PRINTER'S NO. 124
No. 127 Session of 1997
INTRODUCED BY MELLOW, FUMO, BODACK, MUSTO, BELAN, WILLIAMS,
COSTA, KITCHEN, KUKOVICH, WOZNIAK, TARTAGLIONE AND KASUNIC,
JANUARY 21, 1997
REFERRED TO PUBLIC HEALTH AND WELFARE, JANUARY 21, 1997
AN ACT
1 Amending the act of July 19, 1979 (P.L.130, No.48), entitled "An
2 act relating to health care; prescribing the powers and
3 duties of the Department of Health; establishing and
4 providing the powers and duties of the State Health
5 Coordinating Council, health systems agencies and Health Care
6 Policy Board in the Department of Health, and State Health
7 Facility Hearing Board in the Department of Justice;
8 providing for certification of need of health care providers
9 and prescribing penalties," reenacting provisions relating to
10 certificate of need; and repealing sunset provisions.
11 The General Assembly of the Commonwealth of Pennsylvania
12 hereby enacts as follows:
13 Section 1. The heading of Chapter 7 of the act of July 19,
14 1979 (P.L.130, No.48), known as the Health Care Facilities Act,
15 is reenacted to read:
16 CHAPTER 7
17 CERTIFICATE OF NEED
18 Section 2. Sections 701 and 702 of the act, amended December
19 18, 1992 (P.L.1602, No.179), are reenacted to read:
20 Section 701. Certificate of need required; clinically related
21 health services subject to review.
1 (a) Any person, including, but not limited to, a health care
2 facility, health maintenance organization or health care
3 provider who offers, develops, constructs, renovates, expands or
4 otherwise establishes or undertakes to establish within the
5 State a clinically related health service that is included in
6 the department's list of reviewable services developed under
7 subsections (d) and (e) or a health care facility as defined in
8 section 103 must obtain a certificate of need from the
9 department if one or more of the following factors applies:
10 (1) The proposal requires a capital expenditure in
11 excess of $2,000,000 under generally accepted accounting
12 principles, consistently applied.
13 (2) The proposal involves the establishment of a health
14 care facility or a reviewable clinically related health
15 service.
16 (3) The proposal increases the number of licensed beds
17 by more than ten beds or 10%, whichever is less, every two
18 years.
19 (i) If the additional beds are acute care beds and
20 are not beds in a distinct-part psychiatric,
21 rehabilitation or long-term care unit, all licensed beds
22 of the acute-care facility shall be counted in
23 determining whether the increased number of beds exceeds
24 10%.
25 (ii) If the additional beds are beds in a distinct-
26 part psychiatric, rehabilitation or long-term care unit
27 of an acute care facility, only the beds within that unit
28 shall be counted in determining whether the increased
29 number of beds exceeds 10%.
30 (iii) If the additional beds are in a freestanding
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1 psychiatric, rehabilitation or long-term care facility,
2 all licensed beds of the freestanding facility shall be
3 counted in determining whether the increased number of
4 beds exceeds 10%.
5 (4) The proposal substantially expands an existing
6 clinically related health service as determined by the
7 department in the State health services plan.
8 (b) For the purposes of this act, an expenditure for the
9 purpose of acquiring an existing health care facility or
10 replacement of equipment where there is no change in service
11 shall not be considered to be a capital expenditure subject to
12 review. Expenditures for nonclinical activities or services,
13 such as parking garages, computer systems or refinancing of
14 debt, and research projects involving premarket approval of new
15 equipment shall not be subject to review.
16 (c) The capital expenditure threshold identified in
17 subsection (a)(1) may be modified periodically by the department
18 to reflect any increase in the construction cost or other
19 factors influencing health care-related capital expenditures.
20 The department shall publish a modification of the expenditure
21 threshold through the regulatory review process.
22 (d) A list of reviewable clinically related health services
23 shall be published by the department within 30 days of the
24 effective date of this act and may be modified by regulation on
25 an annual basis. Exclusive of new high-cost technology, the
26 initial list published by the department as required under this
27 subsection shall be no more extensive than those services
28 reviewable on the effective date of this act. Criteria for
29 inclusion of reviewable services shall include, but not be
30 limited to:
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1 (1) the quality of the service to be offered is likely
2 to be compromised through insufficient volumes or
3 utilization;
4 (2) the service is dependent upon the availability of
5 scarce natural resources such as human organs;
6 (3) the operating costs associated with the service are
7 reimbursed by major third party payors on a cost
8 reimbursement basis; or
9 (4) the service involves the use of new technology.
10 (e) Any changes to the list required under subsection (d)
11 and proposed by regulation shall be developed by the department
12 after consultation with the policy board.
13 (f) A facility providing treatment solely on the basis of
14 prayer or spiritual means in accordance with the tenets of any
15 church or religious denomination or a facility conducted by a
16 religious organization for the purpose of providing health care
17 services exclusively to clergy or other persons in a religious
18 profession who are members of the religious denomination
19 conducting the facility shall not be considered to constitute a
20 health service subject to review under this act.
21 (g) As used in this section, "new high-cost technology"
22 means new technological equipment with an aggregate purchase
23 cost of greater than $500,000. The department shall consult with
24 national medical and surgical speciality organizations
25 recognized by the American Board of Medical Specialities (ABMS)
26 and other nationally recognized scientific resources in the
27 determination of what constitutes new technological equipment.
28 Section 702. Certificates of need; notice of intent;
29 application; issuance.
30 (a) Projects requiring a certificate of need shall, at the
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1 earliest possible time in their planning, be submitted to the
2 department in a letter of intent in such detail advising of the
3 scope and nature of the project as required by regulations.
4 Within 30 days after receipt of the letter of intent, the
5 department shall inform the applicant providing the letter of
6 intent whether the proposed project is subject to a certificate
7 of need review or if additional information is required to make
8 that determination. If the department determines that the
9 project is subject to a certificate of need review, the project
10 shall be subject to the remaining provisions of this act.
11 (b) A person desiring to obtain or amend a certificate of
12 need shall apply in writing to the department, supplying such
13 information as is required by the department and certifying that
14 all data, information and statements are factual to the best of
15 their knowledge, information and belief. The department shall
16 have 60 days after receipt of the application within which to
17 assess the application and in which to request specific further
18 information. If further information is requested, the department
19 shall complete its preliminary assessment of the application
20 within 45 days of receipt of the same. No information shall be
21 required that is not specified in the rules and regulations
22 promulgated by the department.
23 (c) Timely notice of the beginning of review of the
24 application by the department shall be published after
25 preliminary assessment of the application is completed by the
26 department. The "date of notification" of the beginning of
27 review shall be the date such notice is sent, or the date such
28 notice is published in the Pennsylvania Bulletin or in a
29 newspaper of general circulation, whichever is latest.
30 (d) The department shall approve or disapprove the
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1 application within 90 days from the date of notification of the
2 beginning of the review unless the period for review is extended
3 by the applicant in writing.
4 (e) (1) Certificates of need shall be granted or refused.
5 They shall not be conditioned upon the applicant changing
6 other aspects of its facilities or services or requiring the
7 applicant to meet other specified requirements, and no such
8 condition shall be imposed by the department in granting or
9 refusing approval of certificates of need.
10 (2) A certificate of need shall state the maximum amount
11 of expenditures which may be obligated under it and
12 applicants proceeding with an approved project may not exceed
13 this level of expenditure except as allowed under the
14 conditions and procedures established by the department
15 through regulation.
16 (f) (1) The department shall make written findings which
17 state the basis for any final decision made by the
18 department. Such findings shall be served upon the applicant
19 and provided to all persons expressing an interest in the
20 proceedings and shall be made available to others upon
21 written request.
22 (2) All decisions of the department shall be based
23 solely on the record. No ex parte contact regarding the
24 application between any employee of the department who
25 exercises responsibilities respecting the application and the
26 applicant, any person acting on behalf of the applicant or
27 any person opposed to the issuance of the certificate of need
28 shall occur after the commencement of a hearing on the
29 application and before a decision is made by the department.
30 (g) Modification of the application at any stage of the
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1 proceeding shall not extend the time limits provided by this act
2 unless the department expressly finds that the modification
3 represents a substantial change in the character of the
4 application.
5 (h) The responsibility of performing certificate of need
6 review may not be delegated by the department. The department
7 shall consider recommendations of one or more community-based
8 health services planning committees whose localities are
9 affected by specific applications.
10 (i) The department may provide that categories of projects
11 shall receive simultaneous and comparative review.
12 Section 3. Section 703 of the act, amended July 12, 1980
13 (P.L.655, No.136), is reenacted to read:
14 Section 703. Notice and hearings before health systems
15 agencies.
16 (a) Notice of completed applications for certificates of
17 need or amendment thereto and of the beginning of review shall
18 be published by the health systems agency in the appropriate
19 news media and by the department in the Pennsylvania Bulletin in
20 accordance with 45 Pa.C.S. Chap. 7B (relating to publication of
21 documents), and the health systems agency shall notify all
22 affected persons with notice of the schedule for review, the
23 date by which a public hearing must be demanded, and of the
24 manner notice will be given of a hearing, if one is to be held.
25 Notice to affected persons (other than members of the public who
26 are to be served by the proposed new institutional health
27 service) shall be by mail (which may be part of a newsletter).
28 Members of the public may be notified through newspapers of
29 general circulation. Directly affected persons may file
30 objections within 15 days of such publication with the local
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1 health systems agency setting forth specifically the reasons
2 such objections were filed. Persons filing the objections shall
3 be parties to the proceeding, unless and until such objections
4 are withdrawn.
5 (b) Affected persons may request a public hearing or the
6 health systems agency may require a public hearing during the
7 course of such review. Fourteen days written notice of the
8 hearing shall be given to affected persons in the same manner as
9 a notice of a completed application is provided in subsection
10 (a). In the hearing, any person shall have the right to be
11 represented by counsel and to present oral or written arguments
12 and relevant evidence. Any person directly affected may conduct
13 reasonable questioning of persons who make relevant factual
14 allegations. A record of the hearing shall be maintained.
15 Section 4. Sections 704, 705, 706, 707, 708.1 and 709,
16 amended December 18, 1992 (P.L.1602, No.179), are reenacted to
17 read:
18 Section 704. Notice of public meetings.
19 (a) Notification of the beginning of review of a certificate
20 of need application shall be published by the department in the
21 appropriate news media and in the Pennsylvania Bulletin in
22 accordance with 45 Pa.C.S. Ch. 7 Subch. B (relating to
23 publication of documents). The notice shall identify the
24 schedule for review, the date by which a public meeting must be
25 requested and the manner in which notice will be given of a
26 meeting, if one is held.
27 (b) Interested persons may request a public meeting within
28 15 days of publication, and the department shall hold such a
29 meeting or the department may require a public meeting during
30 the course of such review. The department shall publish written
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1 notice of the meeting in the appropriate news media and the
2 Pennsylvania Bulletin at least 14 days prior to the public
3 meeting date. In the meeting, the applicant and any interested
4 person providing prior notice to the department shall have the
5 right to present oral or written comments and relevant evidence
6 on the application in the manner prescribed by the department.
7 The department shall prepare a transcript of the oral testimony
8 presented at the meeting. Meetings shall be held in accordance
9 with the guidelines and procedures established by the department
10 and published in the Pennsylvania Code as a statement of policy.
11 The department may require the applicant to provide copies of
12 the application to any interested person making a request for
13 such application, at the expense of the interested person.
14 (c) The applicant may, for good cause shown, request in
15 writing a public hearing for the purpose of reconsideration of a
16 decision of the department within ten days of service of the
17 decision of the department. The department shall treat the
18 request in accordance with the provisions of 1 Pa. Code § 35.241
19 (relating to application for rehearing or reconsideration). The
20 department shall set forth the cause for the hearing and the
21 issues to be considered at such hearing. If such hearing is
22 granted, it shall be held no sooner than six days and no later
23 than 30 days after the notice to grant such a hearing and shall
24 be limited to the issues submitted for reconsideration. A
25 transcript shall be made of the hearing and a copy of the
26 transcript shall be provided at cost to the applicant. The
27 department shall affirm or reverse its decision and submit the
28 same to the person requesting the hearing within 30 days of the
29 conclusion of such hearing. Any change in the decision shall be
30 supported by the reasons for the change.
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1 (d) Where hearings under subsection (b) are held on more
2 than two days, consecutive days of hearings and intervening
3 weekends and holidays shall be excluded in calculating the time
4 permitted for the department to conduct its review, and, if
5 briefs are to be filed, ten days subsequent to the adjournment
6 of the hearing shall also be excluded.
7 Section 705. Good cause.
8 Good cause shall be deemed to have been shown if:
9 (1) there is significant, relevant information not
10 previously considered;
11 (2) there is significant change in factors or
12 circumstances relied on in making the decision;
13 (3) there has been material failure to comply with the
14 procedural requirements of this act; or
15 (4) good cause is otherwise found to exist.
16 Section 706. Information during review.
17 During the course of review the department shall upon request
18 of any person set forth the status, any findings made in the
19 proceeding and other appropriate information requested. The
20 department may require such request in writing.
21 Section 707. Criteria for review of applications for
22 certificates of need or amendments.
23 (a) An application for certificate of need shall be
24 considered for approval when the department determines that the
25 application substantially meets the requirements listed below:
26 (1) There is need by the population served or to be
27 served by the proposed service or facility.
28 (2) The proposed service or facility will provide care
29 consistent with quality standards established by the State
30 health services plan.
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1 (3) The proposed service or facility will meet the
2 standards identified in the State health services plan for
3 access to care by medically underserved groups, including
4 individuals eligible for medical assistance and persons
5 without health insurance.
6 (b) The department shall issue a certificate of need if the
7 project substantially meets the criteria of subsection (a)(1),
8 (2) and (3) and the project is consistent with the State health
9 services plan unless the department can demonstrate:
10 (1) There is a more appropriate, less costly or more
11 effective alternative method of providing the proposed
12 services.
13 (2) The service or facility is not financially and
14 economically feasible, considering anticipated volume of care
15 and the availability of reasonable financing based on
16 information received from the applicant and other sources
17 during the review process.
18 (3) The proposed service or facility will have an
19 inappropriate, adverse impact on the overall level of health
20 care expenditures in the area.
21 (4) The proposed service or facility adversely impacts
22 the maintenance and development of rural and inner-city
23 health services generally and, in particular, those services
24 provided by health care providers which are based in rural
25 and inner-city locations and which have an established
26 history of providing services to medically underserved
27 populations.
28 (c) Notwithstanding the provisions of subsections (a) and
29 (b), applications for projects described in subsection (d) shall
30 be approved unless the department finds that the facility or
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1 service with respect to such expenditure as proposed is not
2 needed or that the project is not consistent with the State
3 health services plan. An application made under this subsection
4 shall be approved only to the extent that the department
5 determines it is required to overcome the conditions described
6 in subsection (d).
7 (d) Subject to the provisions of subsection (c), subsections
8 (a) and (b) shall not apply to capital expenditures required to:
9 (1) eliminate or prevent imminent safety hazards as a
10 result of violations of safety codes or regulations;
11 (2) comply with State licensure standards; or
12 (3) comply with accreditation standards, compliance with
13 which is required to receive reimbursement or payments under
14 Title XVIII or XIX of the Federal Social Security Act.
15 Section 708.1. Monitoring certificate of need; expiration of a
16 certificate of need.
17 A certificate of need or an amendment to it shall expire two
18 years from the date issued unless substantially implemented, as
19 defined by regulation. The department may grant extensions for a
20 specified time upon request of the applicant and upon a showing
21 that the applicant has or is making a good faith effort to
22 substantially implement the project. An expired certificate of
23 need shall be invalid, and no person may proceed to undertake
24 any activity pursuant to it for which a certificate of need or
25 amendment is required. The applicant shall report to the
26 department, on forms prescribed by the department, the status of
27 the project until such time as the project is licensed or
28 operational, if no license is required.
29 Section 709. Emergencies.
30 Notwithstanding any other provision of this act, in the event
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1 of an emergency the department may suspend the foregoing
2 application process and permit such steps to be taken as may be
3 required to meet the emergency including the replacement of
4 equipment or facilities.
5 Section 5. Section 710 of the act is reenacted to read:
6 Section 710. Notice of termination of services.
7 For informational purposes only, at least 30 days prior to
8 termination or substantial reduction of a service or a permanent
9 decrease in the bed complement, the provider shall notify the
10 health systems agency and the department of its intended action.
11 Section 6. Section 711 of the act, amended December 18, 1992
12 (P.L.1602, No.179), is reenacted to read:
13 Section 711. Review of activities.
14 (a) The department shall prepare and publish not less
15 frequently than annually reports of reviews conducted under this
16 act, including a statement on the status of each such review and
17 of reviews completed by it and statements of the decisions made
18 in the course of such reviews since the last report. The
19 department shall also make available to the general public for
20 examination at reasonable times of the business day all
21 applications reviewed by it. Such reports and applications shall
22 be considered public records.
23 (b) The department's report which shall be submitted to the
24 members of the Health and Welfare Committees of the Senate and
25 House of Representatives shall contain the following
26 information:
27 (1) The volume of applications submitted, by project
28 type, their dollar value, and the numbers and costs
29 associated with those approved and those not approved.
30 (2) The assessment of the extent of competition in
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1 specific service sectors that guided decisions.
2 (3) A detailed description of projects involving
3 nontraditional or innovative service delivery methods or
4 organizational arrangements and the decisions made on each of
5 these projects.
6 (4) The average time for review, by level of review.
7 (5) The fees collected for reviews and the cost of the
8 program.
9 Section 7. Section 712 of the act, added July 12, 1980
10 (P.L.655, No.136) and repealed in part December 20, 1982
11 (P.L.1409, No.326), is reenacted to read:
12 Section 712. Actions against violations of law and rules and
13 regulations; bonds.
14 (a) Whenever any person, regardless of whether such person
15 is a licensee, has willfully violated any of the provisions of
16 this act or the rules and regulations adopted thereunder, the
17 department may maintain any action in the name of the
18 Commonwealth for an injunction or other process restraining or
19 prohibiting such person from engaging in such activity.
20 Section 8. Section 904.1 of the act is repealed.
21 Section 9. This act shall be retroactive to December 18,
22 1996.
23 Section 10. This act shall take effect immediately.
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