H.F. _____ Section 1. Section 135.61, Code 2016, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 21A. “Rural area” means any of the 3 following: 4 a. A county with a population of less than fifty thousand 5 persons. 6 b. A geographic area outside an urban or suburban setting 7 which, due to its location, requires at least twenty minutes 8 of travel time on normally traveled roads under normal traffic 9 conditions between institutional health facilities of the same 10 type. 11 Sec. 2. Section 135.62, subsection 2, paragraph f, 12 subparagraph (1), Code 2016, is amended to read as follows: 13 (1) Make the final decision, as required by section 135.69 , 14 with respect to each uncontested application for a certificate 15 of need accepted by the department. 16 Sec. 3. Section 135.63, subsection 2, Code 2016, is amended 17 by adding the following new paragraph: 18 NEW PARAGRAPH . q. An institutional health facility 19 constructed, renovated, relocated, or otherwise offered or 20 developed in a rural area. 21 Sec. 4. Section 135.64, subsection 1, unnumbered paragraph 22 1, Code 2016, is amended to read as follows: 23 In determining whether a certificate of need shall be 24 issued, the department and council , and the administrative 25 law judge with respect to a contested application pursuant to 26 section 135.66A, shall consider the following: 27 Sec. 5. Section 135.64, subsection 1, paragraph r, Code 28 2016, is amended to read as follows: 29 r. The recommendations of staff personnel of the department 30 assigned to the area of certificate of need, concerning 31 the application, if requested by the council , or by the 32 administrative law judge pursuant to section 135.66A . 33 Sec. 6. Section 135.64, subsection 2, unnumbered paragraph 34 1, Code 2016, is amended to read as follows: 35 -1- LSB 5538YC (5) 86 pf/nh 1/ 6

H.F. _____ In addition to the findings required with respect to any 1 of the criteria listed in subsection 1 of this section , the 2 council shall grant or the administrative law judge pursuant to 3 section 135.66A may approve an application for a certificate 4 of need for a new institutional health service or changed 5 institutional health service only if it the council or the 6 administrative law judge finds in writing, on the basis of data 7 submitted to it by the department, that: 8 Sec. 7. NEW SECTION . 135.66A Contested application 9 procedure. 10 1. After formal review of an application for a certificate 11 of need has been initiated and notification has been made 12 pursuant to section 135.66 and prior to any final decision 13 on the application, any affected party or affected party’s 14 designated representative may contest the application by 15 filing a petition with the department for a hearing on the 16 application. The hearing shall be a contested case proceeding 17 subject to all of the provisions of chapter 17A applicable to 18 contested cases, unless otherwise specified in this section. 19 a. A party contesting the application may petition the 20 department for a contested case hearing under this section by 21 submitting a written request to the director within fifteen 22 days of the date of public notification of formal review 23 pursuant to section 135.66, subsection 2. Any petition 24 filed after the fifteen-day period shall not be accepted and 25 the department shall not have jurisdiction to consider such 26 petition. 27 b. Upon receipt of a timely filed petition, the department 28 shall immediately forward the petition to the department of 29 inspections and appeals for assignment to an administrative law 30 judge. 31 c. A contested case proceeding under this section shall 32 be heard and presided over by an administrative law judge 33 sitting alone. The administrative law judge shall conduct the 34 proceedings as a matter of first impression subject to de novo 35 -2- LSB 5538YC (5) 86 pf/nh 2/ 6

H.F. _____ review. 1 d. The subject of the contested case proceeding shall be 2 limited to a single application and shall not concern the 3 merits of any other pending application of the same applicant. 4 e. The administrative law judge shall convene the parties 5 for a scheduling conference within fifteen days of the date 6 the petition was filed. During the scheduling conference, 7 each party shall state the party’s position regarding the 8 alternative of mediation as provided in paragraph “g” . If 9 the parties do not agree to mediation, the hearing shall be 10 scheduled to allow for completion of the proceedings within one 11 hundred eighty days from the date the petition was filed, with 12 an initial decision to be entered within sixty days of the date 13 of completion of the hearing. Extensions of or variances in 14 the scheduling shall only be made if substantial prejudice to a 15 party would otherwise result. 16 f. The administrative law judge shall enter a proposed 17 decision within thirty days of the date of the initial 18 decision. Following entry of the proposed decision, the 19 decision shall become a final decision unless a party appeals 20 to the department within the time frames established in and in 21 accordance with section 17A.15. If the department declines to 22 hear an appeal on a proposed decision, the proposed decision is 23 a final decision and may be subject to judicial review. 24 g. In lieu of a contested case hearing, the parties may 25 participate in mediation. If the parties agree to mediation, 26 the mediator shall be designated by mutual agreement of the 27 parties. Mediation proceedings shall not be subject to the 28 time frames established under this subsection for contested 29 case hearings. Any mediation agreement or failure to reach an 30 agreement shall be part of the record of the proceedings and 31 final decision by the administrative law judge. 32 h. A party who is aggrieved or adversely affected by a final 33 decision under this section is entitled to judicial review 34 pursuant to section 17A.19. 35 -3- LSB 5538YC (5) 86 pf/nh 3/ 6

H.F. _____ i. All costs of a contested case hearing under this section 1 shall be paid equally by all nonprevailing parties. No costs 2 shall be assessed against the department. 3 2. This section shall not apply to contested cases initiated 4 by the health facilities council regarding certificate of need 5 decisions. 6 Sec. 8. Section 135.69, Code 2016, is amended to read as 7 follows: 8 135.69 Council to make final decision on uncontested 9 applications . 10 1. The department shall complete its formal review of 11 the application , which is not contested and subject to 12 section 135.66A, within ninety days after acceptance of the 13 application, except as otherwise provided by section 135.72, 14 subsection 4 . Upon completion of the formal review, the 15 council shall approve or deny the application. The council 16 shall issue written findings stating the basis for its decision 17 on the application, and the department shall send copies of 18 the council’s decision and the written findings supporting 19 the decision to the applicant and to any other person who so 20 requests. 21 2. Failure by the council to issue a written decision 22 on an application for a certificate of need , which is not 23 contested and subject to section 135.66A, within the time 24 required by this section shall constitute denial of and final 25 administrative action on the application. 26 Sec. 9. Section 135.70, Code 2016, is amended to read as 27 follows: 28 135.70 Appeal of uncontested certificate of need decisions. 29 1. The council’s decision on an uncontested application for 30 certificate of need, when announced pursuant to section 135.69 , 31 is a final decision. 32 2. Any dissatisfied party who is an affected person with 33 respect to the uncontested application, and who participated 34 or sought unsuccessfully to participate in the formal review 35 -4- LSB 5538YC (5) 86 pf/nh 4/ 6

H.F. _____ procedure prescribed by section 135.66 , may request a rehearing 1 in accordance with chapter 17A and rules of the department. 2 3. If a rehearing is not requested or an affected party 3 remains dissatisfied after the request for rehearing, an appeal 4 may be taken in the manner provided by chapter 17A . 5 4. Notwithstanding the Iowa administrative procedure Act, 6 chapter 17A , a request for rehearing is not required, prior to 7 appeal under section 17A.19 . 8 Sec. 10. Section 135.72, Code 2016, is amended by adding the 9 following new subsection: 10 NEW SUBSECTION . 5. Rules relating to contested 11 applications for certificate of need including procedures 12 pursuant to section 135.66A. 13 EXPLANATION 14 The inclusion of this explanation does not constitute agreement with 15 the explanation’s substance by the members of the general assembly. 16 This bill relates to the certificate of need process. The 17 bill provides for an exclusion from the certificate of need 18 process for institutional health facilities constructed, 19 renovated, relocated, or otherwise offered or developed in a 20 rural area. The bill defines “rural area” as a county with 21 a population of less than 50,000 persons or a geographic 22 area outside an urban or suburban setting which, due to its 23 location, requires at least 20 minutes of travel time on 24 normally traveled roads under normal traffic conditions between 25 institutional health facilities of the same type. 26 The bill also establishes a procedure for contested 27 certificate of need applications. The bill provides that after 28 the department of public health (department) has received an 29 application for a certificate of need, formal review of the 30 application has been initiated, and notification regarding 31 the application has been made, if any affected party or a 32 party’s representative contests the application and follows the 33 specified process for petitioning, the contested application 34 may be subject to a contested case hearing as provided in 35 -5- LSB 5538YC (5) 86 pf/nh 5/ 6

H.F. _____ the administrative procedure Act, Code chapter 17A, and the 1 provisions of the bill. The bill establishes time frames for 2 the contested case proceeding and also provides for mediation 3 in lieu of the contested case proceeding. A contested case 4 proceeding on an application is to be heard and presided over 5 by an administrative law judge sitting alone, and the hearing 6 is to be conducted as a matter of first impression subject 7 to de novo review. The subject matter of the contested case 8 proceeding is limited to the single application and is not to 9 concern the merits of any other pending application of the same 10 applicant. Once the administrative law judge makes a proposed 11 decision on the application, the proposed decision becomes a 12 final decision unless a party appeals to the department within 13 the specified time frames. If the department declines to hear 14 an appeal on a proposed decision, the proposed decision is a 15 final decision and may be subject to judicial review. A party 16 who is aggrieved or adversely affected by a final decision 17 under the bill is entitled to judicial review. The costs 18 of a contested case hearing are to be paid equally by all 19 nonprevailing parties. No costs are to be assessed against 20 the department. The procedure does not apply to contested 21 cases initiated by the health facilities council regarding 22 certificate of need decisions. 23 The bill makes other conforming changes to reflect the new 24 procedure for contested certificate of need applications. 25 -6- LSB 5538YC (5) 86 pf/nh 6/ 6