ENGROSSED

COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 640

(By Senators Walker, Craigo and Dittmar)

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[Originating in the Committee on Finance;

reported March 3, 1998.]

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A BILL to amend and reenact section five, article two-d, chapter sixteen of the code of West Virginia, one thousand nine hundred thirty-one, as amended, relating to the conversion of rural hospital acute care beds to skilled nursing beds certified by both medicare and medicaid; and exception to agency rules and certain statutory requirements.

Be it enacted by the Legislature of West Virginia:
That section 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-5. Powers and duties of state agency.
(a) The state agency is hereby empowered to may administer the certificate of need program as provided by this article.
(b) The state agency shall be is 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.
(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 the 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 the 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 shall 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 shall not bill for any medicaid reimbursement for any converted beds so converted. In converting beds, the hospital must shall 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: Provided further, That a hospital designated or provisionally designated by the state agency as a rural primary care hospital may convert up to thirty beds to a distinct-part nursing facility, including skilled nursing beds and intermediate care beds, on a one-for-one basis if said the rural primary care hospital is located in a county without a certified free-standing nursing facility and the hospital may bill for medicaid reimbursement for the converted beds: And provided further, That if the hospital rejects the designation as a rural primary care hospital then the hospital may not bill for medicaid reimbursement. 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 shall demonstrate a need for the project.
(4) The hospital must shall 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 shall 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 affects the rights of inspection and certification which are otherwise required by federal law or regulations or by this code of or duly adopted regulations rules of an authorized state entity.
(j) (1) 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 is not applicable to projects submitted under this subsection. The health care cost review authority shall adopt rules to implement this subsection which shall include a requirement that:
(1) (A) A requirement that the one hundred eighty beds are to be distributed on a statewide basis;
(2) (B) There shall be a minimum of twenty beds and a maximum of sixty beds in each approved unit;
(3) (C) 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) (D) The retirement center must demonstrate a need for the project;
(5) (E) The retirement center must offer personal care, home health services and other lower levels of care to its residents; and
(6) (F) The retirement center must demonstrate both short and long-term financial feasibility.
(2) Nothing in this subsection shall negatively affect negatively affects the rights of inspection and certification which are otherwise required by federal law or regulations or by this code of or duly adopted regulations rules 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) (k) The state agency is hereby empowered to may 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 the new institutional health service have not yet been adopted or are obsolete. Such The 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) ( l ) (1) 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 it 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.
(2) 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 the proposed amendments or modifications, the governor shall either approve or disapprove all or part of said the 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.
(n) (m) The state agency may exempt from or expedite rate review, certificate of need, and annual assessment requirements and issue grants and loans to financially vulnerable health care facilities located in underserved areas that the state agency and the office of community and rural health services determine are collaborating with other providers in the service area to provide cost effective health care services.
 (n) Notwithstanding any provision contained in this article or section and any rule issued by the state agency, including compliance with certificate of need requirements, any rural hospital with less than eighty licensed acute care beds as of the first day of January, one thousand nine hundred ninety-eight, may convert up to forty-four percent of existing licensed acute care beds to skilled nursing beds for certification by both medicare and medicaid for reimbursement purposes provided that the following conditions are met:
(1) There is no overall increase in the bed capacity of the hospital; one acute care bed is converted to one dually certified medicare and medicaid skilled nursing bed.
(2) All converted acute care beds shall be permanently deleted from the acute care bed compliment of the hospital, which may not thereafter add, by conversion or otherwise, acute care beds to its bed compliment without satisfying the requirements of subdivision (4), subsection (b), section three of this article, for which purposes the 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 as found in subsection (e), section two of this article.
(3) Prior to the conversion, the occupancy rate for licensed acute care beds cannot exceed forty percent for twenty-four consecutive months prior to the first month in which this section is effective.
(4) The hospital shall meet all federal and state licensing requirements for the provision of skilled nursing services. Additionally, all skilled nursing beds created under this exemption shall be located in distinct long-term care units in a previously constructed part of the hospital that can be used for that purpose.
(5) The hospital is located in a nonmetropolitan statistical area as defined by the bureau of the census of the federal government and is located in the same city in which a hospital providing mental health inpatient services owned and operated by the state of West Virginia ceased offering the inpatient services not later than one thousand nine hundred ninety.
(6) Nothing in this section negatively affects the rights of inspection and certification which are elsewhere required by federal law or regulations.