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Virginia: Tackling Health Reform on Two Fronts

Virginia is among the 21 states with a lawsuit challenging the federal health care legislation, but it is also preparing to implement reform, acknowledging that the legal challenge may take years to resolve and the federal law may prevail. The state's political leaders oppose the federal law's individual mandate and are concerned that its early focus on a mandatory coverage expansion will drive up costs and exacerbate workforce shortages. However, they also acknowledge that Virginia's health care system faces significant challenges, and support state-based initiatives to control costs, ensure access, and improve quality. In many cases, Virginia's priorities for delivery system innovation are consistent with the pilots and demonstrations authorized in federal reform, including the promotion of medical homes, accountable care organizations, health information technology, and care coordination for complicated cases.

In May 2010, Virginia's secretary of health and human resources, William Hazel, announced the establishment of a Health Care Reform Initiative to manage implementation activities related to ongoing state-specific reforms and federal reform. "We have a federal law on the books," says Hazel, "and we recognize that Virginia has a number of health care issues to be improved. Our challenge is, how do we go forward?"

Virginia's Health Care Reform Initiative is housed within the Office of the Secretary for Health and Human Resources and supported by staff from multiple agencies. Its scope includes Medicaid reform, insurance exchanges, payment and delivery system reform, health information exchange, and coordination of federal grants to fund reform. The Initiative will serve as the liaison between the governor's office, public and private agencies, and other entities affected by health care reform. It will submit initial findings and recommendations to the governor in late September for consideration in the state's executive budget, and then submit reports each January from 2011 through 2014.

The Initiative also will establish an Advisory Group in August 2010 with multiple stakeholders to provide input and guidance. This group will include representatives from various state agencies, legislators appointed by the majority and minority leaders, and representatives of the business community, providers, and patients. Diverse stakeholders are included to bring in expertise that government doesn't have, and to align public and private sector activities. "Managing change is hard," says Hazel. "There is a lot of latitude [under federal reform] for states to shape their future and we need to develop consensus to do this."

One of the major challenges facing Virginia and most states is the lack of resources to plan and implement reform. Virginia is expected to have a $1 billion deficit going into its next budget. So far, state agencies have handled early reform planning by assigning extra work to existing staff, but they also are looking to foundations to provide in-kind support and hoping that the federal government will provide additional planning grants.

According to Hazel, Virginia is "overwhelmed by the amount of work ahead." For example, the state will need to expand Medicaid's administrative capacity to serve a significant number of newly eligible people after the Medicaid expansion in 2014. This expansion is expected to add 270,000 to 435,000 beneficiaries over the current enrollment of 835,000. Virginia also will have to decide whether to create its own insurance exchange, a difficult decision given its lack of experience in this area and the ambiguity about what the exchange should look like, pending the federal government's announcement of minimum standards. The state also will be examining the needs of employers and working to translate recent progress with its health information exchange into decisions about how to manage data and whether to create an all-payer data base.

Despite these challenges, says Hazel, "National reform emphasizes the need to think through carefully where we need to improve. We are looking for ways to make improvements that we consider to be effective, and will discuss these and determine what to do that is best for Virginia. We need to be patient and be aggressive simultaneously to work out the problems."

For more information, contact: William A. Hazel, Jr., M.D., secretary of health and human resources, Commonwealth of Virginia, (804) 786-7765.

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