H.F. 422 Section 1. Section 135.61, subsection 1, paragraphs c and d, 1 Code 2017, are amended to read as follows: 2 c. Each institutional health facility or health maintenance 3 organization which is located in the geographic area which 4 would appropriately be served by the new institutional 5 health service proposed in the application. The appropriate 6 geographic service area of each institutional health facility 7 or health maintenance organization shall be determined on a 8 uniform basis in accordance with criteria established in rules 9 adopted by the department. 10 d. Each institutional health facility or health maintenance 11 organization which, prior to receipt of the application by 12 the department, has formally indicated to the department 13 pursuant to this division an intent to furnish in the future 14 institutional health services similar to the new institutional 15 health service proposed in the application. 16 Sec. 2. Section 135.61, subsections 3, 14, 15, 18, and 19, 17 Code 2017, are amended to read as follows: 18 3. “Consumer” means any individual whose occupation is other 19 than health services, who has no fiduciary obligation to an 20 institutional health facility , health maintenance organization 21 or other facility primarily engaged in delivery of services 22 provided by persons in health service occupations, and who has 23 no material financial interest in the providing of any health 24 services. 25 14. “Institutional health facility” means any of the 26 following an assisted living program or a nursing facility , 27 without regard to whether the facilities referred to are 28 publicly or privately owned or are organized for profit or not 29 or whether the facilities are part of or sponsored by a health 30 maintenance organization : 31 a. A hospital . 32 b. A health care facility. 33 c. An organized outpatient health facility. 34 d. An outpatient surgical facility. 35 -1- LSB 2524YH (6) 87 pf/nh 1/ 14

H.F. 422 e. A community mental health facility. 1 f. A birth center. 2 15. “Institutional health service” means any health service 3 furnished in or through institutional health facilities or 4 health maintenance organizations , including mobile health 5 services. 6 18. “New institutional health service” or “changed 7 institutional health service” means any of the following: 8 a. The construction, development or other establishment of a 9 new institutional health facility regardless of ownership. 10 b. Relocation of an institutional health facility. 11 c. Any capital expenditure, lease, or donation by or on 12 behalf of an institutional health facility in excess of one 13 million five hundred thousand dollars within a twelve-month 14 period. 15 d. A permanent change in the bed capacity, as determined 16 by the department, of an institutional health facility. For 17 purposes of this paragraph, a change is permanent if it is 18 intended to be effective for one year or more. 19 e. Any expenditure in excess of five hundred thousand 20 dollars by or on behalf of an institutional health facility for 21 health services which are or will be offered in or through an 22 institutional health facility at a specific time but which were 23 not offered on a regular basis in or through that institutional 24 health facility within the twelve-month period prior to that 25 time. 26 f. The deletion of one or more health services, previously 27 offered on a regular basis by an institutional health facility 28 or health maintenance organization or the relocation of one or 29 more health services from one physical facility to another. 30 g. Any acquisition by or on behalf of a health care provider 31 or a group of health care providers of any piece of replacement 32 equipment with a value in excess of one million five hundred 33 thousand dollars, whether acquired by purchase, lease, or 34 donation. 35 -2- LSB 2524YH (6) 87 pf/nh 2/ 14

H.F. 422 h. Any acquisition by or on behalf of a health care provider 1 or group of health care providers of any piece of equipment 2 with a value in excess of one million five hundred thousand 3 dollars, whether acquired by purchase, lease, or donation, 4 which results in the offering or development of a health 5 service not previously provided. A mobile service provided 6 on a contract basis is not considered to have been previously 7 provided by a health care provider or group of health care 8 providers. 9 i. g. Any acquisition by or on behalf of an institutional 10 health facility or a health maintenance organization of any 11 piece of replacement equipment with a value in excess of one 12 million five hundred thousand dollars, whether acquired by 13 purchase, lease, or donation. 14 j. h. Any acquisition by or on behalf of an institutional 15 health facility or health maintenance organization of any 16 piece of equipment with a value in excess of one million five 17 hundred thousand dollars, whether acquired by purchase, lease, 18 or donation, which results in the offering or development of 19 a health service not previously provided. A mobile service 20 provided on a contract basis is not considered to have been 21 previously provided by an institutional health facility. 22 k. Any air transportation service for transportation of 23 patients or medical personnel offered through an institutional 24 health facility at a specific time but which was not offered 25 on a regular basis in or through that institutional health 26 facility within the twelve-month period prior to the specific 27 time. 28 l. i. Any mobile health service with a value in excess of 29 one million five hundred thousand dollars. 30 m. Any of the following: 31 (1) Cardiac catheterization service. 32 (2) Open heart surgical service. 33 (3) Organ transplantation service. 34 (4) Radiation therapy service applying ionizing radiation 35 -3- LSB 2524YH (6) 87 pf/nh 3/ 14

H.F. 422 for the treatment of malignant disease using megavoltage 1 external beam equipment. 2 19. “Offer” , when used in connection with health services, 3 means that an institutional health facility , health maintenance 4 organization, health care provider, or group of health care 5 providers holds itself out as capable of providing, or as 6 having the means to provide, specified health services. 7 Sec. 3. Section 135.61, Code 2017, is amended by adding the 8 following new subsections: 9 NEW SUBSECTION . 1A. “Assisted living program” means as 10 defined in section 231C.2. 11 NEW SUBSECTION . 18A. “Nursing facility” means as defined 12 in section 135C.1. 13 Sec. 4. Section 135.61, subsections 2, 20, 21, and 22, Code 14 2017, are amended by striking the subsections. 15 Sec. 5. Section 135.63, subsections 1 and 2, Code 2017, are 16 amended to read as follows: 17 1. A new institutional health service or changed 18 institutional health service shall not be offered or developed 19 in this state without prior application to the department 20 for and receipt of a certificate of need, pursuant to this 21 division . The application shall be made upon forms furnished 22 or prescribed by the department and shall contain such 23 information as the department may require under this division . 24 The application shall be accompanied by a fee equivalent 25 to three-tenths of one percent of the anticipated cost of 26 the project with a minimum fee of six hundred dollars and a 27 maximum fee of twenty-one thousand dollars. The fee shall be 28 remitted by the department to the treasurer of state, who shall 29 place it in the general fund of the state. If an application 30 is voluntarily withdrawn within thirty calendar days after 31 submission, seventy-five percent of the application fee shall 32 be refunded; if the application is voluntarily withdrawn more 33 than thirty but within sixty days after submission, fifty 34 percent of the application fee shall be refunded; if the 35 -4- LSB 2524YH (6) 87 pf/nh 4/ 14

H.F. 422 application is withdrawn voluntarily more than sixty days 1 after submission, twenty-five percent of the application fee 2 shall be refunded. Notwithstanding the required payment of 3 an application fee under this subsection , an applicant for a 4 new institutional health service or a changed institutional 5 health service offered or developed by an intermediate care 6 facility for persons with an intellectual disability or an 7 intermediate care facility for persons with mental illness as 8 defined pursuant to section 135C.1 is exempt from payment of 9 the application fee. 10 2. This division shall not be construed to augment, limit, 11 contravene, or repeal in any manner any other statute of this 12 state which may authorize or relate to licensure, regulation, 13 supervision, or control of, nor to be applicable to: 14 a. Private offices and private clinics of an individual 15 physician, dentist, or other practitioner or group of 16 health care providers, except as provided by section 135.61, 17 subsection 18 , paragraphs “g” , “h” , and “m” , and section 135.61, 18 subsections 20 and 21 . 19 b. Dispensaries and first aid stations, located within 20 schools, businesses, or industrial establishments, which are 21 maintained solely for the use of students or employees of those 22 establishments and which do not contain inpatient or resident 23 beds that are customarily occupied by the same individual for 24 more than twenty-four consecutive hours. 25 c. Establishments such as motels, hotels, and boarding 26 houses which provide medical, nursing personnel, and other 27 health related services as an incident to their primary 28 business or function. 29 d. The remedial care or treatment of residents or patients 30 in any home or institution conducted only for those who 31 rely solely upon treatment by prayer or spiritual means in 32 accordance with the creed or tenets of any recognized church or 33 religious denomination. 34 e. b. A health maintenance organization or combination 35 -5- LSB 2524YH (6) 87 pf/nh 5/ 14

H.F. 422 of health maintenance organizations or an institutional 1 health facility controlled directly or indirectly by a health 2 maintenance organization or combination of health maintenance 3 organizations, except when the health maintenance organization 4 or combination of health maintenance organizations does any of 5 the following: 6 (1) Constructs constructs , develops, renovates, relocates, 7 or otherwise establishes an institutional health facility. 8 (2) Acquires major medical equipment as provided by section 9 135.61, subsection 18 , paragraphs “i” and “j” . 10 f. A residential care facility, as defined in section 11 135C.1 , including a residential care facility for persons with 12 an intellectual disability, notwithstanding any provision in 13 this division to the contrary. 14 g. c. (1) A reduction in bed capacity of an institutional 15 health facility, notwithstanding any provision in this division 16 to the contrary, if all of the following conditions exist: 17 (a) The institutional health facility reports to the 18 department the number and type of beds reduced on a form 19 prescribed by the department at least thirty days before the 20 reduction. In the case of a health care nursing facility, the 21 new bed total must be consistent with the number of licensed 22 beds at the facility. In the case of a hospital, the number 23 of beds must be consistent with bed totals reported to the 24 department of inspections and appeals for purposes of licensure 25 and certification. 26 (b) The institutional health facility reports the new bed 27 total on its next annual report to the department. 28 (2) If these conditions are not met, the institutional 29 health facility is subject to review as a “new institutional 30 health service” or “changed institutional health service” under 31 section 135.61, subsection 18 , paragraph “d” , and subject to 32 sanctions under section 135.73 . If the institutional health 33 facility reestablishes the deleted beds at a later time, 34 review as a “new institutional health service” or “changed 35 -6- LSB 2524YH (6) 87 pf/nh 6/ 14

H.F. 422 institutional health service” is required pursuant to section 1 135.61, subsection 18 , paragraph “d” . 2 h. d. (1) The deletion of one or more health services, 3 previously offered on a regular basis by an institutional 4 health facility or health maintenance organization , 5 notwithstanding any provision of this division to the contrary, 6 if all of the following conditions exist: 7 (a) The institutional health facility or health maintenance 8 organization reports to the department the deletion of the 9 service or services at least thirty days before the deletion on 10 a form prescribed by the department. 11 (b) The institutional health facility or health maintenance 12 organization reports the deletion of the service or services on 13 its next annual report to the department. 14 (2) If these conditions are not met, the institutional 15 health facility or health maintenance organization is subject 16 to review as a “new institutional health service” or “changed 17 institutional health service” under section 135.61, subsection 18 18 , paragraph “f” , and subject to sanctions under section 19 135.73 . 20 (3) If the institutional health facility or health 21 maintenance organization reestablishes the deleted service 22 or services at a later time, review as a “new institutional 23 health service” or “changed institutional health service” may 24 be required pursuant to section 135.61, subsection 18 . 25 i. A residential program exempt from licensing as a health 26 care facility under chapter 135C in accordance with section 27 135C.6, subsection 8 . 28 j. e. The construction, modification, or replacement 29 of nonpatient care services, including parking facilities, 30 heating, ventilation and air conditioning systems, computers, 31 telephone systems, medical office buildings, and other projects 32 of a similar nature, notwithstanding any provision in this 33 division to the contrary. 34 k. (1) The redistribution of beds by a hospital within the 35 -7- LSB 2524YH (6) 87 pf/nh 7/ 14

H.F. 422 acute care category of bed usage, notwithstanding any provision 1 in this division to the contrary, if all of the following 2 conditions exist: 3 (a) The hospital reports to the department the number and 4 type of beds to be redistributed on a form prescribed by the 5 department at least thirty days before the redistribution. 6 (b) The hospital reports the new distribution of beds on its 7 next annual report to the department. 8 (2) If these conditions are not met, the redistribution 9 of beds by the hospital is subject to review as a new 10 institutional health service or changed institutional health 11 service pursuant to section 135.61, subsection 18 , paragraph 12 “d” , and is subject to sanctions under section 135.73 . 13 l. f. The replacement or modernization of any institutional 14 health facility if the replacement or modernization does 15 not add new health services or additional bed capacity for 16 existing health services, notwithstanding any provision in this 17 division to the contrary. With respect to a nursing facility, 18 “replacement” means establishing a new facility within the same 19 county as the prior facility to be closed. With reference to 20 a hospital, “replacement” means establishing a new hospital 21 that demonstrates compliance with all of the following criteria 22 through evidence submitted to the department: 23 (1) Is designated as a critical access hospital pursuant to 24 42 U.S.C. §1395i-4. 25 (2) Serves at least seventy-five percent of the same service 26 area that was served by the prior hospital to be closed and 27 replaced by the new hospital. 28 (3) Provides at least seventy-five percent of the same 29 services that were provided by the prior hospital to be closed 30 and replaced by the new hospital. 31 (4) Is staffed by at least seventy-five percent of the 32 same staff, including medical staff, contracted staff, and 33 employees, as constituted the staff of the prior hospital to be 34 closed and replaced by the new hospital. 35 -8- LSB 2524YH (6) 87 pf/nh 8/ 14

H.F. 422 m. Hemodialysis services provided by a hospital or 1 freestanding facility, notwithstanding any provision in this 2 division to the contrary. 3 n. Hospice services provided by a hospital, notwithstanding 4 any provision in this division to the contrary. 5 o. g. The change in ownership, licensure, organizational 6 structure, or designation of the type of institutional health 7 facility if the health services offered by the successor 8 institutional health facility are unchanged. This exclusion 9 is applicable only if the institutional health facility 10 consents to the change in ownership, licensure, organizational 11 structure, or designation of the type of institutional health 12 facility and ceases offering the health services simultaneously 13 with the initiation of the offering of health services by the 14 successor institutional health facility. 15 p. The conversion of an existing number of beds by an 16 intermediate care facility for persons with an intellectual 17 disability to a smaller facility environment, including but not 18 limited to a community-based environment which does not result 19 in an increased number of beds, notwithstanding any provision 20 in this division to the contrary, including subsection 4 , if 21 all of the following conditions exist: 22 (1) The intermediate care facility for persons with an 23 intellectual disability reports the number and type of beds to 24 be converted on a form prescribed by the department at least 25 thirty days before the conversion. 26 (2) The intermediate care facility for persons with an 27 intellectual disability reports the conversion of beds on its 28 next annual report to the department. 29 Sec. 6. Section 135.63, subsection 4, Code 2017, is amended 30 by striking the subsection. 31 Sec. 7. Section 135.64, subsection 1, paragraphs o and q, 32 Code 2017, are amended to read as follows: 33 o. The impact of relocation of an institutional health 34 facility or health maintenance organization on other 35 -9- LSB 2524YH (6) 87 pf/nh 9/ 14

H.F. 422 institutional health facilities or health maintenance 1 organizations and on the needs of the population to be served, 2 or which was previously served, or both. 3 q. In the case of a proposal for the addition of beds to a 4 health care nursing facility or assisted living program , the 5 consistency of the proposed addition with the plans of other 6 agencies of this state responsible for provision and financing 7 of long-term care services, including home health services. 8 Sec. 8. Section 135.64, subsection 1, paragraphs m and n, 9 Code 2017, are amended by striking the paragraphs. 10 Sec. 9. Section 135.64, subsection 2, Code 2017, is amended 11 to read as follows: 12 2. In addition to the findings required with respect to 13 any of the criteria listed in subsection 1 of this section , 14 the council shall grant a certificate of need for a new 15 institutional health service or changed institutional health 16 service only if it finds in writing, on the basis of data 17 submitted to it by the department, that all of the following 18 conditions are met : 19 a. Less costly, more efficient, or more appropriate 20 alternatives to the proposed institutional health service are 21 not available and the development of such alternatives is not 22 practicable ; . 23 b. Any existing facilities providing institutional health 24 services similar to those proposed are being used in an 25 appropriate and efficient manner ; . 26 c. In the case of new construction, alternatives including 27 but not limited to modernization or sharing arrangements have 28 been considered and have been implemented to the maximum extent 29 practicable ; . 30 d. Patients will experience serious problems in obtaining 31 care of the type which will be furnished by the proposed new 32 institutional health service or changed institutional health 33 service, in the absence of that proposed new service. 34 Sec. 10. Section 135.64, subsection 3, Code 2017, is amended 35 -10- LSB 2524YH (6) 87 pf/nh 10/ 14

H.F. 422 by striking the subsection. 1 Sec. 11. Section 135.131, subsection 1, paragraph a, Code 2 2017, is amended to read as follows: 3 a. “Birth center” means birth center as defined in section 4 135.61 a facility or institution, which is not an ambulatory 5 surgical center or a hospital or in a hospital, in which 6 births are planned to occur following a normal, uncomplicated, 7 low-risk pregnancy . 8 Sec. 12. Section 135H.6, Code 2017, is amended to read as 9 follows: 10 135H.6 Inspection —— conditions for issuance. 11 The department shall issue a license to an applicant under 12 this chapter if all the following conditions exist: 13 1. The department has ascertained that the applicant’s 14 medical facilities and staff are adequate to provide the care 15 and services required of a psychiatric institution. 16 2. The proposed psychiatric institution is accredited 17 by the joint commission on the accreditation of health 18 care organizations, the commission on accreditation of 19 rehabilitation facilities, the council on accreditation of 20 services for families and children, or by any other recognized 21 accrediting organization with comparable standards acceptable 22 under federal regulation. 23 3. The applicant complies with applicable state rules 24 and standards for a psychiatric institution adopted by the 25 department in accordance with federal requirements under 42 26 C.F.R. §441.150 – 441.156 . 27 4. The applicant has been awarded a certificate of need 28 pursuant to chapter 135 , unless exempt as provided in this 29 section . 30 5. The department of human services has submitted written 31 approval of the application based on the department of human 32 services’ determination of need. The department of human 33 services shall identify the location and number of children in 34 the state who require the services of a psychiatric medical 35 -11- LSB 2524YH (6) 87 pf/nh 11/ 14

H.F. 422 institution for children. Approval of an application shall be 1 based upon the location of the proposed psychiatric institution 2 relative to the need for services identified by the department 3 of human services and an analysis of the applicant’s ability to 4 provide services and support consistent with requirements under 5 chapter 232 , particularly regarding community-based treatment. 6 If the proposed psychiatric institution is not freestanding 7 from a facility licensed under chapter 135B or 135C , approval 8 under this subsection shall not be given unless the department 9 of human services certifies that the proposed psychiatric 10 institution is capable of providing a resident with a living 11 environment similar to the living environment provided by a 12 licensee which is freestanding from a facility licensed under 13 chapter 135B or 135C . 14 6. 5. The department of human services shall not give 15 approval to an application which would cause the total number 16 of beds licensed under this chapter for services reimbursed by 17 the medical assistance program under chapter 249A to exceed 18 four hundred thirty beds. 19 7. 6. In addition to the beds authorized under subsection 20 6 , the department of human services may establish not more than 21 thirty beds licensed under this chapter at the state mental 22 health institute at Independence. The beds shall be exempt 23 from the certificate of need requirement under subsection 4 . 24 8. 7. The department of human services may give approval to 25 conversion of beds approved under subsection 6 , to beds which 26 are specialized to provide substance abuse treatment. However, 27 the total number of beds approved under subsection 6 and this 28 subsection shall not exceed four hundred thirty. Conversion 29 of beds under this subsection shall not require a revision of 30 the certificate of need issued for the psychiatric institution 31 making the conversion. Beds for children who do not reside 32 in this state and whose service costs are not paid by public 33 funds in this state are not subject to the limitations on the 34 number of beds and certificate of need requirements otherwise 35 -12- LSB 2524YH (6) 87 pf/nh 12/ 14

H.F. 422 applicable under this section . 1 9. 8. The proposed psychiatric institution is under 2 the direction of an agency which has operated a facility 3 licensed under section 237.3, subsection 2 , paragraph “a” , as 4 a comprehensive residential facility for children for three 5 years or of an agency which has operated a facility for three 6 years providing psychiatric services exclusively to children or 7 adolescents and the facility meets or exceeds requirements for 8 licensure under section 237.3, subsection 2 , paragraph “a” , as a 9 comprehensive residential facility for children. 10 10. 9. A psychiatric institution licensed prior to July 1, 11 1999, may exceed the number of beds authorized under subsection 12 6 if the excess beds are used to provide services funded from a 13 source other than the medical assistance program under chapter 14 249A . Notwithstanding subsections 4, subsection 5, and 6, the 15 provision of services using those excess beds does not require 16 a certificate of need or a review by the department of human 17 services. 18 11. 10. If a child has an emotional, behavioral, or mental 19 health disorder, the psychiatric institution does not require 20 court proceedings to be initiated or that a child’s parent, 21 guardian, or custodian must terminate parental rights over 22 or transfer legal custody of the child for the purpose of 23 obtaining treatment from the psychiatric institution for the 24 child. Relinquishment of a child’s custody shall not be a 25 condition of the child receiving services. 26 Sec. 13. Section 135P.1, subsection 3, Code 2017, is amended 27 to read as follows: 28 3. “Health facility” means an institutional a hospital, a 29 health care facility as defined in section 135.61 , an organized 30 outpatient health facility, an outpatient surgical facility, a 31 community mental health facility, a birth center as defined in 32 section 135.131, a hospice licensed under chapter 135J , home 33 health agency as defined in section 144D.1 , assisted living 34 program certified under chapter 231C , clinic, or community 35 -13- LSB 2524YH (6) 87 pf/nh 13/ 14

H.F. 422 health center, and includes any corporation, professional 1 corporation, partnership, limited liability company, limited 2 liability partnership, or other entity comprised of such health 3 facilities. 4 Sec. 14. Section 231C.3, subsection 2, Code 2017, is amended 5 to read as follows: 6 2. Each assisted living program operating in this state 7 shall be certified by the department. If an assisted living 8 program is voluntarily accredited by a recognized accrediting 9 entity, the department shall certify the assisted living 10 program on the basis of the voluntary accreditation. An 11 assisted living program that is certified by the department on 12 the basis of voluntary accreditation shall not be subject to 13 payment of the certification fee prescribed in section 231C.18 , 14 but shall be subject to an administrative fee as prescribed by 15 rule. An assisted living program certified under this section 16 is exempt from the requirements of section 135.63 relating to 17 certificate of need requirements. 18 EXPLANATION 19 The inclusion of this explanation does not constitute agreement with 20 the explanation’s substance by the members of the general assembly. 21 This bill relates to certificates of need. The bill 22 redefines “institutional health facility” to mean only 23 an assisted living program or a nursing facility, thereby 24 eliminating the application of certificate of need requirements 25 to any other institutional health facility that furnishes new 26 or changed institutional health services. The bill amends the 27 definition of “new institutional health service” or “changed 28 institutional health service” to retain services applicable to 29 an assisted living program or a nursing facility and eliminates 30 definitions and other provisions no longer necessary to the 31 certificate of need provisions. The bill also makes conforming 32 changes throughout the Code. 33 -14- LSB 2524YH (6) 87 pf/nh 14/ 14