WV Center on Budget and Policy > Blog > Transparency and Accountablity

West Virginia’s Top Medicare Billers

The Centers for Medicare and Medicaid Services (CMS) announced the release of a bunch of Medicare data today, the biggest release in CMS history, in fact.  The data include information for nearly 900,000 distinct health care providers across the country who received over $77 billion in Medicare payments in 2012.  This is the second big step in Medicare transparency in the past year as this release comes on the heels of last May’s release of the cost of the most common in-patient procedures at every hospital around the country.

What makes these data so interesting and potentially useful is that they include payment information broken down by individual physician and the services they provided. 

The Wall Street Journal has a neat user-friendly database of the top 200 providers in each state. Playing around with the data shows a few noteworthy trends in West Virginia.  For example, five of the 10 providers who received the most Medicare payments were ambulance service providers.  This was led by the Kanawha County Emergency Ambulance Authority, which received $6.3 million in Medicare payments. Of individual providers, we’re able to see that the physician in West Virginia with the most Medicare payments was Dr. Craig Morgan, an ophthalmologist in Huntington who received almost $5 million in Medicare reimbursement.

Table 1: The 20 health care providers, by type, in West Virginia receiving the most in Medicare payments in 2012

Top 20 Medicare Providers in WV

Ophthalmology and oncology are the two medical specialties receiving the most Medicare dollars in West Virginia, in line with national trends. Specialties that, as the Wall Street Journal notes, were singled out by the inspector general of the Department of Health and Human Services urging greater scrutiny of doctors receiving large Medicare payments. In all, fourteen physicians in West Virginia received more than $1 million in Medicare payments in 2012.

Table 2: These 20 physicians received the most in Medicare payments in West Virginia in 2012

Top 20 Medicare Physicians WV

While it’s important to recognize that this is simply raw data and there is no context of patients’ diagnoses or reasons for treatment, it’s a huge step forward in providing consumers (and researchers) more transparency. It should also help push physicians to reconsider low-value, high-cost procedures or to choose cheaper, generic alternatives instead of costlier brand name drugs.

Property Tax Incentives Growing Costly

An article in Sunday’s in Wheeling’s Intelligencer/News Register highlighted the growing cost of the state’s business property tax incentives. The Marcellus Gas and Manufacturing Development Act of 2011 created a special tax preference for manufacturing facilities involved with natural gas liquids products (the famous “cracker bill” was an expansion of this legislation).

The tax incentive gives a property tax break to businesses that make a capital addition of at least $10 million to a manufacturing facility with an original cost of $20 million, if the facility processes natural gas. The incentive allows the capital addition to be appraised at its salvage value (5%) for 10 years for property tax purposes, rather than at the normal 100% of market value. This dramatically lowers the property tax bill of a qualifying business.

According to the fiscal note on the bill, the tax incentive “will have little or no direct effect on Property Tax revenue” and that any potential forgone revenue is “estimated to be less than $500,000.”

While the fiscal note projected minimal forgone revenue, Marshall County is missing out on millions already, with its booming natural gas industry. According to the Marshall County Assessor, $916 million worth of construction will qualify for the incentive in 2014. Normally, $549.6  million (60% of appraised value) would be taxable. Instead, the assessed value will only be $27.5 million, due to the salvage value treatment.

So, instead of paying $12.1 million in property taxes, the affected companies will only pay about $603,000. That means Marshall County will lose out on over $2 million in property tax revenue, while Marshall County Schools will miss out $4 million from their regular levy, and $4.7 million from their excess levy. And the forgone school revenue means the state is paying an extra $3.3 million through the school aid formula.

The development of the Marcellus Shale hasn’t been without its costs, and those costs can’t be addressed if those benefiting from the resource don’t help pay them. And what was once thought to be a minor tax break is now costing just one county millions of dollars in lost revenue. And this tax incentive is going to companies worth billions of dollars, who are coming to West Virginia because we have a resource that they want, not because of a tax break. A $12 million tax break isn’t going to be the deciding factor for businesses that have already made billions in investments in the state, and want to be located where the natural gas is located. However, it can be the difference in whether or not we balance the budget, or keep our libraries open, or hire new teachers.

Alternative Fuel Tax Credit Isn’t the State’s Only Tax Giveaway

This weekend’s Charleston Gazette included another article lamenting the lost revenue from the alternative vehicle tax credit. When the tax credit was scaled back this past legislative session, it resulted in a rush of people claiming the credit before they become ineligible, pushing up its cost. Now, Deputy Revenue Secretary Mark Muchow thinks that the tax credit may eventually cost the state $100 million.

Muchow claims that the tax credit caught the department by surprise, since the fiscal note they prepared for the original bill did not reflect changes to the final bill, nor did they expect an increase in claims from its pending repeal, since they anticipated it to save the state $10 million (perhaps some fiscal note reform is in order).

While the revenue loss from the alternative vehicle tax credit has garnered plenty of attention lately, Ken Ward, Jr. of the Gazette asks why isn’t the state media concerned about other tax policies that cost the state just as much in revenue each year. Ward highlights the tax preference for thin-seam coal, which enjoys a reduced severance tax rate. This tax expenditure cost the state $75 million in 2011 alone, and has been growing every year.

The state gives away millions in tax credits and incentives each year, that not only go unremarked on by the media, but by state officials themselves.  The problem is, not only do we not know how many or much is given away, we don’t know if the tax cuts are doing their job. West Virginia does very little to keep track of or evaluate its tax incentives. Considering the state’s track record when this lack of transparency is called to light, it’s a wonder that any action was taken to end the alternative vehicle tax credit.

Maybe the tax credit was too expensive to ignore, but $100 million over three years is still less than the $75 million per year from the thin-seam tax preference, or the $190 million per year that the cuts to the corporate net income and business franchise tax cuts will cost the state, and there is no sign of action on them, despite continuing budget problems.

Writing better fiscal notes, keeping better track of tax expenditures, and repealing them when they do too much harm to the state budget are all good things. But it makes little sense to go after one particular example, blame it for the state’s woes, and turn a blind eye to all the others.

Can the Legislature Override the Governor’s Vetoes? Yes, But No

Late last week, the governor vetoed several pieces of legislation. Meanwhile, for the first time in several years, he did not issue any budget vetoes. As Sean and I pointed out here, the governor in West Virginia has extraordinary power compared to other states. In fact, the people of the state grant West Virginia’s governor more budget power than any state except Maryland. Overall, gubernatorial power in West Virginia is second highest in the nation, according to political scientist Thad Beyle.

The governor also has a lot of power when it comes to vetoes.  This is because the legislature has little recourse due to the timing of gubernatorial vetoes. Typically, the governor vetoes bills and budget line items two weeks after the conclusion of the 60-day legislative session and the additional special session called to pass the budget. By this time, all of the legislators are out of town. To override the governor’s vetoes  –  according to Article 6-19 of the state constitution – three-fifths of the members elected to each house need to agree to do so and send a letter to the governor requesting a special session.   While the strong Democratic control of the legislature and executive may be partly why vetoes are rarely overridden, it is also very difficult to get super majorities of both houses to agree on confronting the governor.

What does all of this mean? It means that if you want to implement policy in West Virginia, you better have the governor on board. No support from the Governor, no policy change. It might be that simple.

Job Impact Statements: Can They Work?

On Tuesday the Senate passed SB 187  that would require the Commerce Department to create a jobs impact statement or study on proposed legislation that could impact the state’s economy.  The price tag from the commerce department is $262,000 per year, enough to add two additional staff to its Research Unit to prepare these statements. (The price tag could increase since an amendment was added to allow the governor or three-member panels of either the House and Senate to request a jobs impact study.)

While the debate surrounding the legislation focused on who can request the analysis, it sidesteps the more important question of whether or not somewhat definitive estimates of the jobs impact of bills can actually be done. If legislation like this were to be enacted, the resultant impact analyses would be somewhat official and thus deserving of some deference by legislators. To me, that sounds like a very risky situation, especially when the head of the Commerce Department says  publicly that none of his researchers have the expertise to do such analyses.

As Jared Hunt emphasized in an business column last month, if the state’s track record at producing accurate fiscal notes is any indication of how accurate the jobs impact analysis from the Commerce Department will be then we might be better to just use a Magic 8 ball.

A jobs impact statement has been championed by WV Chamber of Commerce for years. while environmental groups think its a back-door way to kill regulations. One reason why environmental groups may be skeptical about the legislation stems from a Marshall University analysis conducted by CEBR done over a decade ago on the economic impact of changes to surface mine permitting. The CEBR report was politically motivated and it was heavily questioned by a competing economic impact analysis conducted by the EPA. 

While many states conduct economic impact analysis of legislation, very few look specifically at whether legislation creates or destroys jobs. While a jobs impact analysis could be good tool for deciphering the impact of legislation on the state’s economy, it could be greatly improved if it expanded the scope of analysis to include other impacts and that there are assurances that the analysis is objective and evidence driven.  For example, a jobs impact statement should not just show the number of jobs created by tax credits, but also the strain it would put on state and local government services by the forgone revenue.

Beyond expanding the scope of analysis, it would be much better if the analysis was conducted by a respected and objective agency that does not benefit from the implications of the legislation (e.g. the Commerce Department uses tax credits and EDA loans to attract business and it not a source of objective interpretation of these programs). For example,  the state could join the other 40 states that have a independent legislative fiscal office and they could conduct the jobs impact statements.  That way, the public and the legislature could be reassured that the jobs impact analysis is unbiased and objective and it could also improve the fiscal notes that are the cause of so much frustration at the Capitol.