SSB 1117 (LSB 1825XC (3) 90)

SENATE FILE _____ 

BY  (PROPOSED COMMITTEE ON HEALTH AND HUMAN SERVICES BILL BY CHAIRPERSON EDLER)

A BILL FOR

An Act relating to the certificate of need process.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 135.61, subsections 1, 14, 15, and 18, Code 2023, are amended to read as follows:
   1.  “Affected persons” means, with respect to an application for a certificate of need:
   a.  The person submitting the application.
   b.  Consumers who would be served by the new institutional health service proposed in the application.
   c.  Each institutional health facility or health maintenance organization which is located in the geographic area which would appropriately be served by the new institutional health service proposed in the application. The appropriate geographic service area of each institutional health facility or health maintenance organization shall be determined on a uniform basis in accordance with criteria established in rules adopted by the department.
   d.  Each institutional health facility or health maintenance organization which, prior to receipt of the application by the department, has formally indicated to the department pursuant to this subchapter an intent to furnish in the future institutional health services similar to the new institutional health service proposed in the application.
   e.  Any other person designated as an affected person by rules of the department.
   f.  Any payer or third-party payer for health services.
   14.  “Institutional health facility” means any of the following, without regard to whether the facilities referred to are publicly or privately owned or are organized for profit or not or whether the facilities are part of or sponsored by a health maintenance organization:
   a.  A hospital.
   b.  A health care facility.
   c.  An organized outpatient health facility.
   d.  An outpatient surgical facility.
   e.  A community mental health facility.
   f.  A birth center.
   15.  “Institutional health service” means any health service furnished in or through institutional health facilities or health maintenance organizations, including mobile health services.
   18.  “New institutional health service” or “changed institutional health service” means any of the following:
   a.  The construction, development, or other establishment of a new institutional health facility regardless of ownership.
   b.  Relocation of an institutional health facility.
   c.  Any capital expenditure, lease, or donation by or on behalf of an institutional health facility in excess of one five million five hundred thousand dollars within a twelve-month period.
   d.  A permanent change in the bed capacity, as determined by the department, of an institutional health facility. For purposes of this paragraph, a change is permanent if it is intended to be effective for one year or more.
   e.  Any expenditure in excess of five hundred thousand dollars by or on behalf of an institutional health facility for health services which are or will be offered in or through an institutional health facility at a specific time but which were not offered on a regular basis in or through that institutional health facility within the twelve-month period prior to that time.
   f.  The deletion of one or more health services, previously offered on a regular basis by an institutional health facility or health maintenance organization or the relocation of one or more health services from one physical facility to another.
   g.  Any acquisition by or on behalf of a health care provider or a group of health care providers of any piece of replacement equipment with a value in excess of one million five hundred thousand dollars, whether acquired by purchase, lease, or donation.
   h.  Any acquisition by or on behalf of a health care provider or group of health care providers of any piece of equipment with a value in excess of one million five hundred thousand dollars, whether acquired by purchase, lease, or donation, which results in the offering or development of a health service not previously provided. A mobile service provided on a contract basis is not considered to have been previously provided by a health care provider or group of health care providers.
   i.  Any acquisition by or on behalf of an institutional health facility or a health maintenance organization of any piece of replacement equipment with a value in excess of one million five hundred thousand dollars, whether acquired by purchase, lease, or donation.
   j.  Any acquisition by or on behalf of an institutional health facility or health maintenance organization of any piece of equipment with a value in excess of one million five hundred thousand dollars, whether acquired by purchase, lease, or donation, which results in the offering or development of a health service not previously provided. A mobile service provided on a contract basis is not considered to have been previously provided by an institutional health facility.
   k.  Any air transportation service for transportation of patients or medical personnel offered through an institutional health facility at a specific time but which was not offered on a regular basis in or through that institutional health facility within the twelve-month period prior to the specific time.
   l.  Any mobile health service with a value in excess of one million five hundred thousand dollars.
   m.  Any of the following:
   (1)  Cardiac catheterization service.
   (2)  Open heart surgical service.
   (3)  Organ transplantation service.
   (4)  Radiation therapy service applying ionizing radiation for the treatment of malignant disease using megavoltage external beam equipment.
    Sec. 2.  Section 135.61, subsections 2 and 16, Code 2023, are amended by striking the subsections.
    Sec. 3.  Section 135.62, subsection 2, paragraphs a, b, and c, Code 2023, are amended to read as follows:
   a.  Qualifications.  The members of the council shall be chosen so that the council as a whole is broadly representative of various geographical areas of the state and no more than three of its members are affiliated with the same political party. Each council member shall be a person who has demonstrated by prior activities an informed concern for the planning and delivery of health services. A member of the council and any spouse of a member shall not, during the time that member is serving on the council, do either of the following:
   (1)  Be a health care provider nor be otherwise directly or indirectly engaged in the delivery of health care services nor have a material financial interest in the providing or delivery of health services.
   (2)  Serve as a member of any board or other policymaking or advisory body of an institutional health facility, a health maintenance organization, or any health or hospital insurer.
   b.  Appointments.  Terms of council members shall be six three years, beginning and ending as provided in section 69.19. A member shall be appointed in each odd-numbered year to succeed each member whose term expires in that year. Vacancies shall be filled by the governor for the balance of the unexpired term. Each appointment to the council is subject to confirmation by the senate. A council member is ineligible for appointment to a second consecutive term, unless first appointed to an unexpired term of three years or less.
   c.  Chairperson.  The governor council shall designate one of the council members as chairperson. That designation may be changed not later than July 1 of any odd-numbered year, effective on the date of the organizational meeting held in that year under paragraph “d”.
    Sec. 4.  Section 135.63, subsection 1, Code 2023, is amended to read as follows:
   1.  A new institutional health service or changed institutional health service shall not be offered or developed in this state without prior application to the department for and receipt of a certificate of need, pursuant to this subchapter. The application shall be made upon forms furnished or prescribed by the department and shall contain such information as the department may require under this subchapter.  The application shall be accompanied by an economic impact statement that includes information specified by rule to assist the department and the council in the evaluation of the application pursuant to section 135.64. The application shall be accompanied by a fee equivalent to three-tenths of one percent of the anticipated cost of the project with a minimum fee of six hundred dollars and a maximum fee of twenty-one of one thousand dollars. The fee shall be remitted by the department to the treasurer of state, who shall place it in the general fund of the state. If an application is voluntarily withdrawn within thirty calendar days after submission, seventy-five percent of the application fee shall be refunded; if the application is voluntarily withdrawn more than thirty but within sixty days after submission, fifty percent of the application fee shall be refunded; if the application is withdrawn voluntarily more than sixty days after submission, twenty-five percent of the application fee shall be refunded. Notwithstanding the required payment of an application fee under this subsection, an applicant for a new institutional health service or a changed institutional health service offered or developed by an intermediate care facility for persons with an intellectual disability or an intermediate care facility for persons with mental illness as defined pursuant to section 135C.1 is exempt from payment of the application fee.
    Sec. 5.  Section 135.63, subsection 2, paragraphs a and e, Code 2023, are amended to read as follows:
   a.  Private offices and private clinics of an individual physician, dentist, or other practitioner or group of health care providers, except as provided by section 135.61, subsection 18, paragraphs “g”, “h”, and “m”, and section 135.61, subsections 20 and 21.
   e.  A health maintenance organization or combination of health maintenance organizations or an institutional health facility controlled directly or indirectly by a health maintenance organization or combination of health maintenance organizations, except when the health maintenance organization or combination of health maintenance organizations does any of the following:
   (1)  Constructs constructs, develops, renovates, relocates, or otherwise establishes an institutional health facility.
   (2)  Acquires major medical equipment as provided by section 135.61, subsection 18, paragraphs “i” and “j”.
    Sec. 6.  Section 135.63, subsection 2, paragraph h, Code 2023, is amended by striking the paragraph.
    Sec. 7.  Section 135.63, subsection 4, unnumbered paragraph 1, Code 2023, is amended to read as follows:
   A copy of the application shall be sent to the department of human services at the time the application is submitted to the Iowa department of public health. The department shall not process applications for and the council shall not consider a new or changed institutional health service for an intermediate care facility for persons with an intellectual disability unless both of the following conditions are met:
    Sec. 8.  Section 135.66, subsections 1 and 2, Code 2023, are amended to read as follows:
   1.  a.  Within fifteen business days after receipt of an application for a certificate of need, the department shall examine the application for form and completeness and accept or reject it. An application shall be rejected only if it fails to provide all information required by the department pursuant to section 135.63, subsection 1. The department shall promptly return to the applicant any rejected application, with an explanation of the reasons for its rejection.
   b.  Within thirty days after notifying the applicant of rejection of the application, the applicant may resubmit a revised application for review under this subsection and shall not be subject to payment of another required application fee pursuant to section 135.63. If a subsequent rejection is issued, the applicant shall resubmit the application in accordance with and shall be subject to the procedure and requirements for an initial application.
   2.  Upon acceptance of an application for a certificate of need, the department shall promptly undertake to notify all affected persons in writing that formal review of the application has been initiated. Notification to those affected persons who are consumers or third-party payers or other payers for health services may be provided by distribution of the pertinent information to the news media by an electronic distribution method available to the department.
    Sec. 9.  Section 135.67, subsection 1, Code 2023, is amended to read as follows:
   1.  The department may waive the letter of intent procedures prescribed by section 135.65 and substitute conduct a summary review procedure, which shall be established by rules of the department, when it accepts an application for a certificate of need for a project which meets any of the following criteria in paragraphs “a” through “e”:
   a.  A project which is limited to repair or replacement of a facility or equipment damaged or destroyed by a disaster, and which will not expand the facility nor increase the services provided beyond the level existing prior to the disaster.
   b.  A project necessary to enable the facility or service to achieve or maintain compliance with federal, state, or other appropriate licensing, certification, or safety requirements.
   c.  A project which will not change the existing bed capacity of the applicant’s facility or service, as determined by the department, by more than ten percent or ten beds, whichever is less, over a two-year period.
   d.  A project the total cost of which will not exceed one hundred fifty thousand dollars.
   e.  d.  Any other project for which the applicant proposes and the department agrees to summary review.
    Sec. 10.  Section 135.69, Code 2023, is amended to read as follows:
   135.69  Council to make final decision.
   1.  The department shall complete its formal review of the application within ninety thirty days after acceptance of the application, except as otherwise provided by section 135.72, subsection 4. Upon completion of the formal review, the council shall approve or deny the application. The council shall issue written findings stating the basis for its decision on the application, and the department shall send copies of the council’s decision and the written findings supporting the decision to the applicant and to any other person who so requests.
   2.  Failure by the council to issue a written decision on an application for a certificate of need within the time required by this section shall constitute denial approval of and final administrative action on the application.
    Sec. 11.  Section 135.72, subsection 4, Code 2023, is amended to read as follows:
   4.  Criteria for determining when it is not feasible to complete formal review of an application for a certificate of need within the time limits specified in section 135.69. The rules adopted under this subsection shall include criteria for determining whether an application proposes introduction of technologically innovative equipment, and if so, procedures to be followed in reviewing the application. However, a rule adopted under this subsection shall not permit a deferral of more than sixty thirty days beyond the time when a decision is required under section 135.69, unless both the applicant and the department agree to a longer deferment.
    Sec. 12.  Section 135.73, subsection 1, Code 2023, is amended to read as follows:
   1.  Any party constructing a new institutional health facility or an addition to or renovation of an existing institutional health facility without first obtaining a certificate of need or, in the case of a mobile health service, ascertaining that the mobile health service has received certificate of need approval, as required by this subchapter, shall be denied licensure or change of licensure by the appropriate responsible licensing agency of this state.
    Sec. 13.  Section 135.131, subsection 1, paragraph a, Code 2023, is amended to read as follows:
   a.  “Birth center” means birth center as defined in section 135.61 a facility or institution, which is not an ambulatory surgical center or a hospital or in a hospital, in which births are planned to occur following a normal, uncomplicated, low-risk pregnancy.
    Sec. 14.  Section 135P.1, Code 2023, is amended to read as follows:
   135P.1  Definitions.
   For the purposes of this chapter, unless the context otherwise requires:
   1.  “Adverse health care incident” means an objective and definable outcome arising from or related to patient care that results in the death or physical injury of a patient.
   2.  “Health care provider” means a physician or osteopathic physician licensed under chapter 148, a physician assistant licensed and practicing under a supervising physician pursuant to chapter 148C, a podiatrist licensed under chapter 149, a chiropractor licensed under chapter 151, a licensed practical nurse, a registered nurse, or an advanced registered nurse practitioner licensed under chapter 152 or 152E, a dentist licensed under chapter 153, an optometrist licensed under chapter 154, a pharmacist licensed under chapter 155A, or any other person who is licensed, certified, or otherwise authorized or permitted by the law of this state to administer health care in the ordinary course of business or in the practice of a profession.
   3.  “Health facility” means an institutional health facility as defined in section 135.61, a hospice licensed under chapter 135J, a home health agency as defined in section 144D.1, an assisted living program certified under chapter 231C, a clinic, a community health center, or the university of Iowa hospitals and clinics, and includes any corporation, professional corporation, partnership, limited liability company, limited liability partnership, or other entity comprised of such health facilities.
   4.  “Institutional health facility” means any of the following, without regard to whether the facilities referred to are publicly or privately owned or are organized for profit or not, or whether the facilities are part of or sponsored by a health maintenance organization:
   a.  A hospital.
   b.  A health care facility.
   c.  An organized outpatient health facility.
   d.  An outpatient surgical facility.
   e.  A community mental health facility.
   f.  A birth center.
   4.  5.  “Open discussion” means all communications that are made under section 135P.3, and includes all memoranda, work products, documents, and other materials that are prepared for or submitted in the course of or in connection with communications under section 135P.3.
   5.  6.  “Patient” means a person who receives medical care from a health care provider, or if the person is a minor, deceased, or incapacitated, the person’s legal representative.
    Sec. 15.  REPEAL.  Section 135.65, Code 2023, is repealed.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to the health facilities council (HFC) and the certificate of need (CON) process.
   The bill amends the definition of “affected person” with respect to an application for CON to eliminate from inclusion in the definition each institutional health facility or health maintenance organization which, prior to receipt of the application, has formally indicated an intent to furnish in the future institutional health services similar to the new institutional health service proposed in the application; any other person designated as an affected person by rules of the department; and any payer or third-party payer for health services.
   The bill amends the definition of “institutional health facility” by removing a “community mental health facility” and a “birth center” from inclusion in the definition, thereby making these facilities and centers exempt from CON requirements.
   The bill amends the definition of “new institutional health service” or “changed institutional health service” by striking many of the services included in current Code and only including: the construction, development, or other establishment of a new institutional health facility regardless of ownership; relocation of an institutional health facility; any capital expenditure, lease, or donation by or on behalf of an institutional health facility in excess of $5 million within a 12-month period, and a permanent change (effective for one year or more) in the bed capacity of an institutional health facility. Under the bill, only these services included in the definition are subject to CON requirements.
   The bill eliminates terms defined and references to these terms under the Code chapter that are no longer necessary due to provisions of the bill including the definitions of “birth center” and “mobile health service”. 
   The bill amends the qualifications for members of the HFC by retaining the requirement that members of the council be chosen so that the council as a whole is broadly representative of various geographical areas of the state, but eliminating the requirements that no more than three members are affiliated with the same political party and that each council member be a person who has demonstrated by prior activities an informed concern for the planning and delivery of health services. Code section 69.16 requires that all appointive bodies if not otherwise provided by law shall be bipartisan in their composition.
   The bill amends HFC member appointment provisions to provide that terms of council members shall be three rather than six years, and by eliminating the requirements that a member shall be appointed in each odd-numbered year to succeed each member whose term expires in that year, that vacancies shall be filled by the governor for the balance of the unexpired term, and that each appointment to the council is subject to confirmation by the senate. The bill also removes the provision that a council member is ineligible for appointment to a second consecutive term, unless first appointed to an unexpired term of three years or less.
   With regard to the chairperson of the HFC, the bill provides that the council, rather than the governor, shall designate one of the council members as chairperson.
   The bill amends the fee requirements relating to the application for a CON to provide that instead of a fee equivalent to three-tenths of 1 percent of the anticipated cost of the project with a minimum fee of $600 and a maximum fee of $21,000, the fee is $1,000. The bill retains the provision that provides that if an application is voluntarily withdrawn within 30 calendar days after submission, 75 percent of the application fee shall be refunded, but eliminates the proportionate refund of any portion of the fee if the application is voluntarily withdrawn beyond that 30-day period.
   The bill requires that an application be accompanied by an economic impact statement that includes information required by rule to assist in evaluation of the application.
   Due to the combining of the department of human services (DHS) and the department of public health (DPH) into the department of health and human services (HHS), the bill eliminates the requirement that a copy of the application for CON be sent to DHS at the time the application is submitted to DPH.
   Current law provides that within 15 business days after receipt of an application for a CON, HHS shall examine the application and accept or reject it, and that HHS shall promptly return to the applicant any rejected application, with an explanation of the reasons for its rejection. The bill adds a provision that within 30 days after notifying the applicant of rejection of the application, the applicant may resubmit a revised application for review and shall not be subject to payment of another required application fee. Further, if a subsequent rejection is issued, the applicant shall resubmit the application in accordance with and shall be subject to the procedure and requirements for an initial application.
   Current law provides that upon acceptance of an application for a CON, HHS shall promptly notify all affected persons in writing that formal review of the application has been initiated, and that notification to those affected persons who are consumers or third-party payers or other payers for health services may be provided notification by distribution of the pertinent information to the news media. The bill amends this provision to eliminate the reference to third-party payers or other payers as they are no longer included in the definition of affected persons, and provides that notification to affected persons who are consumers may be provided by an electronic distribution method available to HHS.
   The bill eliminates the letter of intent procedure requiring that before applying for a CON, the sponsor of a proposed new institutional health service or changed institutional health service submit to HHS a letter of intent to offer or develop a service requiring a CON, as soon as possible after initiation of the applicant’s planning process and not less than 30 days before applying for a CON and before substantial expenditures to offer or develop the service are made. Under this provision, the letter must include a brief description of the proposed new or changed service, its location, and its estimated cost. If requested by the sponsor, HHS was required to make a preliminary review of the letter and inform the sponsor of any factors likely to result in denial of a CON. The bill also makes a conforming change to eliminate a reference to the letter of intent procedure.
   The bill amends the time frames related to the HFC’s review of CON applications. The bill requires that HHS shall complete its formal review of the application within 30 days, rather than the current 90 days, after acceptance of the application. The bill also provides that failure by the council to issue a written decision on a CON application within the time required shall constitute approval rather than the current denial of and final administrative action on the application.
   The bill provides that any administrative rule adopted for determining when it is not feasible to complete formal review of an application for a CON within the time limits specified for the HFC’s final decision shall not permit a deferral of more than 30 days, rather than the current 60 days, beyond the time specified for a decision on the final decision, unless both the applicant and the department agree to a longer deferment.