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House File 2635 - EnrolledAn Actrelating to health carriers standards of conduct;
utilization review organizations, artificial intelligence,
audits, and prior authorizations; certificate of need
processes; and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
DIVISION I
HEALTH INSURANCE TRADE PRACTICES
Section 1. Section 514F.8, subsection 1, Code 2026, is
amended by adding the following new paragraph:
NEW PARAGRAPH. 0b. “Downgrade” means a decision by
a utilization review organization to change an expedited
or urgent request for prior authorization to a standard
determination, or otherwise modify a health care service that
is the subject of a request for prior authorization to a
lower-level health care service.
-1- Sec. 2. Section 514F.8, Code 2026, is amended by adding the
following new subsection:
NEW SUBSECTION. 2A. A utilization review organization may
use an artificial intelligence-based algorithm or system to
provide an initial review of a request for prior authorization,
except that, for a prior authorization request for a health
care service based on medical necessity, a utilization review
organization shall not use an artificial intelligence-based
algorithm or system as the sole basis for the utilization
review organization’s decision to deny, delay, or downgrade the
prior authorization request.
Sec. 3. NEW SECTION. 514F.8C Utilization review
organizations — audits.
1. As used in this section, unless the context otherwise
requires:
a. “Audit” means a review, investigation, or request for
additional documentation by a utilization review organization
before or after issuing payment on a claim to a health care
provider.
b. “Commissioner” means the commissioner of insurance.
c. “Health care provider” means the same as defined in
section 514F.8.
d. “Health carrier” means the same as defined in section
514F.8.
e. “Utilization review organization” means the same as
defined in section 514F.8.
2. a. A utilization review organization that conducts an
audit shall notify the health care provider that submitted
the claim of the initiation of the audit no later than
fifteen calendar days after the date the utilization review
organization selects the claim for audit.
b. A utilization review organization shall complete an audit
of a claim and issue a determination on the claim to the health
care provider that submitted the claim no later than forty-five
calendar days after the date that the utilization review
-2-organization receives all requested documentation regarding the
claim from the health care provider.
c. A health care provider that submitted a claim that is
the subject of an audit by a utilization review organization
that receives an adverse determination regarding the claim may
appeal the adverse determination no later than thirty calendar
days after the date the health care provider receives the audit
determination.
d. A utilization review organization shall consider an
appeal under paragraph “c” and issue a final determination
on the claim that is the subject of the appeal no later than
thirty calendar days after the date the utilization review
organization receives notice of the appeal.
e. If, after a hearing, the commissioner finds that a
utilization review organization has violated this subsection,
the claim shall be approved by the utilization review
organization and promptly paid, including interest at the rate
of ten percent per annum.
3. A health care provider may opt-in to receive electronic
delivery of notices and audit determinations from a utilization
review organization. A utilization review organization may
determine the method by which a health care provider may
opt-in.
4. a. This section applies to the following classes of
third-party payment provider contracts, policies, or plans
delivered, issued for delivery, continued, or renewed in this
state on or after January 1, 2027:
(1) Individual or group accident and sickness insurance
providing coverage on an expense-incurred basis.
(2) An individual or group hospital or medical service
contract issued pursuant to chapter 509, 514, or 514A.
(3) An individual or group health maintenance organization
contract regulated under chapter 514B.
(4) A plan established for public employees pursuant to
chapter 509A.
-3- b. This section shall not apply to accident-only, specified
disease, short-term hospital or medical, hospital confinement
indemnity, credit, dental, vision, Medicare supplement,
long-term care, basic hospital and medical-surgical expense
coverage as defined by the commissioner of insurance,
disability income insurance coverage, coverage issued as a
supplement to liability insurance, workers’ compensation or
similar insurance, or automobile medical payment insurance.
5. The commissioner may adopt rules pursuant to chapter 17A
to administer and enforce this section.
6. a. This section shall apply to an audit initiated on or
after January 1, 2027.
b. This section shall not apply to a claim that is under
active fraud investigation by a state or federal authority.
Sec. 4. NEW SECTION. 514F.8D Health carriers — standards
of conduct.
1. As used in this section, unless the context otherwise
requires:
a. “Health care provider” means the same as defined in
section 514J.102.
b. “Health carrier” means the same as defined in section
514F.8.
2. A health carrier shall not impose on a health care
provider, directly or indirectly, any financial penalty,
reimbursement reduction, or administrative fee, or terminate a
health care provider’s participation in the health carrier’s
network, based on the health care provider’s referral to, or
affiliation with, an out-of-network health care provider.
3. A health carrier shall not interfere with, or participate
in any capacity in, a health care provider’s decisions
regarding staffing and referrals, except as otherwise provided
by law.
4. A health carrier shall not offer, attempt to enforce,
or enforce an agreement, or an amendment to an agreement, with
a health care provider without providing an opportunity for
-4-negotiation.
5. The commissioner may adopt rules pursuant to chapter 17A
to administer and enforce this section.
DIVISION II
PRIOR AUTHORIZATIONS
Sec. 5. Section 514F.8, Code 2026, is amended by adding the
following new subsection:
NEW SUBSECTION. 6A. a. A health care provider shall
submit all requests for prior authorization to a health carrier
electronically using a standards-based application programming
interface, or another form of electronic submission,
supported by the health carrier that is compliant with federal
interoperability regulations.
b. This subsection applies to a request for prior
authorization made on or after July 1, 2027.
Sec. 6. NEW SECTION. 514F.8A Prior authorizations — peer
review.
1. For purposes of this section, unless the context
otherwise requires:
a. “Clinical peer” means a health care professional that
meets all of the following requirements:
(1) The health care professional practices in the same or
similar specialty as the health care provider that requested
a prior authorization.
(2) The health care professional has experience managing
the specific medical condition or administering the health care
service that is the subject of the prior authorization request.
(3) The health care professional is employed by or
contracted with the utilization review organization or health
carrier to which a health care provider submitted a request for
prior authorization.
b. “Covered person” means the same as defined in section
514F.8.
c. “Downgrade” means a decision by a utilization review
organization to change an expedited or urgent request for prior
-5-authorization to a standard determination, or otherwise modify
a health care service that is the subject of a request for
prior authorization to a lower-level health care service.
d. “Health care professional” means the same as defined in
section 514J.102.
e. “Health care provider” means the same as defined in
section 514F.8.
f. “Health care services” means the same as defined in
section 514F.8.
g. “Health carrier” means the same as defined in section
514F.8.
h. “Physician” means a doctor of medicine and surgery, or
a doctor of osteopathic medicine and surgery, licensed under
chapter 148.
i. “Prior authorization” means the same as defined in
section 514F.8.
j. “Qualified reviewer” means a physician that meets all of
the following requirements:
(1) The physician practices in the same or a similar
specialty as the health care provider that requested a prior
authorization.
(2) The physician has the training and expertise to treat
the specific medical condition that is the subject of a
request for prior authorization, including sufficient knowledge
to determine whether the health care service that is the
subject of the request is medically necessary or clinically
appropriate.
(3) The physician is employed by or contracted with the
utilization review organization to which a health care provider
submitted a request for prior authorization.
k. “Utilization review organization” means the same as
defined in section 514F.8.
2. A utilization review organization shall not deny or
downgrade a request for prior authorization unless all of the
following requirements are met:
-6- a. The decision to deny or downgrade the request is made by
either of the following:
(1) A qualified reviewer, if the health care provider
requesting prior authorization is a physician.
(2) A clinical peer, if the health care provider requesting
prior authorization is not a physician.
b. The utilization review organization provides the health
care provider that requested the prior authorization all of the
following:
(1) A written statement that cites the specific reasons
for the denial or downgrade, including any coverage criteria
or limits, or clinical criteria, that the utilization review
organization considered or that was the basis for the denial
or downgrade. The written statement must be signed by either
of the following:
(a) The qualified reviewer that made the denial or downgrade
determination if the health care provider that requested prior
authorization is a physician.
(b) The clinical peer that made the denial or downgrade
determination if the health care provider that requested prior
authorization is not a physician.
(2) A written explanation of the utilization review
organization’s appeals process. The utilization review
organization shall also provide the written explanation to the
covered person for whom prior authorization was requested.
(3) A written attestation that is either of the following:
(a) If the health care provider that requested prior
authorization is a physician, a written attestation that
the qualified reviewer who made the denial or downgrade
determination practices in the same or a similar specialty as
the health care provider, and has the requisite training and
expertise to treat the medical condition that is the subject
of the request for prior authorization, including sufficient
knowledge to determine whether the health care service is
medically necessary or clinically appropriate. The attestation
-7-shall include the qualified reviewer’s board certifications,
specialty expertise, and educational background, excluding any
personal identifiable information.
(b) If the health care provider that requested prior
authorization is not a physician, a written attestation
that the clinical peer who made the denial or downgrade
determination practices in the same or a similar specialty as
the health care provider, and the clinical peer has experience
managing the specific medical condition or administering
the health care service that is the subject of the request
for prior authorization. The attestation shall include the
clinical peer’s board certifications, specialty expertise, and
educational background, excluding any personal identifiable
information.
3. At the request of the requesting health care provider, a
utilization review organization that denies a request for prior
authorization shall, no later than seven business days after
the date that the utilization review organization notifies
the requesting health care provider of the denial, conduct a
consultation either in person or remotely, as follows:
a. Between the health care provider and a qualified reviewer
if the health care provider requesting prior authorization is a
physician.
b. Between the health care provider and a clinical peer if
the health care provider requesting prior authorization is not
a physician.
4. a. If a utilization review organization’s decision to
deny or downgrade a request for prior authorization is appealed
by the requesting health care provider or covered person, the
appeal shall be conducted by either of the following:
(1) A qualified reviewer if the health care provider
requesting prior authorization is a physician.
(2) A clinical peer if the health care provider requesting
prior authorization is not a physician.
b. A qualified reviewer or clinical peer involved in the
-8-initial denial or downgrade determination of a request for
prior authorization that is the subject of an appeal shall not
conduct the appeal.
c. When conducting an appeal of a request for prior
authorization, the qualified reviewer or clinical peer shall
consider the known clinical aspects of the health care services
under review, including but not limited to medical records
relevant to the covered person’s medical condition who is
the subject of the health care services for which prior
authorization is requested, and any relevant medical literature
submitted by the health care provider as part of the appeal.
5. This section applies to requests for prior authorization
made on or after January 1, 2027.
6. a. This section applies to the following classes of
third-party payment provider contracts, policies, or plans
delivered, issued for delivery, continued, or renewed in this
state on or after January 1, 2027:
(1) Individual or group accident and sickness insurance
providing coverage on an expense-incurred basis.
(2) An individual or group hospital or medical service
contract issued pursuant to chapter 509, 514, or 514A.
(3) An individual or group health maintenance organization
contract regulated under chapter 514B.
(4) A plan established for public employees pursuant to
chapter 509A.
b. This section shall not apply to accident-only, specified
disease, short-term hospital or medical, hospital confinement
indemnity, credit, dental, vision, Medicare supplement,
long-term care, basic hospital and medical-surgical expense
coverage as defined by the commissioner of insurance,
disability income insurance coverage, coverage issued as a
supplement to liability insurance, workers’ compensation or
similar insurance, or automobile medical payment insurance.
7. The commissioner of insurance may adopt rules pursuant to
chapter 17A to administer this section.
-9- Sec. 7. NEW SECTION. 514F.8B Prior authorizations —
exemptions.
1. For purposes of this section:
a. “Covered person” means the same as defined in section
514F.8.
b. “Emergency medical condition” means the same as defined
in 42 C.F.R. §438.114.
c. “Health benefit plan” means the same as defined in
section 514J.102.
d. “Health care professional” means the same as defined in
section 514J.102.
e. “Health carrier” means the same as defined in section
514F.8.
f. “Prior authorization” means the same as defined in
section 514F.8.
g. “Utilization review” means the same as defined in section
514F.4, subsection 3.
2. A health carrier shall not require prior authorization
for, or impose additional utilization review requirements on, a
covered person for any of the following:
a. A cancer-related screening if the cancer-related
screening is recommended by the covered person’s health care
professional based on the most recently updated national
comprehensive cancer network clinical practice guidelines in
oncology which are designated as category 2A or lower.
b. Diagnosis and treatment of an emergency medical condition
that develops or becomes evident in a covered person while
the covered person is receiving inpatient care that meets
inpatient care standards, if the emergency medical condition
is reasonably determined by a health care professional to be a
life-threatening condition unless the covered person receives
immediate assessment and treatment.
3. This section applies to all of the following:
a. Health benefit plans delivered, issued for delivery,
continued, or renewed in this state on or after January 1,
-10-2027.
b. Requests for prior authorization for a cancer-related
screening, if the screening is recommended by the covered
person’s health care professional based on the most recently
updated national comprehensive cancer network clinical practice
guidelines in oncology designated as category 2A or lower, and
is made on or after January 1, 2027.
c. Requests for prior authorization for the diagnosis and
treatment of an emergency medical condition that develops or
becomes evident in a covered person while the covered person is
receiving inpatient care that meets inpatient care standards,
if the emergency medical condition is reasonably determined by
a health care professional to be a life-threatening condition
unless the covered person receives immediate assessment and
treatment if the request is made on or after January 1, 2027.
4. a. This section applies to the following classes of
third-party payment provider contracts, policies, or plans
delivered, issued for delivery, continued, or renewed in this
state on or after January 1, 2027:
(1) Individual or group accident and sickness insurance
providing coverage on an expense-incurred basis.
(2) An individual or group hospital or medical service
contract issued pursuant to chapter 509, 514, or 514A.
(3) An individual or group health maintenance organization
contract regulated under chapter 514B.
(4) A plan established for public employees pursuant to
chapter 509A.
b. This section shall not apply to accident-only, specified
disease, short-term hospital or medical, hospital confinement
indemnity, credit, dental, vision, Medicare supplement,
long-term care, basic hospital and medical-surgical expense
coverage as defined by the commissioner of insurance,
disability income insurance coverage, coverage issued as a
supplement to liability insurance, workers’ compensation or
similar insurance, or automobile medical payment insurance.
-11- 5. The commissioner of insurance may adopt rules pursuant to
chapter 17A to administer this section.
Sec. 8. NEW SECTION. 514F.8E Enforcement.
The remedy for noncompliance with section 514F.8, 514F.8A,
514F.8B, 514F.8C, or 514F.8D shall be those remedies authorized
by chapters 505 and 507B pursuant to the procedures set forth
in sections 507B.6, 507B.7, and 507B.8. Upon a finding of
a pattern or practice of noncompliance with sections 514F.8,
514F.8A, 514F.8B, 514F.8C, or 514F.8D, the commissioner of
insurance may also suspend a utilization review organization’s
authority to conduct utilization review.
DIVISION III
PRIOR AUTHORIZATIONS — MEDICAL ASSISTANCE PROGRAM
Sec. 9. NEW SECTION. 249A.5 Prior authorization —
exemptions.
1. For purposes of this section, unless the context
otherwise requires:
a. “Emergency medical condition” means the same as defined
in 42 C.F.R.§438.114.
b. “Managed care organization” means an entity acting
pursuant to a contract with the department to administer the
medical assistance program.
c. “Prior authorization” means any process used by the
department or a managed care organization to determine if,
before a health care service is furnished to a recipient, the
service is covered or medically necessary.
d. “Utilization review” means a set of formal techniques
used to monitor or evaluate the medical necessity,
appropriateness, or efficiency of a health care service.
2. The department, or a managed care organization, shall
not require prior authorization for, or impose additional
utilization review requirements on, a recipient for any of the
following:
a. A cancer-related screening recommended for the recipient
by the recipient’s provider in accordance with the most
-12-recently updated national comprehensive cancer network clinical
practice guidelines in oncology which are designated as
category 2A or lower.
b. The diagnosis and treatment of an emergency medical
condition that develops or becomes evident in a recipient
while the recipient is receiving inpatient care that
meets inpatient care standards, if the emergency medical
condition is reasonably determined by a provider to present a
life-threatening risk unless the recipient receives immediate
assessment and treatment.
3. This section applies to all of the following:
a. All contracts between the department and a managed
care organization that are delivered, issued for delivery,
continued, extended, or renewed on or after January 1, 2027.
b. All requests for prior authorization made on or after
January 1, 2027.
4. The department may adopt rules pursuant to chapter 17A to
administer this section.
Sec. 10. NEW SECTION. 249A.6 Prior authorization —
requests.
1. A health care provider submitting a request for prior
authorization to a managed care organization shall submit the
request electronically using a standards-based application
programming interface, or another form of electronic
submission, supported by the managed care organization, that is
compliant with federal interoperability regulations.
2. This section applies to a request for prior authorization
made on or after July 1, 2027.
Sec. 11. NEW SECTION. 514I.13 Prior authorizations —
exemptions.
1. For purposes of this section:
a. “Emergency medical condition” means the same as defined
in 42 C.F.R.§438.114.
b. “Health care professional” means a person licensed or
certified under the laws of this state to provide health care
-13-services to an eligible child.
c. “Managed care organization” means an entity acting
pursuant to a contract with the department to administer the
Hawki program.
d. “Prior authorization” means any process used by the
department or a managed care organization to determine if,
before a health care service is furnished to an eligible child,
the service is covered or medically necessary.
e. “Utilization review” means a set of formal techniques
used to monitor or evaluate the medical necessity,
appropriateness, or efficiency of a health care service.
2. The department, or a managed care organization, shall
not require prior authorization for, or impose additional
utilization review requirements on, an eligible child for any
of the following:
a. A cancer-related screening recommended for the eligible
child by the eligible child’s health care professional
in accordance with the most recently updated national
comprehensive cancer network clinical practice guidelines in
oncology which are designated as category 2A or lower.
b. The diagnosis and treatment of an emergency medical
condition that develops or becomes evident in an eligible child
while the eligible child is receiving inpatient care that meets
inpatient care standards, if the emergency medical condition is
reasonably determined by a health care professional to present
a life-threatening risk unless the eligible child receives
immediate assessment and treatment.
3. This section applies to all of the following:
a. All contracts between the department and a managed
care organization that are delivered, issued for delivery,
continued, extended, or renewed on or after January 1, 2027.
b. All requests for prior authorizations made on or after
January 1, 2027.
4. The department may adopt rules pursuant to chapter 17A to
administer this section.
-14-DIVISION IV
CERTIFICATES OF NEED
Sec. 12. Section 135.61, subsection 1, paragraphs d and f,
Code 2026, are amended by striking the paragraphs.
Sec. 13. Section 135.61, subsection 12, paragraph e, Code
2026, is amended by striking the paragraph.
Sec. 14. Section 135.61, subsection 16, Code 2026, is
amended to read as follows:
16. “New institutional health service” or “changed
institutional health service” means any of the following:
a. (1) The construction, development, or other
establishment of a new institutional health facility regardless
of ownership if completing the construction, development, or
other establishment requires more than the following amount:
(a) Beginning on or after January 1, 2027, and before
December 31, 2031, four million dollars.
(b) Beginning on or after January 1, 2032, and before
December 31, 2036, four million five hundred thousand dollars.
(c) Beginning on or after January 1, 2037, five million
dollars.
(2) If the new institutional health facility involves
the use of a leased building, the market value of the leased
building shall be used when calculating the value of completing
construction, development, or other establishment under
subparagraph (1).
b. Relocation of an institutional health facility.
c. Any A capital expenditure, lease, or donation by or on
behalf of an institutional health facility in excess of one
million five hundred thousand dollars the following amount
within a consecutive twelve-month period:
(1) Beginning on or after January 1, 2027, and before
December 31, 2031, four million dollars.
(2) Beginning on or after January 1, 2032, and before
December 31, 2036, four million five hundred thousand dollars.
(3) Beginning on or after January 1, 2037, five million
-15-dollars.
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. e. (1) 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 that has a value in
excess of the following amount:
(a) Beginning on or after January 1, 2027, and before
December 31, 2031, four million dollars.
(b) Beginning on or after January 1, 2032, and before
December 31, 2036, four million five hundred thousand dollars.
(c) Beginning on or after January 1, 2037, five million
dollars.
(2) A mobile health service provided on a contract basis
-16-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. f. (1) 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 that
has a value in excess of the following amount:
(a) Beginning on or after January 1, 2027, and before
December 31, 2031, four million dollars.
(b) Beginning on or after January 1, 2032, and before
December 31, 2036, four million five hundred thousand dollars.
(c) Beginning on or after January 1, 2037, five million
dollars.
(2) A mobile health 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. g. Any A mobile health service with a value in excess of
one four million five hundred thousand dollars.
m. Any of the following:
(1) Cardiac catheterization service.
(2) Open heart surgical service.
(3) Organ transplantation service.
-17- (4) Radiation therapy service applying ionizing radiation
for the treatment of malignant disease using megavoltage
external beam equipment.
Sec. 15. Section 135.62, subsection 1, Code 2026, is amended
to read as follows:
1. a. 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.
b. The application shall be made upon on forms furnished or
prescribed by the department and shall contain such information
as required by the department may require under this subchapter
by rule adopted pursuant to chapter 17A.
c. (1) 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 thousand dollars. The fee
shall be remitted by the department to the treasurer of state,
who shall place it for deposit in the general fund of the
state. 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 each of those terms are defined in section
135C.1, shall not be required to pay the application fee.
(2) 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,
-18-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. 16. Section 135.62, subsection 2, paragraphs a and e,
Code 2026, 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 16, paragraphs “g”, “h”, and “m” paragraph “e”, and
section 135.61, subsections 2 and 18.
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, develops, renovates, relocates, or
otherwise establishes an institutional health facility.
(2) Acquires major medical equipment as provided by section
135.61, subsection 16, paragraphs “i” and “j” paragraph “f”.
Sec. 17. Section 135.62, subsection 2, paragraph h,
subparagraph (2), Code 2026, is amended to read as follows:
(2) If these conditions are not met, the institutional
health facility or health maintenance organization is subject
to review as a “new institutional health service” or “changed
institutional health service” under section 135.61, subsection
16, paragraph “f”, and is subject to sanctions under section
135.72.
Sec. 18. Section 135.62, subsection 2, Code 2026, is amended
by adding the following new paragraphs:
NEW PARAGRAPH. r. An organized outpatient health
-19-facility that provides behavioral health services as defined
by the department by rule, including but not limited to
substitution-based treatment centers for opiate addiction.
NEW PARAGRAPH. s. Open heart surgical services.
NEW PARAGRAPH. t. Organ transplantation services.
NEW PARAGRAPH. u. Radiation therapy services.
NEW PARAGRAPH. v. Cardiac catheterization services.
Sec. 19. Section 135.63, subsection 2, paragraph b, Code
2026, is amended by striking the paragraph.
Sec. 20. Section 135.65, subsections 1 and 2, Code 2026, are
amended to read as follows:
1. a. Within fifteen business days after receipt of the
date the department receives 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 135.62,
subsection 1. The department shall promptly return to the
applicant any a rejected application, to the applicant with an
explanation of the reasons for its rejection.
b. Within thirty calendar days of the date the department
sends a rejected application to an applicant, the applicant may
revise and resubmit the application once for review without
submitting another application fee under section 135.62.
2. Upon acceptance of an application for a certificate
of need, the department shall promptly undertake to notify
all affected persons in writing through electronic means
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 electronic distribution of the pertinent
information to the news media.
Sec. 21. Section 135.65, subsection 3, paragraph b, Code
2026, is amended to read as follows:
b. A period for the submission of written public hearing
-20- comments from affected persons on the application, to be held
scheduled prior to completion of the evaluation required by
paragraph “a”.
Sec. 22. Section 135.65, subsection 4, Code 2026, is amended
by striking the subsection.
Sec. 23. Section 135.66, subsection 1, Code 2026, is amended
to read as follows:
1. The department may waive the letter of intent procedures
prescribed by section 135.64 and substitute conduct a summary
review procedure, which shall be established by rules of
adopted by the department, when it the department accepts an
application for a certificate of need for a project which that
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. 24. Section 135.70, subsection 2, Code 2026, is amended
to read as follows:
2. Upon expiration of a certificate of need, and prior to
extension of the certificate of need, any affected person shall
have the right to submit to the department information which
may be relevant to the question of granting an extension. The
-21-department may call a public hearing for this purpose.
Sec. 25. Section 135.71, subsection 4, Code 2026, 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 limit specified in section 135.68.
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 calendar days beyond the time when a
decision is required under section 135.68, unless both the
applicant and the department agree to a longer deferment.
Sec. 26. Section 135P.1, subsection 3, Code 2026, is amended
to read as follows:
3. “Health facility” means an any of the following:
a. Aninstitutional health facility as defined in section
135.61, a.
b. Abirth center as defined in section 135.131, a.
c. Ahospice licensed under chapter 135J, a.
d. Ahome health agency as defined in section 144D.1, an.
e. Anassisted living program certified under chapter 231C,
a.
f. Aclinic, a.
g. Acommunity health center, or the.
h. Theuniversity of Iowa hospitals and clinics, and
includes any.
i. Acorporation, professional corporation, partnership,
limited liability company, limited liability partnership, or
other entity comprised of such health facilities.
Sec. 27. Section 135P.1, Code 2026, is amended by adding the
following new subsection:
NEW SUBSECTION. 3A. “Institutional health facility” means
any of the following without regard to whether the facility is
-22-publicly or privately owned, organized for profit, or is part
of or sponsored by a health maintenance organization:
a. A hospital as defined in section 135B.1.
b. A health care facility as defined in section 135C.1.
c. An organized outpatient health facility as defined in
section 135.61.
d. An ambulatory surgical center as defined in section
135.61.
e. A community mental health center as defined in section
225A.1.
Sec. 28. REPEAL. Section 135.64, Code 2026, is repealed.
______________________________
PAT GRASSLEY
Speaker of the House
______________________________
AMY SINCLAIR
President of the Senate
I hereby certify that this bill originated in the House and
is known as House File 2635, Ninety-first General Assembly.
______________________________
MEGHAN NELSON
Chief Clerk of the House
Approved _______________, 2026
______________________________
KIM REYNOLDS
Governor
nls/ko/md
utilization review organizations, artificial intelligence,
audits, and prior authorizations; certificate of need
processes; and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
DIVISION I
HEALTH INSURANCE TRADE PRACTICES
Section 1. Section 514F.8, subsection 1, Code 2026, is
amended by adding the following new paragraph:
NEW PARAGRAPH. 0b. “Downgrade” means a decision by
a utilization review organization to change an expedited
or urgent request for prior authorization to a standard
determination, or otherwise modify a health care service that
is the subject of a request for prior authorization to a
lower-level health care service.
-1- Sec. 2. Section 514F.8, Code 2026, is amended by adding the
following new subsection:
NEW SUBSECTION. 2A. A utilization review organization may
use an artificial intelligence-based algorithm or system to
provide an initial review of a request for prior authorization,
except that, for a prior authorization request for a health
care service based on medical necessity, a utilization review
organization shall not use an artificial intelligence-based
algorithm or system as the sole basis for the utilization
review organization’s decision to deny, delay, or downgrade the
prior authorization request.
Sec. 3. NEW SECTION. 514F.8C Utilization review
organizations — audits.
1. As used in this section, unless the context otherwise
requires:
a. “Audit” means a review, investigation, or request for
additional documentation by a utilization review organization
before or after issuing payment on a claim to a health care
provider.
b. “Commissioner” means the commissioner of insurance.
c. “Health care provider” means the same as defined in
section 514F.8.
d. “Health carrier” means the same as defined in section
514F.8.
e. “Utilization review organization” means the same as
defined in section 514F.8.
2. a. A utilization review organization that conducts an
audit shall notify the health care provider that submitted
the claim of the initiation of the audit no later than
fifteen calendar days after the date the utilization review
organization selects the claim for audit.
b. A utilization review organization shall complete an audit
of a claim and issue a determination on the claim to the health
care provider that submitted the claim no later than forty-five
calendar days after the date that the utilization review
-2-organization receives all requested documentation regarding the
claim from the health care provider.
c. A health care provider that submitted a claim that is
the subject of an audit by a utilization review organization
that receives an adverse determination regarding the claim may
appeal the adverse determination no later than thirty calendar
days after the date the health care provider receives the audit
determination.
d. A utilization review organization shall consider an
appeal under paragraph “c” and issue a final determination
on the claim that is the subject of the appeal no later than
thirty calendar days after the date the utilization review
organization receives notice of the appeal.
e. If, after a hearing, the commissioner finds that a
utilization review organization has violated this subsection,
the claim shall be approved by the utilization review
organization and promptly paid, including interest at the rate
of ten percent per annum.
3. A health care provider may opt-in to receive electronic
delivery of notices and audit determinations from a utilization
review organization. A utilization review organization may
determine the method by which a health care provider may
opt-in.
4. a. This section applies to the following classes of
third-party payment provider contracts, policies, or plans
delivered, issued for delivery, continued, or renewed in this
state on or after January 1, 2027:
(1) Individual or group accident and sickness insurance
providing coverage on an expense-incurred basis.
(2) An individual or group hospital or medical service
contract issued pursuant to chapter 509, 514, or 514A.
(3) An individual or group health maintenance organization
contract regulated under chapter 514B.
(4) A plan established for public employees pursuant to
chapter 509A.
-3- b. This section shall not apply to accident-only, specified
disease, short-term hospital or medical, hospital confinement
indemnity, credit, dental, vision, Medicare supplement,
long-term care, basic hospital and medical-surgical expense
coverage as defined by the commissioner of insurance,
disability income insurance coverage, coverage issued as a
supplement to liability insurance, workers’ compensation or
similar insurance, or automobile medical payment insurance.
5. The commissioner may adopt rules pursuant to chapter 17A
to administer and enforce this section.
6. a. This section shall apply to an audit initiated on or
after January 1, 2027.
b. This section shall not apply to a claim that is under
active fraud investigation by a state or federal authority.
Sec. 4. NEW SECTION. 514F.8D Health carriers — standards
of conduct.
1. As used in this section, unless the context otherwise
requires:
a. “Health care provider” means the same as defined in
section 514J.102.
b. “Health carrier” means the same as defined in section
514F.8.
2. A health carrier shall not impose on a health care
provider, directly or indirectly, any financial penalty,
reimbursement reduction, or administrative fee, or terminate a
health care provider’s participation in the health carrier’s
network, based on the health care provider’s referral to, or
affiliation with, an out-of-network health care provider.
3. A health carrier shall not interfere with, or participate
in any capacity in, a health care provider’s decisions
regarding staffing and referrals, except as otherwise provided
by law.
4. A health carrier shall not offer, attempt to enforce,
or enforce an agreement, or an amendment to an agreement, with
a health care provider without providing an opportunity for
-4-negotiation.
5. The commissioner may adopt rules pursuant to chapter 17A
to administer and enforce this section.
DIVISION II
PRIOR AUTHORIZATIONS
Sec. 5. Section 514F.8, Code 2026, is amended by adding the
following new subsection:
NEW SUBSECTION. 6A. a. A health care provider shall
submit all requests for prior authorization to a health carrier
electronically using a standards-based application programming
interface, or another form of electronic submission,
supported by the health carrier that is compliant with federal
interoperability regulations.
b. This subsection applies to a request for prior
authorization made on or after July 1, 2027.
Sec. 6. NEW SECTION. 514F.8A Prior authorizations — peer
review.
1. For purposes of this section, unless the context
otherwise requires:
a. “Clinical peer” means a health care professional that
meets all of the following requirements:
(1) The health care professional practices in the same or
similar specialty as the health care provider that requested
a prior authorization.
(2) The health care professional has experience managing
the specific medical condition or administering the health care
service that is the subject of the prior authorization request.
(3) The health care professional is employed by or
contracted with the utilization review organization or health
carrier to which a health care provider submitted a request for
prior authorization.
b. “Covered person” means the same as defined in section
514F.8.
c. “Downgrade” means a decision by a utilization review
organization to change an expedited or urgent request for prior
-5-authorization to a standard determination, or otherwise modify
a health care service that is the subject of a request for
prior authorization to a lower-level health care service.
d. “Health care professional” means the same as defined in
section 514J.102.
e. “Health care provider” means the same as defined in
section 514F.8.
f. “Health care services” means the same as defined in
section 514F.8.
g. “Health carrier” means the same as defined in section
514F.8.
h. “Physician” means a doctor of medicine and surgery, or
a doctor of osteopathic medicine and surgery, licensed under
chapter 148.
i. “Prior authorization” means the same as defined in
section 514F.8.
j. “Qualified reviewer” means a physician that meets all of
the following requirements:
(1) The physician practices in the same or a similar
specialty as the health care provider that requested a prior
authorization.
(2) The physician has the training and expertise to treat
the specific medical condition that is the subject of a
request for prior authorization, including sufficient knowledge
to determine whether the health care service that is the
subject of the request is medically necessary or clinically
appropriate.
(3) The physician is employed by or contracted with the
utilization review organization to which a health care provider
submitted a request for prior authorization.
k. “Utilization review organization” means the same as
defined in section 514F.8.
2. A utilization review organization shall not deny or
downgrade a request for prior authorization unless all of the
following requirements are met:
-6- a. The decision to deny or downgrade the request is made by
either of the following:
(1) A qualified reviewer, if the health care provider
requesting prior authorization is a physician.
(2) A clinical peer, if the health care provider requesting
prior authorization is not a physician.
b. The utilization review organization provides the health
care provider that requested the prior authorization all of the
following:
(1) A written statement that cites the specific reasons
for the denial or downgrade, including any coverage criteria
or limits, or clinical criteria, that the utilization review
organization considered or that was the basis for the denial
or downgrade. The written statement must be signed by either
of the following:
(a) The qualified reviewer that made the denial or downgrade
determination if the health care provider that requested prior
authorization is a physician.
(b) The clinical peer that made the denial or downgrade
determination if the health care provider that requested prior
authorization is not a physician.
(2) A written explanation of the utilization review
organization’s appeals process. The utilization review
organization shall also provide the written explanation to the
covered person for whom prior authorization was requested.
(3) A written attestation that is either of the following:
(a) If the health care provider that requested prior
authorization is a physician, a written attestation that
the qualified reviewer who made the denial or downgrade
determination practices in the same or a similar specialty as
the health care provider, and has the requisite training and
expertise to treat the medical condition that is the subject
of the request for prior authorization, including sufficient
knowledge to determine whether the health care service is
medically necessary or clinically appropriate. The attestation
-7-shall include the qualified reviewer’s board certifications,
specialty expertise, and educational background, excluding any
personal identifiable information.
(b) If the health care provider that requested prior
authorization is not a physician, a written attestation
that the clinical peer who made the denial or downgrade
determination practices in the same or a similar specialty as
the health care provider, and the clinical peer has experience
managing the specific medical condition or administering
the health care service that is the subject of the request
for prior authorization. The attestation shall include the
clinical peer’s board certifications, specialty expertise, and
educational background, excluding any personal identifiable
information.
3. At the request of the requesting health care provider, a
utilization review organization that denies a request for prior
authorization shall, no later than seven business days after
the date that the utilization review organization notifies
the requesting health care provider of the denial, conduct a
consultation either in person or remotely, as follows:
a. Between the health care provider and a qualified reviewer
if the health care provider requesting prior authorization is a
physician.
b. Between the health care provider and a clinical peer if
the health care provider requesting prior authorization is not
a physician.
4. a. If a utilization review organization’s decision to
deny or downgrade a request for prior authorization is appealed
by the requesting health care provider or covered person, the
appeal shall be conducted by either of the following:
(1) A qualified reviewer if the health care provider
requesting prior authorization is a physician.
(2) A clinical peer if the health care provider requesting
prior authorization is not a physician.
b. A qualified reviewer or clinical peer involved in the
-8-initial denial or downgrade determination of a request for
prior authorization that is the subject of an appeal shall not
conduct the appeal.
c. When conducting an appeal of a request for prior
authorization, the qualified reviewer or clinical peer shall
consider the known clinical aspects of the health care services
under review, including but not limited to medical records
relevant to the covered person’s medical condition who is
the subject of the health care services for which prior
authorization is requested, and any relevant medical literature
submitted by the health care provider as part of the appeal.
5. This section applies to requests for prior authorization
made on or after January 1, 2027.
6. a. This section applies to the following classes of
third-party payment provider contracts, policies, or plans
delivered, issued for delivery, continued, or renewed in this
state on or after January 1, 2027:
(1) Individual or group accident and sickness insurance
providing coverage on an expense-incurred basis.
(2) An individual or group hospital or medical service
contract issued pursuant to chapter 509, 514, or 514A.
(3) An individual or group health maintenance organization
contract regulated under chapter 514B.
(4) A plan established for public employees pursuant to
chapter 509A.
b. This section shall not apply to accident-only, specified
disease, short-term hospital or medical, hospital confinement
indemnity, credit, dental, vision, Medicare supplement,
long-term care, basic hospital and medical-surgical expense
coverage as defined by the commissioner of insurance,
disability income insurance coverage, coverage issued as a
supplement to liability insurance, workers’ compensation or
similar insurance, or automobile medical payment insurance.
7. The commissioner of insurance may adopt rules pursuant to
chapter 17A to administer this section.
-9- Sec. 7. NEW SECTION. 514F.8B Prior authorizations —
exemptions.
1. For purposes of this section:
a. “Covered person” means the same as defined in section
514F.8.
b. “Emergency medical condition” means the same as defined
in 42 C.F.R. §438.114.
c. “Health benefit plan” means the same as defined in
section 514J.102.
d. “Health care professional” means the same as defined in
section 514J.102.
e. “Health carrier” means the same as defined in section
514F.8.
f. “Prior authorization” means the same as defined in
section 514F.8.
g. “Utilization review” means the same as defined in section
514F.4, subsection 3.
2. A health carrier shall not require prior authorization
for, or impose additional utilization review requirements on, a
covered person for any of the following:
a. A cancer-related screening if the cancer-related
screening is recommended by the covered person’s health care
professional based on the most recently updated national
comprehensive cancer network clinical practice guidelines in
oncology which are designated as category 2A or lower.
b. Diagnosis and treatment of an emergency medical condition
that develops or becomes evident in a covered person while
the covered person is receiving inpatient care that meets
inpatient care standards, if the emergency medical condition
is reasonably determined by a health care professional to be a
life-threatening condition unless the covered person receives
immediate assessment and treatment.
3. This section applies to all of the following:
a. Health benefit plans delivered, issued for delivery,
continued, or renewed in this state on or after January 1,
-10-2027.
b. Requests for prior authorization for a cancer-related
screening, if the screening is recommended by the covered
person’s health care professional based on the most recently
updated national comprehensive cancer network clinical practice
guidelines in oncology designated as category 2A or lower, and
is made on or after January 1, 2027.
c. Requests for prior authorization for the diagnosis and
treatment of an emergency medical condition that develops or
becomes evident in a covered person while the covered person is
receiving inpatient care that meets inpatient care standards,
if the emergency medical condition is reasonably determined by
a health care professional to be a life-threatening condition
unless the covered person receives immediate assessment and
treatment if the request is made on or after January 1, 2027.
4. a. This section applies to the following classes of
third-party payment provider contracts, policies, or plans
delivered, issued for delivery, continued, or renewed in this
state on or after January 1, 2027:
(1) Individual or group accident and sickness insurance
providing coverage on an expense-incurred basis.
(2) An individual or group hospital or medical service
contract issued pursuant to chapter 509, 514, or 514A.
(3) An individual or group health maintenance organization
contract regulated under chapter 514B.
(4) A plan established for public employees pursuant to
chapter 509A.
b. This section shall not apply to accident-only, specified
disease, short-term hospital or medical, hospital confinement
indemnity, credit, dental, vision, Medicare supplement,
long-term care, basic hospital and medical-surgical expense
coverage as defined by the commissioner of insurance,
disability income insurance coverage, coverage issued as a
supplement to liability insurance, workers’ compensation or
similar insurance, or automobile medical payment insurance.
-11- 5. The commissioner of insurance may adopt rules pursuant to
chapter 17A to administer this section.
Sec. 8. NEW SECTION. 514F.8E Enforcement.
The remedy for noncompliance with section 514F.8, 514F.8A,
514F.8B, 514F.8C, or 514F.8D shall be those remedies authorized
by chapters 505 and 507B pursuant to the procedures set forth
in sections 507B.6, 507B.7, and 507B.8. Upon a finding of
a pattern or practice of noncompliance with sections 514F.8,
514F.8A, 514F.8B, 514F.8C, or 514F.8D, the commissioner of
insurance may also suspend a utilization review organization’s
authority to conduct utilization review.
DIVISION III
PRIOR AUTHORIZATIONS — MEDICAL ASSISTANCE PROGRAM
Sec. 9. NEW SECTION. 249A.5 Prior authorization —
exemptions.
1. For purposes of this section, unless the context
otherwise requires:
a. “Emergency medical condition” means the same as defined
in 42 C.F.R.§438.114.
b. “Managed care organization” means an entity acting
pursuant to a contract with the department to administer the
medical assistance program.
c. “Prior authorization” means any process used by the
department or a managed care organization to determine if,
before a health care service is furnished to a recipient, the
service is covered or medically necessary.
d. “Utilization review” means a set of formal techniques
used to monitor or evaluate the medical necessity,
appropriateness, or efficiency of a health care service.
2. The department, or a managed care organization, shall
not require prior authorization for, or impose additional
utilization review requirements on, a recipient for any of the
following:
a. A cancer-related screening recommended for the recipient
by the recipient’s provider in accordance with the most
-12-recently updated national comprehensive cancer network clinical
practice guidelines in oncology which are designated as
category 2A or lower.
b. The diagnosis and treatment of an emergency medical
condition that develops or becomes evident in a recipient
while the recipient is receiving inpatient care that
meets inpatient care standards, if the emergency medical
condition is reasonably determined by a provider to present a
life-threatening risk unless the recipient receives immediate
assessment and treatment.
3. This section applies to all of the following:
a. All contracts between the department and a managed
care organization that are delivered, issued for delivery,
continued, extended, or renewed on or after January 1, 2027.
b. All requests for prior authorization made on or after
January 1, 2027.
4. The department may adopt rules pursuant to chapter 17A to
administer this section.
Sec. 10. NEW SECTION. 249A.6 Prior authorization —
requests.
1. A health care provider submitting a request for prior
authorization to a managed care organization shall submit the
request electronically using a standards-based application
programming interface, or another form of electronic
submission, supported by the managed care organization, that is
compliant with federal interoperability regulations.
2. This section applies to a request for prior authorization
made on or after July 1, 2027.
Sec. 11. NEW SECTION. 514I.13 Prior authorizations —
exemptions.
1. For purposes of this section:
a. “Emergency medical condition” means the same as defined
in 42 C.F.R.§438.114.
b. “Health care professional” means a person licensed or
certified under the laws of this state to provide health care
-13-services to an eligible child.
c. “Managed care organization” means an entity acting
pursuant to a contract with the department to administer the
Hawki program.
d. “Prior authorization” means any process used by the
department or a managed care organization to determine if,
before a health care service is furnished to an eligible child,
the service is covered or medically necessary.
e. “Utilization review” means a set of formal techniques
used to monitor or evaluate the medical necessity,
appropriateness, or efficiency of a health care service.
2. The department, or a managed care organization, shall
not require prior authorization for, or impose additional
utilization review requirements on, an eligible child for any
of the following:
a. A cancer-related screening recommended for the eligible
child by the eligible child’s health care professional
in accordance with the most recently updated national
comprehensive cancer network clinical practice guidelines in
oncology which are designated as category 2A or lower.
b. The diagnosis and treatment of an emergency medical
condition that develops or becomes evident in an eligible child
while the eligible child is receiving inpatient care that meets
inpatient care standards, if the emergency medical condition is
reasonably determined by a health care professional to present
a life-threatening risk unless the eligible child receives
immediate assessment and treatment.
3. This section applies to all of the following:
a. All contracts between the department and a managed
care organization that are delivered, issued for delivery,
continued, extended, or renewed on or after January 1, 2027.
b. All requests for prior authorizations made on or after
January 1, 2027.
4. The department may adopt rules pursuant to chapter 17A to
administer this section.
-14-DIVISION IV
CERTIFICATES OF NEED
Sec. 12. Section 135.61, subsection 1, paragraphs d and f,
Code 2026, are amended by striking the paragraphs.
Sec. 13. Section 135.61, subsection 12, paragraph e, Code
2026, is amended by striking the paragraph.
Sec. 14. Section 135.61, subsection 16, Code 2026, is
amended to read as follows:
16. “New institutional health service” or “changed
institutional health service” means any of the following:
a. (1) The construction, development, or other
establishment of a new institutional health facility regardless
of ownership if completing the construction, development, or
other establishment requires more than the following amount:
(a) Beginning on or after January 1, 2027, and before
December 31, 2031, four million dollars.
(b) Beginning on or after January 1, 2032, and before
December 31, 2036, four million five hundred thousand dollars.
(c) Beginning on or after January 1, 2037, five million
dollars.
(2) If the new institutional health facility involves
the use of a leased building, the market value of the leased
building shall be used when calculating the value of completing
construction, development, or other establishment under
subparagraph (1).
b. Relocation of an institutional health facility.
c. Any A capital expenditure, lease, or donation by or on
behalf of an institutional health facility in excess of one
million five hundred thousand dollars the following amount
within a consecutive twelve-month period:
(1) Beginning on or after January 1, 2027, and before
December 31, 2031, four million dollars.
(2) Beginning on or after January 1, 2032, and before
December 31, 2036, four million five hundred thousand dollars.
(3) Beginning on or after January 1, 2037, five million
-15-dollars.
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. e. (1) 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 that has a value in
excess of the following amount:
(a) Beginning on or after January 1, 2027, and before
December 31, 2031, four million dollars.
(b) Beginning on or after January 1, 2032, and before
December 31, 2036, four million five hundred thousand dollars.
(c) Beginning on or after January 1, 2037, five million
dollars.
(2) A mobile health service provided on a contract basis
-16-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. f. (1) 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 that
has a value in excess of the following amount:
(a) Beginning on or after January 1, 2027, and before
December 31, 2031, four million dollars.
(b) Beginning on or after January 1, 2032, and before
December 31, 2036, four million five hundred thousand dollars.
(c) Beginning on or after January 1, 2037, five million
dollars.
(2) A mobile health 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. g. Any A mobile health service with a value in excess of
one four million five hundred thousand dollars.
m. Any of the following:
(1) Cardiac catheterization service.
(2) Open heart surgical service.
(3) Organ transplantation service.
-17- (4) Radiation therapy service applying ionizing radiation
for the treatment of malignant disease using megavoltage
external beam equipment.
Sec. 15. Section 135.62, subsection 1, Code 2026, is amended
to read as follows:
1. a. 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.
b. The application shall be made upon on forms furnished or
prescribed by the department and shall contain such information
as required by the department may require under this subchapter
by rule adopted pursuant to chapter 17A.
c. (1) 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 thousand dollars. The fee
shall be remitted by the department to the treasurer of state,
who shall place it for deposit in the general fund of the
state. 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 each of those terms are defined in section
135C.1, shall not be required to pay the application fee.
(2) 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,
-18-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. 16. Section 135.62, subsection 2, paragraphs a and e,
Code 2026, 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 16, paragraphs “g”, “h”, and “m” paragraph “e”, and
section 135.61, subsections 2 and 18.
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, develops, renovates, relocates, or
otherwise establishes an institutional health facility.
(2) Acquires major medical equipment as provided by section
135.61, subsection 16, paragraphs “i” and “j” paragraph “f”.
Sec. 17. Section 135.62, subsection 2, paragraph h,
subparagraph (2), Code 2026, is amended to read as follows:
(2) If these conditions are not met, the institutional
health facility or health maintenance organization is subject
to review as a “new institutional health service” or “changed
institutional health service” under section 135.61, subsection
16, paragraph “f”, and is subject to sanctions under section
135.72.
Sec. 18. Section 135.62, subsection 2, Code 2026, is amended
by adding the following new paragraphs:
NEW PARAGRAPH. r. An organized outpatient health
-19-facility that provides behavioral health services as defined
by the department by rule, including but not limited to
substitution-based treatment centers for opiate addiction.
NEW PARAGRAPH. s. Open heart surgical services.
NEW PARAGRAPH. t. Organ transplantation services.
NEW PARAGRAPH. u. Radiation therapy services.
NEW PARAGRAPH. v. Cardiac catheterization services.
Sec. 19. Section 135.63, subsection 2, paragraph b, Code
2026, is amended by striking the paragraph.
Sec. 20. Section 135.65, subsections 1 and 2, Code 2026, are
amended to read as follows:
1. a. Within fifteen business days after receipt of the
date the department receives 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 135.62,
subsection 1. The department shall promptly return to the
applicant any a rejected application, to the applicant with an
explanation of the reasons for its rejection.
b. Within thirty calendar days of the date the department
sends a rejected application to an applicant, the applicant may
revise and resubmit the application once for review without
submitting another application fee under section 135.62.
2. Upon acceptance of an application for a certificate
of need, the department shall promptly undertake to notify
all affected persons in writing through electronic means
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 electronic distribution of the pertinent
information to the news media.
Sec. 21. Section 135.65, subsection 3, paragraph b, Code
2026, is amended to read as follows:
b. A period for the submission of written public hearing
-20- comments from affected persons on the application, to be held
scheduled prior to completion of the evaluation required by
paragraph “a”.
Sec. 22. Section 135.65, subsection 4, Code 2026, is amended
by striking the subsection.
Sec. 23. Section 135.66, subsection 1, Code 2026, is amended
to read as follows:
1. The department may waive the letter of intent procedures
prescribed by section 135.64 and substitute conduct a summary
review procedure, which shall be established by rules of
adopted by the department, when it the department accepts an
application for a certificate of need for a project which that
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. 24. Section 135.70, subsection 2, Code 2026, is amended
to read as follows:
2. Upon expiration of a certificate of need, and prior to
extension of the certificate of need, any affected person shall
have the right to submit to the department information which
may be relevant to the question of granting an extension. The
-21-department may call a public hearing for this purpose.
Sec. 25. Section 135.71, subsection 4, Code 2026, 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 limit specified in section 135.68.
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 calendar days beyond the time when a
decision is required under section 135.68, unless both the
applicant and the department agree to a longer deferment.
Sec. 26. Section 135P.1, subsection 3, Code 2026, is amended
to read as follows:
3. “Health facility” means an any of the following:
a. Aninstitutional health facility as defined in section
135.61, a.
b. Abirth center as defined in section 135.131, a.
c. Ahospice licensed under chapter 135J, a.
d. Ahome health agency as defined in section 144D.1, an.
e. Anassisted living program certified under chapter 231C,
a.
f. Aclinic, a.
g. Acommunity health center, or the.
h. Theuniversity of Iowa hospitals and clinics, and
includes any.
i. Acorporation, professional corporation, partnership,
limited liability company, limited liability partnership, or
other entity comprised of such health facilities.
Sec. 27. Section 135P.1, Code 2026, is amended by adding the
following new subsection:
NEW SUBSECTION. 3A. “Institutional health facility” means
any of the following without regard to whether the facility is
-22-publicly or privately owned, organized for profit, or is part
of or sponsored by a health maintenance organization:
a. A hospital as defined in section 135B.1.
b. A health care facility as defined in section 135C.1.
c. An organized outpatient health facility as defined in
section 135.61.
d. An ambulatory surgical center as defined in section
135.61.
e. A community mental health center as defined in section
225A.1.
Sec. 28. REPEAL. Section 135.64, Code 2026, is repealed.
______________________________
PAT GRASSLEY
Speaker of the House
______________________________
AMY SINCLAIR
President of the Senate
I hereby certify that this bill originated in the House and
is known as House File 2635, Ninety-first General Assembly.
______________________________
MEGHAN NELSON
Chief Clerk of the House
Approved _______________, 2026
______________________________
KIM REYNOLDS
Governor
nls/ko/md