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CL- 2121 New Business   Item #:   H.    
City Council Regular Meeting
Meeting Date: 06/04/2019  
Subject:    SOVAH Health Request - Local Provider Assessment
From: Ken F. Larking

COUNCIL ACTION
Business Meeting:     06/04/2019
SUMMARY
Lifepoint Health has requested the imposition of a fee on SOVAH Health - Danville effective July 1, 2019.  The fee revenue collected by the City of Danville will be used in combination with federal matching funds to support the continued access to quality hospital care to individuals qualifying under the Commonwealth of Virginia’s Medicaid program.  SOVAH Health Danville will be prohibited from passing any portion of the cost of such fee onto any patients it serves regardless of payer.  This local hospital fee program will be evaluated on an annual basis. 
BACKGROUND
In 2016, the federal Centers for Medicare and Medicaid Services (“CMS”) authorized additional Medicaid payments to several safety-net hospitals in Virginia.  SOVAH Health Danville meets the federally approved safety-net criteria necessary to qualify for the additional Medicaid payments.  However, the Medicaid program is a shared fiscal responsibility between the states and federal government. The Commonwealth is responsible for $.50 of every $1 spent on Medicaid in Virginia.  While the Virginia legislature was supportive of the opportunity for safety-net hospitals to receive additional Medicaid payments, it does not intend to appropriate general fund dollars to satisfy the Commonwealth’s fiscal obligation to the additional Medicaid payments.  As such, the safety-net hospitals must find a permissible source of funding to serve as the Commonwealth’s “share” of the additional Medicaid payments.
 
One opportunity to generate a permissible source of funds is through the establishment of a local hospital fee, whereby the City of Danville would impose a fee on SOVAH Health Danville that could be used to cover the Commonwealth’s share of the additional Medicaid payments. The fee would be collected from SOVAH Health Danville on an annual basis and would not exceed the six percent local hospital fee limit under federal requirements. The City of Danville will transfer the fee revenue to the Department of Medical Assistance Services (“DMAS”), which is the agency responsible for administering the Commonwealth’s Medicaid program.  DMAS would use the fee revenue and corresponding federal matching funds to make the additional Medicaid payments to SOVAH Health Danville.

This local hospital fee program is time-limited, and will be evaluated on an annual basis to ensure SOVAH Health Danville receives all additional Medicaid payments for which it qualifies under the Commonwealth of Virginia’s federally approved Medicaid State plan.  Under no circumstances may SOVAH Health Danville pass any portion of the cost of the fee onto the patients it serves.
RECOMMENDATION
The City Council is asked to consider a resolution supporting the implementation of a local hospital fee in the City of Danville to support the additional Medicaid payments for which SOVAH Health Danville qualifies under the Commonwealth of Virginia’s federally approved Medicaid State Plan.
 

Attachments
Resolution

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