A feud between Optima and Chesapeake Regional Medical Center lands on the Senate floor

A dispute between the dominant health system in Hampton Roads and a public hospital in Chesapeake has spilled into the legislature, and on Monday the Senate took the side of the public hospital.

Legislation sponsored by Sen. J. Chapman Petersen, D-Fairfax City, would require a vertically-integrated health carrier — health plans that also own hospitals — to allow public hospitals to participate in its network.

The bill addresses a problem raised by Chesapeake Regional Medical Center, which contends that it is unfair that the health plan Optima, which is owned by Sentara Healthcare, does not cover all the services Chesapeake offers as in-network. Optima argues that it does include Chesapeake in its network, just not services and entities for which  Chesapeake isn’t the primary owner.

Last year, similar legislation passed the Senate but was tabled in the House and sent to the Health Insurance Reform Commission to be studied. During a commission meeting in October, Reese Jackson, Chesapeake’s CEO, argued that, “Sentara Healthcare is creating a clear and present danger to public interests,” according to a meeting summary.

But Michael Gentry, Sentara’s senior vice-president and chief operating officer, claimed that vertically integrated systems are better able to improve the health of their community, and that forcing one group to accept another into its network doesn’t have a track record of working.

The argument found its way onto the Senate floor on Monday, with some claiming that the General Assembly needs to support the small players like Chesapeake, and others arguing that lawmakers would just be impeding on a health plan’s ability to negotiate its networks.

“We’re saying Sentara can’t own everything,” said Sen. Lionell Spruill, D-Chesapeake. “I ask you to help this small hospital to stay alive and not allow the big fish to take it over.”

Others brought up the fact that Sentara and Chesapeake actually agreed to a four-year contract just before session started.

“I believe that this bill addresses a significant issue and something we need to deal with in the commonwealth, but we need to deal with it more broadly than what this bill does,” said Sen. George Barker, D-Fairfax, as he spoke against the bill. “We have time to get it right and have it broadly apply across the health system.”

The Certificate of Public Need, or COPN, program, which has long haunted the Virginia legislature, came up in the debate. COPN opponents hold that the program unfairly creates monopolies within Virginia’s health care landscape.

Petersen argued that in over a decade as a senator, every time he’s heard a bill on hospital reform, the response is that the legislature shouldn’t enact a single improvement because the state needs “comprehensive” reform.

“Progressives, don’t we like to say ‘think globally, act locally’?” he said. “Okay, well, this is our chance. We can do something locally while taking a stand and saying monopolies should not be encouraged in health care.”

The bill passed on a 24-14 vote, though it may be heading to the chopping block in the House, where not only did similar legislation die last year, but a similar bill sponsored by Del. Terry Kilgore, R-Scott, was killed in committee earlier this session.

Editor’s note: This story has been updated to clarify the relationship between Optima and Chesapeake.