It is enacted by the General Assembly as follows:

SECTION 1. Sections 27-19-14 and 27-19-15 of the General Laws in Chapter 27-19 entitled "Nonprofit Hospital Service Corporations" are hereby amended to read as follows:

{ADD 27-19-14. Negotiation of hospital cost. -- ADD} The state, acting through the budget officer or his or her designated representative, hospitals and hospital service corporations incorporated under this chapter of the general laws shall be parties to annual budget negotiations held for the purpose of determining payment rates for hospital costs by the state and such corporations. The parties to the negotiations shall know the total operating expenses for hospitals. The negotiations shall commence no later than one hundred eighty (180) days prior to the beginning of each hospital fiscal year {DEL and when the state department of health shall determine that the minimum CONCAP may be exceeded pursuant to section 23-15-6(g) shall also establish a certificate of need capital expenditure maximum limit (CONCAP). CONCAP negotiations shall be initiated contemporaneously with the initiation of the CONCAP batching cycle. The CONCAP shall be an annual dollar limit on interest and depreciation expenses associated with all hospital capital projects requiring certificate of need approval. The percentage of the limit established on hospitals' total operating expenses which is allocated for capital projects requiring certificate of need approval shall be expressed as a specific dollar amount for submission to the health services council. DEL} The negotiations which shall be considered collective bargaining for purposes of section 42-46-5(a)(2), shall be held for each hospital fiscal year and individual budget negotiations shall commence not later than ninety (90) days prior to the beginning of each hospital fiscal year. {DEL The negotiations shall consider the performance of the states economy as one guideline and other hospital operating expenses as another guideline in establishing the CONCAP. DEL} The parties shall employ mediation and arbitration services as an aid to the negotiations.

{ADD 27-19-15. Agreement on budgets. -- ADD} The budgets and/or each hospital's projected expenses and related statistics shall be agreed upon not later than thirty (30) days prior to the beginning of each hospital fiscal year. The agreement shall be prima facie evidence that the budgets and related statistics are (1) consistent with the proper conduct of the business of such corporations and the interest of the public to the extent that the budgets constitute in the aggregate a component of hospital service rates filed for approval in any rate hearing, and (2) reasonable as a component of rates paid by the state as a purchaser of hospital services.

{DEL The state budget office shall provide the general assembly with an annual report on negotiated and actual hospital expenditures during the past year and the projected expenses and CONCAP for the coming year, together with a description of the major considerations which went into formulating the projected expenses. DEL} Each hospital shall file its proposed budget to the state budget office which shall include projected expenses for the current fiscal year and planned expenses for the next fiscal year. Each hospital will also file with the state budget office a copy of its audited financial statements with rates within thirty (30) days of acceptance by the hospital's board of trustees.

SECTION 2. Section 23-15-6 of the General Laws in Chapter 23-15 entitled "Determination of Need for New Health Care Equipment and New Institutional Health Services" is hereby amended to read as follows:

{ADD 23-15-6. Procedures for review. -- ADD} (a) The state agency, with the advice of the health services council, and in accordance with the administrative procedures act after public hearing pursuant to reasonable notice, which notice shall include affected persons, shall promulgate such rules and regulations as may be designated to further the accomplishment of the purposes of this chapter including the formulation of such procedures as 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) above shall include at least the following, except that substitute procedures for the conduct of expeditious reviews may be promulgated by the state agency in accordance with section 23-15-5 herein.

(1) Provision 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 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 {DEL and whether in accordance with section 23-15-6(g) herein, a CONCAP shall be negotiated DEL} .

(2) Provision that no more than one hundred twenty (120) days shall elapse between initial notification of affected persons and the final decision of the state agency. {DEL In the case of 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, schedules for reviews of applications potentially affecting the determination shall be compatible therewith. DEL}

(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(14) 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)(A) 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 therefrom.

(B) 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:

(i) The efficiency and appropriateness of the use of existing inpatient facilities providing inpatient services similar to those proposed; and

(ii) The capital and operating costs (and their potential impact on patient charges), efficiency, and appropriateness of the proposed new institutional health services; and

(iii) 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 have been implemented to the maximum extent practicable;

(III) That patients will experience serious problems in terms of costs, availability, or accessibility, or such other problems as 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) 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; or

(B) Demonstrates that there have been significant changes in factors or circumstances relied upon by the state agency in reaching its decision; or

(C) Demonstrates that the state agency has materially failed to follow its adopted procedures in reaching its decision; or

(D) Provides such other basis for reconsideration as the state agency may have determined by regulation to constitute good cause.

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) Health care facilities and health care providers shall provide periodic reports in such form or manner as shall be established in rules and regulations promulgated by the state agency with the advice of the health services council, which reports shall detail the long and short range plans of the health care facility or health care provider antecedent to the development of proposals for offering or developing new institutional health services and new health care equipment, which plans may be considered to fulfill the requirement of a letter of intent in the case of construction projects. The long and short range plans individually and collectively so provided shall form the initial basis for determinations by the health services council of the relative priorities of the various proposals to be submitted in the course of the ensuing year, in the context of overall projected budgets, the state health system plan, the annual implementation plan, and such capital and operating budgeting mechanisms as may be formulated to which the state and health care facilities or health care providers may be parties.

(d) 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.

(e) 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.

(f) In the case of review of proposals by health care facilities who by contractual agreement, chapter 27-19 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 and hospital service corporations organized under chapter 27-19 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(e)(1) herein:

(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.

{DEL (g)(1) If upon written notification to affected persons of the beginning of review of proposals submitted by parties to annual schedules of budget or payment determinations to which the state is a party and to which health care facilities are required by contractual agreement under, chapter 19 of title 27, or other statute to adhere to, the state agency determines that the annualized expense for depreciation and interest associated with all hospital capital projects included in that cycle, exceeds four tenths of one percent (.4%) of the aggregate total operating expense incurred by all hospitals subject to section 27-19-14 during the immediately preceding fiscal year (the minimum CONCAP), the CONCAP negotiation procedures set forth herein shall apply as follows:

(2) Within seventy-five (75) days of the initiation of the review of such proposals, parties to annual schedules of a budget or reimbursement determination to which the state is a party and to which health care facilities are required by contractual agreement under, chapter 27-19, or other statute to adhere to, shall upon agreement by the parties forward to the health services council statements of the maximum aggregate increase in interest and depreciation costs associated with implementation of needed proposals which can be afforded; provided, however, that when the parties are unable to reach agreement regarding the maximum aggregate increase within thirty (30) days of the initial notification of affected persons of the initiation of the certificate of need review process, they shall employ mediation and arbitration services as an aid to the negotiations in order to reach agreement within seventy-five (75) days of the initiation of the certificate of need review process. Should the parties fail to provide the health services council with a statement of the maximum aggregate increase in interest and depreciation costs associated with implementation of needed proposals which can be afforded within seventy-five (75) days of the initiation of the review process, the state agency shall not make any decisions on any proposal which is subject to the provision of this subsection (g) and which has been included in that respective review cycle.

(h) DEL} {ADD (g) ADD} 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 such other factors as it may deem appropriate {DEL ; provided however, that:

(1) In the case of proposals by health care facilities referred to in subsection (g) of this section the health services council shall not find the proposal to be affordable if approval of the proposal, given its relative priority, would cause the maximum increase in interest and depreciation costs (the limit) set forth under subsection (g) to be exceeded, and

(2) The health services council need not exhaust the limit set forth in subsection (g) in making recommendations of approval of proposals to which the limit applies DEL} .

SECTION 3. This act shall take effect upon passage.