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H.450

Introduced by   Representatives Hube of Londonderry, Clark of Vergennes, Larocque of Barnet, Marron of Stowe, O’Donnell of Vernon and Schiavone of Shelburne

Referred to Committee on

Date:

Subject:  Health; certificate of need

Statement of purpose:  This bill proposes to reform Vermont’s certificate of need laws.

AN ACT RELATING TO CERTIFICATE OF NEED REFORM

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  18 V.S.A. § 9405(b) is amended to read:

(b)  On or before July 1, 2005, the commissioner, in consultation with the secretary of human services, shall submit to the governor a four-year health resource allocation plan.  The plan shall identify Vermont needs in health care services, programs, and facilities; the resources available to meet those needs; and the priorities for addressing those needs on a statewide basis.  The commissioner may update the plan every four years thereafter. 

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Sec. 2.  18 V.S.A. § 9405a is amended to read:

§ 9405a.  COMMUNITY NEEDS ASSESSMENT AND STRATEGIC PLANNING

On or before January 1, 2005, each hospital shall conduct a four-year community needs assessment.  The assessment shall identify and prioritize the health care needs of the service area or patient population for which a hospital provides services, and engage the public in the hospital’s strategic planning process.  It shall be accomplished in collaboration with community members, including other health care professionals in the community, local government officials, community organizations, and local businesses.  The process for assessing the community’s health care needs shall include at least one public meeting held solely for soliciting public comment, notice for which shall be provided pursuant to section 174 of Title 1.  The needs assessment shall be prepared in a uniform format approved by the commissioner and shall be summarized in the hospital’s community report.  In addition, each hospital shall develop a mechanism for receiving ongoing public comment, including an annual public meeting, regarding the community needs assessment and for revising it biannually so that the assessment will continue to project a four-year vision.  Subsequent community needs assessments shall be conducted every four years thereafter, beginning March 1, 2009.

Sec. 3.  18 V.S.A. § 9405b(b) is amended to read:

(b)  On or before January 1, 2005, and annually thereafter beginning on June 1, 2006, the board of directors or other governing body of each hospital licensed under chapter 43 of this title shall publish its community report in a uniform format approved by the commissioner, and in accordance with the standards and procedures adopted by rule under this section, and shall hold one or more public hearings to permit community members to comment on the report.  Notice of meetings shall be by publication, consistent with section 174 of Title 1.  Hospitals located outside this state which serve a significant number of Vermont residents, as determined by the commissioner, shall be invited to participate in the community report process established by this subsection.

Sec. 4.  18 V.S.A. § 9432 is amended to read:

§ 9432.  DEFINITIONS

As used in this subchapter:

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(4)  “Capital expenditure” means an expenditure for the plant or equipment which is not properly chargeable as an expense of operation and maintenance and includes acquisition by purchase, donation, or leasehold expenditure, or operating lease that does not meet the definition of an “operating lease” under statement 13 of the Federal Accounting Standards Board as calculated over the length of the lease for plant or equipment, and includes or which functions as a means of financing the acquisition of long-term assets, including assets having an expected life of at least three years.  The term does not include debt financing expenses.  A capital expenditure includes the cost of studies, surveys, designs, plans, working drawings, specifications, and other activities essential to the acquisition, improvement, expansion, or replacement of the plant and equipment.

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(7)  “Health care facility” means all persons or institutions, including mobile facilities, whether public or private, proprietary or not for profit, which offer diagnosis, treatment, inpatient, or ambulatory care to two or more unrelated persons, and the buildings in which those services are offered.  The term shall not apply to any institution operated by religious groups relying solely on spiritual means through prayer for healing, but shall include but is not limited to:

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(13)  “Diagnostic imaging facility” means a nonhospital‑based facility or a portion thereof where radiological procedures, including computerized tomography (CT) scans and magnetic resonance imaging (MRI), are offered or performed on a freestanding or mobile basis.

Sec. 5.  18 V.S.A. § 9434 is amended to read:

§ 9434.  CERTIFICATE OF NEED; GENERAL RULES

(a)  A health care facility other than a hospital shall not develop, or have developed on its behalf a new health care project without issuance of a certificate of need by the commissioner.  For purposes of this subsection, a “new health care project” includes the following:

(1)  The construction, development, purchase, renovation, or other establishment of a health care facility,or any.

(2)  Any capital expenditure by or on behalf of a health care facility, for which the capital cost exceeds $1,500,000.00.

(2)(3)  A change from one licensing period to the next in the number of licensed beds of a health care facility through addition or conversion, or through relocation from one physical facility or site to another.

(3)(4)  The offering of any home health service.

(4)(5)  The purchase, lease, or other comparable arrangement of a single piece of diagnostic and therapeutic equipment for which the cost, or in the case of a donation the value, is in excess of $1,000,000.00.  For purposes of this subdivision, the purchase or lease of one or more articles of diagnostic or therapeutic equipment which are necessarily interdependent in the performance of their ordinary functions or which would constitute any health care facility included under subdivision 9432(7)(B) of this title, as determined by the commissioner, shall be considered together in calculating the amount of an expenditure.  The commissioner’s determination of functional interdependence of items of equipment under this subdivision shall have the effect of a final decision and is subject to appeal under this subchapter.

(5)(6)  The offering of a health care service or technology having an annual operating expense which exceeds $500,000.00 for either of the next two budgeted fiscal years, if the service or technology was not offered or employed by the health care facility within the previous three fiscal years.

(b)  A health care facility other than a hospital that proposes to develop a project described in subdivision (a)(1) or (4) of this section which is exempt from the requirements of this subchapter solely because the cost or value of the proposed project does not exceed the financial thresholds of those subdivisions shall file a letter of intent with the commissioner, if the cost or value is greater than $750,000.00 or, in the case of durable medical equipment, $500,000.00. Upon review, the commissioner may require the health care facility to obtain a certificate of need if, within 30 days of receiving the letter of intent, he or she finds that the proposed development:

(1)  may be inconsistent with the health resource allocation plan;

(2)  has the potential for significantly increasing utilization or rates; or

(3)  may substantially change the type, scope, or volume of service.

(c)  A hospital shall not develop, or have developed on its behalf a new health care project without issuance of a certificate of need by the commissioner.  For purposes of this subsection, a “new health care project” includes the following:

(1)  The construction, development, purchase, renovation or other establishment of a health care facility, or any.

(2)  Any capital expenditure by or on behalf of a hospital, for which the capital cost exceeds $3,000,000.00 or, if for the purpose of renovation of the hospital’s existing facility or the purchase of nondiagnostic or nontherapeutic equipment for the hospital’s existing facility, in excess of $3,000,000.00 or one percent of the hospital’s approved budget, whichever is greater.

(2)(3)  The purchase, lease, or other comparable arrangement of a single piece of diagnostic and therapeutic equipment for which the cost, or in the case of a donation the value, is in excess of $1,000,000.00.  For purposes of this subdivision, the purchase or lease of one or more articles of diagnostic or therapeutic equipment which are necessarily interdependent in the performance of their ordinary functions or which would constitute any health care facility included under subdivision 9432(7)(B) of this title, as determined by the commissioner, shall be considered together in calculating the amount of an expenditure.  The commissioner’s determination of functional interdependence of items of equipment under this subdivision shall have the effect of a final decision and is subject to appeal under this subchapter.

(3)(4)  The offering of a health care service or technology having an annual operating expense which exceeds $500,000.00 for either of the next two budgeted fiscal years, if the service or technology was not offered or employed by the hospital within the previous three fiscal years.

(4)(5)  A change from one licensing period to the next in the number of licensed beds of a health care facility through addition or conversion, or through relocation from one physical facility or site to another.

(d)  A hospital that proposes to develop a project described in subdivision (c)(1) or (2) of this section which is exempt from the requirements of this subchapter solely because the cost or value of the proposed project does not exceed the financial thresholds of those subdivisions shall file a letter of intent with the commissioner, if the cost or value is greater than $1,500,000.00 or, in the case of diagnostic and therapeutic equipment, $750,000.00. Upon review, the commissioner may require the health care facility to obtain a certificate of need if, within 30 days of receiving the letter of intent, he or she finds that the proposed development:

(1)  may be inconsistent with the health resource allocation plan;

(2)  has the potential for significantly increasing utilization or rates;

(3)  may substantially change the type, scope, or volume of service; or

(4)  has the potential to place an undue financial burden on the hospital’s resources.

(e)(c)  In the case of a project which requires a certificate of need under this section, expenditures for which are anticipated to be in excess of $20,000,000.00, the applicant first shall secure a conceptual development phase certificate of need, in accordance with the standards and procedures established in this subchapter, which permits the applicant to make expenditures for architectural services, engineering design services, and any other planning services needed in connection with the project.  Upon completion of the conceptual development phase of the project, and before offering or further developing the project, the applicant shall secure a final certificate of need, in accordance with the standards and procedures established in this subchapter.  Applicants shall not be subject to sanctions for failure to comply with the provisions of this subsection if such failure is solely the result of good faith reliance on verified project cost estimates issued by qualified persons, which cost estimates would have led a reasonable person to conclude the project was not anticipated to be in excess of $20,000,000.00 and therefore not subject to this subsection.

(f)(d)  If the commissioner determines that a person required to obtain a certificate of need under this subchapter has separated a single project into components in order to avoid cost thresholds or other requirements under this subchapter, the person shall be required to submit an application for a certificate of need for the entire project, and the commissioner may proceed under section 9445 of this title.  The commissioner’s determination under this subsection shall have the effect of a final decision and is subject to appeal under this subchapter.

(g)(e)  Beginning January 1, 2005, and biannually thereafter, the commissioner may by rule adjust the monetary jurisdictional thresholds contained in this section.  In doing so, the commissioner shall reflect the same categories of health care facilities, services, and programs recognized in this section.  Any adjustment by the commissioner shall not exceed the consumer price index rate of inflation.

Sec. 6.  18 V.S.A. § 9435 is amended to read:

§ 9435.  EXCLUSIONS

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(c)  The provisions of subsection (a) of this section shall not apply to offices owned or, operated, or leased by a hospital or its subsidiary, parent, or holding company, outpatient diagnostic or therapy programs, kidney disease treatment centers, independent diagnostic laboratories, cardiac catheterization laboratories, radiation therapy facilities, ambulatory surgical centers, and diagnostic imaging facilities and similar facilities owned or operated by a physician, dentist, or other practitioner of the healing arts.

(d)  Excluded from this subchapter are expenditures relating to information technology.

Sec. 7.  18 V.S.A. § 9440 is amended to read:

§ 9440.  PROCEDURES

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(c)  The application process shall be as follows:

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(3)  The commissioner shall review each letter of intent and, if the letter contains the information required for letters of intent as established by the commissioner by rule, within 30 days, determine whether the project described in the letter will require a certificate of need.  If the commissioner determines that a certificate of need is required for a proposed expenditure or action, an application for a certificate of need shall be filed before development of the project begins.

(4)  Within 15 days or, in the case of review cycle applications under section 9439 of this title, within 30 days of receipt of an application, the commissioner shall notify the applicant that the application contains all necessary information required and is complete, or that additional information is required.

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(9)  Except in the case of a health care project involving capital expenditures in excess of $20,000,000.00, a completeness determination shall be made within six months of the date the application is filed.

(d)  The Except in cases eligible for expedited review under subsection (e) or (f) of this section, the review process shall be as follows:

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(e)  The commissioner shall adopt rules governing procedures for the expeditious processing of applications for replacement, repair, rebuilding, or reequipping of any part of a health care facility or health maintenance organization destroyed or damaged as the result of fire, storm, flood, act of God, or civil disturbance, or any other circumstances beyond the control of the applicant where the commissioner finds that the circumstances require action in less time than normally required for review.  If the nature of the emergency requires it, an application under this subsection may be reviewed by the commissioner only, without notice and opportunity for public hearing or intervention by any party.

(f)  The commissioner shall adopt rules governing procedures for the expeditious processing of applications that fall into one of the following categories:

(1)  hospital expenditures for professional offices subject to certificate of need review under subsection 9435(c) of this subchapter;

(2)  The replacement of diagnostic or therapeutic equipment that has depreciated fully;

(3)  The replacement or renovation of infrastructure that no longer complies with other regulatory requirements such as building codes or is otherwise obsolete;

(4)  The expansion of an existing health care service or program in response to increased utilization; or

(5)  Any other health care projects the commissioner deems appropriate for expedited review.  

(g)  Any applicant, competing applicant, or interested party aggrieved by a final decision of the commissioner under this section may appeal the decision to the supreme court.  If the commissioner’s decision is contrary to the recommendation of the public oversight commission, the standard of review on appeal shall require that the commissioner’s decision be supported by a preponderance of the evidence in the record.

Sec. 8.  18 V.S.A. § 9444 is amended to read:

§ 9444.  REVOCATION OF CERTIFICATES; MATERIAL CHANGE

(a)  The commissioner may revoke a certificate of need for substantial noncompliance with the scope of the project as designated in the application, or for failure to comply with the conditions set forth in the certificate of need granted by the commissioner.  In the event that after a project has been approved, its proponent wishes to materially change the scope or cost of the approved project, all such changes are subject to review under this subchapter.  If a change itself would be considered a new health care project as defined in section 9434(a) of this title, it shall be considered as material.  If the change itself would not be considered a new health care project as defined in section 9434(a) of this title, the commissioner may decide not to review the change and shall notify the applicant and all parties of such decision.  Where the commissioner decides not to review a change, such change will be deemed to have been granted a certificate of need A change shall be deemed material if:

(1)  it would be considered a new health care project as defined in section 9434 of this title; or

(2)  it constitutes an increase in capital expenditures in excess of ten percent above the approved amount.

(b)  Changes made to a health care project more than five years after the final implementation report has been filed shall in no event be considered material unless they would be considered a new health care project as defined in section 9434 of this title.

Sec. 9.  18 V.S.A. § 9456(c) is amended to read:

(c)  Individual hospital budgets established under this section shall:

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(5)  include a finding that the analysis provided in subdivision (b)(10) subdivision (b)(9) of this section is a reasonable methodology for reflecting a reduction in net revenues for non-Medicaid payers.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us