CODE OF VIRGINIA

REVIEW OF COOPERATIVE AGREEMENTS (§ 15.2-5384.1)

A. The policy of the Commonwealth related to each participating locality is to
encourage cooperative, collaborative, and integrative arrangements, including
mergers and acquisitions among hospitals, health centers, or health providers
who might otherwise be competitors. To the extent such cooperative agreements,
or the planning and negotiations that precede such cooperative agreements, might
be anticompetitive within the meaning and intent of state and federal antitrust
laws, the intent of the Commonwealth with respect to each participating locality
is to supplant competition with a regulatory program to permit cooperative
agreements that are beneficial to citizens served by the Authority, and to
invest in the Commissioner the authority to approve cooperative agreements
recommended by the Authority and the duty of active supervision to ensure
compliance with the provisions of the cooperative agreements that have been
approved. Such intent is within the public policy of the Commonwealth to
facilitate the provision of quality, cost-efficient medical care to rural
patients.

B. A hospital may negotiate and enter into proposed cooperative agreements with
other hospitals in the Commonwealth if the likely benefits resulting from the
proposed cooperative agreements outweigh any disadvantages attributable to a
reduction in competition that may result from the proposed cooperative
agreements. Benefits to such a cooperative agreement may include, but are not
limited to, improving access to care, advancing health status, targeting
regional health issues, promoting technological advancement, ensuring
accountability of the cost of care, enhancing academic engagement in regional
health, strengthening the workforce for health-related careers, and improving
health entity collaboration and regional integration where appropriate.

C. 

   1.  Parties located within any participating locality may submit an
   application for approval of a proposed cooperative agreement to the Authority.
   In such an application, the applicants shall state in detail the nature of the
   proposed arrangement between them, including without limitation the
   parties’ goals for, and methods for achieving, population health
   improvement, improved access to health care services, improved quality, cost
   efficiencies, ensuring affordability of care, and, as applicable, supporting
   the Authority’s goals and strategic mission. The Authority shall
   determine whether the application is complete. If the Authority determines
   that the application is not complete, the Authority shall notify the
   applicants in writing of the additional items required to complete the
   application. A copy of the complete application shall be provided to the
   Commissioner and the Office of the Attorney General at the same time that it
   is submitted to the Authority. If the applicants believe the materials
   submitted contain proprietary information that are required to remain
   confidential, such information must be clearly identified and the applicants
   shall submit duplicate applications, one with full information for the
   Authority’s use and one redacted application available for release to
   the public.

   2.  The Authority, promptly upon receipt of a complete application, shall
   publish notification of the application in a newspaper of general circulation
   in the LENOWISCO and Cumberland Plateau Planning Districts and on the
   Authority’s website. The public may submit written comments regarding
   the application to the Authority within 20 days after the notice is first
   published. The Authority shall promptly make any such comments available to
   the applicants. The applicants may respond in writing to the comments within
   10 days after the deadline for submitting comments. Following the close of the
   written comment period, the Authority shall, in conjunction with the
   Commissioner, schedule a public hearing on the application. The hearing shall
   be held no later than 45 days after receipt of the application. Notice of the
   hearing shall be mailed to the applicants and to all persons who have
   submitted written comments on the proposed cooperative agreement. The
   Authority, no later than 15 days prior to the scheduled date of the hearing,
   also shall publish notice of the hearing in a newspaper of general circulation
   in the LENOWISCO and Cumberland Plateau Planning Districts and on the
   Authority’s website.

D. In its review of an application submitted pursuant to subsection C, the
Authority may consider the proposed cooperative agreement and any supporting
documents submitted by the applicants, any written comments submitted by any
person, any written response by the applicants, and any written or oral comments
submitted at the public hearing. The Authority shall review a proposed
cooperative agreement in consideration of the Commonwealth’s policy to
facilitate improvements in patient health care outcomes and access to quality
health care, and population health improvement, in rural communities and in
accordance with the standards set forth in subsection E. Any applicants to the
proposed cooperative agreement under review, and their affiliates or employees,
who are members of the Authority, as well as any members of the Authority that
are competitors, or affiliates or employees of competitors, of the applicants
proposing such cooperative agreement, shall not participate as a member of the
Authority in the Authority’s review of, or decision relating to, the
proposed cooperative agreement; however, this prohibition on such person’s
participation shall not prohibit the person from providing comment on a proposed
cooperative agreement to the Authority or the Commissioner. The Authority shall
determine whether the proposed cooperative agreement should be recommended for
approval by the Commissioner within 75 days of the date the completed
application for the proposed cooperative agreement is submitted for approval.
The Authority may extend the review period for a specified period of time upon
15 days’ notice to the parties.

E. 

   1.  The Authority shall recommend for approval by the Commissioner a proposed
   cooperative agreement if it determines that the benefits likely to result from
   the proposed cooperative agreement outweigh the disadvantages likely to result
   from a reduction in competition from the proposed cooperative agreement.

   2.  In evaluating the potential benefits of a proposed cooperative agreement,
   the Authority shall consider whether one or more of the following benefits may
   result from the proposed cooperative agreement:
               
               
               
               
               
               
               
            

      a.  Enhancement of the quality of hospital and hospital-related care,
      including mental health services and treatment of substance abuse, provided
      to citizens served by the Authority, resulting in improved patient
      satisfaction;

      b.  Enhancement of population health status consistent with the regional
      health goals established by the Authority;

      c.  Preservation of hospital facilities in geographical proximity to the
      communities traditionally served by those facilities to ensure access to
      care;

      d.  Gains in the cost-efficiency of services provided by the hospitals
      involved;

      e.  Improvements in the utilization of hospital resources and equipment;

      f.  Avoidance of duplication of hospital resources;

      g.  Participation in the state Medicaid program; and

      h.  Total cost of care.

   3.  The Authority’s evaluation of any disadvantages attributable to any
   reduction in competition likely to result from the proposed cooperative
   agreement shall include, but need not be limited to, the following factors:
               
               
               
            

      a.  The extent of any likely adverse impact of the proposed cooperative
      agreement on the ability of health maintenance organizations, preferred
      provider organizations, managed health care organizations, or other health
      care payors to negotiate reasonable payment and service arrangements with
      hospitals, physicians, allied health care professionals, or other health
      care providers;

      b.  The extent of any reduction in competition among physicians, allied
      health professionals, other health care providers, or other persons
      furnishing goods or services to, or in competition with, hospitals that is
      likely to result directly or indirectly from the proposed cooperative
      agreement;

      c.  The extent of any likely adverse impact on patients in the quality,
      availability, and price of health care services; and

      d.  The availability of arrangements that are less restrictive to
      competition and achieve the same benefits or a more favorable balance of
      benefits over disadvantages attributable to any reduction in competition
      likely to result from the proposed cooperative agreement.

F. 

   1.  If the Authority deems that the proposed cooperative agreement should be
   recommended for approval, it shall provide such recommendation to the
   Commissioner.

   2.  Upon receipt of the Authority’s recommendation, the Commissioner may
   request from the applicants such supplemental information as the Commissioner
   deems necessary to the assessment of whether to approve the proposed
   cooperative agreement. The Commissioner shall consult with the Attorney
   General regarding his assessment of whether to approve the proposed
   cooperative agreement. On the basis of his review of the record developed by
   the Authority, including the Authority’s recommendation, as well as any
   additional information received from the applicants as well as any other data,
   information, or advice available to the Commissioner, the Commissioner shall
   approve the proposed cooperative agreement if he finds after considering the
   factors in subsection E that the benefits likely to result from the proposed
   cooperative agreement outweigh the disadvantages likely to result from a
   reduction in competition from the proposed cooperative agreement. The
   Commissioner shall issue his decision in writing within 45 days of receipt of
   the Authority’s recommendation. However, if the Commissioner has
   requested additional information from the applicants, the Commissioner shall
   have an additional 15 days, following receipt of the supplemental information,
   to approve or deny the proposed cooperative agreement. The Commissioner may
   reasonably condition approval of the proposed cooperative agreement upon the
   parties’ commitments to achieving the improvements in population health,
   access to health care services, quality, and cost efficiencies identified by
   the parties in support of their application for approval of the proposed
   cooperative agreement. Such conditions shall be fully enforceable by the
   Commissioner. The Commissioner’s decision to approve or deny an
   application shall constitute a case decision pursuant to the Virginia
   Administrative Process Act (§ 2.2-4000 et seq.).

G. If approved, the cooperative agreement is entrusted to the Commissioner for
active and continuing supervision to ensure compliance with the provisions of
the cooperative agreement. The parties to a cooperative agreement that has been
approved by the Commissioner shall report annually to the Commissioner on the
extent of the benefits realized and compliance with other terms and conditions
of the approval. The report shall describe the activities conducted pursuant to
the cooperative agreement, including 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, and shall include
information relating to price, cost, quality, access to care, and population
health improvement. The Commissioner may require the parties to a cooperative
agreement to supplement such report with additional information to the extent
necessary to the Commissioner’s active and continuing supervision to
ensure compliance with the cooperative agreement. The Commissioner shall have
the authority to investigate as needed, including the authority to conduct
onsite inspections, to ensure compliance with the cooperative agreement.

H. If the Commissioner has reason to believe that compliance with a cooperative
agreement no longer meets the requirements of this chapter, the Commissioner
shall initiate a proceeding to determine whether compliance with the cooperative
agreement no longer meets the requirements of this chapter. In the course of
such proceeding, the Commissioner is authorized to seek reasonable modifications
to a cooperative agreement, with the consent of the parties to the agreement, in
order to ensure that it continues to meet the requirements of this chapter. The
Commissioner is authorized to revoke a cooperative agreement upon a finding that
(i) the parties to the agreement are not complying with its terms or the
conditions of approval; (ii) the agreement is not in substantial compliance with
the terms of the application or the conditions of approval; (iii) the benefits
resulting from the approved agreement no longer outweigh the disadvantages
attributable to the reduction in competition resulting from the agreement; (iv)
the Commissioner’s approval was obtained as a result of intentional
material misrepresentation to the Commissioner or as the result of coercion,
threats, or intimidation toward any party to the cooperative agreement; or (v)
the parties to the agreement have failed to pay any required fee. All
proceedings initiated by the Commissioner under this chapter and any judicial
review thereof shall be held in accordance with and governed by the Virginia
Administrative Process Act (§ 2.2-4000 et seq.).

I. The Commissioner shall maintain on file all cooperative agreements that the
Commissioner has approved, including any conditions imposed by the Commissioner.
Any party to a cooperative agreement that terminates its participation in such
cooperative agreement shall file a notice of termination with the Commissioner
within 30 days after termination.

J. The Commissioner shall be entitled to reimbursement from the parties seeking
approval of a cooperative agreement for all reasonable and actual costs, not to
exceed $ 75,000, incurred by the Commissioner in his review and approval of any
cooperative agreement approved pursuant to this chapter. In addition, the
Commissioner may assess an annual fee, in an amount established by regulation
promulgated by the State Board of Health that does not exceed $ 75,000, for the
supervision of any cooperative agreement approved pursuant to this chapter and
to support the implementation and administration of the provisions of this
chapter.

HISTORY: 2015, c. 741.