Report Title:

Economic Development

Description:

Exempts economic development projects from the certificate of need requirements for projects occurring after 2001 through 2006. Creates a certificate of need study commission.

HOUSE OF REPRESENTATIVES

H.B. NO.

812

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO THE STATE HEALTH PLANNING AND DEVELOPMENT AGENCY.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The regulatory structure for the state health planning and development agency certificate of need program, which was put in place in 1975, is an outgrowth of federal legislation that is predicated on the idea that the most satisfactory means of controlling health care costs is the allocation of health care resources by government through a highly centralized health planning mechanism.

For over two decades, the State established strong controls over the health care delivery system through the certificate of need program, which allocated the provision of services among providers and regulated health care facilities and health care services expansion. The evolution of market-based means of controlling costs, most notably the growth of managed care, and the rapid development of new medical techniques and innovations in medical technology exposed inefficiencies inherent in centralized health care planning, which was unable to respond quickly to the changing needs of the health care system.

The certificate of need program is a relic of the highly regulated environment, and its original purpose, which was to control costs by limiting the proliferation of health care service through state control of those services has been undermined by significant changes in the economics of the health care system, which have taken place since its inception. Decisions as to health care services, the acquisition of medical technology, and the expansion of facilities can best be made by health care providers based on their expertise in delivering health care services to the community.

For reasons of maintaining the quality of certain health care services, limiting the proliferation of those services may be essential to protect the viability of the services and the providers rendering them.

However, the State has determined that economic development projects are vital to the economic development of the State. Therefore, it is essential to promote greater efficiency in the State’s health care delivery system, eliminate the certificate of need requirement for economic development projects in the interest of the well-being of the public, and ensure the maintenance of quality health care throughout the State.

The purpose of this Act is to:

(1) Exempt economic development projects occurring after 2001 through 2006 from the certificate of need requirements; and

(2) Create a certificate of need study commission.

SECTION 2. Chapter 329D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§323D- Certificate of need study commission. (a) There is established a twelve-member certificate of need study commission. The members shall include: the director of the department of health, who shall serve ex officio, and eleven public members. The public members shall be appointed as follows:

(1) Two persons to be appointed by the president of the senate, one of whom shall be appointed upon the recommendation of the minority leader of the senate, of which of the two appointments:

(A) One shall be a state licensed health care professional; and

(B) One shall be a representative of a state licensed health care facility;

(2) Two persons to be appointed by the speaker of the house of representatives, one of whom shall be appointed upon the recommendation of the minority leader of the house of representatives, of which of the two appointments:

(A) One shall be a state licensed health care professional; and

(B) One shall be a representative of a state licensed health care facility;

and

(3) Seven persons to be appointed by the governor, of which:

(A) Two appointments shall be state licensed health care professionals;

(B) Three appointments shall be representatives of state licensed health care facilities;

(C) One appointment shall be a health economist; and

(D) One appointment shall be a consumer of health care services who is knowledgeable about health care financing issues and who is a resident of this State.

Vacancies in the membership of the commission shall be filled in the same manner provided for the original appointments.

(b) The director of the department of health shall serve as chairman of the commission. The commission shall select a vice-chairman from among the members. The commission shall organize as soon as practicable following the appointment of its members.

(c) The commission shall be entitled to call to its assistance and avail itself of the services of the employees of any state, county, or municipal department, board, bureau, commission, or agency as it may require and as may be available to it for its purposes. The department of health shall provide staff support for the commission.

(d) The commission shall conduct a comprehensive study to examine the impact that elimination of certificate of need requirements would have on health care services and facilities subject to certificate of need requirements in the State. The commission shall assess the impact that deregulation of the services or facilities will have on:

(1) Access to care by residents in the State;

(2) Quality of care;

(3) Services that are delivered statewide or on a regional basis; and

(4) The general revenue fund, including programs such as medicaid.

The commission shall make recommendations about which health care services or facilities, if any, should continue to be subject to certificate of need requirements or another type of State regulation, and which services or facilities should be exempt from State regulation.

(e) Within twenty-four months of the effective date of this amendatory act of the twenty-second legislature, the commission shall report its findings and recommendations to the governor and the legislature.

(f) The commission shall expire upon the submission of its report."

SECTION 3. Section 323D-2, Hawaii Revised Statutes, is amended to read as follows:

"§323D-2 Definitions. As used in this chapter:

["Applicant" means any person who applies for a certificate of need under part V.

"Assisted living facility" means a combination of housing, health care services, and personalized support services designed to respond to individual needs, and to promote choice, responsibility, independence, privacy, dignity, and individuality. In this context, "health care services" means the provision of services in an assisted living facility that assists the resident in achieving and maintaining the highest state of positive well-being (i.e., psychological, social, physical, and spiritual) and functional status. This may include nursing assessment and monitoring, and the delegation of nursing tasks by registered nurses pursuant to chapter 457, care management, monitoring, records management, arranging for, and/or coordinating health and social services.

"Capital expenditure" means any purchase or transfer of money or anything of value or enforceable promise or agreement to purchase or transfer money or anything of value incurred by or in behalf of any person for construction, expansion, alteration, conversion, development, initiation, or modification as defined in this section. The term includes the:

(1) Cost of studies, surveys, designs, plans, working drawings, specifications, and other preliminaries necessary for construction, expansion, alteration, conversion, development, initiation, or modification;

(2) Fair market values of facilities and equipment obtained by donation or lease or comparable arrangements as though the items had been acquired by purchase; and

(3) Fair market values of facilities and equipment transferred for less than fair market value, if a transfer of the facilities or equipment at fair market value would be subject to review under section 323D-43.

"Certificate of need" means an authorization, when required pursuant to section 323D-43, to construct, expand, alter, or convert a health care facility or to initiate, expand, develop, or modify a health care service.

"Construct", "expand", "alter", "convert", "develop", "initiate", or "modify" includes the erection, building, reconstruction, modernization, improvement, purchase, acquisition, or establishment of a health care facility or health care service; the purchase or acquisition of equipment attendant to the delivery of health care service and the instruction or supervision therefor; the arrangement or commitment for financing the offering or development of a health care facility or health care service; any obligation for a capital expenditure by a health care facility; and studies, surveys, designs, plans, working drawings, specifications, procedures, and other actions necessary for any such undertaking, which will:

(1) Result in a total capital expenditure in excess of the expenditure minimum,

(2) Substantially modify, decrease, or increase the scope or type of health service rendered, or

(3) Increase, decrease, or change the class of usage of the bed complement of a health care facility.]

"Economic development project" means a health care

facility or health care services project of more than five acres

or more than $5,000,000.

"Expenditure minimum" means $4,000,000 for capital expenditures, $1,000,000 for new or replacement medical equipment and $400,000 for used medical equipment.

"Extended care adult residential care home" means an adult residential care home providing twenty-four-hour living accommodation for a fee, for adults unrelated to the licensee. The primary caregiver shall be qualified to provide care to nursing facility level individuals who have been admitted to a medicaid waiver program, or persons who pay for care from private funds and have been certified for this type of facility. There shall be two categories of extended care adult residential care homes, which shall be licensed in accordance with rules adopted by the department of health:

(1) Type I home shall consist of five or less unrelated persons with no more than two extended care adult residential care home residents; and

(2) Type II home shall consist of six or more unrelated persons and one or more persons may be extended care adult residential care home residents.

"Health" includes physical and mental health.

"Health care facility" and "health care service" include any program, institution, place, building, or agency, or portion thereof, private or public, other than federal facilities or services, whether organized for profit or not, used, operated, or designed to provide medical diagnosis, treatment, nursing, rehabilitative, or preventive care to any person or persons. The terms include, but are not limited to, health care facilities and health care services commonly referred to as hospitals, extended care and rehabilitation centers, nursing homes, skilled nursing facilities, intermediate care facilities, hospices for the terminally ill that require licensure or certification by the department of health, kidney disease treatment centers including freestanding hemodialysis units, outpatient clinics, organized ambulatory health care facilities, emergency care facilities and centers, home health agencies, health maintenance organizations, and others providing similarly organized services regardless of nomenclature.

"Health care provider" means a health care facility, physician, dentist licensed under chapter 448, chiropractor licensed under chapter 442, optometrist licensed under chapter 459, podiatrist licensed under chapter 463E, psychologist licensed under chapter 465, occupational therapist subject to chapter 457G, and physical therapist licensed under chapter 461J.

"Organized ambulatory health care facility" means a facility not part of a hospital, which is organized and operated to provide health services to outpatients. The state agency may adopt rules to establish further criteria for differentiating between the private practice of medicine and organized ambulatory health care facilities.

"Person" means an individual or a natural person, a trust or estate, a society, a firm, an assembly, a partnership, a corporation, a professional corporation, an association, the State, any political subdivision of the State, a county, a state agency or any instrumentality of the State, a county agency or any instrumentality of a county.

"Physician" means a doctor of medicine or osteopathy who is legally authorized to practice medicine and surgery by the State.

["Primary care clinic" means a clinic for outpatient

services providing all preventive and routine health care

services, management of chronic diseases, consultation with

specialists when necessary, and coordination of care across

health care settings or multiple providers or both. Primary

care clinic providers include:

(1) General or family practice physicians;

(2) General internal medicine physicians;

(3) Pediatricians;

(4) Obstetricians and gynecologists;

(5) Physician assistants; and

(6) Advanced practice registered nurses.

"Review panel" means the panel established pursuant to section 323D-42.]

"State agency" means the state health planning and development agency established in section 323D-11.

"State health services and facilities plan" means the comprehensive plan for the economical delivery of health services in the State prepared by the statewide council.

"Statewide council" means the statewide health coordinating council established in section 323D-13.

"Subarea" means one of the geographic subareas designated by the state agency pursuant to section 323D-21.

"Subarea council" means a subarea health planning council established pursuant to section 323D-21.

"Substantially modify, decrease, or increase the scope or type of health service" refers to the establishment of a new health care facility or health care service or the addition of a clinically related (i.e., diagnostic, curative, or rehabilitative) service not previously provided or the termination of such a service which had previously been provided."

SECTION 4. Section 323D-54, Hawaii Revised Statutes, is amended to read as follows:

"§323D-54 Exemptions from certificate of need requirements. (a) Nothing in this part or rules with respect to the requirement for certificates of need applies to:

(1) Offices of physicians, dentists, or other practitioners of the healing arts in private practice as distinguished from organized ambulatory health care facilities, except in any case of purchase or acquisition of equipment attendant to the delivery of health care service and the instruction or supervision for any private office or clinic involving a total expenditure in excess of the expenditure minimum;

(2) Laboratories, as defined in section 321-11(12), except in any case of purchase or acquisition of equipment attendant to the delivery of health care service and the instruction or supervision for any laboratory involving a total expenditure in excess of the expenditure minimum;

(3) Dispensaries and first aid stations located within business or industrial establishments and maintained solely for the use of employees; provided such facilities do not regularly provide inpatient or resident beds for patients or employees on a daily twenty-four-hour basis;

(4) Dispensaries or infirmaries in correctional or educational facilities;

(5) Dwelling establishments, such as hotels, motels, and rooming or boarding houses that do not regularly provide health care facilities or health care services;

(6) Any home or institution conducted only for those who, pursuant to the teachings, faith, or belief of any group, depend for healing upon prayer or other spiritual means;

(7) Dental clinics;

(8) Nonpatient areas of care facilities such as parking garages and administrative offices;

(9) Bed changes that involve ten per cent or ten beds of existing licensed bed types, whichever is less, of a facility's total existing licensed beds within a two-year period;

    (10) Projects that are wholly dedicated to meeting the State's obligations under court orders, including consent decrees, that have already determined that need for the projects exists;

    (11) Replacement of existing equipment with its modern-day equivalent;

    (12) Primary care clinics under the expenditure thresholds referenced in section 323D-2;

    (13) Equipment and services related to that equipment, that are primarily invented and used for research purposes as opposed to usual and customary diagnostic and therapeutic care;

    (14) Capital expenditures that are required:

(A) To eliminate or prevent imminent safety hazards as defined by federal, state, or county fire, building, or life safety codes or regulations;

(B) To comply with state licensure standards;

(C) To comply with accreditation standards, compliance with which is required to receive reimbursements under Title XVIII of the Social Security Act or payments under a state plan for medical assistance approved under Title XIX of such Act;

    (15) Extended care adult residential care homes and assisted living facilities; [or]

    (16) Other facilities or services that the agency through the statewide council chooses to exempt, by rules pursuant to section 323D-62[.]; or

(17) For economic development projects occurring after

, 2001, through , 2006.

(b) No certificate of need shall be issued unless the state agency has determined that:

(1) There is a public need for the facility or the service; and

(2) The cost of the facility or service will not be unreasonable in light of the benefits it will provide and its impact on health care costs.

(c) The state agency may adopt criteria for certificate of need review that are consistent with this section. The criteria may include but is not limited to need, cost, quality, accessibility, availability, and acceptability."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon approval.

INTRODUCED BY:

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