H. B. 4091
(By Delegates Walters, Kime, Ashley,
Stalnaker and Petersen)
[Introduced January 17, 1996; referred to the
Committee on Health and Human Resources then Government
Organization.]
A BILL to amend and reenact section four, article two-d, chapter
sixteen of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to exemptions from
certificate of need for small hospitals.
Be it enacted by the Legislature of West Virginia:
That section four, article two-d, chapter sixteen of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted to read as follows:
ARTICLE 2D. CERTIFICATE OF NEED.
§16-2D-4. Exemptions from certificate of need program.
(a) Except as provided in subdivision (h), section three of
this article, nothing in this article or the rules and
regulations adopted pursuant to the provisions of this article
may be construed to authorize the licensure, supervision, regulation or control in any manner of the following:
(1) Private office practice of any one or more health
professionals licensed to practice in this state pursuant to the
provisions of chapter thirty of this code: Provided, That such
exemption from review of private office practice shall not be
construed to include such practices where major medical equipment
otherwise subject to review under the provisions of this article
is acquired, offered or developed: Provided, however, That such
exemption from review of private office practice shall not be
construed to include the acquisition, offering or development of
one or more health services, including ambulatory surgical
facilities or centers, lithotripsy, magnetic resonance imaging
and radiation therapy by one or more health professionals. The
state agency shall adopt rules pursuant to section eight of this
article which specify the health services acquired, offered or
developed by health professionals which are subject to
certificate of need review;
(2) Dispensaries and first-aid stations located within
business or industrial establishments maintained solely for the
use of employees: Provided, That such facility does not contain
inpatient or resident beds for patients or employees who
generally remain in the facility for more than twenty-four hours;
(3) Establishments, such as motels, hotels and
boardinghouses, which provide medical, nursing personnel and health related services;
(4) The remedial care or treatment of residents or patients
in any home or institution conducted only for those who rely
solely upon treatment by prayer or spiritual means in accordance
with the creed or tenets of any recognized church or religious
denomination;
(5) The creation of new primary care services located in
communities that are underserved with respect to primary care
services: Provided, That to qualify for this exemption, an
applicant must be a community-based nonprofit organization with
a community board that provides or will provide primary care
services to people without regard to ability to pay: Provided,
however, That the exemption from certificate of need review of
new primary care services provided by this subdivision shall not
include the acquisition, offering or development of major medical
equipment otherwise subject to review under the provisions of
this article or to include the acquisition, offering or
development of CT scanners, ambulatory surgical facilities,
lithotripsy, magnetic resonance imaging or radiation therapy.
The office of community and rural health services shall define
which services constitute primary care services for purposes of
this subdivision, and shall, to prevent duplication of primary
care services, determine whether a community is underserved with
respect to certain primary care services within the meaning of this subdivision. Any organization planning to qualify for an
exemption pursuant to this subdivision shall submit to the state
agency a letter of intent describing the proposed new services
and area of service; and
(6) The creation of birthing centers by nonprofit primary
care centers that have a community board and provide primary care
services to people in their community without regard to ability
to pay, or by nonprofit hospitals with less than one hundred
licensed acute care beds: Provided, That to qualify for this
exemption, an applicant must be located in an area that is
underserved with respect to low-risk obstetrical services:
Provided, however, That if a primary care center attempting to
qualify for this exemption is located in the same county as a
hospital that is also eligible for this exemption, or if a
hospital attempting to qualify for this exemption is located in
the same county as a primary care center that is also eligible
for this exemption, then at least one primary care center and at
least one hospital from said county shall be required to
collaborate for the provision of services at a birthing center in
order to qualify for this exemption: Provided further, That for
purposes of this subsection, a "birthing center" is a short-stay
ambulatory health care facility designed for low-risk births
following normal uncomplicated pregnancy. Any primary care
center or hospital planning to qualify for an exemption pursuant to this subdivision shall submit to the state agency a letter of
intent describing the proposed birthing center and area of
service; and
(7) Any health care facility of less than one hundred beds
located outside of a metropolitan statistical area and licensed
by authority of article five-b of this chapter shall be exempt
from all requirements contained within this article for the
acquisition, construction, development and operation of any
ambulatory surgical facility or other primary health care
facility.
(b) (1) A certificate of need is not required for the
offering of an inpatient institutional health service or the
acquisition of major medical equipment for the provision of an
inpatient institutional health service or the obligation of a
capital expenditure for the provisions of an inpatient
institutional health service, if with respect to such offering,
acquisition or obligation, the state agency has, upon application
under subdivision (2) of this subsection, granted an exemption
to:
(A) A health maintenance organization or a combination of
health maintenance organizations if: (i) The organization or
combination of organizations has, in the service area of the
organization or the service areas of the organizations in the
combination, an enrollment of at least fifty thousand individuals; (ii) the facility in which the service will be
provided is or will be geographically located so that the service
will be reasonably accessible to such enrolled individuals; and
(iii) at least seventy-five percent of the patients who can
reasonably be expected to receive the institutional health
service will be individuals enrolled with such organization or
organizations in the combination;
(B) A health care facility if: (i) The facility primarily
provides or will provide inpatient health services; (ii) the
facility is or will be controlled, directly or indirectly, by a
health maintenance organization or a combination of health
maintenance organizations which has, in the service area of the
organization or service areas of the organizations in the
combination, an enrollment of at least fifty thousand
individuals; (iii) the facility is or will be geographically
located so that the service will be reasonably accessible to such
enrolled individuals; and (iv) at least seventy-five percent of
the patients who can reasonably be expected to receive the
institutional health service will be individuals enrolled with
such organization or organizations in the combination; or
(C) A health care facility, or portion thereof, if: (i) The
facility is or will be leased by a health maintenance
organization or combination of health maintenance organizations
which has, in the service area of the organization or the service areas of the organizations in the combination, an enrollment of
at least fifty thousand individuals and on the date the
application is submitted under subdivision (2) of this
subsection, at least fifteen years remain in the term of the
lease; (ii) the facility is or will be geographically located so
that the service will be reasonably accessible to such enrolled
individuals; and (iii) at least seventy-five percent of the
patients who can reasonably be expected to receive the new
institutional health service will be individuals enrolled with
such organization.
(2) (A) A health maintenance organization, combination of
health maintenance organizations or other health care facility is
not exempt under subdivision (1) of this subsection from
obtaining a certificate of need unless:
(i) It has submitted, at such time and in such form and
manner as the state agency shall prescribe, an application for
such exemption to the state agency;
(ii) The application contains such information respecting
the organization, combination or facility and the proposed
offering, acquisition or obligation as the state agency may
require to determine if the organization or combination meets the
requirements of subdivision (1) of this subsection or the
facility meets or will meet such requirements; and
(iii) The state agency approves such application.
(B) The state agency shall approve an application submitted
under paragraph (A) of this subdivision, if it determines that
the applicable requirements of subdivision (1) of this subsection
are met or will be met on the date the proposed activity for
which an exemption was requested will be undertaken.
(3) A health care facility, or any part thereof, or medical
equipment with respect to which an exemption was granted under
subdivision (1) of this subsection, may not be sold or leased and
a controlling interest in such facility or equipment or in a
lease of such facility or equipment may not be acquired and a
health care facility described in paragraph (C) of said
subdivision, which was granted an exemption under said
subdivision, may not be used by any person other than the lessee
described in paragraph (C) of said subdivision, unless:
(A) The state agency issues a certificate of need approving
the sale, lease, acquisition or use; or
(B) The state agency determines, upon application, that the
entity to which the facility or equipment is proposed to be sold
or leased, which intends to acquire the controlling interest in
or to use the facility is:
(i) A health maintenance organization or a combination of
health maintenance organizations which meets the enrollment
requirements of subparagraph (i), paragraph (A), subdivision (1)
of this subsection, and with respect to such facility or equipment, the entity meets the accessibility and patient
enrollment requirements of subparagraphs (ii) and (iii) of said
paragraph; or
(ii) A health care facility which meets the inpatient,
enrollment and accessibility requirements of subparagraphs (i),
(ii) and (iii), paragraph (B), subdivision (1) of this subsection
and with respect to its patients meets the enrollment
requirements of subparagraph (iv) of said paragraph (B).
(4) In the case of a health maintenance organization or an
ambulatory care facility or health care facility which ambulatory
or health care facility is controlled, directly or indirectly, by
a health maintenance organization or a combination of health
maintenance organizations, the certificate of need requirements
apply only to the offering of inpatient institutional health
services, the acquisition of major medical equipment, and the
obligation of capital expenditures for the offering of inpatient
institutional health services and then only to the extent that
such offering, acquisition or obligation is not exempt under
subdivision (1) of this subsection.
(5) The state agency shall establish the period within which
approval or disapproval by the state agency of applications for
exemptions under subdivision (1) of this subsection shall be
made.
(c) (1) A health care facility is not required to obtain a certificate of need for the acquisition of major medical
equipment to be used solely for research, the addition of health
services to be offered solely for research, or the obligation of
a capital expenditure to be made solely for research if the
health care facility provides the notice required in subdivision
(2) of this subsection, and the state agency does not find,
within sixty days after it receives such notice, that the
acquisition, offering or obligation will, or will have the effect
to:
(A) Affect the charges of the facility for the provision of
medical or other patient care services other than the services
which are included in the research;
(B) Result in a substantial change to the bed capacity of
the facility; or
(C) Result in a substantial change to the health services of
the facility.
(2) Before a health care facility acquires major medical
equipment to be used solely for research, offers a health service
solely for research or obligates a capital expenditure solely for
research, such health care facility shall notify in writing the
state agency of such facility's intent and the use to be made of
such medical equipment, health service or capital expenditure.
(3) If major medical equipment is acquired, a health service
is offered or a capital expenditure is obligated and a certificate of need is not required for such acquisition,
offering or obligation as provided in subdivision (1) of this
subsection, such equipment or service or equipment or facilities
acquired through the obligation of such capital expenditure may
not be used in such a manner as to have the effect or to make a
change described in paragraphs (A), (B) and (C) of said
subdivision unless the state agency issues a certificate of need
approving such use.
(4) For purposes of this subsection, the term "solely for
research" includes patient care provided on an occasional and
irregular basis and not as part of a research program.
(d) (1) The state agency may adopt regulations pursuant to
section eight of this article to specify the circumstances under
which a certificate of need may not be required for the
obligation of a capital expenditure to acquire, either by
purchase or under lease or comparable arrangement, an existing
health care facility: Provided, That a certificate of need shall
be required for the obligation of a capital expenditure to
acquire, either by purchase or under lease or comparable
arrangement, an existing health care facility if:
(A) The notice required by subdivision (2) of this
subsection is not filed in accordance with that subdivision with
respect to such acquisition; or
(B) The state agency finds, within thirty days after the date it receives a notice in accordance with subdivision (2) of
this subsection, with respect to such acquisition, that the
services or bed capacity of the facility will be changed by
reason of said acquisition.
(2) Before any person enters into a contractual arrangement
to acquire an existing health care facility, such person shall
notify the state agency of his or her intent to acquire the
facility and of the services to be offered in the facility and
its bed capacity. Such notice shall be made in writing and shall
be made at least thirty days before contractual arrangements are
entered into to acquire the facility with respect to which the
notice is given. The notice shall contain all information the
state agency requires in accordance with subsections (e) and (s),
section seven of this article.
(e) The state agency shall adopt regulations, pursuant to
section eight of this article, wherein criteria are established
to exempt from review the addition of certain health services,
not associated with a capital expenditure, that are projected to
entail annual operating costs of less than the expenditure
minimum for annual operating costs. For purposes of this
subsection, "expenditure minimum for annual operating costs"
means three hundred thousand dollars for the first twelve months
following the effective date of this section and for each
twelve-month period thereafter, the state agency may, by regulations adopted pursuant to section eight of this article,
adjust the expenditure minimum for annual operating costs to
reflect the impact of inflation.
(f) The state agency shall adopt rules within ninety days of
the effective date of the amendment of this section in the year
one thousand nine hundred ninety pursuant to section eight of
this article to specify the circumstances under which and the
procedures by which a certificate of need may not be required for
shared services between two or more acute care facilities
providing services made available through existing technology
that can reasonably be mobile. The state agency shall specify
the types of items in the regulations and under what
circumstances mobile MRI and mobile lithotripsy may be so
exempted from review. In no case, however, will mobile cardiac
catheterization be exempted from certificate of need review. In
addition, if the shared services mobile unit proves less cost
effective than a fixed unit, the acute care facility will not be
exempted from certificate of need review.
On a yearly basis, the state agency shall review existing
technologies to determine if other shared services should be
included under this exemption.
(g) This subsection applies only to hospitals designated as
rural primary care hospitals by West Virginia office of rural
health policy in conformance with requirements of the health care financing administration of the federal department of health and
human services under Section 1920 of Public Law 101-239, Section
6000(g) of the federal Omnibus Budget Reconciliation Act of 1989.
A hospital, designated as a rural primary care hospital, in
accordance with final rules issued by the health care financing
administration, shall undergo a reduction in its number of
licensed acute care beds as determined by the office of rural
health policy.
The office of rural health policy shall notify the health
care cost review authority of such designation including the
number of staffed and operated beds immediately prior to
designation and the number of acute care beds certified by the
health care financing administration.
A rural primary care hospital may reject this designation
any time within twenty-four calendar months, beginning from the
date of designation by the office of rural health policy. If a
hospital chooses to reject this designation, it may do so upon
written notification to the office of rural health policy and the
health care cost review authority. If such designation is
rejected by a rural primary care hospital, license restoration,
not to exceed the number of acute care beds staffed and operated
by the hospital immediately prior to receiving designation as a
rural primary care hospital, shall be exempt from the certificate
of need program review.
Within twenty-five months from designating rural primary
care hospitals, the office of rural health policy shall notify
the health care cost review authority of the status of the
designated hospitals including the number of licensed beds.
The state agency shall promulgate rules within ninety days
of the effective date of this amendment in order to carry out the
purpose of this subsection.
NOTE: The purpose of this bill is to exempt small hospitals
from certificate of need requirements.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.