WVHCA Rate Review

Pursuant to W. Va. Code § 16-29B-1 et seq., the West Virginia Health Care Authority (hereinafter referred to as the "Authority") was created in March, 1983, in order "to protect the health and well-being of the citizens of this state by guarding against unreasonable loss of economic resources as well as to ensure the continuation of appropriate access to cost-effective, high quality health care services." West Virginia Code § 16-29B-1. The statute created the Authority as a three-member board with the power "to approve or disapprove hospital rates and budgets taking into consideration the criteria set forth in section twenty" of the statute. West Virginia Code § 16-29B-19(a)(4).

The Authority establishes revenue limits for a group of payors termed "nongovernmental payors" or "other payors". This group includes public and private insurers, persons who pay for their own hospital services, and all other third-party payors. The Authority establishes these revenue limits in accordance with W. Va. Code § 16-29B-1 et seq. and the "Hospital Cost-Based Rate Review System", 65 C.S.R. 5. The Authority cannot establish payment rates for the hospital's Medicare and Medicaid patients. These programs are strictly controlled by the federal government and are beyond state regulatory powers for rate review purposes. Also exempt from review are the rates paid by the Public Employees Insurance Agency (PEIA) pursuant to the 1989 Omnibus Health Care Act. Although the Authority does not establish payment rates for these governmental programs, the Authority does review the impact of revenues and expenses associated with these programs on "nongovernmental payors". In addition, the Authority and Medicare require rates charged by hospitals to be uniform for like services in all payor classifications.

From May 20, 1985, until July 1, 1992, the Authority established revenue limits for hospitals based upon hospital revenues rather than actual hospital costs.

In 1991, the Legislature substantially amended W. Va. Code § 16-29B-1 et seqand found that a cost-based rate review system is more effective in containing the cost of acute care hospital services than a revenue - based system. The Legislature further required the Authority to develop a cost-based rate review system and adopt regulations to implement the cost-based rate review methodology by the first day of July, one thousand nine hundred ninety-two. The Legislature also amended W. Va. Code § 16-29B-20(a)(2) to require hospitals to file discount contracts for review by the Authority. A discount contract may not be implemented until it is approved by the board.

The most commonly used application methodologies are: Standard and Benchmarking. The Standard application format is further broken down into either Standard – retroactivity (due 75 days before the hospital’s fiscal year end) or Standard – non – retroactivity (due 45 days before the hospital’s fiscal year end). The difference between the two are: with retroactivity – if the application is deemed complete, the hospital will have its approved rate increase before the beginning of the applicable fiscal year. If an event occurs beyond the control of the Authority or the hospital (such as a hearing request) and the increase is not granted before the beginning of the fiscal year, then the Authority has the option to make the increase retroactivity back to the beginning of the applicable fiscal year. With non-retroactivity, the hospital may not get its increase before the beginning of its fiscal year and the Authority does not have the option to make it retroactive. The Benchmarking application methodology is a streamlined process wherein hospitals are entitled to request an automatic rate of increase based on their rankings within their peer groups. Hospitals are ranked within a peer group based on cost and charge. The automatic rate of increase a hospital may request is then based on the average of its rankings in the peer group based on cost and charge. The more efficient hospitals qualify to ask for a greater percent of increase. The range of automatic request are from 2.5% to 7.5%. Any questions should be emailed to: Barbara Skeen, Director of Rate Review.