DC Financial Responsibility and Management Assistance Authority
Actions regarding the Public Benefit Corporation and DC General Hospital
April 27, 2001

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District of Columbia Financial Responsibility and Management Assistance Authority
Washington, D.C.
441 4th Street. NW, Room 570, Washington. DC 20001, 20001

"Authority"

RESOLUTION AND ORDER CONCERNING THE TRANSITION TO NEW HEALTH CARE SYSTEM

WHEREAS, there exists a health care crisis facing the uninsured residents of the District of Columbia;

WHEREAS, the Mayor of the District of Columbia (the "Mayor"), the Council of the District of Columbia (the "Council"), and the District of Columbia Financial Responsibility and Management Assistance Authority ("Authority") have worked to restructure and contract out certain services provided by the Health and Hospitals Public Benefit Corporation ("PBC"), including D.C. General Hospital and the public clinics (a copy of the restructuring plan is attached hereto as Exhibit A);

WHEREAS, the Authority adopted on December 4, 2000 a comprehensive Resolution, Recommendations and Orders concerning the PBC to address the continuing health care crisis (a copy of which is attached hereto as Exhibit B);

WHEREAS, the process leading up to the restructuring and contracting out of health care delivery services by the PBC has involved a complex contract analysis, award and negotiation procedure, which has continued up to the date of this Resolution and Order;

WHEREAS, the Authority has agreed to contract with Greater Southeast Community Hospital Corporation I for the delivery of certain health care services;

WHEREAS, the Authority has determined that it is advisable that the Authority. supervise the transition to the new health care delivery system;

WHEREAS, on January 6, 1998, in the case of Shook v. D.C. Financial Responsibility and Management Assistance Authority, 132 F.3d 775, 780-781 (D.C. Cir. 1998), the United States Court of Appeals for the District of Columbia Circuit held that Congress had provided that the Authority "is able to use its 207(d) power [under Public Law 104-8, as amended] to issue orders as if it were the [head of any department or agency of the District government]"; and that the Authority "can, by using section 207(d), assume any or all of the [department or agency's] powers";

WHEREAS, the Authority must act immediately to assure the continued delivery of health care services during the period of transition to the new health care system, in conformity with Federal and District law, including Public Law 104-8 as amended, the

Fiscal Year 2001 D.C. Appropriations Act, Public Law 106-522, and Federal appropriations law; and
WHEREAS, to achieve these objectives, it is advisable that the Authority assume the powers possessed by the Board of Directors of the Public Benefit Corporation and the Department of Health during the transitional period to a new health care delivery system.

  ORDER

Now, therefore, it is ORDERED, pursuant to Public Law 104-8, as amended, the Fiscal Year 2001 D.C. Appropriations Act, Public Law 106-522, other applicable provisions of law and the decision of the U.S. Court of Appeals in Shook v. D.C. Financial Responsibility and Management Assistance Authority, supra, that:

1. The Authority hereby declares the continued existence of a state of emergency in the public health care system, including the governance, oversight and operation of D.C. General Hospital and the public clinics.
2. The Authority shall have and exercise all the authority, powers, functions, duties, responsibilities, exemptions, and immunities held and exercised by the Board of Directors of the PBC, under any provision of District of Columbia and federal law, rules and regulations, and those of the head of the District of Columbia Department of Health under the Act adopted by the Authority today, DCFRMAA-1, for the period until September 30, 2001, or until further Order of the Authority
3. During that period, the Authority shall exercise oversight and supervision of the implementation of the health care services contract with Greater Southeast Community Hospital Corporation I and the establishment of the new health care delivery system.
4. The Authority hereby delegates to Francis S. Smith, its Executive Director, authority to exercise all the authority. powers, functions, duties, responsibilities, exemptions, and immunities of the PBC Board of Directors and the head of the District of Columbia Department of Health.
5. The Authority hereby delegates to Francis S. Smith, its Executive Director, authority to exercise its powers under Section 5204 of Public Law 104-208.
6. The Authority hereby designates Authority employee Dr. George Gilbert as an agent of the Authority for purposes of providing oversight and executive and operational management of D.C. General Hospital and the public clinics during the period of transition to the new health care delivery system.
7. The Authority hereby designates the District of Columbia Department of Health as an advisor to the Authority for oversight and implementation of the health care services contract with Greater Southeast Community Hospital Corporation I and the new health care delivery system. 
8. The Authority hereby directs the District of Columbia Department of Health to issue a state plan amendment for the Medical Assistance Program (Medicaid) transferring the disproportionate share hospital allotment currently received by D.C. General Hospital to Greater Southeast Community Hospital Corporation I, effective October 1, 2001, for the purposes of providing compensation for services to uninsured District residents provided under the contract with the Authority.
9. If any provision, section, sentence, clause, phrase, or word of this Order or the application thereof to any person or circumstance, is held invalid, the invalidity shall not affect any other provision, section, sentence, clause, phrase, word, or application of this Order which can be given effect without regard to the invalid provision, section, sentence, clause, phrase, word, or application. To this end the provisions of this Order are severable.
10. This Order is effective immediately.

Dated: April 30, 2001

Alice M. Rivlin
Chair

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RESTRUCTURING PLAN FOR THE PUBLIC BENEFIT CORPORATION  
PURSUANT TO THE REQUIREMENTS OF THE HUMAN SUPPORT SERVICES TITLE OF THE DISTRICT OF COLUMBIA APPROPRIATIONS ACT. 2001

Whereas, the maintenance of a quality health delivery system for the District's uninsured population is a public priority that requires the full attention of the city's elected leadership and health care providers;

Whereas, the Chief Financial Officer of the District of Columbia has determined that the District of Columbia Health and Hospitals Public Benefit Corporation (PBC) has operated on a deficit basis for the last two fiscal years and will deplete its $45.3 million FY 2001 subsidy from the District Government by mid-March 2001;

Whereas, adherence to the federal Anti-Deficiency Act prohibits the Chief Financial Officer from advancing additional funds to the PBC until final approval of a comprehensive transition plan;

Whereas, the absence of funding will force the PBC (DC General Hospital and eight community health clinics) to close by mid-March 2001 and threatens the delivery of health care;

Now, Therefore, Be It Resolved That the Mayor, Council of the District of Columbia, the PBC Board, and the District of Columbia Financial Responsibility and Management Assistance Authority shall jointly pursue a private sector alternative to the delivery of comprehensive health services currently provided by the PBC as an independent governmental entity. The contractor selected will be responsible for providing an integrated, community-based system that emphasizes primary and preventative health care and ensures that District residents who become ill receive the inpatient, diagnostic and specialty services they need.

The Plan

The Financial Authority will issue a Request for Proposals (RFP) by December 15, 2000 with proposals due by January 16, 2001. The UP was developed by the Financial Authority, Mayor, and Council who wilt also constitute the review committees that will select a contractor by January 24, 200 I . The contract will be approved by the Mayor and sent to the Council by February I, 2001, and a Council briefing will be held by February 8, 2001. The selected contractor will receive a letter contract by January 28, 2001, and contract operations will begin by March 13, 2001.

The selected contractor will be required to provide (either directly or with a consortium of one or more subcontractors) (lie following health services, presently provided by the PBC, on a comprehensive integrated and coordinated basis: (a) primary care: (b) specialty healthcare; (c) Inpatient services, (d) emergency/urgent care; and (e) public school healthcare. Contractor selection will be based on the following criteria and weights: Up to 500 points will be awarded for the Offeror's past experience and performance on comparable contracts. knowledge and understanding of the needs of the Authority, quality of professional and management personnel assigned to support this service, the Offeror's approach and compliance with RFP requirements and ability to fulfill the scope of work. As a component of the technical evaluation, the Offerors will be given preference points for proposing to use current DC General employees as their first source of employees for any positions funded under this contract. Preference will also be given for Offerors proposing to locate services at the current DC General Hospital site. Each proposal will also be evaluated on its proposed costs. The selection will be made on a best value basis.

The goal of this plan is to provide the volume of medical services currently provided at the PBC to uninsured District residents. The winning bidder will provide an effective and comprehensive primary and preventive care system that operates within the context of a fully integrated health care delivery system that also provides secondary and tertiary care. To achieve these goals the selected contractor will be evaluated annually on its ability to: (a) Ensure that persons with diabetes, hypertension and heart disease receive health exams and pregnant women receive early prenatal care; (b) Ensure that outside referrals for specialty and ancillary care are completed promptly; (c) Reduce inappropriate ER use and hospitalizations; (d) Identify primary care homes for uninsured persons and achieve 10°/a increase in primary care visits; (e) Screen uninsured individuals for eligibility iii Medicaid and other third party resources; (0 Maintain health care services in geographic locations that are reasonably accessible to the uninsured population; (g) Complete partnerships-or coordination agreements with DC Public Schools, Commission of Mental Health, Department of Corrections; and (h) Resolve complaints and grievances to the satisfaction of the patient within reasonable timeframes,

The RFP will require bidders to provide a cap on reimbursement for District-funded services based on their itemized cost for specific services multiplied by the volume of each service presently being received by uninsured patients of the PBC. To the extent that total costs on an basis are lower than projected, the savings will be shared between the contractor and the District. To the extent volumes of services result in expenses above the contractor's total cap. District will provide additional reimbursement, at a lower rate per service, until the District's " cap on annual expenditures is reached. This cap wilt not be disclosed until after the bidding process is complete and will be consistent with the current multi-year financial plan and sec for the District of Columbia.

Two additional actions protecting the health of uninsured District residents will be completed. First, within the next 30 days, the PBC will submit a plan to the Financial Authority and the Mayor for ensuring that the services it currently provides will continue (either directly delivered or through contracting) with no degradation in quality, as interim personnel reductions (Including an initial 500 required by Congressional legislation) and service efficiency improvements proceed. Second, should the RFP process not produce a successful contractor by January 24, 2001, I , the Mayor, the Council, and the Financial authority will implement an alternative plan, that provides equivalent volumes and service types to those currently provided by the PBC for uninsured (district residents, by March 13, 2001. 

This restructuring plan fulfills the requirements in the District of Columbia Appropriations Act, 2001, and is the precursor for the transfer of up to $90 million from other non-federal funds to the Human Services appropriation for the purpose of restructuring the delivery of health services in the District of Columbia.

Adopted, this day of December 2000.

Alice M. Rivlin
Chair DC Financial Responsibility and Management Assistance Authority

Anthony A. Williams 
Mayor of the District of Columbia

Linda W. Cropp 
Chairman of the Council of the District of Columbia

Julius Hobson, Jr.
Chairperson, Board of Directors, PBC

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District of Columbia Financial Responsibility and Management Assistance Authority
441 4th Street. NW, Room 570, Washington, DC 20001, (202) 504-3400

(''AUTHORITY'')

RESOLUTION, RECOMMENDATIONS AND ORDERS CONCERNING THE PUBLIC BENEFIT CORPORATION 

WHEREAS, the mission of the District of Columbia Health and Hospitals Public Benefit Corporation (the "PBC"), including D.C. General Hospital ("D.C. General"), is to provide comprehensive community-centered health care to residents of the District of Columbia; 

WHEREAS, the PBC and D.C. General are operating in a manner inconsistent with the multiyear financial plan and budget of the District of Columbia in that the PBC and DC General are .generating, and are projected to continue to generate, operating deficits in excess of $64 million in Fiscal Year ("FY") 2001;

WHEREAS, the Chief Financial Officer of the District of Columbia (the "CFO") found that: 

"At its current rate of spending, PBC will exhaust its $45.3 million FY 2001 subsidy by the middle of March 2001. If money is set aside to maintain PBC's clinics throughout the fiscal year, D.C. General Hospital will be forced to close even sooner, perhaps by as early as two months from today. In either case, [the CFO] will be unable to redirect funds from any source to continue PBC operations unless a plan to restructure PBC is approved by Congress." (The CFO's Nov. 14, 2000 Memorandum attached as Exhibit A); 

WHEREAS, the CFO also projects that the PBC is currently deficit spending in excess of $6 million per month over its authorized appropriation and at this rate of spending will require in excess of $64 million in FY 2001 and in subsequent years may well require subsidies in excess of its legally appropriated funding level; 

WHEREAS, there is now agreement by all concerned parties that the continued expenditure of funds at this rate by the PBC and D.C. General will necessitate the closure of the PBC and D.C. General and loss of the health care services provided by them to the residents of the District of Columbia; 

WHEREAS, a delay in addressing these spending pressures could affect the ability of the District government to adhere to the overall FY 2001 District of Columbia Budget and Financial Plan;

WHEREAS, the District of Columbia Appropriations Act, 2001, Pub. L. 106-522 further requires:

"That notwithstanding any other provision of law, to augment the District of Columbia subsidy for the District of Columbia Health and Hospitals Public Benefit Corporation (PBC), the District may transfer from other non-Federal funds appropriated under this Act to the Human Support Services appropriation under this Act an amount not to exceed $90,000,000 for the purpose of restructuring the delivery of health services in the District: Provided further, That such restructuring shall be pursuant to a restructuring plan approved by the Mayor, the Council, the Authority, and the Board of Directors of the PBC: Provided further, That —

(1) the restructuring plan reduces personnel levels of D.C. General Hospital and of the PBC consistent with the reduction in force set forth in the August 25, 2000, resolution of the Board of Directors of the PBC regarding personnel structure, by reducing personnel by at least 500 fulltime equivalent employees, without replacement by contract personnel;

(2) no transferred funds are expended until 10 calendar days after the restructuring plan has received final approval and a copy evidencing final approval has been submitted by the Mayor to the. Committee on Government Reform of the House of Representatives, the Committee on Governmental Affairs of the Senate, and the Committees on Appropriations of the House of Representatives and the Senate; and

(3) the plan includes a certification that the plan does not request and does not rely upon any current or future request for additional appropriation of Federal funds." (Pub. L. 106-522, H.R. 5633, 106`11 Cong., 2 Sess., pg. 13 (Nov. 22, 2000)).

WHEREAS, the Mayor of the District of Columbia (the "Mayor"), the Council of the District of Columbia (the "Council"), and the Authority (collectively referred to as the "Parties") are jointly and diligently working to restructure and privatize certain services currently provided by the PBC and D.C. General by March 1, 2001, just in advance of the deadline for the exhaustion of the PBC's subsidy identified by the CFO;

WHEREAS, the process leading up to the restructuring and privatization of health care delivery by the PBC and D.C. General Hospital involves a complex contract bidding procedure which could easily be delayed past the subsidy exhaustion deadline identified by the CFO;

WHEREAS, the Authority anticipates that such a delay is possible, even likely, and deems it prudent to plan to act immediately to assure the uninterrupted delivery of health care services in the interim, while allowing the restructuring and privatization process to continue; and,

WHEREAS, in order to be able to act to assure the uninterrupted delivery of health care services in conformity with Federal and District law, including the FY 2001 D.C. Appropriations Act, the federal Anti-deficiency Act, and federal appropriations law, the Authority must act now to preserve its options in the event that the PBC restructuring and privatization process is not successfully completed prior to the exhaustion of the PBC's subsidy.

NOW, THEREFORE BE IT RESOLVED THAT:

RECOMMENDATIONS

1. The Authority recommends, pursuant to Section 207 of Public Law 104-8, that the Council, pursuant to its statutory authority under the Home Rule Act, repeal D.C. Act 13-454, "District of Columbia Health and Hospitals Public Benefit Corporation Emergency Amendment Act of 2000" (attached hereto as Exhibit B);

2. The Authority recommends, pursuant to Section 207 of Public Law 104-8, that the Council, pursuant to its statutory authority under the Home Rule Act, repeal D. C. Act 11-389, codified at Title 32 of the D.C. Code, §§ 261.1 and 262.1 through 262.20, et. seg.;

3. The Authority recommends, pursuant to Section 207 of Public Law 104-8, that the Council work with the Mayor to prepare and approve a plan to establish an alternative publiclyfinanced health care delivery system in the District of Columbia that a) is consistent with the current multi-year financial plan and budget for the District of Columbia, b) provides for equivalent volumes and types of services as currently provided by the PBC to uninsured District residents, and c) ensures that the services meet standards of quality and accessibility;

4. The Authority recommends, pursuant to Section 207 of Public Law 104-8, :r at the Council, pursuant to its statutory authority under the Home Rule Act, approve and/or enact legislation, regulations, and reprogrammings, and take any and all other actions necessary to authorize and implement an alternative publicly-financed health care delivery system;

5. The Authority recommends, pursuant to Section 207 of Public Law 104-8, that the Council, pursuant to its statutory authority under the Home Rule Act, act to approve the restructuring plan required by Public Law 106-522, which plan is to be submitted to by the Mayor to the Committees on Government Reform of the House of Representatives, the Committee on Governmental Affairs of the Senate, and the Committees on Appropriations of the House of Representatives and the Senate; and,

6. All of the above Recommendations must be enacted by the Council and approved by the Mayor within 90 calendar days of the adoption of these Recommendations and Orders by the Authority.

7. If the Council and the Mayor fail to adopt these Recommendations, pursuant to Section 207 of Public Law 104-8, the-Authority will enact and implement them in accordance with the provisions of Section 207 after consultation with the appropriate Committees of Congress.

ORDERS

It is further ORDERED, that, during the pendency of these Recommendations before the Council and the Mayor and until further Order of the Authority, the Authority:

1. Directs the Mayor to, exercising authority under Title 1, Chapter 2 of the District of Columbia Code, immediately prepare and submit a Reorganization Order to the Council by December 19, 2000, establishing an alternative publicly-financed health care delivery system in the District of Columbia consistent with the Recommendations issued hereunder and is a) consistent with the current multi-year financial plan and budget for the District of Columbia, b) provides for equivalent volumes and types of services currently provided by the PBC to uninsured District residents, and c) ensures that the services meet standards of quality and accessibility;

2. Directs the Mayor and the PBC to eliminate 500 full-time equivalent employees ("FTEs") in accordance with the FY 2001 D.C. Appropriations Act, P.L. 106522, and identify those health care services to be reduced and those to be eliminated to achieve the 500 FTE reduction (with supporting utilization data for the services to be reduced or eliminated and for the services to be retained). The Mayor and the PBC must: a) submit to the Authority by December 19, 2000, the 500 FTE positions identified for elimination, b) begin implementation of the personnel reductions and elimination of services by January 19, 2001, and c) complete implementation of the elimination of 500 FTE and reduction and elimination of services previously identified, by January 31, 2001;

3. Directs the PBC to comply with all appropriation law requirements and be vigilant in not violating the strictures of the Anti-deficiency Act, 31 U.S.C. 1341, et. seq .;
4. Directs the Mayor to authorize and approve contracts, personnel actions, expenditures, regulations, and reprogramming of funds, and take any and all other actions necessary to implement an alternative publicly-financed health care delivery system, including establishing by the dates identified in Order No. 2 above, a mechanism to secure services currently provided by the PBC and implementing changes that may be required with regard to emergency medical services and transportation.
5. Directs the CFO to identify to the Authority, the Mayor and the Council, by December 19, 2000, the funding resources and available sources needed to implement these Recommendations and Orders and the cost of the contracts necessitated by-the final restructuring and privatization process, consistent with the FY 2001 D.C. Appropriations Act, P.L. 106-522.

Alice M. Rivlin
Chair

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GOVERNMENT OF THE DISTRICT OF COLUMBIA
Office of the Chief Financial Officer

MEMORANDUM

DATE: November 14, 2000

RE: Urgent Need for Action in Regard to PBC

At our November 3, 2000 retreat I expressed my concern that unless decisive action is taken soon, the Public Benefit Corporation (PBC) will run out of cash. It is with the greatest urgency that I write to you now to reiterate that concern about the need for prompt action.

At its current rate of spending, PBC will exhaust its $=h_3 million FY 2001 subsidy by the middle of March 2001. If money is set aside to maintain PBC's clinics throughout the fiscal year, D.C. General Hospital will be forced to close even sooner, perhaps by as early as two months from today. In either case. I will be unable to redirect funds from any source to continue PBC operations unless a plan to restructure PBC is approved by Congress.

Under the FY 2001 appropriations act, Congress imposed conditions on any inter-appropriation transfer of funds to PBC. These conditions require the District to have an agreed upon restructuring plan for PBC that eliminates, at a minimum, 500 full time equivalent positions at .PBC; does not contemplate any additional expenditure of federal funds; and provides Congress with 10 days prior notice of any inter-appropriation transfer of funds.

No such plan has yet been formulated. Congress is expected to be in recess until December 5, 2000. It is anticipated that Congress will adjourn again shortly thereafter until late January or early February 2001, past the point at which PBC's cash would be exhausted. It is therefore imperative that any plan to restructure PBC be in place for Congress to consider upon its return from recess on December 5.

I also believe it would be prudent to formulate a contingency plan for closure of D.C. General Hospital in the event a plan to restructure PBC cannot be agreed upon in a timely manner.

In conclusion, decisive action must be taken now to ensure adequate, continued delivery of public health care services in the District.

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ENROLLED ORIGINAL

D.C. ACT 13-454