Senate Bill No. 424
(By Senators Wagner and Bailey)
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[Introduced February 16, 1996; referred to the Committee on Health and Human Resources.]
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A BILL to amend and reenact sections two, three, four and five,

article two-d, chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, relating to certificates of need; what constitutes capital expenditures, major medical equipment, new institutional health services and substantial changes to bed capacity or health services; prohibition of any new institutional health service except upon application for and receipt of a certificate of need; exemption of private office practices, certain primary care services, certain birthing centers, services by certain health maintenance organizations and certain other services from certificate of need requirements; adoption of rules by the health care cost review authority relating to certificate of need rural primary care hospitals; powers and duties of the health care cost review authority in administering the certificate of need program; certificates of need for nursing care beds and standards for certificates of need; defining the expenditure minimum as one million dollars; setting the cost of major medical equipment subject to certificate of need at one millions dollars; specifically identifying health services the addition of which requires a certificate of need; limiting private office practices exempt from certificate of need to those not in excess of the expenditure minimum; determining that ambulatory surgical facilities, lithotripsy services, specialized diagnostic services, radiation therapy and similar health services shall not be considered private office practice; exempting from the certificate of need program the replacement of major medical equipment when the capital expenditure is less than the expenditure minimum and the conversion of mobile CT services to fixed services when the capital expenditure is less than the expenditure minimum; setting the expenditure minimum for annual operating costs at one million dollars, subject to increase by inflation; and requiring the health care cost review authority to review and revise the certificate of need standards at least once every two years.

Be it enacted by the Legislature of West Virginia:
That sections two, three, four and five, 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-2. Definitions.
As used in this article, unless otherwise indicated by the context:
(a) "Affected person" means:
(1) The applicant;
(2) An agency or organization representing consumers;
(3) Any individual residing within the geographic area served or to be served by the applicant;
(4) Any individual who regularly uses the health care facilities within that geographic area;
(5) The health care facilities which provide services similar to the services of the facility under review and which will be significantly affected by the proposed project;
(6) The health care facilities which, prior to receipt by the state agency of the proposal being reviewed, have formally indicated an intention to provide similar services in the future;
(7) Third-party payors who reimburse health care facilities similar to those proposed for services;
(8) Any agency which establishes rates for health care facilities similar to those proposed; or
(9) Organizations representing health care providers.
(b) "Ambulatory health care facility" means a facility which is free-standing and not physically attached to a health care facility and which provides health care to noninstitutionalized and nonhomebound persons on an outpatient basis. This definition does not include the 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 certain health services otherwise subject to review under the provisions of subdivision (1), subsection (a), section four of this article.
(c) "Ambulatory surgical facility" means a facility which is free-standing and not physically attached to a health care facility and which provides surgical treatment to patients not requiring hospitalization. This definition does not include the private office practice of any one or more health professionals licensed to practice surgery 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 certain health services otherwise subject to review under the provisions of subdivision (1), subsection (a), section four of this article.
(d) "Applicant" means: (1) The governing body or the person proposing a new institutional health service who is, or will be, the health care facility licensee wherein the new institutional health service is proposed to be located, and (2) in the case of a proposed new institutional health service not to be located in a licensed health care facility, the governing body or the person proposing to provide such new institutional health service. Incorporators or promoters who will not constitute the governing body or persons responsible for the new institutional health service may not be an applicant.
(e) "Bed capacity" means the number of beds for which a license is issued to a health care facility, or, if a facility is unlicensed, the number of adult and pediatric beds permanently staffed and maintained for immediate use by inpatients in patient rooms or wards.
(f) "Capital expenditure" means an expenditure:
(1) Made by or on behalf of a health care facility; and
(2) (A) Which (i) under generally accepted accounting principles is not properly chargeable as an expense of operation and maintenance, or (ii) is made to obtain either by lease or comparable arrangement any facility or part thereof or any equipment for a facility or part; and (B) which (i) exceeds the expenditure minimum, or (ii) is a substantial change to the bed capacity of the facility with respect to which the expenditure is made, or (iii) is a substantial change to the services of such facility. For purposes of subparagraph (i), paragraph (B), subdivision (2) of this definition, the cost of any studies, surveys, designs, plans, working drawings, specifications, and other activities, including staff effort and consulting and other services, essential to the acquisition, improvement, expansion, or replacement of any plant or equipment with respect to which an expenditure described in paragraph (B), subdivision (2) of this definition is made shall be included in determining if such expenditure exceeds the expenditure minimum. Donations of equipment or facilities to a health care facility which if acquired directly by such facility would be subject to review shall be considered capital expenditures, and a transfer of equipment or facilities for less than fair market value shall be considered a capital expenditure for purposes of such subdivisions if a transfer of the equipment or facilities at fair market value would be subject to review. A series of expenditures, each less than the expenditure minimum, which when taken together are in excess of the expenditure minimum, may be determined by the state agency to be a single capital expenditure subject to review. In making its determination, the state agency shall consider: Whether the expenditures are for components of a system which is required to accomplish a single purpose; whether the expenditures are to be made over a two-year period and are directed towards the accomplishment of a single goal within the health care facility's long-range plan; or whether the expenditures are to be made within a two-year period within a single department such that they will constitute a significant modernization of the department.
(g) "Expenditure minimum" means ~~seven hundred fifty thousand~~ one million dollars ~~per~~ for the fiscal year beginning the first day of July, one thousand nine hundred ninety-six. For each fiscal year thereafter, the state agency shall, by regulations adopted pursuant to section eight of this article, increase the expenditure minimum to reflect inflation during the preceding fiscal year.
(h) "Health," used as a term, includes physical and mental health.
(i) "Health care facility" is defined as including hospitals, skilled nursing facilities, kidney disease treatment centers, including free-standing hemodialysis units, intermediate care facilities, ambulatory health care facilities, ambulatory surgical facilities, home health agencies, rehabilitation facilities and health maintenance organizations; community mental health and mental retardation facilities, whether under public or private ownership, or as a profit or nonprofit organization and whether or not licensed or required to be licensed in whole or in part by the state. For purposes of this definition, "community mental health and mental retardation facility" means a private facility which provides such comprehensive services and continuity of care as emergency, outpatient, partial hospitalization, inpatient and consultation and education for individuals with mental illness, mental retardation or drug or alcohol addiction.
(j) "Health care provider" means a person, partnership, corporation, facility or institution licensed or certified or authorized by law to provide professional health care service in this state to an individual during that individual's medical care, treatment or confinement.
(k) "Health maintenance organization" means a public or private organization, organized under the laws of this state, which:
(1) Is a qualified health maintenance organization under Section 1310(d) of the Public Health Service Act, as amended, Title 42 United States Code Section 300e-9(d); or
(2) (A) Provides or otherwise makes available to enrolled participants health care services, including substantially the following basic health care services: Usual physician services, hospitalization, laboratory, X ray, emergency and preventive services and out-of-area coverage; and
(B) Is compensated except for copayments for the provision of the basic health care services listed in paragraph (A), subdivision (2), subsection (k) of this definition to enrolled participants on a predetermined periodic rate basis without regard to the date the health care services are provided and which is fixed without regard to the frequency, extent or kind of health service actually provided; and
(C) Provides physicians' services primarily: (i) Directly through physicians who are either employees or partners of such organization; or (ii) through arrangements with individual physicians or one or more groups of physicians organized on a group practice or individual practice basis.
(l) "Health services" means clinically related preventive, diagnostic, treatment or rehabilitative services, including alcohol, drug abuse and mental health services.
(m) "Home health agency" is an organization primarily engaged in providing directly or through contract arrangements, professional nursing services, home health aide services, and other therapeutic and related services, including, but not limited to, physical, speech and occupational therapy and nutritional and medical social services to persons in their place of residence on a part-time or intermittent basis.
(n) "Hospital" means an institution which is primarily engaged in providing to inpatients, by or under the supervision of physicians, diagnostic and therapeutic services for medical diagnosis, treatment, and care of injured, disabled or sick persons, or rehabilitation services for the rehabilitation of injured, disabled or sick persons. This term also includes psychiatric and tuberculosis hospitals.
(o) "Intermediate care facility" means an institution which provides, on a regular basis, health-related care and services to individuals who do not require the degree of care and treatment which a hospital or skilled nursing facility is designed to provide, but who, because of their mental or physical condition, require health-related care and services above the level of room and board.
(p) "Long-range plan" means a document formally adopted by the legally constituted governing body of an existing health care facility or by a person proposing a new institutional health service. Each long-range plan shall consist of the information required by the state agency in regulations adopted pursuant to section eight of this article.
(q) "Major medical equipment" means a single unit of medical equipment or a single system of components with related functions which is used for the provision of medical and other health services and which costs in excess of ~~three hundred thousand~~ one million dollars, except that such term does not include medical equipment acquired by or on behalf of a clinical laboratory to provide clinical laboratory services if the clinical laboratory is independent of a physician's office and a hospital and it has been determined under Title XVIII of the Social Security Act to meet the requirements of paragraphs ten and eleven of Section 1861(s) of such act, Title 42 United States Code Sections 1395x (10) and (11). In determining whether medical equipment costs more than ~~three hundred thousand~~ one million dollars, the cost of studies, surveys, designs, plans, working drawings, specifications, and other activities essential to the acquisition of such equipment shall be included. If the equipment is acquired for less than fair market value, the term "cost" includes the fair market value.
(r) "Medically underserved population" means the population of an urban or rural area designated by the state agency as an area with a shortage of personal health services or a population having a shortage of such services, after taking into account unusual local conditions which are a barrier to accessibility or availability of such services. Such designation shall be in regulations adopted by the state agency pursuant to section eight of this article, and the population so designated may include the state's medically underserved population designated by the federal secretary of health and human services under Section 330(b)(3) of the Public Health Service Act, as amended, Title 42 United States Code Section 254(b)(3).
(s) "New institutional health service" means such service as described in section three of this article.
(t) "Offer," when used in connection with health services, means that the health care facility or health maintenance organization holds itself out as capable of providing, or as having the means for the provision of, specified health services.
(u) "Person" means an individual, trust, estate, partnership, committee, corporation, association and other organizations such as joint-stock companies and insurance companies, a state or a political subdivision or instrumentality thereof or any legal entity recognized by the state.
(v) "Personal care services" means medically oriented activities or tasks ordered by a physician and which is implemented according to a nursing plan of care which has been completed by, and which is supervised by, a registered nurse and billed to the state. These services include those activities which are intended to enable persons to meet their physical needs and to be treated by a physician in their place of residence. The term shall include, but not be limited to, services related to personal hygiene, dressing, feeding, nutrition, environmental support functions and health related tasks.
(w) "Physician" means a doctor of medicine or osteopathy legally authorized to practice by the state.
(x) "Proposed new institutional health service" means such service as described in section three of this article.
(y) "Psychiatric hospital" means an institution which primarily provides to inpatients, by or under the supervision of a physician, specialized services for the diagnosis, treatment and rehabilitation of mentally ill and emotionally disturbed persons.
(z) "Rehabilitation facility" means an inpatient facility which is operated for the primary purpose of assisting in the rehabilitation of disabled persons through an integrated program of medical and other services which are provided under competent professional supervision.
(aa) "Review agency" means an agency of the state, designated by the governor as the agency for the review of state agency decisions.
(bb) "Skilled nursing facility" means an institution or a distinct part of an institution which is primarily engaged in providing to inpatients skilled nursing care and related services for patients who require medical or nursing care, or rehabilitation services for the rehabilitation of injured, disabled or sick persons.
(cc) "State agency" means the health care cost review authority created, established, and continued pursuant to article twenty-nine-b of this chapter.
(dd) "State health plan" means the document approved by the governor after preparation by the former health care planning commission, or that document as approved by the governor after amendment by the health care planning council or its successor agency.
(ee) "Substantial change to the bed capacity" of a health care facility means any change, with which a capital expenditure is associated, that increases or decreases the bed capacity, or relocates beds from one physical facility or site to another, but does not include a change by which a health care facility reassigns existing beds as swing beds between acute care and long-term care categories: Provided, That a decrease in bed capacity in response to federal rural health initiatives shall be excluded from this definition.
(ff) "Substantial change to the health services" of a health care facility means the addition of a health service which is offered by or on behalf of the health care facility and which was not offered by or on behalf of the facility within the twelve- month period before the month in which the service is first offered, or the termination of a health service which was offered by or on behalf of the facility, but does not include the providing of hospice care, ambulance service, wellness centers or programs, adult day care, or respite care by acute care facilities.
(gg) "To develop," when used in connection with health services, means to undertake those activities which upon their completion will result in the offer of a new institutional health service or the incurring of a financial obligation, in relation to the offering of such a service.
§16-2D-3. Certificate of need.
Except as provided in section four of this article, any new institutional health service may not be acquired, offered or developed within this state except upon application for and receipt of a certificate of need as provided by this article. Any new provider of personal care service offered by any person, facility, corporation or entity, other than an agency of the state, may not be offered or developed in this state, if the service is to be funded, in whole or in part, by state or federal medicaid funds, except upon application for and receipt of a certificate of need as provided in section six of this article: Provided, That a certificate of need shall not be required for a person providing specialized foster care personal care services to one individual and those services are delivered in the provider's home. Whenever a new institutional health service for which a certificate of need is required by this article is proposed for a health care facility for which, pursuant to section four of this article, no certificate of need is or was required, a certificate of need shall be issued before the new institutional health service is offered or developed. No person may knowingly charge or bill for any health services associated with any new institutional health service that is knowingly acquired, offered or developed in violation of this article, and any bill made in violation of this section is legally unenforceable. For purposes of this article, a proposed "new institutional health service" ~~includes~~ means:
(a) The construction, development, acquisition or other establishment of a new health care facility or health maintenance organization;
(b) The partial or total closure of a health care facility or health maintenance organization with which a capital expenditure is associated;
(c) Any obligation for a capital expenditure incurred by or on behalf of a health care facility, except as exempted in section four of this article, or health maintenance organization in excess of the expenditure minimum or any obligation for a capital expenditure incurred by any person to acquire a health care facility. An obligation for a capital expenditure is considered to be incurred by or on behalf of a health care facility:
(1) When a contract, enforceable under state law, is entered into by or on behalf of the health care facility for the construction, acquisition, lease or financing of a capital asset;
(2) When the governing board of the health care facility takes formal action to commit its own funds for a construction project undertaken by the health care facility as its own contractor; or
(3) In the case of donated property, on the date on which the gift is completed under state law;
(d) A substantial change to the bed capacity of a health care facility with which a capital expenditure is associated;
(e) ~~(1)~~ The addition of any of the following health services which are offered by or on behalf of a health care facility or health maintenance organization and which were not offered on a regular basis by or on behalf of the health care facility or health maintenance organization within the twelve-month period prior to the time the services would be offered~~; and~~:
(1) Alcohol and other drug treatment and rehabilitation offered in a discrete inpatient unit;
(2) Ambulatory surgical facilities or ambulatory surgical centers;
(3) Cardiac catheterization;
(4) Comprehensive medical rehabilitation on an inpatient basis;
(5) End-stage renal dialysis stations and home training;
(6) Hyperbaric oxygen therapy;
(7) Intermediate care for the mentally retarded;
(8) Discrete units for intermediate or skilled nursing care;
(9) Lithotripsy;
(10) Magnetic resonance imaging;
(11) Medical or surgical beds;
(12) Discrete obstetrical units;
(13) Organ transplants;
(14) Open-heart surgery;
(15) Discrete pediatric units;
(16) Discrete inpatient psychiatric units;
(17) Special care units for burns, intensive care, cardiac care, neonatal intensive care, neonatal intermediate care and pediatric intensive care;
(18) Surgical services;
(19) Radiation therapy; and
(20) Ambulatory health care facilities, including comprehensive ambulatory diagnostic centers and birthing centers.
~~(2) The addition of any of the following ventilator services for any nursing facility bed by any health care facility or health maintenance organization;~~
(f) The deletion of one or more health services, previously offered on a regular basis by or on behalf of a health care facility or health maintenance organization which is associated with a capital expenditure;
(g) A substantial change to the bed capacity or health services offered by or on behalf of a health care facility, whether or not the change is associated with a proposed capital expenditure, if the change is associated with a previous capital expenditure for which a certificate of need was issued and if the change will occur within two years after the date the activity which was associated with the previously approved capital expenditure was undertaken;
(h) The acquisition of major medical equipment;
(i) A substantial change in an approved new institutional health service for which a certificate of need is in effect. For purposes of this subsection, "substantial change" shall be defined by the state agency in regulations adopted pursuant to section eight of this article.

§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 any capital expenditures in excess of the expenditure minimum. ~~however, That such exemption from review of private office practice shall not be construed to include the~~ Anything in this code to the contrary notwithstanding, the acquisition, offering or development of one or more ~~health services, including~~ ambulatory surgical facilities or centers, lithotripsy services, specialized diagnostic services including, but not limited to, CT scanners or magnetic resonance imaging, ~~and~~ radiation therapy and similar health services by one or more health professionals shall not be considered private office practice. 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) The replacement of major medical equipment when the capital expenditure involved is less than the expenditure minimum or the conversion of mobile CT services to fixed services when the capital expenditure involved is less than the expenditure minimum.
(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~~ one million dollars for the ~~first twelve months following the effective date of this section~~ fiscal year beginning the first day of July, one thousand nine hundred ninety-six, and, for each ~~twelve-month period~~ fiscal year thereafter, the state agency ~~may~~ shall, by regulations adopted pursuant to section eight of this article, ~~adjust~~ increase the expenditure minimum for annual operating costs to reflect the impact of inflation during the preceding fiscal year.
(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.
§16-2D-5. Powers and duties of state agency.
(a) The state agency is hereby empowered to administer the certificate of need program as provided by this article.
(b) The state agency shall be responsible for coordinating and developing the health planning research efforts of the state and for amending and modifying the state health plan which includes the certificate of need standards. The state agency shall review and revise the certificate of need standards at least once every two years, with particular focus on those standards for health services involving specialized technology and regionalization, such as open-heart surgery.
(c) The state agency may seek advice and assistance of other persons, organizations and other state agencies in the performance of the state agency's responsibilities under this article.
(d) For health services for which competition appropriately allocates supply consistent with the state health plan, the state agency shall, in the performance of its functions under this article, give priority, where appropriate to advance the purposes of quality assurance, cost effectiveness and access, to actions which would strengthen the effect of competition on the supply of such services.
(e) For health services for which competition does not or will not appropriately allocate supply consistent with the state health plan, the state agency shall, in the exercise of its functions under this article, take actions, where appropriate to advance the purposes of quality assurance, cost effectiveness and access and the other purposes of this article, to allocate the supply of such services.
(f) Notwithstanding the provisions of section seven of this article, the state agency may charge a fee for the filing of any application, the filing of any notice in lieu of an application, the filing of any exemption determination request or the filing of any request for a declaratory ruling. The fees charged may vary according to the type of matter involved, the type of health service or facility involved or the amount of capital expenditure involved. The state agency shall implement this subsection by filing procedural rules pursuant to chapter twenty-nine-a of this code. The fees charged shall be deposited into a special fund known as the certificate of need program fund to be expended for the purposes of this article.
(g) No hospital, nursing home or other health care facility shall add any intermediate care or skilled nursing beds to its current licensed bed complement. This prohibition also applies to the conversion of acute care or other types of beds to intermediate care or skilled nursing beds: Provided, That hospitals eligible under the provisions of section four-a and subsection (i), section five of this article may convert acute care beds to skilled nursing beds in accordance with the provisions of these sections, upon approval by the state agency. Furthermore, no certificate of need shall be granted for the construction or addition of any intermediate care or skilled nursing beds except in the case of facilities designed to replace existing beds in unsafe existing facilities. A health care facility in receipt of a certificate of need for the construction or addition of intermediate care or skilled nursing beds which was approved prior to the effective date of this section must incur an obligation for a capital expenditure within twelve months of the date of issuance of the certificate of need. No extensions shall be granted beyond the twelve-month period: Provided, however, That a maximum of sixty beds may be approved, as a demonstration project, by the state agency for a unit to provide nursing services to patients with alzheimer's disease if: (1) The unit is located in an existing facility which was formerly owned and operated by the state of West Virginia and is presently owned by a county of the state of West Virginia; (2) the facility has provided health care services, including personal care services, within one year prior to the effective date of this section; (3) the facility demonstrates that awarding the certificate of need and operating the facility will be cost effective for the state; and (4) that any applicable lease, lease-purchase or contract for operating the facility was awarded through a process of competitive bidding consistent with state purchasing practices and procedures: Provided further, That an application for said demonstration project shall be filed with the state agency on or before the twenty-first day of October, one thousand nine hundred ninety-three.
(h) No additional intermediate care facility for the mentally retarded (ICF/MR) beds shall be granted a certificate of need, except that prohibition does not apply to ICF/MR beds approved under the Kanawha County circuit court order of the third day of August, one thousand nine hundred eighty-nine, civil action number MISC-81-585 issued in the case of E. H. v. Matin, 168 W.V. 248, 284 S.E.2d 232 (1981).
(i) Notwithstanding the provisions of subsection (g), section five of this article and, further notwithstanding the provisions of subsection (d), section three of this article, an existing acute care hospital may apply to the health care cost review authority for a certificate of need to convert acute care beds to skilled nursing beds: Provided, That the proposed skilled nursing beds are medicare certified only: Provided, however, That any hospital which converts acute care beds to medicare certified only skilled nursing beds is prohibited from billing for any medicaid reimbursement for any beds so converted. In converting beds, the hospital must convert a minimum of one acute care bed into one medicare certified only skilled nursing bed. The health care cost review authority may require a hospital to convert up to and including three acute care beds for each medicare certified only skilled nursing bed. The health care cost review authority shall adopt rules to implement this subsection which require that:
(1) All acute care beds converted shall be permanently deleted from the hospital's acute care bed complement and the hospital may not thereafter add, by conversion or otherwise, acute care beds to its bed complement without satisfying the requirements of subsection (d), section three of this article for which purposes such an addition, whether by conversion or otherwise, shall be considered a substantial change to the bed capacity of the hospital notwithstanding the definition of that term found in subsection (ee), section two of this article.
(2) The hospital shall meet all federal and state licensing certification and operational requirements applicable to nursing homes including a requirement that all skilled care beds created under this subsection shall be located in distinct-part, long- term care units.
(3) The hospital must demonstrate a need for the project.
(4) The hospital must use existing space for the medicare certified only skilled nursing beds. Under no circumstances shall the hospital construct, lease or acquire additional space for purposes of this section.
(5) The hospital must notify the acute care patient, prior to discharge, of facilities with skilled nursing beds which are located in or near the patient's county of residence.
Nothing in this subsection shall negatively affect the rights of inspection and certification which are otherwise required by federal law or regulations or by this code of duly adopted regulations of an authorized state entity.
(j) Notwithstanding the provisions of subsection (g) of this section, a retirement life care center with no skilled nursing beds may apply to the health care cost review authority for a certificate of need for up to sixty skilled nursing beds provided the proposed skilled beds are medicare certified only. On a statewide basis, a maximum of one hundred eighty skilled beds which are medicare certified only may be developed pursuant to this subsection. The state health plan shall not be applicable to projects submitted under this subsection. The health care cost review authority shall adopt rules to implement this subsection which shall include:
(1) A requirement that the one hundred eighty beds are to be distributed on a statewide basis;
(2) There shall be a minimum of twenty beds and a maximum of sixty beds in each approved unit;
(3) The unit developed by the retirement life care center shall meet all federal and state licensing certification and operational requirements applicable to nursing homes;
(4) The retirement center must demonstrate a need for the project;
(5) The retirement center must offer personal care, home health services and other lower levels of care to its residents; and
(6) The retirement center must demonstrate both short and long-term financial feasibility.
Nothing in this subsection shall negatively affect the rights of inspection and certification which are otherwise required by federal law or regulations or by this code of duly adopted regulations of an authorized state entity.
(k) The provisions of this article are severable and if any provision, section or part thereby shall be held invalid, unconstitutional or inapplicable to any person or circumstance, such invalidity, unconstitutionality or inapplicability shall not affect or impair any other remaining provisions contained herein.
(l) The state agency is hereby empowered to order a moratorium upon the processing of an application or applications for the development of a new institutional health service filed pursuant to section three of this article, when criteria and guidelines for evaluating the need for such new institutional health service have not yet been adopted or are obsolete. Such moratorium shall be declared by a written order which shall detail the circumstances requiring the moratorium. Upon the adoption of criteria for evaluating the need for the new institutional health service affected by the moratorium, or one hundred eighty days from the declaration of a moratorium, whichever is less, the moratorium shall be declared to be over and affected applications shall be processed pursuant to section six of this article.
(m) The state agency shall coordinate the collection of information needed to allow the state agency to develop recommended modifications to certificate of need standards as required in this article. When the state agency proposes amendments or modifications to the certificate of need standards, they shall file with the secretary of state, for publication in the state register, a notice of proposed action, including the text of all proposed amendments and modifications, and a date, time and place for receipt of general public comment. To comply with the public comment requirement of this section, the state agency may hold a public hearing or schedule a public comment period for the receipt of written statements or documents.
All proposed amendments and modifications to the certificate of need standards, with a record of the public hearing or written statements and documents received pursuant to a public comment period, shall be presented to the governor. Within thirty days of receiving said proposed amendments or modifications, the governor shall either approve or disapprove all or part of said amendments and modifications, and, for any portion of amendments or modifications not approved, shall specify the reason or reasons for nonapproval. Any portions of the amendments or modifications not approved by the governor may be revised and resubmitted.

NOTE: The purpose of this bill is to increase the expenditure minimum for certificate of need determinations from $750,000 to $1,000,000; to increase the cost of major medical equipment subject to certificate of need from $300,000 to
$1,000,000; to specify the 20 health services for the addition of which a certificate of need is required; to limit the exemption from certificate of need for private office practice to those not in excess of the expenditure minimum; to determine that ambulatory surgical facilities, lithotripsy services, specialized diagnostic services, radiation therapy and similar health services shall not be considered private office practice; to specifically exempt from certificate of need the replacement of major medical equipment when the capital expenditure is less than the expenditure minimum; to exempt from certificate of need the conversion of mobile CT services to fixed services when the capital expenditure is less than the expenditure minimum; to increase the expenditure minimum for annual operating costs from $300,000 to $1,000,000; and to require that the Health Care Cost Review Authority review and revise the certificate of need standards at least once every two years, with particular focus on specialized technology and regionalization.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.