An explanation of the reasons for the exclusion of any information set forth in this section. If the parties exclude an item because it is not applicable to the proposed cooperative agreement, an explanation of why the item is not applicable shall be provided.

22. A timetable for implementing all components of the proposed cooperative agreement and contact information for the person or persons authorized to receive notices, reports, and communications with respect to the letter authorizing cooperative agreement.

23. Records, reports, and documentation to support the information submitted pursuant to this section, including any additional supplemental information requested by the commissioner.

C. All supplemental information submitted to the commissioner shall be accompanied by a verified statement signed by the chairperson of the board of directors and chief executive officer of each party; or if one or more party is an individual, signed by the individual attesting to the accuracy and completeness of the enclosed information.

Statutory Authority

§ 32.1-12 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 34, Issue 1, eff. October 20, 2017.

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