Title of Regulation: 4VAC20-620. Pertaining to Summer Flounder (amending 4VAC20-620-40).

Statutory Authority: §§ 28.2-201 and 28.2-210 of the Code of Virginia.

Effective Dates: January 27, 2016, through February 25, 2016.

Agency Contact: Jennifer Farmer, Regulatory Coordinator, Marine Resources Commission, 2600 Washington Avenue, 3rd Floor, Newport News, VA 23607, telephone (757) 247-2248 or email jennifer.farmer@mrc.virginia.gov.

Preamble:

The emergency amendments modify the landing dates, landing periods, possession limits, and landing limits for summer flounder commercially harvested outside of Virginia waters, and include (i) permitting the possession of a North Carolina vessel possession limit of summer flounder but prohibiting offloading any amount of that possession limit except pursuant to a transfer quota agreed to by the Commissioner of the Marine Resources Commission, (ii) changing the harvesting date of April 19 to May 7, (iii) increasing the 20-day period for landing to 30 days, and (iv) prohibiting landing more than a total of 5000 pounds of summer flounder during the second 30-day period.

4VAC20-620-40. Commercial vessel possession and landing limitations.

A. It shall be unlawful for any person harvesting Summer Flounder outside of Virginia's waters to do any of the following, except as described in subsections B, C, D, and D E of this section:

1. Possess aboard any vessel in Virginia waters any amount of Summer Flounder in excess of 10% by weight of Atlantic croaker or the combined landings, on board a vessel, of black sea bass, scup, squid, scallops and Atlantic mackerel.

2. Possess aboard any vessel in Virginia waters any amount of Summer Flounder in excess of 1,500 pounds landed in combination with Atlantic croaker.

3. Fail to sell the vessel's entire harvest of all species at the point of landing.

B. Nothing in this chapter shall preclude a vessel from possessing any North Carolina vessel possession limit of summer flounder in Virginia; however, no vessel that possesses the North Carolina vessel possession limit of summer flounder shall offload any amount of that possession limit, except as described in subdivision J of this section.

B. C. From the second Wednesday in March through April 19 May 7, it shall be unlawful for any person harvesting Summer Flounder outside of Virginia waters to do any of the following:

1. Possess aboard any vessel in Virginia waters any amount of Summer Flounder in excess of the combined total of the Virginia landing limit described in subdivision subdivisions 3 and 4 of this subsection and the amount of the legal North Carolina landing limit or trip limit.

2. Land Summer Flounder in Virginia for commercial purposes more than twice during each consecutive 20-day 30-day period, with the first 20-day 30-day period beginning on the second Wednesday in March.

3. Land in Virginia more than a total of 7,500 pounds of Summer Flounder during each consecutive 20-day the first 30-day period, with the first 20-day 30-day period beginning on the second Wednesday in March.

4. Land in Virginia more than a total of 5,000 pounds of summer flounder during the second 30-day period with the second 30-day period beginning on April 7.

4. 5. Land in Virginia any amount of Summer Flounder more than once in any consecutive five-day period.

C. D. From November 1 through December 31 of each year, or until it has been projected and announced that 85% of the allowable landings have been taken, it shall be unlawful for any person harvesting Summer Flounder outside of Virginia waters to do any of the following:

1. Possess aboard any vessel in Virginia waters any amount of Summer Flounder in excess of the combined total of the Virginia landing limit described in subdivisions 3 and 4 of this subsection and the amount of the legal North Carolina landing limit or trip limit.

2. Land Summer Flounder in Virginia for commercial purposes more than twice during each consecutive 30-day period, with the first 30-day period beginning on November 1.

3. Land in Virginia more than a total of 10,000 pounds of Summer Flounder during the first 30-day period, with the first 30-day period beginning on November 1.

4. Land in Virginia more than a total of 5,000 pounds of Summer Flounder during the second 30-day period with the second 30-day period beginning on December 1.

5. Land in Virginia any amount of Summer Flounder more than once in any consecutive five-day period.

D. E. From January 1 through December 31 of each year, any boat or vessel issued a valid federal Summer Flounder moratorium permit and owned and operated by a legal Virginia Commercial Hook-and-Line Licensee that possesses a Restricted Summer Flounder Endorsement shall be restricted to a possession and landing limit of 200 pounds of Summer Flounder, except as described in 4VAC20-620-30 F.

E. F. Upon request by a marine police officer, the seafood buyer or processor shall offload and accurately determine the total weight of all Summer Flounder aboard any vessel landing Summer Flounder in Virginia.

F. G. Any possession limit described in this section shall be determined by the weight in pounds of Summer Flounder as customarily packed, boxed and weighed by the seafood buyer or processor. The weight of any Summer Flounder in pounds found in excess of any possession limit described in this section shall be prima facie evidence of violation of this chapter. Persons in possession of Summer Flounder aboard any vessel in excess of the possession limit shall be in violation of this chapter unless that vessel has requested and been granted safe harbor. Any buyer or processor offloading or accepting any quantity of Summer Flounder from any vessel in excess of the possession limit shall be in violation of this chapter, except as described by subsection I J of this section. A buyer or processor may accept or buy Summer Flounder from a vessel that has secured safe harbor, provided that vessel has satisfied the requirements described in subsection I J of this section.

G. H. If a person violates the possession limits described in this section, the entire amount of Summer Flounder in that person's possession shall be confiscated. Any confiscated Summer Flounder shall be considered as a removal from the appropriate commercial harvest or landings quota. Upon confiscation, the marine police officer shall inventory the confiscated Summer Flounder and, at a minimum, secure two bids for purchase of the confiscated Summer Flounder from approved and licensed seafood buyers. The confiscated fish will be sold to the highest bidder and all funds derived from such sale shall be deposited for the Commonwealth pending court resolution of the charge of violating the possession limits established by this chapter. All of the collected funds will be returned to the accused upon a finding of innocence or forfeited to the Commonwealth upon a finding of guilty.

H. I. It shall be unlawful for a licensed seafood buyer or federally permitted seafood buyer to fail to contact the Marine Resources Commission Operation Station prior to a vessel offloading Summer Flounder harvested outside of Virginia. The buyer shall provide to the Marine Resources Commission the name of the vessel, its captain, an estimate of the amount in pounds of Summer Flounder on board that vessel, and the anticipated or approximate offloading time. Once offloading of any vessel is complete and the weight of the landed Summer Flounder has been determined, the buyer shall contact the Marine Resources Commission Operations Station and report the vessel name and corresponding weight of Summer Flounder landed. It shall be unlawful for any person to offload from a boat or vessel for commercial purposes any Summer Flounder during the period of 9 p.m. to 7 a.m.

I. J. Any boat or vessel that has entered Virginia waters for safe harbor shall only offload Summer Flounder when the state that licenses that vessel requests to transfer quota to Virginia, in the amount that corresponds to that vessel's possession limit, and the commissioner agrees to accept that transfer of quota.

J. K. After any commercial harvest or landing quota as described in 4VAC20-620-30 has been attained and announced as such, any boat or vessel possessing Summer Flounder on board may enter Virginia waters for safe harbor but shall contact the Marine Resources Commission Operation Center in advance of such entry into Virginia waters.

K. L. It shall be unlawful for any person harvesting Summer Flounder outside of Virginia waters to possess aboard any vessel, in Virginia, any amount of Summer Flounder, once it has been projected and announced that 100% of the quota described in 4VAC20-620-30 A has been taken.

Title of Regulation: 4VAC20-720. Pertaining to Restrictions on Oyster Harvest (amending 4VAC20-720-40).

Statutory Authority: § 28.2-201 of the Code of Virginia.

Effective Date: February 1, 2016.

Agency Contact: Jennifer Farmer, Regulatory Coordinator, Marine Resources Commission, 2600 Washington Avenue, 3rd Floor, Newport News, VA 23607, telephone (757) 247-2248 or email jennifer.farmer@mrc.virginia.gov.

Summary:

The amendment changes the dates of part of the open oyster harvest season for the James River Area and the Thomas Rock Area (James River) from March 1, 2016, through March 31, 2016, to January 1, 2016, through January 31, 2016.

4VAC20-720-40. Open oyster harvest season and areas.

A. It shall be unlawful for any person to harvest oysters from public and unassigned grounds outside of the seasons and areas set forth in this section.

B. It shall be unlawful to harvest clean cull oysters from the public oyster grounds and unassigned grounds except during the lawful seasons and from the lawful areas as described in the following subdivisions of this subsection.

1. James River Seed Area, including the Deep Water Shoal State Replenishment Seed Area: October 1, 2015, through April 30, 2016.

2. Milford Haven: December 1, 2015, through February 29, 2016.

3. Rappahannock River Area 9: November 1, 2015, through December 31, 2015.

4. Little Wicomico River: October 1, 2015, through December 31, 2015.

5. Coan River: October 1, 2015, through December 31, 2015.

6. Yeocomico River: October 1, 2015, through December 31, 2015.

7. Nomini Creek: October 1, 2015, through December 31, 2015.

8. Mobjack Bay Area: January 1, 2016, through January 31, 2016.

9. Rappahannock River Rotation Area 5: October 1, 2015, through November 30, 2015.

10. Rappahannock River Rotation Area 3: November 1, 2015, through December 31, 2015.

11. Great Wicomico River Area: December 1, 2015, through January 31, 2016.

12. Upper Chesapeake Bay - Blackberry Hangs Area: December 1, 2015, through January 31, 2016.

13. James River Area and the Thomas Rock Area (James River): November 1 2015, through December 31, 2015, and March January 1, 2016, through March January 31, 2016.

14. Pocomoke and Tangier Sounds Rotation Area 1: December 1, 2015, through February 29, 2016.

15. Pocomoke Sound Area - Public Ground 10: November 2, 2015, through November 13, 2015.

16. Pocomoke Sound Area - Public Ground 9: November 16, 2015, through November 27, 2015.

17. Deep Rock Area: December 1, 2015, through February 29, 2016.

18. Seaside of the Eastern Shore (for clean cull oysters only): November 1, 2015, through March 31, 2016.

C. It shall be unlawful to harvest seed oysters from the public oyster grounds or unassigned grounds, except during the lawful seasons. The harvest of seed oysters from the lawful areas is described in the following subdivisions of this subsection.

1. James River Seed Area: October 1, 2015, through May 31, 2016.

2. Deep Water Shoal State Replenishment Seed Area: October 1, 2015, through May 31, 2016.

Titles of Regulations: 12VAC5-90. Regulations for Disease Reporting and Control (adding 12VAC5-90-215).

12VAC5-120. Regulations for Testing Children for Elevated Blood-Lead Levels (repealing 12VAC5-120-10 through 12VAC5-120-90).

Statutory Authority: §§ 32.1-12, 32.1-35, and 32.1-46.1 of the Code of Virginia.

Effective Date: March 11, 2016.

Agency Contact: Diane Woolard, Ph.D., Director, Division of Surveillance and Investigation, Department of Health, 109 Governor Street, Richmond, VA 23219, telephone (804) 864-8124, or email diane.woolard@vdh.virginia.gov.

Summary:

The amendments incorporate the testing and risk determination criteria for identifying children with elevated blood lead levels into 12VAC5-90 and repeal 12VAC5-120, the existing regulation pertaining to blood lead level testing of children.

Summary of Public Comments and Agency's Response: A summary of comments made by the public and the agency's response may be obtained from the promulgating agency or viewed at the office of the Registrar of Regulations.

Part IX
Protocol for Identification of Children with Elevated Blood Lead Levels

12VAC5-90-215. Schedule and criteria for and confirmation of blood lead testing and information to be provided.

A. Schedule for testing. Every child shall be tested to determine the blood lead level at 12 months and 24 months of age if the health care provider determines that the child meets any of the criteria listed in subsection B of this section. Children 25 months through 72 months of age who present for medical care and meet any of criteria of subsection B of this section shall also be tested if they have either not previously been tested for blood lead level or were previously tested but experienced a change since testing that has resulted in an increased risk of lead exposure based on the criteria listed in subsection B of this section.

B. Criteria for testing.

1. The child is eligible for or receiving benefits from Medicaid or the Special Supplemental Nutrition Program for Women, Infants and Children (WIC);

2. The child is living in or regularly visiting a house, apartment, dwelling, structure, or child care facility built before 1960;

3. The child is living in or regularly visiting a house, apartment, dwelling, structure, or child care facility built before 1978 that has (i) peeling or chipping paint or (ii) recent (within the last six months) ongoing or planned renovations;

4. The child is living in or regularly visiting a house, apartment, dwelling, or other structure in which one or more persons have blood lead testing yielding evidence of lead exposure;

5. The child is living with an adult whose job, hobby, or other activity involves exposure to lead;

6. The child is living near an active lead smelter, battery recycling plant, or other industry likely to release lead;

7. The child's parent, guardian, or other person standing in loco parentis requests the child's blood be tested due to any suspected exposure; or

8. The child is a recent refugee or immigrant or is adopted from outside of the United States.

C. Exceptions. A child who does not meet any of the schedule or criteria provided in subsection A or B of this section is considered to be at low risk, and testing is not required but may be conducted at the discretion of the health care provider. The testing requirement shall be waived if the parent, guardian, or other person standing in loco parentis of a child objects to the testing on the basis that the procedure conflicts with his religious tenets or practices.

D. Confirmation of blood lead levels. Blood lead level testing shall be performed on venous or capillary blood. Tests of venous blood performed by a laboratory certified by the federal Centers for Medicare & Medicaid Services in accordance with 42 USC § 263a, the Clinical Laboratory Improvement Amendment of 1988 (CLIA-certified), are considered confirmatory. Tests of venous blood performed by any other laboratory and tests of capillary blood shall be confirmed by a repeat blood test, preferably venous, performed by a CLIA-certified laboratory. Such confirmatory testing shall be performed in accordance with the following schedule:

1. Within one to three months if the result of the capillary test is at or above the CDC's reference value and up to 9 micrograms of lead per deciliter of whole blood (µg/dL).

2. Within one week to one month if the result of the capillary test is 10-44 µg/dL. The higher this test result, the more urgent the need for a confirmatory test.

3. Within 48 hours if the result of the capillary test is 45-59 µg/dL.

4. Within 24 hours if the result of the capillary test is 60-69 µg/dL.

5. Immediately as an emergency laboratory test if the result of the capillary test is 70 µg/dL or higher.

E. Information to be provided. As part of regular well-check visits for all children, the health care provider shall make available to parents, guardians, or other persons standing in loco parentis information on the dangers of lead poisoning, potential sources of lead and ways to prevent exposure, and a list of available lead-related resources. When blood lead level testing is performed, the health care provider shall share the child's blood lead level test result with the child's parent, guardian, or other person standing in loco parentis and report to the local health department in accordance with the requirements of 12VAC5-90-80.

Titles of Regulations: 12VAC5-90. Regulations for Disease Reporting and Control (adding 12VAC5-90-215).

12VAC5-120. Regulations for Testing Children for Elevated Blood-Lead Levels (repealing 12VAC5-120-10 through 12VAC5-120-90).

Statutory Authority: §§ 32.1-12, 32.1-35, and 32.1-46.1 of the Code of Virginia.

Effective Date: March 11, 2016.

Agency Contact: Diane Woolard, Ph.D., Director, Division of Surveillance and Investigation, Department of Health, 109 Governor Street, Richmond, VA 23219, telephone (804) 864-8124, or email diane.woolard@vdh.virginia.gov.

Summary:

The amendments incorporate the testing and risk determination criteria for identifying children with elevated blood lead levels into 12VAC5-90 and repeal 12VAC5-120, the existing regulation pertaining to blood lead level testing of children.

Summary of Public Comments and Agency's Response: A summary of comments made by the public and the agency's response may be obtained from the promulgating agency or viewed at the office of the Registrar of Regulations.

Part IX
Protocol for Identification of Children with Elevated Blood Lead Levels

12VAC5-90-215. Schedule and criteria for and confirmation of blood lead testing and information to be provided.

A. Schedule for testing. Every child shall be tested to determine the blood lead level at 12 months and 24 months of age if the health care provider determines that the child meets any of the criteria listed in subsection B of this section. Children 25 months through 72 months of age who present for medical care and meet any of criteria of subsection B of this section shall also be tested if they have either not previously been tested for blood lead level or were previously tested but experienced a change since testing that has resulted in an increased risk of lead exposure based on the criteria listed in subsection B of this section.

B. Criteria for testing.

1. The child is eligible for or receiving benefits from Medicaid or the Special Supplemental Nutrition Program for Women, Infants and Children (WIC);

2. The child is living in or regularly visiting a house, apartment, dwelling, structure, or child care facility built before 1960;

3. The child is living in or regularly visiting a house, apartment, dwelling, structure, or child care facility built before 1978 that has (i) peeling or chipping paint or (ii) recent (within the last six months) ongoing or planned renovations;

4. The child is living in or regularly visiting a house, apartment, dwelling, or other structure in which one or more persons have blood lead testing yielding evidence of lead exposure;

5. The child is living with an adult whose job, hobby, or other activity involves exposure to lead;

6. The child is living near an active lead smelter, battery recycling plant, or other industry likely to release lead;

7. The child's parent, guardian, or other person standing in loco parentis requests the child's blood be tested due to any suspected exposure; or

8. The child is a recent refugee or immigrant or is adopted from outside of the United States.

C. Exceptions. A child who does not meet any of the schedule or criteria provided in subsection A or B of this section is considered to be at low risk, and testing is not required but may be conducted at the discretion of the health care provider. The testing requirement shall be waived if the parent, guardian, or other person standing in loco parentis of a child objects to the testing on the basis that the procedure conflicts with his religious tenets or practices.

D. Confirmation of blood lead levels. Blood lead level testing shall be performed on venous or capillary blood. Tests of venous blood performed by a laboratory certified by the federal Centers for Medicare & Medicaid Services in accordance with 42 USC § 263a, the Clinical Laboratory Improvement Amendment of 1988 (CLIA-certified), are considered confirmatory. Tests of venous blood performed by any other laboratory and tests of capillary blood shall be confirmed by a repeat blood test, preferably venous, performed by a CLIA-certified laboratory. Such confirmatory testing shall be performed in accordance with the following schedule:

1. Within one to three months if the result of the capillary test is at or above the CDC's reference value and up to 9 micrograms of lead per deciliter of whole blood (µg/dL).

2. Within one week to one month if the result of the capillary test is 10-44 µg/dL. The higher this test result, the more urgent the need for a confirmatory test.

3. Within 48 hours if the result of the capillary test is 45-59 µg/dL.

4. Within 24 hours if the result of the capillary test is 60-69 µg/dL.

5. Immediately as an emergency laboratory test if the result of the capillary test is 70 µg/dL or higher.

E. Information to be provided. As part of regular well-check visits for all children, the health care provider shall make available to parents, guardians, or other persons standing in loco parentis information on the dangers of lead poisoning, potential sources of lead and ways to prevent exposure, and a list of available lead-related resources. When blood lead level testing is performed, the health care provider shall share the child's blood lead level test result with the child's parent, guardian, or other person standing in loco parentis and report to the local health department in accordance with the requirements of 12VAC5-90-80.

Title of Regulation: 12VAC5-221. Virginia's Rules and Regulations Governing Cooperative Agreements (adding 12VAC5-221-10 through 12VAC5-221-150).

Statutory Authority: § 32.1-12 of the Code of Virginia; Chapter 741 of the 2015 Acts of Assembly.

Effective Dates: January 18, 2016, through July 17, 2017.

Agency Contact: Susan Puglisi, Policy Analyst, Department of Health, 9960 Mayland Drive, Suite 401, Richmond, VA 23233, telephone (804) 367-2157, FAX (804) 527-4502, or email susan.puglisi@vdh.virginia.gov.

Preamble:

Chapter 741 of the 2015 Acts of Assembly mandates the Board of Health to promulgate regulations that at a minimum address the review of applications for proposed cooperative agreements, the process by which applications for proposed cooperative agreements shall be approved or denied, post-approval monitoring and a fee schedule establishing the amount of the annual fee per cooperative agreement. The second enactment clause of Chapter 741 further specifies that the regulations must be effective within 280 days of enactment. For that reason, the board is utilizing the emergency rulemaking process authorized by the Administrative Process Act in § 2.2-4011 of the Code of Virginia. The regulations contain provisions pertaining to definitions; a fee schedule; procedures for applying for a cooperative agreement, the Commissioner of Health's request for information, and the commissioner's review; ongoing monitoring; and annual reporting.

In drafting the emergency regulations, the Virginia Department of Health (VDH) consulted other jurisdictions, convened a regulatory advisory panel, and held a public hearing. Tennessee has a program that is similar to the program envisioned by Chapter 741 and is a neighboring jurisdiction to Southwest Virginia. For these reasons, VDH utilized regulations issued by Tennessee as a framework in drafting the emergency regulations. VDH convened a regulatory advisory panel of stakeholders consisting of hospital providers, health plans, physicians, and representatives from the Southwest Virginia Health Authority. The regulatory advisory panel met twice and provided feedback regarding a framework document that VDH incorporated into the emergency regulations. Finally, VDH held a public hearing in Abingdon, Virginia. Public comment received at the hearing was considered and where appropriate incorporated into the emergency regulations.

To address the unique health care challenges that exist in Southwest Virginia, the General Assembly through Chapter 741 has authorized the commissioner to approve cooperative agreements that are beneficial to individuals served by the Southwest Virginia Health Authority and to actively supervise cooperative agreements to ensure compliance with the provisions that have been approved. The intent of this regulatory action is to promote and protect the health and safety of individuals within the Southwest Virginia Health Authority's geographic area by ensuring any cooperative agreements entered into by hospitals foster improvements in the quality of health care, moderate increases in health care cost, improve access to needed health care services, and promote improvements in population health status in the Southwest Virginia Health Authority's geographic area. Chapter 741 mandates that this regulatory action include at a minimum provisions regarding (i) the review of applications for proposed cooperative agreements; (ii) the process by which applications for proposed cooperative agreements shall be approved or denied; (iii) post-approval monitoring; and (iv) a schedule establishing the amount of the annual fee that the commissioner is authorized to assess from the parties to a cooperative agreement. The emergency regulations contain provisions that meet these requirements.

CHAPTER 221
VIRGINIA'S RULES AND REGULATIONS GOVERNING COOPERATIVE AGREEMENTS

12VAC5-221-10. Purpose.

To address the unique health care challenges that exist in the Southwest Virginia community, the General Assembly authorized the commissioner to approve or deny an application for a cooperative agreement following receipt of a recommendation for approval by the authority. To the extent an approved cooperative agreement might be anticompetitive within the meaning and intent of state and federal antitrust laws, it is the intent of the Commonwealth with respect to each participating locality to supplant competition with a regulatory program to permit cooperative agreements that are beneficial to citizens served by the authority. The commissioner is authorized to issue a letter authorizing cooperative agreement if he determines by a preponderance of the evidence that the benefits likely to result from the cooperative agreement outweigh the disadvantages likely to result from a reduction in competition. The commissioner is responsible for actively supervising the parties that receive the letter authorizing cooperative agreement to ensure compliance with the provisions 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 residents of a participating locality.

12VAC5-221-20. Definitions.

"Applicant" means a party to a proposed cooperative agreement who submits an application to the authority pursuant to § 15.2-5384.1 of the Code of Virginia.

"Application" means the written materials submitted by applicants to the authority and the department in accordance with § 15.2-5384.1 of the Code of Virginia.

"Authority" means the political subdivision organized and operated pursuant to Chapter 53.1 (§ 15.2-5368 et seq.) of Title 15.2 of the Code of Virginia, or if such authority is abolished, the board, body, authority, department, or officer succeeding to the principal functions thereof or to whom the powers given by Chapter 53.1 of Title 15.2 of the Code of Virginia are given by law.

"Attorney General" means the Attorney General for the Commonwealth of Virginia.

"Commissioner" means the State Health Commissioner.

"Cooperative agreement" means an agreement among two or more hospitals for the sharing, allocation, consolidation by merger or other combination of assets, or referral of patients, personnel, instructional programs, support services, and facilities or medical, diagnostic, or laboratory facilities or procedures or other services traditionally offered by hospitals.

"Day"means a business day.

"Department" means the Virginia Department of Health.

"Hospital" includes any health center and health provider under common ownership with the hospital and means any and all providers of dental, medical, and mental health services, including all related facilities and approaches thereto and appurtenances thereof. Dental, medical, and mental health facilities includes any and all facilities suitable for providing hospital, dental, medical, and mental health care, including any and all structures, buildings, improvements, additions, extensions, replacements, appurtenances, lands, rights in lands, franchises, machinery, equipment, furnishing, landscaping, approaches, roadways, and other facilities necessary or desirable in connection therewith or incidental thereto (including, without limitation, hospitals; nursing homes; assisted living facilities; continuing care facilities; self-care facilities; mental health facilities; wellness and health maintenance centers; medical office facilities; clinics; outpatient surgical centers; alcohol, substance abuse, and drug treatment centers; dental care clinics; laboratories; research facilities; sanitariums; hospices; facilities for the residence or care of the elderly, the handicapped, or the chronically ill; residential facilities for nurses, interns, and physicians; and any other kind of facility for the diagnosis, treatment, rehabilitation, prevention, or palliation of any human illness, injury, disorder, or disability) together with all related and supporting facilities and equipment necessary and desirable in connection therewith or incidental thereto, or equipment alone, including, without limitation, kitchen, laundry, laboratory, wellness, pharmaceutical, administrative, communications, computer and recreational facilities and equipment, storage space, mobile medical facilities, vehicles and other equipment necessary or desirable for the transportation of medical equipment or the transportation of patients. Dental, medical, and mental health facilities also includes facilities for graduate-level instruction in medicine or dentistry and clinics appurtenant thereto offering free or reduced rate dental, medical, or mental health services to the public.

"Letter authorizing cooperative agreement" means a document that is issued by the commissioner approving a cooperative agreement.

"Measure" means some number of factors or benchmarks, which may be binary, a range, or continuous factors.

"Participating locality" means any county or city in the LENOWISCO or Cumberland Plateau Planning District Commissions and the Counties of Smyth and Washington and the City of Bristol with respect to which an authority may be organized and in which it is contemplated that the authority will function.

"Party" means a hospital entering into a cooperative agreement.

"Plan of separation" means the written proposal submitted with an application to return the parties to a preconsolidation state, which includes a plan for separation of any combined assets, offering, provision, operation, planning, funding, pricing, contracting, utilization review or management of health services or any combined sharing, allocation, or referral of patients, personnel, instructional programs, support services and facilities or medical, diagnostic or laboratory facilities or procedures or other services traditionally offered by hospitals, including any parent or subsidiary at the time the consolidation occurs or thereafter.

"Primary service area" or "PSA" means the geographic area from which a hospital draws 75% of its patients as measured by the residential zip code of each patient.

"Secondary service area" or "SSA" means the geographic area from which a hospital draws an additional 15% of its patients, as measured by the residential zip code of each patient.

12VAC5-221-30. Separate applications.

A party shall submit an application for a letter authorizing cooperative agreement for each cooperative agreement the party is applying to enter into. This provision applies even in the event that the parties have an existing letter authorizing cooperative agreement issued by the commissioner. An amendment to a cooperative agreement shall require submission of a new application.

12VAC5-221-40. Application.

A. Parties within any participating locality may submit an application for a letter authorizing cooperative agreement to the authority. Information regarding the requirements of an application for a letter authorizing cooperative agreement submitted to the authority should be obtained through the authority.

B. At the time of submission to the authority, parties shall simultaneously submit a copy of the application to the commissioner and the Attorney General.

C. If the authority requires the applicant to submit additional information before determining that the application is complete, the parties shall simultaneously submit a copy of the additional information to the authority, the commissioner, and the Attorney General.

D. If the applicants believe the materials submitted contain proprietary information that is required to remain confidential, such information must be clearly identified and the applicants shall submit duplicate applications, one with full information for the commissioner's use and one redacted application available for release to the public. Proprietary information that is clearly identified by the applicants will be kept confidential by the department pursuant to subdivision 3 of § 2.2-3705.6 of the Code of Virginia.

12VAC5-221-50. Fee schedule.

A. Fees shall be remitted only by certified check, cashier's check, bank money order, or other methods approved by the department. Fees shall be made payable to the department.

B. The application fee shall be $50,000 and shall be due to the department upon its receipt of a recommendation for approval from the authority.

C. If the commissioner should determine after review of the application that the actual cost incurred by the department is less than $50,000, the applicant shall be reimbursed the amount that is greater than the actual cost. If the commissioner should determine that the actual cost incurred by the department is greater than $50,000, the applicant shall pay any additional amounts due as instructed by the department. The application fee shall not exceed $75,000.

12VAC5-221-60. Public hearing.

A. The authority shall, in conjunction with the commissioner, schedule a public hearing for each completed application submitted. The hearing shall be held no later than 45 days after the receipt of a complete application by the authority.

B. The authority will publish and issue notice of the hearing in accordance with subsection C of § 15.2-5384.1 of the Code of Virginia.

C. The public hearing shall be open to the public in accordance with the provisions of the Virginia Freedom of Information Act (§ 2.2-3700 et. seq. of the Code of Virginia).

D. The public hearing shall be recorded by the Virginia Department of Health.

12VAC5-221-65. Public comment to the commissioner.

The public may submit written comments regarding the application to the commissioner. To ensure consideration by the commissioner, written comments must be received no later than 14 days after the authority adopts its recommendation on the application.

12VAC5-221-70. The 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, but are not limited to:

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 and/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, but not limited to, 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, 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, but not limited to, 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 but not limited to, 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 (GAAP) 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 (GAAP) 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 and/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.

12VAC5-221-80. The commissioner's review.

A. The commissioner shall consult with the Attorney General when reviewing an application.

B. The commissioner may consult with the Federal Trade Commission when reviewing an application.

C. The commissioner may consult and coordinate with other affected jurisdictions when reviewing an application.

D. The commissioner shall consult with all other affected agencies of the Commonwealth when reviewing an application.

E. The commissioner in his review shall examine the record developed by the authority, the authority's recommendation for approval, and any additional information received from the parties. In addition, the commissioner may consider any other data, information, or advice available to him.

F. The commissioner shall not render a decision on the application until all supplemental information requested has been received.

G. The commissioner shall consider the following factors when conducting a review of an application:

1. Advantages.

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.

2. Disadvantages.

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 payers 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 care 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.

H. The commissioner shall approve the application if he finds by a preponderance of the evidence 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.

I. In the selection and application of the measures for reviewing the proposed benefits of the cooperative agreement, as well as during the monitoring and active supervision of any approved cooperative agreement, the commissioner shall:

1. Draw from consensus health and health care metrics, such as those being developed pursuant to the Virginia state innovation model development initiative and state population health improvement plan, to ensure the validity and consistency of the measure;

2. Use historical actual experience in the region to establish baseline performance and evaluate progress over time;

3. Consider recommendations on the measures and goals from the Technical Advisory Panel appointed pursuant to 12VAC5-221-120; and

4. Allow for flexibility, to the extent quantifiable goals or targets are specified, should environmental factors that are outside the control of the parties change significantly.

12VAC5-221-90. Action on an application.

A. The commissioner shall issue his decision in writing within 45 days of receipt of the authority's recommendation. However, if the commissioner has requested supplemental information from the applicants, the commissioner shall have 15 days, following receipt of the supplemental information, to issue a decision.

B. At the request of the applicants, the commissioner may delay issue of his decision to provide additional time to review the record.

C. The commissioner may condition approval of the letter authorizing cooperative agreement upon the applicants' commitment to achieving the improvements in population health, access to health care services, quality, and cost efficiencies identified by the applicants in support of their application. Such conditions may include, but are not limited to:

1. A cap on the negotiated case-mix adjusted revenue per discharge by payer by product. The method for calculating such a case-mix shall be published on the Virginia Department of Health's Office of Licensure and Certification's website in a guidance document. The department may rely on third-party auditors to assist in determining the method for determining such caps, such caps' levels, and a plan for monitoring compliance;

2. A commitment to return a portion of the cost savings and efficiencies gained through the cooperative agreement to residents in the participating localities through specific proposed mechanisms;

3. An agreement that the parties shall not prevent or discourage health plans from directing or incentivizing patients to choose certain providers; the parties shall not have any contractual clauses or provisions that prevent health plans from directing or incentivizing patients;

4. An agreement that the parties shall not engage in the tying of sales of the health system's services with the health plan's purchase of other services from the health system;

5. An agreement that the parties shall not restrict a health plan's ability to make available to its health plan enrollees cost, quality, efficiency, and performance information to aid enrollees in evaluating and selecting providers in the health plan; and

6. A commitment that the parties shall not refuse to include certain provisions in contracts with health plans that have been utilized in health plan contracts in other parts of the Commonwealth in order to promote value-based health care, including but not limited to, bundled payments, pay for performance, utilization management, and other processes that reward improvements in quality and efficiency.

D. 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. of the Code of Virginia).

12VAC5-221-100. Ongoing and active supervision.

A. The commissioner shall maintain active and continuing supervision of the parties in accordance with the terms under this subsection and to ensure compliance with the cooperative agreement and the letter authorizing cooperative agreement.

B. Any party who receives a letter authorizing cooperative agreement shall submit any additional information that is requested by the department to establish benchmarks for ongoing monitoring and supervision. The department's request may include, but is not limited to (i) information on patient satisfaction, (ii) information on employee satisfaction, (iii) a charge master, (iv) information reflecting the contracted rates negotiated with nonphysician providers, (v) information reflecting the noncontracted rates negotiated with allied health professionals, and (vi) information reflecting the noncontracted rates negotiated with other providers.

C. The department shall establish quantitative measures that will be used to evaluate the proposed and continuing benefits of the cooperative agreement.

1. The quantitative measures shall include measures of the cognizable benefits from the cooperative agreement in at least the following categories:

a. Population health;

b. Access to health services;

c. Economic;

d. Patient safety;

e. Patient satisfaction; and

f. Other cognizable benefits.

2. Each category may be comprised of measures for subcategories.

3. The Technical Advisory Panel and the parties to the cooperative agreement may make recommendations for the creation and evaluation of quantitative measures, but the department shall have the exclusive authority to add, modify, accept, or reject recommendations when creating or interpreting the quantitative measures.

D. A department representative may make periodic unannounced on-site inspections of the parties' facilities as necessary. If the department finds, after inspection, noncompliance with any provision of this chapter, any applicable state regulations, or the elements of the cooperative agreement or the letter authorizing cooperative agreement, the commissioner shall begin enforcement procedures in accordance with 12VAC5-221-130.

E. The parties shall make available to the department representative requested records and shall allow access to interview the agents, employees, contractors, and any other person under control, direction, or supervision of the parties.

F. Complaints received by the department with regard to noncompliance with the cooperative agreement or the letter authorizing cooperative agreement shall be investigated. When the investigation is complete, the parties and the complainant, if known, shall be notified of the findings of the investigation.

G. The commissioner may develop other mechanisms of monitoring the parties to determine compliance with the cooperative agreement and whether compliance continues to meet the requirements of § 15.2-5384.1 of the Code of Virginia. The commissioner may modify the mechanisms of monitoring the parties upon notice to the parties.

12VAC5-221-110. Annual reporting.

A. parties shall report annually to the commissioner on the extent of the benefits realized and compliance with any terms and conditions placed on their letter authorizing cooperative agreement. The report shall:

1. Describe the activities conducted pursuant to the cooperative agreement;

2. Include 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;

3. Include information related to changes in price, cost, quality, access to care, and population health improvement;

4. Include actual costs, revenues, profit margins, and operating costs;

5. Include a charge master;

6. Include information reflecting the contracted rates negotiated with nonphysician providers, allied health professionals, and others;

7. Include any measures requested by the department based on the recommendations of the Technical Advisory Panel appointed pursuant to 12VAC5-221-120; and

8. Include the current status of the quantitative measures established under subsection C of 12VAC5-221-100 and the information requested by the department for benchmarks established in subsection B of 12VAC5-221-100.

B. The parties shall be required to update the parties' plan of separation annually and submit the updated plan of separation to the department. The parties shall provide an independent opinion from a qualified organization that states the plan of separation may be operationally implemented without undue disruption to essential health services provided by the parties.

C. The commissioner may require the parties to supplement the annual report with additional information to the extent necessary to ensure compliance with the cooperative agreement and the letter authorizing cooperative agreement.

D. All annual reports submitted pursuant to this section shall be certified audited by a third-party auditor.

E. The fee due with the filing of the annual report shall be $20,000. If the commissioner should determine that the actual cost incurred by the department is greater than $20,000, the parties shall pay any additional amounts due as instructed by the department. The annual filing fee shall not exceed $75,000.

F. The commissioner shall issue a written decision and the basis for the decision on an annual basis as to whether the benefits of the cooperative agreement continue to outweigh the disadvantages attributable to a reduction in competition that have resulted from the cooperative agreement.

12VAC5-221-120. Technical Advisory Panel.

A. The commissioner shall appoint a Technical Advisory Panel to provide (i) initial recommendations to the commissioner as to the quality, cost, and access measures and benchmarks to be considered to objectively track the benefits and disadvantages of a cooperative agreement; and (ii) provide ongoing input to the commissioner on the evolution of these and other new measures and the progress of the parties with respect to achievement of commitments with respect to these measures.

B. The Technical Advisory Panel shall consist of:

1. A representative of the Commissioner of Health who shall serve as chair of the panel;

2. The chief medical or quality officer or officers of the parties;

3. A chief medical or quality officer of a hospital or health system from other state market areas with no affiliation with the parties;

4. A chief medical or quality officer of a health plan that has subscribers in the affected area;

5. Experts in the area of health quality measurement and performance;

6. A consumer and employer representative from the affected area;

7. A representative from the Bureau of Insurance of the State Corporation Commission;

8. The chief financial officer or officers of the parties;

9. A chief financial officer of a hospital or health system from other state market areas with no affiliation with the parties; and

10. A chief financial officer of a health plan that has subscribers in the affected area.

C. The Technical Advisory Panel shall meet at least on an annual basis.

D. The Technical Advisory Panel shall identify evidence-based cost, quality, and access measures in areas including, but not limited to, population health, patient safety, health outcomes, patient satisfaction, access to care, and any other areas identified by the panel. The panel shall also make recommendations regarding how to best report performance on quality metrics.

E. The Technical Advisory Panel meetings shall be staffed by the Virginia Department of Health Office of Licensure and Certification.

12VAC5-221-130. Enforcement procedures.

A. If the commissioner has reason to believe that compliance with a cooperative agreement no longer meets the requirements of § 15.2-5384.1 of the Code of Virginia or this chapter, the commissioner shall initiate a proceeding to determine whether compliance with the cooperative agreement no longer meets the requirements of § 15.2-5384.1 of the Code of Virginia or this chapter.

B. In the course of such a proceeding, the commissioner is authorized to seek reasonable modifications to a letter authorizing cooperative agreement. Such modifications shall be with the consent of the parties.

C. The commissioner may revoke a letter authorizing cooperative agreement upon a finding that:

1. The parties are not complying with the terms or conditions of the cooperative agreement or the letter authorizing cooperative agreement;

2. The cooperative agreement is not in substantial compliance with the terms of the parties' application or the letter authorizing cooperative agreement;

3. The benefits resulting from the cooperative agreement no longer outweigh the disadvantages attributable to the reduction in competition resulting from the cooperative agreement;

4. 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

5. The parties have failed to pay any fee required by the department or the authority.

D. The proceeding initiated by the commissioner under this section, and any judicial review thereof, shall be held in accordance with and governed by the Virginia Administrative Process Act (§ 2.2-4000 et seq. of the Code of Virginia).

12VAC5-221-140. Voluntary termination of cooperative agreement.

A. Any party shall file notice with the department within 30 days after terminating its participation in a cooperative agreement. The notice shall be sent in writing to the attention of the director of the department's Office of Licensure and Certification.

B. In the event of a termination of a cooperative agreement, the parties shall return the letter authorizing cooperative agreement to the department's Office of Licensure and Certification.

12VAC5-221-150. Official records.

A. The commissioner shall maintain on file all cooperative agreements that the commissioner has approved.

B. All records collected pursuant to this chapter shall be maintained in accordance with the Virginia Freedom of Information Act (§ 2.2-3700 et seq. of the Code of Virginia) and the Library of Virginia's record management program (§ 42.1-85 of the Code of Virginia).

C. All approved cooperative agreements and letters authorizing cooperative agreement shall be published on the Virginia Department of Health Office of Licensure and Certification website.

D. All reports collected pursuant to 12VAC5-221-110 shall be published on the Virginia Department of Health Office of Licensure and Certification website.

E. The commissioner shall make public his annual determination of compliance with a letter authorizing the cooperative agreement.

Title of Regulation: 12VAC5-481. Virginia Radiation Protection Regulations (amending 12VAC5-481-451).

Statutory Authority: § 32.1-229 of the Code of Virginia.

Effective Date: March 9, 2016.

Agency Contact: Steve Harrison, Director, Office of Radiological Health, Department of Health, 109 Governor Street, Richmond, VA 23219, telephone (804) 864-8151, FAX (804) 864-8155, or email steve.harrison@vdh.virginia.gov.

Summary:

The federal Nuclear Regulatory Commission adopted 10 CFR Part 37, Physical Protection of Category 1 and Category 2 Quantities of Radioactive Material effective March 19, 2013, which required Virginia to adopt compatible regulations within three years of that date to maintain its status as an Agreement State. This action amends 12VAC5-481-451 to comply with this federal requirement. The amendments include definitions of Category 1 and Category 2 radioactive materials; requirements for background investigations and access authorization programs; protection of background information; physical protection requirements during use, which includes a security program and coordination with local law-enforcement agencies; physical protection in transit; and recordkeeping.

12VAC5-481-451. Increased controls and fingerprinting Physical protection of Category 1 and Category 2 quantities of radioactive material.

A. Any licensee who possesses or uses an aggregated quantity of Category 1 or Category 2 radioactive material equal to or in excess of those in subdivision 1 of this subsection shall establish a physical protection program that meets all requirements detailed in this section.

1. Radionuclides of concern.

Title of Regulation: 14VAC5-216. Rules Governing Internal Appeal and External Review (amending 14VAC5-216-10, 14VAC5-216-20, 14VAC5-216-40, 14VAC5-216-50; adding 14VAC5-216-65).

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.

Effective Date: February 1, 2016.

Agency Contact: Tom Bridenstine, Manager, Life and Health Division, Bureau of Insurance, State Corporation Commission, P.O. Box 1157, Richmond, VA 23218, telephone (804) 371-9746, FAX (804) 371-9944, or email tom.bridenstine@scc.virginia.gov.

Summary:

The amendments (i) define an "exception request" for an enrollee to obtain a prescription drug that is not on a health carrier's closed formulary, including that the requirements pertaining to such requests apply only to health plans in the individual and small group markets; (ii) describe the requirements for the exception request process, which enhances and further clarifies the process identified in subdivisions B 2 and B 3 of § 38.2-3407.9:01 of the Code of Virginia and is in accordance with 45 CFR 156.122(c); (iii) differentiate the period of time that a standard exception request must be reviewed and acted upon from the time in which a coverage determination must be made; and (iv) provide further clarification to an existing provision in the urgent care appeals section.

AT RICHMOND, JANUARY 13, 2016

COMMONWEALTH OF VIRGINIA, ex rel.

STATE CORPORATION COMMISSION

CASE NO. INS-2015-00184

Ex Parte: In the matter of Amending Rules
Governing Internal Appeal and External Review

ORDER ADOPTING REVISIONS TO RULES

On November 9, 2015, the State Corporation Commission ("Commission") issued an Order to Take Notice ("Order") to consider revisions to the Rules Governing Internal Appeal and External Review set forth in Chapter 216 of Title 14 of the Virginia Administrative Code ("Rules").¹

These amendments were proposed by the Bureau of Insurance ("Bureau") to define an "exception request" for an enrollee to obtain a prescription drug that is not on a health carrier's closed formulary and to describe the requirements for the exception request process that will enhance and further clarify the process identified in § 38.2-3407.9:01 B 2 and 3 of the Code of Virginia. The amendments also provide further clarification to the urgent care appeals section.

The Order required that on or before December 18, 2015, any person requesting a hearing on the amendments to the Rules shall have filed such request for a hearing with the Clerk of the Commission ("Clerk"). No request for a hearing was filed with the Clerk.

The Order also required any interested persons to file with the Clerk their comments in support of or in opposition to the amendments to the Rules on or before December 18, 2015. Comments were timely filed by the Virginia Association of Health Plans ("VAHP"). These comments sought to clarify the proposed definition of "exception request" in Rule 14 VAC 5-216-20, and to differentiate the period of time that a standard exception request must be reviewed and acted upon from the time in which a coverage determination must be made in Rule 14 VAC 5-216-65 A 1. The Bureau filed a Response to Comments with the Clerk on January 5, 2016, and recommends that the amendments to Rules 14 VAC 5-216-20 and 14 VAC 5-216-65 A 1 that were suggested by the VAHP be made, as attached.

NOW THE COMMISSION, having considered the proposed amendments, the filed comments, and the Bureau's Response to Comments and recommendation, is of the opinion that the attached amendments to the Rules should be adopted.

Accordingly, IT IS ORDERED THAT:

(1) The amendments to the Rules Governing Internal Appeal and External Review at Chapter 216 of Title 14 of the Virginia Administrative Code, which amend the Rules at 14 VAC 5-216-10, 14 VAC 5-216-20, 14 VAC 5-216-40, and 14 VAC 5-216-50 and establish a new section at 14 VAC 5-216-65, and which are attached hereto and made a part hereof, are hereby ADOPTED, to be effective February 1, 2016.

(2) The Bureau forthwith shall give notice of the adoption of the amendments to the Rules by sending, by e-mail or U.S. mail, a copy of this Order, together with a copy of the adopted Rules, to all insurers, health maintenance organizations and health services plans licensed in Virginia to sell accident and sickness insurance, and to all interested persons.

(3) The Commission's Division of Information Resources forthwith shall cause a copy of this Order, together with the final amended Rules, to be forwarded to the Virginia Registrar of Regulations for appropriate publication in the Virginia Register of Regulations.

(4) The Commission's Division of Information Resources shall make available this Order and the attached amendments to the Rules on the Commission's website: http://www.scc.virginia.gov/case.

(5) The Bureau shall file with the Clerk of the Commission an affidavit of compliance with the notice requirements in Ordering Paragraph (2) above.

(6) This case is dismissed, and the papers herein shall be placed in the file for ended causes.

AN ATTESTED COPY hereof shall be sent by the Clerk of the Commission to the Commission's Office of General Counsel and the Bureau in care of Deputy Commissioner Althelia P. Battle.

________________________________

¹The Rules can be found at: http://law.lis.virginia.gov/admincode/title14/agency5/chapter216.

Part I
General

14VAC5-216-10. Scope and purpose.

A. This chapter shall apply to all health carriers, except that the provisions of this chapter shall not apply to a policy or certificate that provides coverage only for a specified disease, specified accident or accident-only coverage; credit; disability income; hospital indemnity; long-term care; dental, vision care, or any other limited supplemental benefit or to a Medicare supplement policy of insurance; coverage under a plan through Medicare, Medicaid, or the federal employees health benefits program; self-insured plans except that a self-insured employee welfare benefit plan may elect to use the state external review process; any coverage issued under Chapter 55 of Title 10 of the U.S. Code (TRICARE), and any coverage issued as supplemental to that coverage; any coverage issued as supplemental to liability insurance, workers' compensation or similar insurance; and automobile medical payment insurance or any insurance under which benefits are payable with or without regard to fault, whether written on a group or individual basis.

B. The purpose of this chapter is to set forth rules to carry out the provisions of Chapter 35.1 (§ 38.2-3556 et seq.) of Title 38.2 of the Code of Virginia as well as federal law to provide a health carrier with guidelines to assist with establishing a procedure for an internal appeals process under which there will be a full and fair review of any adverse benefit determination. This chapter also sets forth requirements for the external review process.

C. This chapter shall apply to any adverse benefit determination made on or after July 1, 2011, by any health carrier for a grandfathered or non-grandfathered health benefit plan, as defined by the PPACA.

D. This chapter also sets forth requirements for an exception request for plan years beginning on or after January 1, 2016.

14VAC5-216-20. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"Adverse benefit determination" in the context of the internal appeals process means (i) a determination by a health carrier or its designee utilization review entity that, based on the information provided, a request for, a benefit under the health carrier's health benefit plan upon application of any utilization review technique does not meet the health carrier's requirements for medical necessity, appropriateness, health care setting, level of care, or effectiveness or is determined to be experimental or investigational and the requested benefit is therefore denied, reduced, or terminated or payment is not provided or made, in whole or in part, for the requested benefit; (ii) the denial, reduction, or termination of, or failure to provide or make payment in whole or in part for, a benefit based on a determination by a health carrier or its designee utilization review entity of a covered person's eligibility to participate in the health carrier's health benefit plan; (iii) any review determination that denies, reduces, or terminates or fails to provide or make payment, in whole or in part, for a benefit; (iv) a rescission of coverage determination as defined in § 38.2-3438 of the Code of Virginia; or (v) any decision to deny individual coverage in an initial eligibility determination.

"Adverse determination" in the context of external review means a determination by a health carrier or its designee utilization review entity that an admission, availability of care, continued stay, or other health care service that is a covered benefit has been reviewed and, based upon the information provided, does not meet the health carrier's requirements for medical necessity, appropriateness, health care setting, level of care, or effectiveness or is determined to be experimental or investigational and the requested service or payment for the service is therefore denied, reduced, or terminated.

"Authorized representative" means (i) a person to whom a covered person has given express written consent to represent the covered person; (ii) a person authorized by law to provide substituted consent for a covered person; (iii) a family member of a covered person or the covered person's treating health care professional when the covered person is unable to provide consent; (iv) a health care professional when the covered person's health benefit plan requires that a request for a benefit under the plan be initiated by the health care professional; or (v) in the case of an urgent care internal appeal, a health care professional with knowledge of the covered person's medical condition.

"Clinical peer reviewer" means a practicing health care professional who holds a nonrestricted license in a state, district, or territory of the United States and in the same or similar specialty as typically manages the medical condition, procedure, or treatment under appeal.

"Commission" means the State Corporation Commission.

"Concurrent review" means utilization review conducted during a patient's stay or course of treatment in a facility, the office of a health care professional, or other inpatient or outpatient health care setting.

"Covered person" means a policyholder, subscriber, enrollee, or other individual participating in a health benefit plan. For purposes of this chapter with respect to the administration of appeals, references to a covered person include a covered person's authorized representative, if any.

"Emergency services" means those health care services that are rendered after the sudden onset of a medical condition that manifests itself by symptoms of sufficient severity, including severe pain, that the absence of immediate medical attention could reasonably be expected by a prudent layperson who possesses an average knowledge of health and medicine to result in (i) serious jeopardy to the mental or physical health of the individual, (ii) danger of serious impairment of the individual's bodily functions, (iii) serious dysfunction of any of the individual's bodily organs, or (iv) in the case of a pregnant woman, serious jeopardy to the health of the fetus.

"Exception request" means a process that allows a covered person, authorized representative, or prescribing physician (or other prescriber, as appropriate) to request and gain access to clinically appropriate drugs not otherwise covered by a health benefit plan [ in the individual and small group market because of formulary restrictions ].

"Final adverse determination" means an adverse determination involving a covered benefit that has been upheld by a health carrier, or its designee utilization review entity, at the completion of the health carrier's internal appeal process.

"Group health plan" means an employee welfare benefit plan (as defined in the Employee Retirement Income Security Act of 1974 (29 USC § 1002(1)), to the extent that the plan provides medical care and including items and services paid for as medical care to employees or their dependents (as defined under the terms of the plan) directly or through insurance, reimbursement, or otherwise.

"Health benefit plan" means a policy, contract, certificate, or agreement offered or issued by a health carrier to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services. "Health benefit plan" does not include accident only, credit, or disability insurance; coverage of Medicare services or federal employee health plans pursuant to contracts with the United States government; Medicare supplement or long-term care insurance; Medicaid coverage; dental only or vision only insurance; specified disease insurance; hospital indemnity coverage; limited benefit health coverage; coverage issued as a supplement to liability insurance; insurance arising out of a workers' compensation or similar law; automobile medical payment insurance; medical expense and loss of income benefits; or insurance under which benefits are payable with or without regard to fault and that is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.

"Health care professional" means a physician or other health care practitioner licensed, accredited, or certified to perform specified health care services consistent with the laws of the Commonwealth.

"Health carrier" means an entity, subject to the insurance laws and regulations of the Commonwealth or subject to the jurisdiction of the commission, that contracts or offers to contract to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including an accident and sickness insurance company, a health maintenance organization, a nonprofit hospital and health service corporation, or a nonstock corporation offering or administering a health services plan, a hospital services plan, or a medical or surgical services plan, or any other entity providing a plan of health insurance, health benefits, or health care services except as excluded under § 38.2-3557 of the Code of Virginia.

"Independent review organization" means an entity that conducts independent external reviews of adverse determinations and final adverse determinations, as well as alleged violations of 14VAC5-216-30 through 14VAC5-216-70 pertaining to internal appeal.

"PPACA" means the Patient Protection and Affordable Care Act (P.L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152).

"Pre-service claim" means a claim for a benefit under a health benefit plan that requires approval of the benefit in whole or in part, in advance of obtaining the service or treatment.

"Post-service claim" means a claim for a benefit under a health benefit plan that is not a pre-service claim, or the service or treatment has been provided to the covered person.

"Self-insured plan" means an "employee welfare benefit plan" that has the meaning set forth in the Employee Retirement Income Security Act of 1974, 29 USC § 1002(1).

"Urgent care appeal" means an appeal for medical care or treatment with respect to which the application of the time periods for making non-urgent care determinations (i) could seriously jeopardize the life or health of the covered person or the ability of the covered person to regain maximum function; or (ii) in the opinion of the treating health care professional with knowledge of the covered person's medical condition, would subject the covered person to severe pain that cannot be adequately managed without the care or treatment that is the subject of the appeal. An urgent care appeal shall not be available for any post-service claim or retrospective adverse benefit determination.

"Utilization review" means a set of formal techniques designed to monitor the use of or evaluate the clinical necessity, appropriateness, efficacy, or efficiency of health care services, procedures or settings. Techniques may include ambulatory review, prospective review, second opinion, certification, concurrent review, case management, discharge planning, or retrospective review.

14VAC5-216-40. Minimum appeal requirements.

A. Each covered person shall be entitled to a full and fair review of an adverse benefit determination. Within 180 days after the date of receipt of a notice of an adverse benefit determination, a covered person may file an appeal with the health carrier. A health carrier may designate a utilization review entity to coordinate the review. For purposes of this chapter, "health carrier" may also mean its designated utilization review entity.

B. The health carrier shall conduct the appeal in a manner to ensure the independence and impartiality of the individuals involved in reviewing the appeal. In ensuring the independence and impartiality of such individuals, the health carrier shall not make decisions regarding hiring, compensation, termination, promotion, or other similar matters based upon the likelihood that an individual will support the denial of benefits.

C. 1. In deciding an appeal of any adverse benefit determination that is based in whole or in part on a medical judgment, including determinations with regard to whether a particular treatment, drug, or other service is experimental, investigational, or not medically necessary or appropriate, the health carrier shall designate a clinical peer reviewer to review the appeal. The clinical peer reviewer shall not have been involved in any previous adverse benefit determination with respect to the claim.

2. A reviewer of any other type of adverse benefit determination shall be an appropriate person designated by the health carrier. The reviewer of the appeal shall not be the individual who made any previous adverse benefit determination of the subject appeal nor the subordinate of such individual and shall not defer to any prior adverse benefit determination.

D. A full and fair review shall also provide for:

1. The covered person to have an opportunity to submit written comments, documents, records, and other information relating to the appeal for the reviewer or reviewers to consider when reviewing the appeal.

2. Upon request to the health carrier, the covered person to have reasonable access to and free of charge copies of all documents, records, and other information relevant to the covered person's request for benefits. This information shall be provided to the covered person as soon as practicable.

3. An appeal process that takes into account all comments, documents, records, and other information submitted by the covered person relating to the appeal, without regard to whether such information was submitted or considered in the initial benefit determination.

4. The identification of medical or vocational experts whose advice was obtained on behalf of the health benefit plan carrier in connection with a covered person's adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination.

5. An urgent care appeal process.

6. Prior to issuing a final adverse benefit determination, the health carrier to provide free of charge to the covered person any new or additional evidence relied upon or generated by the health carrier or at the direction of the health carrier, in connection with the internal appeal sufficiently in advance of the date the determination is required to be provided to permit the covered person a reasonable opportunity to respond prior to that date.

E. A health carrier shall notify the covered person of the final benefit determination within a reasonable period of time appropriate to the medical circumstances, but not later than the timeframes established in subdivisions 1 and 2 of this subsection.

1. If an internal appeal involves a pre-service claim review request, the health carrier shall notify the covered person of its decision within 30 days after receipt of the appeal. A health carrier may provide a second level of internal appeal for group health plans only, provided that a maximum of 15 days is allowed for a benefit determination and notification from each level of the appeal.

2. If an internal appeal involves a post-service claim review request, the health carrier shall notify the covered person of its decision within 60 days after receipt of the appeal. A health carrier may provide a second level of internal appeal for group health plans only, provided that a maximum of 30 days is allowed for a benefit determination and notification from each level of the appeal.

14VAC5-216-50. Urgent care appeals.

A. The health carrier shall notify the covered person of its initial benefit determination as soon as possible taking into account medical exigencies, but not later than 72 hours after receipt of the request, unless the covered person fails to provide sufficient information to determine whether, or to what extent, benefits are covered or payable under the health benefit plan. In the case of such failure, the health carrier shall notify the covered person as soon as possible, but not later than 24 hours after receipt of the request, of the specific information necessary to complete the claim. The covered person shall be afforded a reasonable amount of time, taking into account the circumstances, but not less than 48 hours to provide the specified information. The health carrier shall notify the covered person of its benefit determination not later than 48 hours after the earlier of (i) its receipt of the specified information or (ii) the end of the period afforded to the covered person to provide the specified additional information.

B. The notification of an urgent care adverse benefit determination that is based on a medical necessity, appropriateness, health care setting, level of care, effectiveness, experimental or investigational service or treatment, or similar exclusion or limit, shall include a description of the health carrier's urgent care appeal process including any time limits applicable to those procedures and the availability of and procedures for an expedited external review.

C. Upon receipt of an adverse benefit determination, a covered person may submit a request for an urgent care appeal either orally or in writing to the health carrier. Any appeal request made under this section by a treating health care professional shall be handled as an urgent care appeal. If such request is made by the covered person and not the treating health care professional, an individual acting on behalf of the health carrier shall apply the judgment of a prudent layperson who possesses an average knowledge of health and medicine to determine whether the appeal meets urgent care requirements.

D. All necessary information, including the benefit determination on appeal, shall be transmitted between the health carrier and the covered person by telephone, facsimile, or the most expeditious method available.

E. The health carrier shall notify the covered person and the treating health care professional of its benefit determination as soon as possible, taking into account the medical exigencies, but not later than 72 hours after receipt of an urgent care appeal.

14VAC5-216-65. Exception request for prescription drugs.

A. For plan years beginning on or after January 1, 2016, notwithstanding any other provision of this chapter, a health carrier shall have a process in place that allows for a covered person or his prescribing physician (or other prescriber) to request and gain access to clinically appropriate drugs not otherwise covered by the health benefit plan, known as an exception request, in accordance with the requirements of 45 CFR §156.122(c).

1. A standard exception request shall be reviewed [ and acted upon within one business day of receipt of the request, ] and a coverage determination [ shall be ] provided to the covered person and prescribing physician no later than [ the earlier of one business day or ] 72 hours following receipt of the request.

2. An expedited exception request may be made when exigent circumstances exist. Exigent circumstances exist when the covered person is suffering from a health condition that may seriously jeopardize the covered person's life, health, or ability to regain maximum function or when the covered person is undergoing a current course of treatment using a nonformulary drug. An expedited exception request shall be reviewed and a coverage determination provided to the covered person and prescribing physician no later than 24 hours following receipt of the request.

3. If a health carrier denies coverage as a result of a standard exception request or an expedited exception request, the covered person or prescribing physician may submit an external exception request to the health carrier, requiring that the original exception request and subsequent denial be reviewed by an independent review organization. Such request shall be reviewed and a coverage determination provided to the covered person and prescribing physician no later than 72 hours following receipt of the request if the original request was a standard exception request, or 24 hours following receipt of the request if the original request was an expedited exception request.

B. The health carrier shall provide the nonformulary drug or drugs for the duration of the prescription (including refills) if coverage is granted under a standard exception request, or for the duration of the exigency if coverage is granted under an expedited exception request, including those granted through an external exception request. Coverage for each drug approved by an exception request shall be applied as if the drug was part of the prescription formulary.

C. A health carrier shall contract with at least one accredited independent review organization to conduct reviews in accordance with the requirements of subdivision A 3 of this section.

Titles of Regulations: 18VAC110-20. Regulations Governing the Practice of Pharmacy (amending 18VAC110-20-10; adding 18VAC110-20-211).

18VAC110-50. Regulations Governing Wholesale Distributors, Manufacturers, and Warehousers (amending 18VAC110-50-10; adding 18VAC110-50-51).

Statutory Authority: §§ 54.1-2400 and 54.1-3307 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: March 9, 2016.

Effective Date: March 24, 2016.

Agency Contact: Caroline Juran, RPh, Executive Director, Board of Pharmacy, 9960 Mayland Drive, Suite 300, Richmond, VA 23233-1463, telephone (804) 367-4416, FAX (804) 527-4472, or email caroline.juran@dhp.virginia.gov.

Basis: Section 54.1-2400 of the Code of Virginia authorizes the Board of Pharmacy to promulgate regulations that are reasonable and necessary to administer effectively the regulatory system and establish renewal schedules.

The specific authority to regulate prescription drugs in the Commonwealth is found in Chapters 33 (§ 54.1-3300 et seq.) and 34 (§ 54.1-3400 et seq.) of Title 54.1 of the Code of Virginia.

Purpose: The purpose of this regulatory action is to establish regulations that will authorize the board to inspect for and enforce standards for collection on controlled substances. If requirements for collection and destruction are not followed, there may be opportunity for diversion of donated drugs or adulteration of controlled substances when there is risk of commingling with existing stocks. Designation of authorized collection sites will facilitate the disposal of unused prescription drugs, which in turn reduces the supply of such drugs for abuse and diversion and protects public health and safety. However, the collection must be handled in a manner that protects the drugs until destruction in compliance with local, state, and federal laws.

Rationale for Using Fast-Track Process: This action was begun with a Notice of Intended Regulatory Action that was published in the Virginia Register of Regulations in Volume 31, Issue 20, on June 1, 2015, with comment until July 1, 2015. No comment was received, and no controversy is expected. The proposed regulation was unanimously recommended by the board's Regulation Committee and adopted by the board. To facilitate the authorization for collection sites, the board is promulgating the regulation as a fast-track rulemaking action under § 2.2-4012.1 of the Code of Virginia.

Substance: The new regulations will include requirements found in the federal Drug Enforcement Administration (DEA) regulations, such as registration with the DEA as an authorized collector to serve as a site for the collection of controlled substances from an ultimate user. An ultimate user is defined as a person who has lawfully obtained and who possesses a controlled substance for his own use or for the use of a member of his household or for an animal owned by him or a member of his household. Manufacturers, wholesale distributors, reverse distributors, narcotic treatment programs, hospitals with an on-site pharmacy, and retail pharmacies may become collectors by modifying their current DEA registration to be approved as authorized collectors.

Authorized collectors may maintain collection receptacles and then must dispose of collected drugs in accordance with DEA rules for destruction. Authorized collectors may conduct a mail-back program, but are not authorized to conduct take-back events. Registered collection sites may accept Schedule II through VI drugs in a single collection receptacle but may not accept illicit drugs (Schedule I, heroin, etc.). Authorized hospitals with on-site pharmacies may maintain collection receptacles at long-term care facilities at which drugs may be disposed on behalf of an ultimate user who resides or has resided at the facility.

Drugs so collected by the authorized collector must be destroyed in a matter that makes the drugs nonretrievable, meaning they cannot be transformed to a physical or chemical condition or state as a controlled substance or controlled substance analogue.

Issues: The advantage to the public is assurance that a facility that serves as an authorized collector is not commingling donated drugs intended for disposal with drug stocks and that the board has some oversight authority. There are no disadvantages. If a facility meets the DEA requirements for an authorized collector, it will be able to comply with board regulations.

The advantage to the Commonwealth is facilitation of authorized collector sites for disposal of unused medications to take those drugs out of circulation for abuse or diversion.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The proposed regulation will require that entities registered by the federal Drug Enforcement Administration (DEA) to collect and destroy unused drugs from consumers provide certain information to the Virginia Board of Pharmacy to help enforce compliance.

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

Estimated Economic Impact. In 2014, the DEA promulgated federal regulations to allow entities authorized to possess controlled substances to collect previously prescribed but unused drugs from a consumer (ultimate user) for appropriate disposal in a safe and effective manner consistent with controls against diversion. Authorized entities include pharmacies, manufacturers, wholesale distributors, reverse distributors, and narcotic treatment programs. Participation in the federal collection and disposal program is voluntary. Entities may choose to establish disposal programs for various reasons, including for profit, to build goodwill in the community, to attract customers, to advertise businesses, and to preserve the environment.¹ These costs and benefits are not discussed here because they cannot be attributed to this proposed state regulation. The proposed regulation merely requires that if an authorized Virginia entity participates in the DEA program it provide notification to the Virginia Board of Pharmacy (Board) of its name, address, license number, and the intended methods of collection. No additional fee is required from participants who hold a valid state controlled substances registration. However, if a narcotic treatment program without an in-house pharmacy wants to become an authorized collector, it will need a registration at a one-time cost of $90. Without the required information, the Board would not have essential information to enforce compliance and would completely rely on DEA. The Board states that DEA typically relies on state boards to conduct inspections and to regulate the safety and integrity of prescription drugs. Thus, the proposed regulation will likely enhance compliance with federal and state rules and reduce opportunities for diversion of donated drugs or adulteration of controlled substances if there is risk of co-mingling with existing stocks. In addition, the Board will be able to list names of collectors on its website to inform the public of where to take their unwanted drugs for destruction and promote collection efforts.

Businesses and Entities Affected. Currently, there are 1836 licensed pharmacies, 71 restricted manufacturers and 122 wholesale distributors. It is estimated that a very small number of those will choose to become authorized collectors.²

Localities Particularly Affected. The proposed changes apply throughout the Commonwealth.

Projected Impact on Employment. The proposed amendments are unlikely to significantly affect employment.

Effects on the Use and Value of Private Property. No significant impact on the use and value of private property is expected.

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

Small Businesses:

Definition. Pursuant to § 2.2-4007.04 of the Code of Virginia, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

Costs and Other Effects. The participation in collection of unused drugs is voluntary. Consequently, the proposed regulation does not impose significant costs or other effects on small businesses.

Alternative Method that Minimizes Adverse Impact. No significant adverse impact on small businesses is expected.

Adverse Impacts:

Businesses: The proposed regulation does not have a significant impact on non-small businesses.

Localities: The proposed regulation will not adversely affect localities.

Other Entities: The proposed regulation will not adversely affect other entities.

________________________________________________

¹The participation in the DEA collection and disposal program has certain costs and benefits associated with it.

²In a somewhat similar but essentially different program that collects donated drugs, there are only 15 voluntary participants in Virginia.

Agency's Response to Economic Impact Analysis: The Board of Pharmacy generally concurs with the analysis of the Department of Planning and Budget on proposed amended regulations for 18VAC110-20, Regulations Governing the Practice of Pharmacy. The board does not believe any entity would choose to become a collection site for unused drugs with profit as a motivation, since costs for destruction will likely be borne by the entity. Pharmacies and other authorized entities are more likely to provide the collection option as a service to the community in an effort to take unused drugs out of circulation for possible abuse.

Summary:

The amendments (i) establish standards for collection sites similar to those required by the Drug Enforcement Administration (DEA) to register as an "authorized collector" in Virginia, (ii) require notification to the board prior to establishing a collection site, and (iii) authorize the board to inspect for and enforce standards for collection. As of October 2014, DEA regulations allow entities authorized to possess controlled substances, such as pharmacies and wholesale distributors, to collect unused drugs to deliver for appropriate disposal in a safe and effective manner consistent with effective controls against diversion.

Part I
General Provisions

18VAC110-20-10. Definitions.

In addition to words and terms defined in §§ 54.1-3300 and 54.1-3401 of the Code of Virginia, the following words and terms when used in this chapter shall have the following meanings, unless the context clearly indicates otherwise:

"ACPE" means the Accreditation Council for Pharmacy Education.

"Acquisition" of an existing entity permitted, registered or licensed by the board means (i) the purchase or transfer of all or substantially all of the assets of the entity or of any corporation that owns or controls the entity; (ii) the creation of a partnership by a sole proprietor or change in partnership composition; (iii) the acquiring of 50% or more of the outstanding shares of voting stock of a corporation owning the entity or of the parent corporation of a wholly owned subsidiary owning the entity, except that this shall not apply to any corporation the voting stock of which is actively traded on any securities exchange or in any over-the-counter market; or (iv) the merger of a corporation owning the entity, or of the parent corporation of a wholly owned subsidiary owning the entity, with another business or corporation.

"Actively reports" means reporting all dispensing errors and analyses of such errors to a patient safety organization as soon as practical or at least within 30 days of identifying the error.

"Alternate delivery site" means a location authorized in 18VAC110-20-275 to receive dispensed prescriptions on behalf of and for further delivery or administration to a patient.

"Analysis" means a review of the findings collected and documented on each dispensing error, assessment of the cause and any factors contributing to the dispensing error, and any recommendation for remedial action to improve pharmacy systems and workflow processes to prevent or reduce future errors.

"Authorized collector" means a narcotic treatment program, hospital, or clinic with an on-site pharmacy, or pharmacy that is authorized by the U.S. Drug Enforcement Administration to receive drugs from an ultimate user, a person lawfully entitled to dispose of an ultimate user decedent's property, or a long-term care facility on behalf of an ultimate user who resides or has resided at that facility for the purpose of destruction.

"Beyond-use date" means the date beyond which the integrity of a compounded, repackaged, or dispensed drug can no longer be assured and as such is deemed to be adulterated or misbranded as defined in §§ 54.1-3461 and 54.1-3462 of the Code of Virginia.

"Board" means the Virginia Board of Pharmacy.

"CE" means continuing education as required for renewal of licensure by the Board of Pharmacy.

"CEU" means a continuing education unit awarded for credit as the equivalent of 10 contact hours.

"Chart order" means a lawful order for a drug or device entered on the chart or in a medical record of a patient by a prescriber or his designated agent.

"Compliance packaging" means packaging for dispensed drugs that is comprised of a series of containers for solid oral dosage forms and designed to assist the user in administering or self-administering the drugs in accordance with directions for use.

"Contact hour" means the amount of credit awarded for 60 minutes of participation in and successful completion of a continuing education program.

"Correctional facility" means any prison, penitentiary, penal facility, jail, detention unit, or other facility in which persons are incarcerated by government officials.

"DEA" means the United States U.S. Drug Enforcement Administration.

"Dispensing error" means one or more of the following discovered after the final verification by the pharmacist, regardless of whether the patient received the drug:

1. Variation from the prescriber's prescription drug order, including but not limited to:

a. Incorrect drug;

b. Incorrect drug strength;

c. Incorrect dosage form;

d. Incorrect patient; or

e. Inadequate or incorrect packaging, labeling, or directions.

2. Failure to exercise professional judgment in identifying and managing:

a. Known therapeutic duplication;

b. Known drug-disease contraindications;

c. Known drug-drug interactions;

d. Incorrect drug dosage or duration of drug treatment;

e. Known drug-allergy interactions;

f. A clinically significant, avoidable delay in therapy; or

g. Any other significant, actual, or potential problem with a patient's drug therapy.

3. Delivery of a drug to the incorrect patient.

4. Variation in bulk repackaging or filling of automated devices, including but not limited to:

a. Incorrect drug;

b. Incorrect drug strength;

c. Incorrect dosage form; or

d. Inadequate or incorrect packaging or labeling.

"Drug donation site" means a permitted pharmacy that specifically registers with the board for the purpose of receiving or redispensing eligible donated prescription drugs pursuant to § 54.1-3411.1 of the Code of Virginia.

"Electronic prescription" means a written prescription that is generated on an electronic application in accordance with 21 CFR Part 1300 and is transmitted to a pharmacy as an electronic data file.

"EMS" means emergency medical services.

"Expiration date" means that date placed on a drug package by the manufacturer or repacker beyond which the product may not be dispensed or used.

"Facsimile (FAX) prescription" means a written prescription or order which is transmitted by an electronic device over telephone lines which sends the exact image to the receiver (pharmacy) in a hard copy form.

"FDA" means the United States U.S. Food and Drug Administration.

"Floor stock" means a supply of drugs that have been distributed for the purpose of general administration by a prescriber or other authorized person pursuant to a valid order of a prescriber.

"Foreign school of pharmacy" means a school outside the United States and its territories offering a course of study in basic sciences, pharmacology, and pharmacy of at least four years in duration resulting in a degree that qualifies a person to practice pharmacy in that country.

"Forgery" means a prescription that was falsely created, falsely signed, or altered.

"FPGEC certificate" means the certificate given by the Foreign Pharmacy Equivalency Committee of NABP that certifies that the holder of such certificate has passed the Foreign Pharmacy Equivalency Examination and a credential review of foreign training to establish educational equivalency to board approved schools of pharmacy, and has passed approved examinations establishing proficiency in English.

"Generic drug name" means the nonproprietary name listed in the United States Pharmacopeia-National Formulary (USP-NF) or in the United States Adopted Names (USAN) and the USP Dictionary of Drug Names.

"Hospital" or "nursing home" means those facilities as defined in Title 32.1 of the Code of Virginia or as defined in regulations by the Virginia Department of Health.

"Inactive license" means a license that is registered with the Commonwealth but does not entitle the licensee to practice, the holder of which is not required to submit documentation of CE necessary to hold an active license.

"Long-term care facility" means a nursing home, retirement care, mental care, or other facility or institution that provides extended health care to resident patients.

"NABP" means the National Association of Boards of Pharmacy.

"Nuclear pharmacy" means a pharmacy providing radiopharmaceutical services.

"On duty" means that a pharmacist is on the premises at the address of the permitted pharmacy and is available as needed.

"On-hold prescription" means a valid prescription that is received and maintained at the pharmacy for initial dispensing on a future date.

"Patient safety organization" means an organization that has as its primary mission continuous quality improvement under the Patient Safety and Quality Improvement Act of 2005 (Pub. L. 109-41) and is credentialed by the Agency for Healthcare Research and Quality.

"Permitted physician" means a physician who is licensed pursuant to § 54.1-3304 of the Code of Virginia to dispense drugs to persons to whom or for whom pharmacy services are not reasonably available.

"Perpetual inventory" means an ongoing system for recording quantities of drugs received, dispensed, or otherwise distributed by a pharmacy.

"Personal supervision" means the pharmacist must be physically present and render direct, personal control over the entire service being rendered or act being performed. Neither prior nor future instructions shall be sufficient nor, shall supervision rendered by telephone, written instructions, or by any mechanical or electronic methods be sufficient.

"Pharmacy closing" means that the permitted pharmacy ceases pharmacy services or fails to provide for continuity of pharmacy services or lawful access to patient prescription records or other required patient records for the purpose of continued pharmacy services to patients.

"Pharmacy technician trainee" means a person who is currently enrolled in an approved pharmacy technician training program and is performing duties restricted to pharmacy technicians for the purpose of obtaining practical experience in accordance with § 54.1-3321 D of the Code of Virginia.

"PIC" means the pharmacist-in-charge of a permitted pharmacy.

"Practice location" means any location in which a prescriber evaluates or treats a patient.

"Prescription department" means any contiguous or noncontiguous areas used for the compounding, dispensing and storage of all Schedule II through VI drugs and devices and any Schedule I investigational drugs.

"PTCB" means the Pharmacy Technician Certification Board, co-founded by the American Pharmaceutical Association and the American Society of Health System Pharmacists, as the national organization for voluntary examination and certification of pharmacy technicians.

"Quality assurance plan" means a plan approved by the board for ongoing monitoring, measuring, evaluating, and, if necessary, improving the performance of a pharmacy function or system.

"Radiopharmaceutical" means any drug that exhibits spontaneous disintegration of unstable nuclei with the emission of nuclear particles or photons and includes any nonradioactive reagent kit or radionuclide generator that is intended to be used in the preparation of any such substance, but does not include drugs such as carbon-containing compounds or potassium-containing salts that include trace quantities of naturally occurring radionuclides. The term also includes any biological product that is labeled with a radionuclide or intended solely to be labeled with a radionuclide.

"Repackaged drug" means any drug removed from the manufacturer's original package and placed in different packaging.

"Robotic pharmacy system" means a mechanical system controlled by a computer that performs operations or activities relative to the storage, packaging, labeling, dispensing, or distribution of medications, and collects, controls, and maintains all transaction information.

"Safety closure container" means a container that meets the requirements of the federal Poison Prevention Packaging Act of 1970 (15 USC §§ 1471-1476), that is, in testing such containers, that 85% of a test group of 200 children of ages 41-52 months are unable to open the container in a five-minute period and that 80% fail in another five minutes after a demonstration of how to open it and that 90% of a test group of 100 adults must be able to open and close the container.

"Satellite pharmacy" means a pharmacy that is noncontiguous to the centrally permitted pharmacy of a hospital but at the location designated on the pharmacy permit.

"Special packaging" means packaging that is designed or constructed to be significantly difficult for children younger than five years of age to open to obtain a toxic or harmful amount of the drug contained therein within a reasonable time and not difficult for normal adults to use properly, but does not mean packaging that all such children cannot open or obtain a toxic or harmful amount within a reasonable time.

"Special use permit" means a permit issued to conduct a pharmacy of a special scope of service that varies in any way from the provisions of any board regulation.

"Storage temperature" means those specific directions stated in some monographs with respect to the temperatures at which pharmaceutical articles shall be stored, where it is considered that storage at a lower or higher temperature may produce undesirable results. The conditions are defined by the following terms:

1. "Cold" means any temperature not exceeding 8°C (46°F). A refrigerator is a cold place in which temperature is maintained thermostatically between 2° and 8°C (36° and 46°F). A freezer is a cold place in which the temperature is maintained thermostatically between -20° and -10°C (-4° and 14°F).

2. "Room temperature" means the temperature prevailing in a working area.

3. "Controlled room temperature" means a temperature maintained thermostatically that encompasses the usual and customary working environment of 20° to 25°C (68° to 77°F); that results in a mean kinetic temperature calculated to be not more than 25°C; and that allows for excursions between 15° and 30°C (59° and 86°F) that are experienced in pharmacies, hospitals, and warehouses.

4. "Warm" means any temperature between 30° and 40°C (86° and 104°F).

5. "Excessive heat" means any temperature above 40°C (104°F).

6. "Protection from freezing" means where, in addition to the risk of breakage of the container, freezing subjects a product to loss of strength or potency, or to the destructive alteration of its characteristics, the container label bears an appropriate instruction to protect the product from freezing.

7. "Cool" means any temperature between 8° and 15°C (46° and 59°F).

"Terminally ill" means a patient with a terminal condition as defined in § 54.1-2982 of the Code of Virginia.

"Ultimate user" means a person who has lawfully obtained, and who possesses, a controlled substance for his own use or for the use of a member of his household or for an animal owned by him or a member of his household.

"Unit dose container" means a container that is a single-unit container, as defined in United States Pharmacopeia-National Formulary, for articles intended for administration by other than the parenteral route as a single dose, direct from the container.

"Unit dose package" means a container that contains a particular dose ordered for a patient.

"Unit dose system" means a system in which multiple drugs in unit dose packaging are dispensed in a single container, such as a medication drawer or bin, labeled only with patient name and location. Directions for administration are not provided by the pharmacy on the drug packaging or container but are obtained by the person administering directly from a prescriber's order or medication administration record.

"USP-NF" means the United States Pharmacopeia-National Formulary.

"Well-closed container" means a container that protects the contents from extraneous solids and from loss of the drug under the ordinary or customary conditions of handling, shipment, storage, and distribution.

18VAC110-20-211. Disposal of drugs by authorized collectors.

Any narcotic treatment program, hospital, or clinic with an on-site pharmacy, or pharmacy wishing to accept for return a previously dispensed drug for the purpose of destruction from an ultimate user, a person lawfully entitled to dispose of an ultimate user decedent's property, or a long-term care facility on behalf of an ultimate user who resides or has resided at that facility shall first be authorized by the DEA as a collector. The process used to collect and destroy drugs, along with any required recordkeeping, shall comply with applicable federal and state law.

1. Prior to collecting drugs, an authorized collector shall submit in writing to the board:

a. The name, address, and license number, if applicable, of the facility;

b. The intended method or methods of collection (i.e., collection receptacle or mail-back program); and

c. Signature of PIC or medical director of a narcotic treatment program.

2. If an authorized collector chooses to cease acting as a collector, the PIC or medical director shall notify the board within 30 days.

3. A narcotic treatment program that does not have an in-house pharmacy shall obtain a controlled substance registration.

Part I
General Provisions

18VAC110-50-10. Definitions.

In addition to words and terms defined in §§ 54.1-3300 and 54.1-3401 of the Code of Virginia, the following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"Authorized collector" means a registered manufacturer, wholesale distributor, or reverse distributor that is authorized by the U.S. Drug Enforcement Administration to receive drugs from an ultimate user, a person lawfully entitled to dispose of an ultimate user decedent's property, or a long-term care facility on behalf of an ultimate user who resides or has resided at that facility for the purpose of destruction.

"Authorized distributor of record" means a wholesale distributor with whom a manufacturer has entered into a written agreement under which such wholesale distributor is either authorized to distribute all of that manufacturer's prescription drug products, or only those products listed in the agreement, for such a period of time or number of shipments as specified in the agreement.

"Control number" means the unique identifying customer number assigned by the Virginia Department of Motor Vehicles to an individual when issuing a driver's license, learner's permit, or official identification card. This number is displayed on the driver's license or ID card in lieu of the social security number.

"DEA" means the United States U.S. Drug Enforcement Administration.

"Drop shipment" means the sale and distribution of a prescription drug in which a manufacturer, third party third-party logistics provider, or the manufacturer's exclusive distributor directly ships the prescription drug to a pharmacy, chain drug warehouse, or other person authorized to dispense or administer the prescription drug, and the pharmacy, chain drug warehouse or other authorized person is invoiced by a wholesale distributor that took title to the prescription drug during the shipping, but did not take physical possession of the prescription drug.

"Expiration date" means that date placed on a drug package by the manufacturer or repacker beyond which the product may not be dispensed or used.

"FDA" means the United States U.S. Food and Drug Administration.

"Manufacturer's exclusive distributor" means a distributor licensed by the board as a wholesale distributor or registered as a nonresident wholesale distributor who contracts with a manufacturer to provide or coordinate warehousing, distribution or other services on behalf of a manufacturer for a prescription drug and who takes title to that manufacturer's prescription drug, but who does not have general responsibility to direct the sale or disposition of the prescription drug.

"Third-party logistics provider" means an entity licensed by the board as a wholesale distributor or registered as a nonresident wholesale distributor who that contracts with a manufacturer to provide or coordinate warehousing, distribution, or other services on behalf of a manufacturer for a prescription drug, but does not take title to the prescription drug and who that only sells, distributes, or otherwise disposes of the prescription drug at the direction of the manufacturer.

"Ultimate user" means a person who has lawfully obtained, and who possesses, a controlled substance for his own use or for the use of a member of his household or for an animal owned by him or a member of his household.

"USP-NF" means the United States Pharmacopeia-National Formulary.

18VAC110-50-51. Disposal of drugs by authorized collectors.

Any manufacturer, wholesale distributor, or reverse distributor wishing to accept for return a previously dispensed drug in Schedules II through V for the purpose of destruction from an ultimate user, or a person lawfully entitled to dispose of an ultimate user decedent’s property, shall first be authorized by the DEA as a collector. The process used to collect and destroy drugs, along with any required recordkeeping, shall comply with federal and state law.

1. Prior to collecting drugs, an authorized collector shall submit in writing to the board:

a. The name, address, and license number, if applicable, of the facility;

b. The intended method or methods of collection (i.e., collection receptacle or mail-back program); and

c. Signature of the responsible party.

2. If an authorized collector chooses to cease acting as a collector, the responsible party shall notify the board within 30 days.

Titles of Regulations: 18VAC110-20. Regulations Governing the Practice of Pharmacy (amending 18VAC110-20-10; adding 18VAC110-20-211).

18VAC110-50. Regulations Governing Wholesale Distributors, Manufacturers, and Warehousers (amending 18VAC110-50-10; adding 18VAC110-50-51).

Statutory Authority: §§ 54.1-2400 and 54.1-3307 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: March 9, 2016.

Effective Date: March 24, 2016.

Agency Contact: Caroline Juran, RPh, Executive Director, Board of Pharmacy, 9960 Mayland Drive, Suite 300, Richmond, VA 23233-1463, telephone (804) 367-4416, FAX (804) 527-4472, or email caroline.juran@dhp.virginia.gov.

Basis: Section 54.1-2400 of the Code of Virginia authorizes the Board of Pharmacy to promulgate regulations that are reasonable and necessary to administer effectively the regulatory system and establish renewal schedules.

The specific authority to regulate prescription drugs in the Commonwealth is found in Chapters 33 (§ 54.1-3300 et seq.) and 34 (§ 54.1-3400 et seq.) of Title 54.1 of the Code of Virginia.

Purpose: The purpose of this regulatory action is to establish regulations that will authorize the board to inspect for and enforce standards for collection on controlled substances. If requirements for collection and destruction are not followed, there may be opportunity for diversion of donated drugs or adulteration of controlled substances when there is risk of commingling with existing stocks. Designation of authorized collection sites will facilitate the disposal of unused prescription drugs, which in turn reduces the supply of such drugs for abuse and diversion and protects public health and safety. However, the collection must be handled in a manner that protects the drugs until destruction in compliance with local, state, and federal laws.

Rationale for Using Fast-Track Process: This action was begun with a Notice of Intended Regulatory Action that was published in the Virginia Register of Regulations in Volume 31, Issue 20, on June 1, 2015, with comment until July 1, 2015. No comment was received, and no controversy is expected. The proposed regulation was unanimously recommended by the board's Regulation Committee and adopted by the board. To facilitate the authorization for collection sites, the board is promulgating the regulation as a fast-track rulemaking action under § 2.2-4012.1 of the Code of Virginia.

Substance: The new regulations will include requirements found in the federal Drug Enforcement Administration (DEA) regulations, such as registration with the DEA as an authorized collector to serve as a site for the collection of controlled substances from an ultimate user. An ultimate user is defined as a person who has lawfully obtained and who possesses a controlled substance for his own use or for the use of a member of his household or for an animal owned by him or a member of his household. Manufacturers, wholesale distributors, reverse distributors, narcotic treatment programs, hospitals with an on-site pharmacy, and retail pharmacies may become collectors by modifying their current DEA registration to be approved as authorized collectors.

Authorized collectors may maintain collection receptacles and then must dispose of collected drugs in accordance with DEA rules for destruction. Authorized collectors may conduct a mail-back program, but are not authorized to conduct take-back events. Registered collection sites may accept Schedule II through VI drugs in a single collection receptacle but may not accept illicit drugs (Schedule I, heroin, etc.). Authorized hospitals with on-site pharmacies may maintain collection receptacles at long-term care facilities at which drugs may be disposed on behalf of an ultimate user who resides or has resided at the facility.

Drugs so collected by the authorized collector must be destroyed in a matter that makes the drugs nonretrievable, meaning they cannot be transformed to a physical or chemical condition or state as a controlled substance or controlled substance analogue.

Issues: The advantage to the public is assurance that a facility that serves as an authorized collector is not commingling donated drugs intended for disposal with drug stocks and that the board has some oversight authority. There are no disadvantages. If a facility meets the DEA requirements for an authorized collector, it will be able to comply with board regulations.

The advantage to the Commonwealth is facilitation of authorized collector sites for disposal of unused medications to take those drugs out of circulation for abuse or diversion.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The proposed regulation will require that entities registered by the federal Drug Enforcement Administration (DEA) to collect and destroy unused drugs from consumers provide certain information to the Virginia Board of Pharmacy to help enforce compliance.

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

Estimated Economic Impact. In 2014, the DEA promulgated federal regulations to allow entities authorized to possess controlled substances to collect previously prescribed but unused drugs from a consumer (ultimate user) for appropriate disposal in a safe and effective manner consistent with controls against diversion. Authorized entities include pharmacies, manufacturers, wholesale distributors, reverse distributors, and narcotic treatment programs. Participation in the federal collection and disposal program is voluntary. Entities may choose to establish disposal programs for various reasons, including for profit, to build goodwill in the community, to attract customers, to advertise businesses, and to preserve the environment.¹ These costs and benefits are not discussed here because they cannot be attributed to this proposed state regulation. The proposed regulation merely requires that if an authorized Virginia entity participates in the DEA program it provide notification to the Virginia Board of Pharmacy (Board) of its name, address, license number, and the intended methods of collection. No additional fee is required from participants who hold a valid state controlled substances registration. However, if a narcotic treatment program without an in-house pharmacy wants to become an authorized collector, it will need a registration at a one-time cost of $90. Without the required information, the Board would not have essential information to enforce compliance and would completely rely on DEA. The Board states that DEA typically relies on state boards to conduct inspections and to regulate the safety and integrity of prescription drugs. Thus, the proposed regulation will likely enhance compliance with federal and state rules and reduce opportunities for diversion of donated drugs or adulteration of controlled substances if there is risk of co-mingling with existing stocks. In addition, the Board will be able to list names of collectors on its website to inform the public of where to take their unwanted drugs for destruction and promote collection efforts.

Businesses and Entities Affected. Currently, there are 1836 licensed pharmacies, 71 restricted manufacturers and 122 wholesale distributors. It is estimated that a very small number of those will choose to become authorized collectors.²

Localities Particularly Affected. The proposed changes apply throughout the Commonwealth.

Projected Impact on Employment. The proposed amendments are unlikely to significantly affect employment.

Effects on the Use and Value of Private Property. No significant impact on the use and value of private property is expected.

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

Small Businesses:

Definition. Pursuant to § 2.2-4007.04 of the Code of Virginia, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

Costs and Other Effects. The participation in collection of unused drugs is voluntary. Consequently, the proposed regulation does not impose significant costs or other effects on small businesses.

Alternative Method that Minimizes Adverse Impact. No significant adverse impact on small businesses is expected.

Adverse Impacts:

Businesses: The proposed regulation does not have a significant impact on non-small businesses.

Localities: The proposed regulation will not adversely affect localities.

Other Entities: The proposed regulation will not adversely affect other entities.

________________________________________________

¹The participation in the DEA collection and disposal program has certain costs and benefits associated with it.

²In a somewhat similar but essentially different program that collects donated drugs, there are only 15 voluntary participants in Virginia.

Agency's Response to Economic Impact Analysis: The Board of Pharmacy generally concurs with the analysis of the Department of Planning and Budget on proposed amended regulations for 18VAC110-20, Regulations Governing the Practice of Pharmacy. The board does not believe any entity would choose to become a collection site for unused drugs with profit as a motivation, since costs for destruction will likely be borne by the entity. Pharmacies and other authorized entities are more likely to provide the collection option as a service to the community in an effort to take unused drugs out of circulation for possible abuse.

Summary:

The amendments (i) establish standards for collection sites similar to those required by the Drug Enforcement Administration (DEA) to register as an "authorized collector" in Virginia, (ii) require notification to the board prior to establishing a collection site, and (iii) authorize the board to inspect for and enforce standards for collection. As of October 2014, DEA regulations allow entities authorized to possess controlled substances, such as pharmacies and wholesale distributors, to collect unused drugs to deliver for appropriate disposal in a safe and effective manner consistent with effective controls against diversion.

Part I
General Provisions

18VAC110-20-10. Definitions.

In addition to words and terms defined in §§ 54.1-3300 and 54.1-3401 of the Code of Virginia, the following words and terms when used in this chapter shall have the following meanings, unless the context clearly indicates otherwise:

"ACPE" means the Accreditation Council for Pharmacy Education.

"Acquisition" of an existing entity permitted, registered or licensed by the board means (i) the purchase or transfer of all or substantially all of the assets of the entity or of any corporation that owns or controls the entity; (ii) the creation of a partnership by a sole proprietor or change in partnership composition; (iii) the acquiring of 50% or more of the outstanding shares of voting stock of a corporation owning the entity or of the parent corporation of a wholly owned subsidiary owning the entity, except that this shall not apply to any corporation the voting stock of which is actively traded on any securities exchange or in any over-the-counter market; or (iv) the merger of a corporation owning the entity, or of the parent corporation of a wholly owned subsidiary owning the entity, with another business or corporation.

"Actively reports" means reporting all dispensing errors and analyses of such errors to a patient safety organization as soon as practical or at least within 30 days of identifying the error.

"Alternate delivery site" means a location authorized in 18VAC110-20-275 to receive dispensed prescriptions on behalf of and for further delivery or administration to a patient.

"Analysis" means a review of the findings collected and documented on each dispensing error, assessment of the cause and any factors contributing to the dispensing error, and any recommendation for remedial action to improve pharmacy systems and workflow processes to prevent or reduce future errors.

"Authorized collector" means a narcotic treatment program, hospital, or clinic with an on-site pharmacy, or pharmacy that is authorized by the U.S. Drug Enforcement Administration to receive drugs from an ultimate user, a person lawfully entitled to dispose of an ultimate user decedent's property, or a long-term care facility on behalf of an ultimate user who resides or has resided at that facility for the purpose of destruction.

"Beyond-use date" means the date beyond which the integrity of a compounded, repackaged, or dispensed drug can no longer be assured and as such is deemed to be adulterated or misbranded as defined in §§ 54.1-3461 and 54.1-3462 of the Code of Virginia.

"Board" means the Virginia Board of Pharmacy.

"CE" means continuing education as required for renewal of licensure by the Board of Pharmacy.

"CEU" means a continuing education unit awarded for credit as the equivalent of 10 contact hours.

"Chart order" means a lawful order for a drug or device entered on the chart or in a medical record of a patient by a prescriber or his designated agent.

"Compliance packaging" means packaging for dispensed drugs that is comprised of a series of containers for solid oral dosage forms and designed to assist the user in administering or self-administering the drugs in accordance with directions for use.

"Contact hour" means the amount of credit awarded for 60 minutes of participation in and successful completion of a continuing education program.

"Correctional facility" means any prison, penitentiary, penal facility, jail, detention unit, or other facility in which persons are incarcerated by government officials.

"DEA" means the United States U.S. Drug Enforcement Administration.

"Dispensing error" means one or more of the following discovered after the final verification by the pharmacist, regardless of whether the patient received the drug:

1. Variation from the prescriber's prescription drug order, including but not limited to:

a. Incorrect drug;

b. Incorrect drug strength;

c. Incorrect dosage form;

d. Incorrect patient; or

e. Inadequate or incorrect packaging, labeling, or directions.

2. Failure to exercise professional judgment in identifying and managing:

a. Known therapeutic duplication;

b. Known drug-disease contraindications;

c. Known drug-drug interactions;

d. Incorrect drug dosage or duration of drug treatment;

e. Known drug-allergy interactions;

f. A clinically significant, avoidable delay in therapy; or

g. Any other significant, actual, or potential problem with a patient's drug therapy.

3. Delivery of a drug to the incorrect patient.

4. Variation in bulk repackaging or filling of automated devices, including but not limited to:

a. Incorrect drug;

b. Incorrect drug strength;

c. Incorrect dosage form; or

d. Inadequate or incorrect packaging or labeling.

"Drug donation site" means a permitted pharmacy that specifically registers with the board for the purpose of receiving or redispensing eligible donated prescription drugs pursuant to § 54.1-3411.1 of the Code of Virginia.

"Electronic prescription" means a written prescription that is generated on an electronic application in accordance with 21 CFR Part 1300 and is transmitted to a pharmacy as an electronic data file.

"EMS" means emergency medical services.

"Expiration date" means that date placed on a drug package by the manufacturer or repacker beyond which the product may not be dispensed or used.

"Facsimile (FAX) prescription" means a written prescription or order which is transmitted by an electronic device over telephone lines which sends the exact image to the receiver (pharmacy) in a hard copy form.

"FDA" means the United States U.S. Food and Drug Administration.

"Floor stock" means a supply of drugs that have been distributed for the purpose of general administration by a prescriber or other authorized person pursuant to a valid order of a prescriber.

"Foreign school of pharmacy" means a school outside the United States and its territories offering a course of study in basic sciences, pharmacology, and pharmacy of at least four years in duration resulting in a degree that qualifies a person to practice pharmacy in that country.

"Forgery" means a prescription that was falsely created, falsely signed, or altered.

"FPGEC certificate" means the certificate given by the Foreign Pharmacy Equivalency Committee of NABP that certifies that the holder of such certificate has passed the Foreign Pharmacy Equivalency Examination and a credential review of foreign training to establish educational equivalency to board approved schools of pharmacy, and has passed approved examinations establishing proficiency in English.

"Generic drug name" means the nonproprietary name listed in the United States Pharmacopeia-National Formulary (USP-NF) or in the United States Adopted Names (USAN) and the USP Dictionary of Drug Names.

"Hospital" or "nursing home" means those facilities as defined in Title 32.1 of the Code of Virginia or as defined in regulations by the Virginia Department of Health.

"Inactive license" means a license that is registered with the Commonwealth but does not entitle the licensee to practice, the holder of which is not required to submit documentation of CE necessary to hold an active license.

"Long-term care facility" means a nursing home, retirement care, mental care, or other facility or institution that provides extended health care to resident patients.

"NABP" means the National Association of Boards of Pharmacy.

"Nuclear pharmacy" means a pharmacy providing radiopharmaceutical services.

"On duty" means that a pharmacist is on the premises at the address of the permitted pharmacy and is available as needed.

"On-hold prescription" means a valid prescription that is received and maintained at the pharmacy for initial dispensing on a future date.

"Patient safety organization" means an organization that has as its primary mission continuous quality improvement under the Patient Safety and Quality Improvement Act of 2005 (Pub. L. 109-41) and is credentialed by the Agency for Healthcare Research and Quality.

"Permitted physician" means a physician who is licensed pursuant to § 54.1-3304 of the Code of Virginia to dispense drugs to persons to whom or for whom pharmacy services are not reasonably available.

"Perpetual inventory" means an ongoing system for recording quantities of drugs received, dispensed, or otherwise distributed by a pharmacy.

"Personal supervision" means the pharmacist must be physically present and render direct, personal control over the entire service being rendered or act being performed. Neither prior nor future instructions shall be sufficient nor, shall supervision rendered by telephone, written instructions, or by any mechanical or electronic methods be sufficient.

"Pharmacy closing" means that the permitted pharmacy ceases pharmacy services or fails to provide for continuity of pharmacy services or lawful access to patient prescription records or other required patient records for the purpose of continued pharmacy services to patients.

"Pharmacy technician trainee" means a person who is currently enrolled in an approved pharmacy technician training program and is performing duties restricted to pharmacy technicians for the purpose of obtaining practical experience in accordance with § 54.1-3321 D of the Code of Virginia.

"PIC" means the pharmacist-in-charge of a permitted pharmacy.

"Practice location" means any location in which a prescriber evaluates or treats a patient.

"Prescription department" means any contiguous or noncontiguous areas used for the compounding, dispensing and storage of all Schedule II through VI drugs and devices and any Schedule I investigational drugs.

"PTCB" means the Pharmacy Technician Certification Board, co-founded by the American Pharmaceutical Association and the American Society of Health System Pharmacists, as the national organization for voluntary examination and certification of pharmacy technicians.

"Quality assurance plan" means a plan approved by the board for ongoing monitoring, measuring, evaluating, and, if necessary, improving the performance of a pharmacy function or system.

"Radiopharmaceutical" means any drug that exhibits spontaneous disintegration of unstable nuclei with the emission of nuclear particles or photons and includes any nonradioactive reagent kit or radionuclide generator that is intended to be used in the preparation of any such substance, but does not include drugs such as carbon-containing compounds or potassium-containing salts that include trace quantities of naturally occurring radionuclides. The term also includes any biological product that is labeled with a radionuclide or intended solely to be labeled with a radionuclide.

"Repackaged drug" means any drug removed from the manufacturer's original package and placed in different packaging.

"Robotic pharmacy system" means a mechanical system controlled by a computer that performs operations or activities relative to the storage, packaging, labeling, dispensing, or distribution of medications, and collects, controls, and maintains all transaction information.

"Safety closure container" means a container that meets the requirements of the federal Poison Prevention Packaging Act of 1970 (15 USC §§ 1471-1476), that is, in testing such containers, that 85% of a test group of 200 children of ages 41-52 months are unable to open the container in a five-minute period and that 80% fail in another five minutes after a demonstration of how to open it and that 90% of a test group of 100 adults must be able to open and close the container.

"Satellite pharmacy" means a pharmacy that is noncontiguous to the centrally permitted pharmacy of a hospital but at the location designated on the pharmacy permit.

"Special packaging" means packaging that is designed or constructed to be significantly difficult for children younger than five years of age to open to obtain a toxic or harmful amount of the drug contained therein within a reasonable time and not difficult for normal adults to use properly, but does not mean packaging that all such children cannot open or obtain a toxic or harmful amount within a reasonable time.

"Special use permit" means a permit issued to conduct a pharmacy of a special scope of service that varies in any way from the provisions of any board regulation.

"Storage temperature" means those specific directions stated in some monographs with respect to the temperatures at which pharmaceutical articles shall be stored, where it is considered that storage at a lower or higher temperature may produce undesirable results. The conditions are defined by the following terms:

1. "Cold" means any temperature not exceeding 8°C (46°F). A refrigerator is a cold place in which temperature is maintained thermostatically between 2° and 8°C (36° and 46°F). A freezer is a cold place in which the temperature is maintained thermostatically between -20° and -10°C (-4° and 14°F).

2. "Room temperature" means the temperature prevailing in a working area.

3. "Controlled room temperature" means a temperature maintained thermostatically that encompasses the usual and customary working environment of 20° to 25°C (68° to 77°F); that results in a mean kinetic temperature calculated to be not more than 25°C; and that allows for excursions between 15° and 30°C (59° and 86°F) that are experienced in pharmacies, hospitals, and warehouses.

4. "Warm" means any temperature between 30° and 40°C (86° and 104°F).

5. "Excessive heat" means any temperature above 40°C (104°F).

6. "Protection from freezing" means where, in addition to the risk of breakage of the container, freezing subjects a product to loss of strength or potency, or to the destructive alteration of its characteristics, the container label bears an appropriate instruction to protect the product from freezing.

7. "Cool" means any temperature between 8° and 15°C (46° and 59°F).

"Terminally ill" means a patient with a terminal condition as defined in § 54.1-2982 of the Code of Virginia.

"Ultimate user" means a person who has lawfully obtained, and who possesses, a controlled substance for his own use or for the use of a member of his household or for an animal owned by him or a member of his household.

"Unit dose container" means a container that is a single-unit container, as defined in United States Pharmacopeia-National Formulary, for articles intended for administration by other than the parenteral route as a single dose, direct from the container.

"Unit dose package" means a container that contains a particular dose ordered for a patient.

"Unit dose system" means a system in which multiple drugs in unit dose packaging are dispensed in a single container, such as a medication drawer or bin, labeled only with patient name and location. Directions for administration are not provided by the pharmacy on the drug packaging or container but are obtained by the person administering directly from a prescriber's order or medication administration record.

"USP-NF" means the United States Pharmacopeia-National Formulary.

"Well-closed container" means a container that protects the contents from extraneous solids and from loss of the drug under the ordinary or customary conditions of handling, shipment, storage, and distribution.

18VAC110-20-211. Disposal of drugs by authorized collectors.

Any narcotic treatment program, hospital, or clinic with an on-site pharmacy, or pharmacy wishing to accept for return a previously dispensed drug for the purpose of destruction from an ultimate user, a person lawfully entitled to dispose of an ultimate user decedent's property, or a long-term care facility on behalf of an ultimate user who resides or has resided at that facility shall first be authorized by the DEA as a collector. The process used to collect and destroy drugs, along with any required recordkeeping, shall comply with applicable federal and state law.

1. Prior to collecting drugs, an authorized collector shall submit in writing to the board:

a. The name, address, and license number, if applicable, of the facility;

b. The intended method or methods of collection (i.e., collection receptacle or mail-back program); and

c. Signature of PIC or medical director of a narcotic treatment program.

2. If an authorized collector chooses to cease acting as a collector, the PIC or medical director shall notify the board within 30 days.

3. A narcotic treatment program that does not have an in-house pharmacy shall obtain a controlled substance registration.

Part I
General Provisions

18VAC110-50-10. Definitions.

In addition to words and terms defined in §§ 54.1-3300 and 54.1-3401 of the Code of Virginia, the following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"Authorized collector" means a registered manufacturer, wholesale distributor, or reverse distributor that is authorized by the U.S. Drug Enforcement Administration to receive drugs from an ultimate user, a person lawfully entitled to dispose of an ultimate user decedent's property, or a long-term care facility on behalf of an ultimate user who resides or has resided at that facility for the purpose of destruction.

"Authorized distributor of record" means a wholesale distributor with whom a manufacturer has entered into a written agreement under which such wholesale distributor is either authorized to distribute all of that manufacturer's prescription drug products, or only those products listed in the agreement, for such a period of time or number of shipments as specified in the agreement.

"Control number" means the unique identifying customer number assigned by the Virginia Department of Motor Vehicles to an individual when issuing a driver's license, learner's permit, or official identification card. This number is displayed on the driver's license or ID card in lieu of the social security number.

"DEA" means the United States U.S. Drug Enforcement Administration.

"Drop shipment" means the sale and distribution of a prescription drug in which a manufacturer, third party third-party logistics provider, or the manufacturer's exclusive distributor directly ships the prescription drug to a pharmacy, chain drug warehouse, or other person authorized to dispense or administer the prescription drug, and the pharmacy, chain drug warehouse or other authorized person is invoiced by a wholesale distributor that took title to the prescription drug during the shipping, but did not take physical possession of the prescription drug.

"Expiration date" means that date placed on a drug package by the manufacturer or repacker beyond which the product may not be dispensed or used.

"FDA" means the United States U.S. Food and Drug Administration.

"Manufacturer's exclusive distributor" means a distributor licensed by the board as a wholesale distributor or registered as a nonresident wholesale distributor who contracts with a manufacturer to provide or coordinate warehousing, distribution or other services on behalf of a manufacturer for a prescription drug and who takes title to that manufacturer's prescription drug, but who does not have general responsibility to direct the sale or disposition of the prescription drug.

"Third-party logistics provider" means an entity licensed by the board as a wholesale distributor or registered as a nonresident wholesale distributor who that contracts with a manufacturer to provide or coordinate warehousing, distribution, or other services on behalf of a manufacturer for a prescription drug, but does not take title to the prescription drug and who that only sells, distributes, or otherwise disposes of the prescription drug at the direction of the manufacturer.

"Ultimate user" means a person who has lawfully obtained, and who possesses, a controlled substance for his own use or for the use of a member of his household or for an animal owned by him or a member of his household.

"USP-NF" means the United States Pharmacopeia-National Formulary.

18VAC110-50-51. Disposal of drugs by authorized collectors.

Any manufacturer, wholesale distributor, or reverse distributor wishing to accept for return a previously dispensed drug in Schedules II through V for the purpose of destruction from an ultimate user, or a person lawfully entitled to dispose of an ultimate user decedent’s property, shall first be authorized by the DEA as a collector. The process used to collect and destroy drugs, along with any required recordkeeping, shall comply with federal and state law.

1. Prior to collecting drugs, an authorized collector shall submit in writing to the board:

a. The name, address, and license number, if applicable, of the facility;

b. The intended method or methods of collection (i.e., collection receptacle or mail-back program); and

c. Signature of the responsible party.

2. If an authorized collector chooses to cease acting as a collector, the responsible party shall notify the board within 30 days.