Chapter
336
2006 -- S 2741 SUBSTITUTE A
Enacted 07/05/06
A N A
C T
RELATING TO HEALTH
AND SAFETY -- HEALTH CARE SERVICES
Introduced By: Senators
Roberts, Perry, Sosnowski, and Gibbs
Date Introduced: February
14, 2006
It is
enacted by the General Assembly as follows:
SECTION
1. Sections 23-15-2, 23-15-4, 23-15-6 and 23-15-10 of the General Laws in
Chapter
23-15 entitled "Determination of Need for New Health Care Equipment and
New
Institutional
Health Services" are hereby amended to read as follows:
23-15-2.
Definitions. -- As used in this chapter:
(1) "Affected person" means and includes the person whose proposal is
being reviewed,
or the
applicant, health care facilities located within the state which provide institutional
health
services,
the state medical society, the state osteopathic society, those voluntary
nonprofit area-
wide
planning agencies that may be established in the state, the state budget
office, the office of
the
health insurance commissioner, any
hospital or medical service corporation organized under
the laws
of the state, the statewide health coordinating council, contiguous health
systems
agencies,
and those members of the public who are to be served by the proposed new
institutional
health
services or new health care equipment.
(2) "Cost impact analysis" means a written analysis of the effect
that a proposal to offer
or
develop new institutional health services or new health care equipment, if
approved, will have
on
health care costs and shall include any detail that may be prescribed by the
state agency in
rules
and regulations.
(3) "Director" means the director of the Rhode Island state
department of health.
(4) (i) "Health care facility" means any institutional health service
provider, facility or
institution,
place, building, agency, or portion of them, whether a partnership or
corporation,
whether
public or private, whether organized for profit or not, used, operated, or
engaged in
providing
health care services, which are limited to hospitals, nursing facilities,
inpatient
rehabilitation
centers (including drug and/or alcohol abuse treatment centers), and facilities
providing
surgical treatment to patients not requiring hospitalization (surgi-centers)
and inpatient
hospice
care. The term "health care facility" does not include Christian
Science institutions (also
known as
Christian Science nursing facilities) listed and certified by the Commission
for
Accreditation
of Christian Science Nursing Organizations/Facilities, Inc.
(ii) Any provider of hospice care who provides hospice care without charge
shall be
exempt
from the provisions of this chapter.
(5) "Health care provider" means a person who is a direct provider of
health care
services
(including but not limited to physicians, dentists, nurses, podiatrists,
physician assistants,
or nurse
practitioners) in that the person's primary current activity is the provision
of health care
services
for persons.
(6) "Health services" means organized program components for
preventive, assessment,
maintenance,
diagnostic, treatment, and rehabilitative services provided in a health care
facility.
(7) "Health services council" means the advisory body to the Rhode
Island state
department
of health established in accordance with chapter 17 of this title, appointed
and
empowered
as provided to serve as the advisory body to the state agency in its review
functions
under
this chapter.
(8) "Institutional health services" means health services provided in
or through health
care
facilities and includes the entities in or through which the services are
provided.
(9) "New health care equipment" means any single piece of medical
equipment (and any
components
which constitute operational components of the piece of medical equipment)
proposed
to be utilized by a health care provider (whether practicing alone or as a
member of a
partnership,
corporation, organization, or association) in conjunction with the provision of
services
to patients or the public, the capital costs of which would exceed one million
dollars
($1,000,000);
provided, however, that the state agency shall be exempt from review any
application
which proposes one for one equipment replacement as defined in regulation.
(10) "New institutional health services" means and includes:
(i) Construction, development, or other establishment of a new health care
facility.
(ii) Any expenditure except acquisitions of an existing health care facility
which will not
result
in a change in the services or bed capacity of the health care facility by or
on behalf of an
existing
health care facility in excess of two million dollars ($2,000,000) which is a
capital
expenditure
including expenditures for predevelopment activities.
(iii) Where a person makes an acquisition by or on behalf of a health care
facility or
health
maintenance organization under lease or comparable arrangement or through
donation,
which
would have required review if the acquisition had been by purchase, the
acquisition shall
be
deemed a capital expenditure subject to review.
(iv) Any capital expenditure which results in the addition of a health service
or which
changes
the bed capacity of a health care facility with respect to which the
expenditure is made,
except
that the state agency may exempt from review by rules and regulations
promulgated for
this
chapter any bed reclassifications made to licensed nursing facilities and
annual increases in
licensed
bed capacities of nursing facilities that do not exceed the greater of ten (10)
beds or ten
percent
(10%) of facility licensed bed capacity and for which the related capital
expenditure does
not
exceed two million dollars ($2,000,000).
(v) Any health service proposed to be offered to patients or the public by a
health care
facility
which was not offered on a regular basis in or through the facility within the
twelve (12)
month
period prior to the time the service would be offered, and which increases operating
expenses
by more than seven hundred and fifty thousand dollars ($750,000), except that
the state
agency
may exempt from review by rules and regulations promulgated for this chapter
any health
service
involving reclassification of bed capacity made to licensed nursing facilities.
(vi) Any new or expanded tertiary or specialty care service, regardless of
capital expense
or
operating expense, as defined by and listed in regulation, the list not to
exceed a total of twelve
(12)
categories of services at any one time.
(11) "Person" means any individual, trust or estate, partnership,
corporation (including
associations,
joint stock companies, and insurance companies), state or political
subdivision, or
instrumentality
of a state.
(12) "Predevelopment activities" means expenditures for architectural
designs, plans,
working
drawings and specifications, site acquisition, professional consultations,
preliminary
plans,
studies, and surveys made in preparation for the offering of a new
institutional health
service.
(13) "State agency" means the Rhode Island state department of
health.
(14) "To develop" means to undertake those activities which, on their
completion, will
result
in the offering of a new institutional health service or new health care
equipment or the
incurring
of a financial obligation, in relation to the offering of that service.
(15) "To offer" means to hold oneself out as capable of providing, or
as having the
means
for the provision of, specified health services or health care equipment.
23-15-4.
Review and approval of new health care equipment and new institutional
health
services. -- (a) No health care
provider or health care facility shall develop or offer new
health
care equipment or new institutional health services in Rhode Island, the
magnitude of
which
exceeds the limits defined by this chapter, without prior review by the health
services
council
and approval by the state agency; except that review by the health services
council may
be
waived in the case of expeditious reviews conducted in accordance with section
23-15-5, and
except
that health maintenance organizations which fulfill criteria to be established
in rules and
regulations
promulgated by the state agency with the advice of the health services council
shall be
exempted
from the review and approval requirement established in this section upon
approval by
the
state agency of an application for exemption from the review and approval
requirement
established
in this section which contain any information that the state agency may require
to
determine
if the health maintenance organization meets the criteria.
(b) No approval shall be made without an adequate demonstration of need by the
applicant
at the time and place and under the circumstances proposed, nor shall the
approval be
made
without a determination that a proposal for which need has been demonstrated is
also
affordable
by the people of the state.
(c) No approval of new institutional health services for the provision of
health services to
inpatients
shall be granted unless the written findings required in accordance with
section 23-15-
6(b)(6)
are made.
(d) Applications for determination of need shall be filed with the state agency
on a date
fixed by
the state agency together with plans and specifications and any other
appropriate data
and
information that the state agency shall require by regulation, and shall be
considered in
relation
to each other no less than once a year. A duplicate copy of each application
together with
all
supporting documentation shall be kept on file by the state agency as a public
record.
(e) The health services council shall consider, but shall not be limited to, the
following in
conducting
reviews and determining need:
(1) The relationship of the proposal to state health plans that may be
formulated by the
state
agency;
(2) The impact of approval or denial of the proposal on the future viability of
the
applicant
and of the providers of health services to a significant proportion of the
population
served
or proposed to be served by the applicant;
(3) The need that the population to be served by the proposed equipment or
services has
for the
equipment or services;
(4) The availability of alternative, less costly, or more effective methods of
providing
services
or equipment, including economies or improvements in service that could be
derived
from
feasible cooperative or shared services;
(5) The immediate and long term financial feasibility of the proposal, as well
as the
probable
impact of the proposal on the cost of, and charges for, health services of the
applicant;
(6) The relationship of the services proposed to be provided to the existing
health care
system
of the state;
(7) The impact of the proposal on the quality of health care in the state and
in the
population
area to be served by the applicant;
(8) The availability of funds for capital and operating needs for the provision
of the
services
or equipment proposed to be offered;
(9) The cost of financing the proposal including the reasonableness of the
interest rate,
the
period of borrowing, and the equity of the applicant in the proposed new
institutional health
service
or new equipment;
(10) The relationship, including the organizational relationship of the
services or
equipment
proposed, to ancillary or support services;
(11) Special needs and circumstances of those entities which provide a
substantial
portion
of their services or resources, or both, to individuals not residing within the
state;
(12) Special needs of entities such as medical and other health professional
schools,
multidisciplinary
clinics, and specialty centers; also, the special needs for and availability of
osteopathic
facilities and services within the state;
(13) In the case of a construction project:
(i) The costs and methods of the proposed construction, and
(ii) The probable impact of the construction project reviewed on the costs of
providing
health
services by the person proposing the construction project;
(14) Those appropriate considerations that may be established in rules and
regulations
promulgated
by the state agency with the advice of the health services council;
(15) The potential of the proposal to demonstrate or provide one or more
innovative
approaches
or methods for attaining a more cost effective and/or efficient health care
system;
(16) The relationship of the proposal to the need indicated in any requests for
proposals
issued
by the state agency;
(17) The input of the community to be served by the proposed equipment and
services
and the people
of the neighborhoods close to the health care facility who are impacted by the
proposal;
(18) The relationship of the proposal to any long-range capital improvement
plan of the
health
care facility applicant.
(19)
Cost impact statements forwarded pursuant to subsection 23-15-6(e).
(f) In conducting its review, the health services council shall perform the
following:
(1) Within one hundred and fifteen (115) days after initiating its review,
which must be
commenced
no later than thirty-one (31) days after the filing of an application, the
health services
council
shall determine as to each proposal whether the applicant has demonstrated need
at the
time and
place and under the circumstances proposed, and in doing so may apply the
criteria and
standards
set forth in subsection (e) of this section; provided however, that a
determination of
need
shall not alone be sufficient to warrant a recommendation to the state agency
that a proposal
should
be approved. The director shall render his or her decision within five (5) days
of the
determination
of the health services council.
(2) Prior to the conclusion of its review in accordance with section
23-15-6(e), the health
services
council shall evaluate each proposal for which a determination of need has been
established
in relation to other proposals, comparing proposals with each other, whether
similar
or not,
establishing priorities among the proposals for which need has been determined,
and
taking
into consideration the criteria and standards relating to relative need and
affordability as
set forth
in subsection (e) of this section and section 23-15-6(f).
(3) At the conclusion of its review, the health services council shall make
recommendations
to the state agency relative to approval or denial of the new institutional
health
services
or new health care equipment proposed; provided that:
(i) The health services council shall recommend approval of only those
proposals found
to be
affordable in accordance with the provisions of section 23-15-6(f); and
(ii) If the state agency proposes to render a decision that is contrary to the
recommendation
of the health services council, the state agency must render its reasons for
doing
so in
writing.
(g) Approval of new institutional health services or new health care equipment
by the
state
agency shall be subject to conditions that may be prescribed by rules and
regulations
developed
by the state agency with the advice of the health services council, but those
conditions
must relate
to the considerations enumerated in subsection (e) and to considerations that
may be
established
in regulations in accordance with subsection (e)(14).
(h) The offering or developing of new institutional health services or health
care
equipment
by a health care facility without prior review by the health services council
and
approval
by the state agency shall be grounds for the imposition of licensure sanctions
on the
facility,
including denial, suspension, revocation, or curtailment or for imposition of
any
monetary
fines that may be statutorily permitted by virtue of individual health care
facility
licensing
statutes.
(i) No government agency and no hospital or medical service corporation
organized
under
the laws of the state shall reimburse any health care facility or health care
provider for the
costs
associated with offering or developing new institutional health services or new
health care
equipment
unless the health care facility or health care provider has received the approval
of the
state
agency in accordance with this chapter. Government agencies and hospital and
medical
service
corporations organized under the laws of the state shall, during budget
negotiations, hold
health
care facilities and health care providers accountable to operating efficiencies
claimed or
projected
in proposals which receive the approval of the state agency in accordance with
this
chapter.
(j) In addition, the state agency shall not make grants to, enter into
contracts with, or
recommend
approval of the use of federal or state funds by any health care facility or
health care
provider
which proceeds with the offering or developing of new institutional health
services or
new
health care equipment after disapproval by the state agency.
23-15-6.
Procedures for review. -- (a) The state agency, with the advice of the
health
services
council, and in accordance with the Administrative Procedures Act, chapter 35
of title
42,
after public hearing pursuant to reasonable notice, which notice shall include
affected persons,
shall
promulgate appropriate rules and regulations that may be designated to further
the
accomplishment
of the purposes of this chapter including the formulation of procedures that
may
be
particularly necessary for the conduct on reviews of particular types of new
institutional health
services
or new health care equipment.
(b) Review procedures promulgated in accordance with subsection (a) shall
include at
least
the following, except that substitute procedures for the conduct of expeditious
and
accelerated
reviews may be promulgated by the state agency in accordance with section
23-15-5:
(1) Provision that the state agency established a process requiring
potential applicants to
file
a detailed letter of intent to submit an application at least forty-five (45)
days prior to the
submission
of an application and that the state
agency shall undertake reviews in a timely fashion
no less
often than twice a year and give written notification to affected persons of
the beginning
of the
review including the proposed schedule for the review, the period within which
a public
meeting
may be held, and the manner by which notification will be provided of the time
and place
of any
public meeting so held.
(2) Provision that no more than one hundred and twenty (120) days shall elapse
between
initial
notification of affected persons and the final decision of the state agency.
(3) Provision that, if the state agency fails to act upon an application within
the
applicable
period established in subsection (b)(2), the applicant may apply to the
superior court of
Providence
County to require the state agency to act upon the application.
(4) Provision for review and comment by the health services council and any
affected
person,
including but not limited to those parties defined in section 23-15-2(1) and
the department
of
business regulation, the department of mental health, retardation, and
hospitals, the department
of human
services, health maintenance organizations, and the state professional
standards review
organization,
on every application for the determination of need.
(5) Provision that a public meeting may be held during the course of the state
agency
review
at which any person may have the opportunity to present testimony. Procedures
for the
conduct
of the public meeting shall be established in rules and regulations promulgated
by the
state
agency with the advice of the health services council.
(6) (i) Provision for issuance of a written decision by the state agency which
shall be
based
upon the findings and recommendations of the health services council unless the
state
agency
shall afford written justification for variance from that decision.
(ii) In the case of any proposed new institutional health service for the
provision of
health services
to inpatients, a state agency shall not make a finding that the proposed new
institutional
health service is needed, unless it makes written findings as to:
(A) The efficiency and appropriateness of the use of existing inpatient
facilities
providing
inpatient services similar to those proposed;
(B) The capital and operating costs (and their potential impact on patient
charges),
efficiency,
and appropriateness of the proposed new institutional health services; and
(C) Makes each of the following findings in writing:
(I) That superior alternatives to inpatient services in terms of cost,
efficiency, and
appropriateness
do not exist and that the development of alternatives is not practicable;
(II) That, in the case of new construction, alternatives to new construction
(e.g.,
modernization
or sharing arrangements) have been considered and implemented to the maximum
extent
practicable;
(III) That patients will experience serious problems in terms of costs,
availability, or
accessibility,
or any other problems that may be identified by the state agency, in obtaining
inpatient
care of the type proposed in the absence of the proposed new service; and
(IV) That, in the case of a proposal for the addition of beds for the provision
of skilled
nursing
or intermediate care, the relationship of the addition to the plans of other
agencies of the
state
responsible for providing and financing long-term care (including home health
services) has
been
considered.
(7) Provision for the distribution of the decision of the state agency,
including its
findings
and recommendations, to the applicant and to affected persons.
(8) Provision that the state agency may approve or disapprove in whole or in
part any
application
as submitted, but that the parties may mutually agree to a modification of any
element
of an
application as submitted, without requiring resubmission of the application.
(9) (i) Provision that any person affected may request in writing reconsideration
of a
state
agency decision if the person:
(A) Presents significant relevant information not previously considered by the
state
agency;
(B) Demonstrates that there have been significant changes in factors or
circumstances
relied upon
by the state agency in reaching its decision;
(C) Demonstrates that the state agency has materially failed to follow its
adopted
procedures
in reaching its decision; or
(D) Provides any other basis for reconsideration that the state agency may have
determined
by regulation to constitute good cause.
(ii) Procedures for reconsideration shall be established in regulations
promulgated by the
state
agency with the advice of the health services council.
(10) Provision that upon the request of any affected person, the decision of
the state
agency
to issue, deny, or withdraw a certificate of need or to grant or deny an
exemption shall be
administratively
reviewed under an appeals mechanism provided for in the rules and regulations
of the
state agency, with the review to be conducted by a hearing officer appointed by
the director
of
health. The procedures for judicial review shall be in accordance with the
provisions of section
42-35-15.
(c) The state agency shall publish at least annually a report of reviews of new
institutional
health services and new health care equipment conducted, together with the
findings
and
decisions rendered in the course of the reviews. The reports shall be published
on or about
February
1 of each year and shall contain evaluations of the prior year's statutory
changes where
feasible.
(d) All applications reviewed by the state agency and all written materials
pertinent to
state
agency review, including minutes of all health services council meetings, shall
be accessible
to the
public upon request.
(e) In the case or review of proposals by health care facilities who by
contractual
agreement,
chapter 19 of title 27, or other statute are required to adhere to an annual
schedule of
budget
or reimbursement determination to which the state is a party, the state budget
office, the
office
of the health insurance commissioner,
and hospital service corporations organized under
chapter
19 of title 27 shall forward to the health services council within forty-five
(45) days of the
initiation
of the review of the proposals by the health services council under section
23-15-
4(f)(1):
(1) A cost impact analysis of each proposal which analysis shall include, but
not be
limited to,
consideration of increases in operating expenses, per diem rates, health care
insurance
premiums,
and public expenditures; and
(2) Comments on acceptable interest rates and minimum equity contributions
and/or
maximum
debt to be incurred in financing needed proposals.
(f) The health services council shall not make a recommendation to the state
agency that
a
proposal be approved unless it is found that the proposal is affordable to the
people of the state.
In
determining whether or not a proposal is affordable, the health service council
shall consider
the
condition of the state's economy, the statements of authorities and/or parties
affected by the
proposals,
and any other factors that it may deem appropriate.
23-15-10.
Application fees. -- The state agency shall require that any applicant
for
certificate
of need submit an application fee prior to requesting any review of matters
pursuant to
the
requirements of this chapter; except that health care facilities owned and
operated by the state
of Rhode
Island shall be exempt from this application fee requirement. The application
fee shall
be paid
by check made payable to the general treasurer. The Except for
applications that propose
new
or expanded tertiary or specialty care services as defined in subdivision
23-15-2(10)(vi),
submission
of any application filed in accordance with section 23-15-4(d) shall include an
application
fee of five hundred dollars ($500) per application plus an amount equal to one third
quarter of one percent (0.33%) (0.25%) of the
total capital expenditure costs associated with the
application.
For an application filed in accordance with the requirements of section 23-15-5
(Expeditious
review), the application shall include an application processing fee of seven
hundred
and
fifty dollars ($750) per application plus an amount equal to one third quarter
of one percent
(0.33%) (0.25%) of the total capital expenditure costs
associated with the application.
Applications
that propose new or expanded tertiary or specialty care services as defined in
subdivision
23-15-2(10)(vi), shall include an application fee of ten thousand dollars
($10,000)
plus
an amount equal to one quarter of one percent (0.25%) of the total capital
expenditure costs
associated
with the application. Application
fees shall be non-refundable. All fees received
pursuant
to this chapter shall be deposited in the general fund.
SECTION
2. Chapter 23-15 of the General Laws entitled "Determination of Need for
New Health
Care Equipment and New Institutional Health Services" is hereby amended by
adding
thereto the following section:
23-15-11.
Reports, use of experts, all costs and expenses. -- The state agency
may
in
effectuating the purposes of this chapter engage experts or consultants
including, but not
limited
to, actuaries, investment bankers, accountants, attorneys, or industry
analysts. Except
for
privileged or confidential communications between the state agency and engaged
attorneys,
all copies of final reports prepared by experts and consultants, and all costs
and
expenses
associated with the reports, shall be public. All costs and expenses incurred
under
this
provision shall be the responsibility of the applicant in an amount to be
determined by
the
director as he or she shall deem appropriate. No application made pursuant to
the
requirements
of this chapter shall be considered complete unless an agreement has been
executed
with the director for the payment of all costs and expenses in accordance with
this
section.
The maximum cost and expense to an applicant for experts and/or consultants
that may
be
required by the state agency shall be twenty thousand dollars ($20,000);
provided however,
that
the maximum amount shall be increased by regulations promulgated by the state
agency on
or
after January 1, 2008 by the most recently available annual increase in the
federal consumer
price
index as determined by the state agency.
SECTION
3. This act shall take effect upon passage.
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LC01736/SUB A/2
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