Title of Regulation: 12VAC5-540. Rules and Regulations for the Identification of Medically Underserved Areas in Virginia (amending 12VAC5-540-10 through 12VAC5-540-40).

Statutory Authority: §§ 32.1-12 and 32.1-122.5 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: December 21, 2012.

Agency Contact: Kenneth Studer, Department of Health, 109 Governor Street, Richmond, VA 23219, telephone (804) 864-7428, or email ken.studer@vdh.virginia.gov.

Basis: The Board of Health is authorized pursuant to § 32.1-122.5 of the Code of Virginia to establish criteria to identify primary care medically underserved areas within the Commonwealth and specify the data calculations to be used to estimate the level of underservice. The Board of Health is also to include criteria to estimate need for medical services in state facilities operated by the Departments of Corrections, Juvenile Justice, and Behavioral Health and Developmental Services.

Purpose: The regulations require updating because certain state programs and private funding sources depend on the accuracy of the Virginia Medically Underserved Area designation process in awarding funds to health providers and to communities. All of the changes are in response to the availability of new data sources allowing more timely designation of underserved areas. The designation process is designed to encourage the appropriate distribution and expansion of healthcare services into areas often lacking in such services thereby improving the public's health and welfare.

Substance: The recommended changes are designed to:

1. Allow state facilities to be automatically designated as Virginia Medically Underserved Areas.

2. Incorporate new state incentive programs into the Virginia Medically Underserved Program description.

3. Allow new data sources to be used in computing Virginia Medically Underserved Areas.

4. Establish a minimum five year update and renewal cycle for designation of Virginia Medically Underserved Areas.

Issues: The changes are required to make the regulations compatible with current medical and nursing scholarship regulations and to appropriately use new data sources that were not previously available. The regulatory action poses no disadvantage to the public or the Commonwealth.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Board of Health (the board) proposes to 1) automatically designate the state facilities operated by the Departments of Corrections, Juvenile Justice, and Behavioral Health and Developmental Services as Virginia Medically Underserved Areas (VMUA), 2) update the data sources to be used in computing VMUA designations and establish a minimum of five years of update and renewal cycle for designations, and 3) remove outdated information regarding scholarship programs that are affected by the designation.

Result of Analysis. The benefits likely exceed the costs for all proposed changes.

Estimated Economic Impact. These regulations establish criteria for VMUA designation. The criteria are required to be quantifiable measures, sensitive to the unique characteristics of urban and rural jurisdictions. The purpose of identifying medically underserved areas within the Commonwealth is to establish geographic areas in need of additional primary healthcare services. The VMUA designation is a targeting device that assists individual practitioners, medical facilities (e.g., clinics, hospitals), and communities in recruiting health professionals, obtaining foundation grants, qualifying for special services, etc.

VMUA designation is designed to encourage the appropriate distribution and expansion of healthcare services into areas where Virginia citizens often lack access to healthcare. State, private, and sometimes federal funding programs and agencies rely on VMUA designation to allocate their limited resources to provide incentives.

According to the Virginia Department of Health (VDH), VMUA designation has a direct impact on Nurse Practitioner/Nurse Midwife Scholarship allocations in Virginia. Also, Virginia Health Care Foundation, hospital conversion foundations, and other healthcare foundations use VMUA as acceptable criteria for grant applications. Moreover, federal regulations allow Virginia to develop criteria for qualifying areas for rural health clinic development. Rural health clinics are designed to recruit and retain providers in underserved areas through a cost-based reimbursement mechanism. Furthermore, Virginia may establish criteria for the placement of J-1 Waiver physicians in federal and state designated health professional shortage areas. A J-1 Waiver relieves an international medical graduate from the obligation of returning to his or her home country for two years, and allows the physician to apply for an immigration status that would allow him or her to remain in the U.S. Finally, VDH expects that once the VMUA criteria are updated according to the proposed changes and maintained regularly, the designations will be more generally used as a health planning tool and as a recognized set of criteria for evaluating healthcare shortages in the Commonwealth.

One of the proposed changes will allow the board to automatically designate the state facilities operated by the Departments of Corrections, Juvenile Justice, and Behavioral Health and Developmental Services as VMUA. While the board has had this authority since 1990 under § 32.1-122.5 of the Code of Virginia, the regulatory language has never included this authority. Since this authority has not been in the regulations, the Board has never designated these state facilities as VMUA. The proposed changes will add this authority in the regulations and allow the Board to designate the state facilities as VMUA. According to VDH, Departments of Corrections, Juvenile Justice, and Behavioral Health and Developmental Services respectively have 39, 11, and 16 facilities which may be automatically designated as VMUA.

The main benefit of this change will fall on the 66 state facilities operated by the three departments. These facilities will be able to attract nurse practitioners and midwives through the Commonwealth's Nurse Practitioner/Nurse Midwife Scholarship program. These facilities may also be approved for grant applications by various healthcare foundations and for J-1 Waiver recommendation by the United States Department of State. Since most of the benefits will depend on the decision of other entities on whether to rely on the VMUA designations, the exact extent of the potential benefits is unknown at this time.

The main cost of this change will fall on the areas that are currently designated as VMUA.¹ These areas will have to share the same available resources with 66 additional state facilities which may reduce the amount of benefits they currently receive due to VMUA designation.

Other proposed changes will update the data sources to be used in computing VMUA designations and establish a minimum of five years of update and renewal cycle for designations. According to VDH, these regulations were last revised in 1991 and have not been reviewed since that time. Since then, new and improved data sources have become available to assess the demographic characteristics indicative of areas with inadequate primary healthcare resources.

Similar to the previous change, the main cost of this change will fall on the areas that are currently designated as VMUA.² With the use of new data, some of the areas that are currently designated as VMUA may no longer be designated as VMUA. However, VDH believes only one or two areas might lose their current VMUA designation based on an experimentation with the data a few years ago.

On the other hand, areas that will become newly designated as VMUA due to use of new data will be the ones to mainly benefit from this change. These areas may enjoy an influx of state scholarships for nurse practitioners and midwives and grants made available by various healthcare associations and foundations.

In addition, updating the VMUA designations at least once in every five years is expected to keep up with the demographic changes that may occur and result in more accurate identification of areas that remains truly underserved over time.

The use of newer and improved data and frequent updates are also expected to more accurately identify the areas that are truly in need of additional primary healthcare resources. Due to this improvement in methodology, there is a chance that the federal government may start relying on the Commonwealth's VMUA designations and make new federal resources available to the designated areas.

Finally, the proposed changes will remove outdated information regarding scholarship programs that are affected by the designation. This particular change is not expected to create any significant economic effects other than improving the clarity of the regulations.

Businesses and Entities Affected. These regulations directly affect beneficiaries of VMUA designation. According to VDH, there are approximately 500 community and business entities supported by the designation process. In addition, the proposed changes will add 66 state facilities to the list of beneficiaries.

Localities Particularly Affected. The proposed regulations apply throughout the Commonwealth. However, areas designated as VMUA under the current regulations include the counties of Accomack, Alleghany, Bath, Bland, Brunswick, Buchanan, Caroline, Charlotte, Dickenson, Essex, Greensville, Halifax, Henry, Highland, Lancaster, Lee, Louisa, Lunenburg, Mecklenburg, Northampton, Northumberland, Nottoway, Page, Patrick, Pittsylvania, Richmond, Russell, Scott, Smyth, Surry, Sussex, Tazewell, Washington, Westmoreland, Wise, and Wythe and the cities of Bristol, Clifton Forge, Covington, Danville, Emporia, Martinsville, and Norton. The proposed changes may remove VMUA designation from one or two of these areas while some other areas may be newly designated.

Projected Impact on Employment. The proposed changes may affect the distribution of statewide public scholarships by changing the list of VMUAs. Thus, supply of certain healthcare professionals may increase for facilities that may newly be designated as VMUA and decrease for those losing their designation. Similarly, statewide distribution of private grants may be altered by the proposed changes. Thus, facilities with new VMUA designation may see an increase in their demand for labor due to influx of additional grant funds, while those losing their designation may experience a decrease in their demand for labor.

Additionally, if the improvement in the VMUA designation process due to new data results in federal government relying on Commonwealth's VMUA designations and making new federal resources available to the designated areas, we can expect to see an effect on employment. For example, federal rural health clinic development designation would be expected to increase demand for healthcare professionals as additional clinics would be established in VMUAs. Also, federal J-1 Waiver designations would add to the supply of physicians available in VMUAs.

Effects on the Use and Value of Private Property. Asset value of privately owned beneficiaries of scholarships or grants may increase if they are newly designated as VMUA. On the other hand, their asset values may decrease if they lose their VMUA designation.

Small Businesses: Costs and Other Effects. While there is no data to conclusively identify the small businesses affected by the proposed changes, it is believed that most of the approximately 500 community and business entities supported by the designation process are non-profit community groups such as free clinics and community health centers. The costs and other effects on the affected small businesses would be the same as discussed above.

Small Businesses: Alternative Method that Minimizes Adverse Impact. The proposed regulations would have an adverse impact on small businesses that are current beneficiaries of the VMUA designation, but would lose some or all of their benefits once the proposed regulations become effective. There is no known alternative that minimizes the adverse impact while accomplishing the same goals.

Real Estate Development Costs. No direct effect on real estate development costs is expected.

Legal Mandate. The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Administrative Process Act and Executive Order Number 14 (10). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

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¹ VMUAs as of September 2006 include counties of Accomack, Alleghany, Bath, Bland, Brunswick, Buchanan, Caroline, Charlotte, Dickenson, Essex, Greensville, Halifax, Henry, Highland, Lancaster, Lee, Louisa, Lunenburg, Mecklenburg, Northampton, Northumberland, Nottoway, Page, Patrick, Pittsylvania, Richmond, Russell, Scott, Smyth, Surry, Sussex, Tazewell, Washington, Westmoreland, Wise, Wythe, and cities of Bristol, Clifton Forge, Covington, Danville, Emporia, Martinsville, Norton.

² Ibid.

Agency's Response to Economic Impact Analysis: Virginia Department of Health concurs with the conclusion reached by the Department of Planning and Budget's economic impact analysis that the benefits for the proposed changes will exceed the costs incurred in updating and identifying medically underserved areas in Virginia in accordance with the amended regulations.

Summary:

The proposed amendments (i) automatically designate the state facilities operated by the Departments of Corrections, Juvenile Justice, and Behavioral Health and Developmental Services as Virginia Medically Underserved Areas (VMUA); (ii) update the data sources to be used in computing VMUA designations and establish a minimum of five years of update and renewal cycle for designations; and (iii) remove outdated information regarding scholarship programs that are affected by the designation.

Part I
General Information

12VAC5-540-10. Authority.

In accordance with the provisions of § 32.1-122.5 of the Code of Virginia, the State Board of Health is required to establish criteria for determining medically underserved areas within the Commonwealth and include in these criteria the need for medical care services in the state facilities operated by the Departments of Corrections, Juvenile Justice, and Behavioral Health and Developmental Services. The criteria are required to be quantifiable measures, sensitive to the unique characteristics of urban and rural jurisdictions.

12VAC5-540-20. Purpose.

The purpose of identifying medically underserved areas within the Commonwealth is to establish geographic areas in need of additional primary health care services. These areas may be selected by trained primary care physicians and other health professionals as practice sites in fulfillment of obligations that the physicians and other health professionals accepted in return for medical training and scholarship grant assistance. Each year of practice in a medically underserved area satisfies the repayment requirement of a year of scholarship support from the Virginia Medical Scholarship Program. Additionally, these medically underserved areas will be eligible locations for practicing primary care physicians and other health professionals participating in the state or federal physician loan repayment programs. Further, these medically underserved areas may become eligible for assistance, state or federal, to establish primary care medical centers.

Part II
Designating Medically Underserved Areas

12VAC5-540-30. Criteria for determining medically underserved areas.

The following five criteria, as available, and as indicated, shall be used to evaluate and identify medically underserved areas throughout the Commonwealth of Virginia and the criteria shall be applied at a minimum five-year interval using the most recent data available to update the designations:

1. Percentage of population with income at or below 100% of the federal poverty level. The source for these data shall be the most recent available publication of the Bureau of the Census of the U.S. Department of Commerce or appropriate intercensorial estimates of poverty accepted by the Health Resources and Services Administration Shortage Designation Branch for federal health professional shortage area and medically underserved area designations.

2. Percentage of population that is 65 years of age or older. The source for these data shall be the Bureau of the Census of the U.S. Department of Commerce, or the latest estimates from the Weldon Cooper Center for Public Service at the University of Virginia, or the Economic Services Division of the Virginia Employment Commission.

3. The primary care physician to population ratio. The source for these data shall be the Department of Family Practice of the Medical College of Virginia of Virginia Commonwealth University Virginia Department of Health Professions, Board of Medicine physician profile database. Primary care physicians are defined as board certified or self-designated generalist practitioners who practice family medicine, pediatrics, internal medicine, or obstetrics/gynecology.

4. The four-year aggregate infant mortality rate. The source for these data shall be the Center most recent four-year infant mortality data for each jurisdiction from the Division of Health Statistics of the Virginia Department of Health.

5. The most recent annual seasonally adjusted quarterly civilian unemployment rate for each jurisdiction. The source for these data shall be the Information Services Division of the Virginia Employment Commission.

12VAC5-540-40. Application of the criteria.

A. Determining medically underserved cities and counties. The criteria enumerated in 12VAC5-540-30 shall be used to construct a numerical index by which the relative degree of medical underservice shall be calculated for each city and county within the Commonwealth. Observations for each of the five criteria will be listed for each Virginia city and county. An interval scale will be used to assign a particular value to each observation. This will be done for each of the five criteria. Each interval scale will consist of four ranges or outcomes of observations. The ranges will be numerically equal. The four ranges will be labeled as Level 1, Level 2, Level 3, and Level 4. The numerical difference between the ranges will be established beginning with the Level 2 range.

The Level 2 range shall have the statewide average for each respective criterion, except the population to primary care physician ratio, as its upper limit. The Level 2 upper limit for the primary care physician to population ratio is established by dividing the difference between the Level 4 upper limit for this criterion and the Level 1 upper limit by two. Each observation which is equal to or less than the Level 2 upper limit, but greater than the Level 1 upper limit, will be assigned a numerical value of two.

The Level 1 range shall have an upper limit which is the quotient of the statewide average divided by two. For the ratio of population to primary care physician criterion, the upper limit of Level 1 shall be the ratio 2500:1 as recommended by the American Academy of Family Physicians. Each observation that is equal to or less than the Level 1 upper limit will be assigned a numerical value of one.

The Level 3 range shall have an upper limit that is equal to the sum of the upper limit of the Level 1 range and the upper limit of the Level 2 range. For the ratio of population to primary care physician criterion, the upper limit of level 3 shall be established at 3500:1, the federal standard for designating health manpower shortage areas. Each observation that is equal to or less than the Level 3 upper limit will be assigned a numerical value of three.

The Level 4 range will include any observation greater than the upper limit of Level 3 range. Each observation in the Level 4 range will be assigned a numerical value of four.

The values for each of the ranges of the five criteria will be summed for each Virginia city and county. Each Virginia city and county will have an assigned value of five or greater, to a maximum of 20. A statewide average value will be determined by summing the total city and county values and dividing by the number of cities and counties. Any city or county assigned a value that is greater than the statewide average value shall be considered medically underserved. The application of criteria for determining medically underserved cities and counties shall be performed annually and published by the board.

B. Determining medically underserved areas within cities and counties. Geographic subsections of cities or counties may be designated as medically underserved areas when the entire city or county is not eligible if the subsection has: (i) a population to primary care physician ratio equal to or greater than 3500:1; and (ii) a population whose rate of poverty is greater than the statewide average poverty rate; and (iii) a minimum population of 3,500 persons residing in a contiguous, identifiable, geographic area. The board shall from time to time, on petition of any person, or as a result of its own decision, apply criteria for determining medically underserved subareas of cities and counties. Once determined to be medically underserved, any subarea of a city or county shall appear on the next list of medically underserved areas published by the board. Areas which qualify as medically underserved areas under 12VAC5-540-40 A and that are within Standard Metropolitan Areas as defined by the U.S. Department of Commerce, must also qualify under this section for purposes of placement of health professionals.

C. Medical care services in state facilities operated by the Departments of Corrections, Juvenile Justice, and Behavioral Health and Developmental Services will be deemed Virginia medically underserved areas.