1.1 	A bill for an act
1.2 	relating to health; providing an exception to the hospital construction moratorium 
1.3 	for a facility in Cass County; providing for the licensing and certification of 
1.4 	certain nursing home or boarding care home beds transferred from a certain 
1.5 	existing facility in Cass County to a new facility;amending Minnesota Statutes 
1.6 	2004, section 144A.071, subdivision 4c; Minnesota Statutes 2005 Supplement, 
1.7 	section 144.551, subdivision 1.
1.8 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9 	Section 1. Minnesota Statutes 2005 Supplement, section 144.551, subdivision 1, 
1.10 	is amended to read:
1.11 		Subdivision 1.Restricted construction or modification. (a) The following 
1.12 	construction or modification may not be commenced:
1.13 	(1) any erection, building, alteration, reconstruction, modernization, improvement, 
1.14 	extension, lease, or other acquisition by or on behalf of a hospital that increases the bed 
1.15 	capacity of a hospital, relocates hospital beds from one physical facility, complex, or site 
1.16 	to another, or otherwise results in an increase or redistribution of hospital beds within 
1.17 	the state; and
1.18 	(2) the establishment of a new hospital.
1.19 	(b) This section does not apply to:
1.20 	(1) construction or relocation within a county by a hospital, clinic, or other health 
1.21 	care facility that is a national referral center engaged in substantial programs of patient 
1.22 	care, medical research, and medical education meeting state and national needs that 
1.23 	receives more than 40 percent of its patients from outside the state of Minnesota;
2.1 	(2) a project for construction or modification for which a health care facility held 
2.2 	an approved certificate of need on May 1, 1984, regardless of the date of expiration of 
2.3 	the certificate;
2.4 	(3) a project for which a certificate of need was denied before July 1, 1990, if a 
2.5 	timely appeal results in an order reversing the denial;
2.6 	(4) a project exempted from certificate of need requirements by Laws 1981, chapter 
2.7 	200, section 2;
2.8 	(5) a project involving consolidation of pediatric specialty hospital services within 
2.9 	the Minneapolis-St. Paul metropolitan area that would not result in a net increase in the 
2.10 	number of pediatric specialty hospital beds among the hospitals being consolidated;
2.11 	(6) a project involving the temporary relocation of pediatric-orthopedic hospital 
2.12 	beds to an existing licensed hospital that will allow for the reconstruction of a new 
2.13 	philanthropic, pediatric-orthopedic hospital on an existing site and that will not result in a 
2.14 	net increase in the number of hospital beds. Upon completion of the reconstruction, 
2.15 	the licenses of both hospitals must be reinstated at the capacity that existed on each site 
2.16 	before the relocation;
2.17 	(7) the relocation or redistribution of hospital beds within a hospital building or 
2.18 	identifiable complex of buildings provided the relocation or redistribution does not result 
2.19 	in: (i) an increase in the overall bed capacity at that site; (ii) relocation of hospital beds 
2.20 	from one physical site or complex to another; or (iii) redistribution of hospital beds within 
2.21 	the state or a region of the state;
2.22 	(8) relocation or redistribution of hospital beds within a hospital corporate system 
2.23 	that involves the transfer of beds from a closed facility site or complex to an existing site 
2.24 	or complex provided that: (i) no more than 50 percent of the capacity of the closed facility 
2.25 	is transferred; (ii) the capacity of the site or complex to which the beds are transferred 
2.26 	does not increase by more than 50 percent; (iii) the beds are not transferred outside of a 
2.27 	federal health systems agency boundary in place on July 1, 1983; and (iv) the relocation or 
2.28 	redistribution does not involve the construction of a new hospital building;
2.29 	(9) a construction project involving up to 35 new beds in a psychiatric hospital in 
2.30 	Rice County that primarily serves adolescents and that receives more than 70 percent of its 
2.31 	patients from outside the state of Minnesota;
2.32 	(10) a project to replace a hospital or hospitals with a combined licensed capacity 
2.33 	of 130 beds or less if: (i) the new hospital site is located within five miles of the current 
2.34 	site; and (ii) the total licensed capacity of the replacement hospital, either at the time of 
2.35 	construction of the initial building or as the result of future expansion, will not exceed 70 
3.1 	licensed hospital beds, or the combined licensed capacity of the hospitals, whichever is 
3.2 	less;
3.3 	(11) the relocation of licensed hospital beds from an existing state facility operated 
3.4 	by the commissioner of human services to a new or existing facility, building, or complex 
3.5 	operated by the commissioner of human services; from one regional treatment center 
3.6 	site to another; or from one building or site to a new or existing building or site on the 
3.7 	same campus;
3.8 	(12) the construction or relocation of hospital beds operated by a hospital having a 
3.9 	statutory obligation to provide hospital and medical services for the indigent that does not 
3.10 	result in a net increase in the number of hospital beds, notwithstanding section 144.552, 27 
3.11 	beds, of which 12 serve mental health needs, may be transferred from Hennepin County 
3.12 	Medical Center to Regions Hospital under this clause;
3.13 	(13) a construction project involving the addition of up to 31 new beds in an existing 
3.14 	nonfederal hospital in Beltrami County;
3.15 	(14) a construction project involving the addition of up to eight new beds in an 
3.16 	existing nonfederal hospital in Otter Tail County with 100 licensed acute care beds;
3.17 	(15) a construction project involving the addition of 20 new hospital beds 
3.18 	used for rehabilitation services in an existing hospital in Carver County serving the 
3.19 	southwest suburban metropolitan area. Beds constructed under this clause shall not be 
3.20 	eligible for reimbursement under medical assistance, general assistance medical care, 
3.21 	or MinnesotaCare;
3.22 	(16) a project for the construction or relocation of up to 20 hospital beds for the 
3.23 	operation of up to two psychiatric facilities or units for children provided that the operation 
3.24 	of the facilities or units have received the approval of the commissioner of human services;
3.25 	(17) a project involving the addition of 14 new hospital beds to be used for 
3.26 	rehabilitation services in an existing hospital in Itasca County;
3.27 	(18) a project to add 20 licensed beds in existing space at a hospital in Hennepin 
3.28 	County that closed 20 rehabilitation beds in 2002, provided that the beds are used only 
3.29 	for rehabilitation in the hospital's current rehabilitation building. If the beds are used for 
3.30 	another purpose or moved to another location, the hospital's licensed capacity is reduced 
3.31 	by 20 beds; or
3.32 	(19) a critical access hospital established under section 144.1483, clause (9), and 
3.33 	section 1820 of the federal Social Security Act, United States Code, title 42, section 
3.34 	1395i-4, that delicensed beds since enactment of the Balanced Budget Act of 1997, Public 
3.35 	Law 105-33, to the extent that the critical access hospital does not seek to exceed the 
3.36 	maximum number of beds permitted such hospital under federal law; or
4.1 	(20) a project for the construction of a hospital with up to 25 beds in Cass County 
4.2 	within a 20-mile radius of the state Ah-Gwah-Ching facility, provided the hospital's 
4.3 	license holder is approved by the Cass County Board.

4.4 	Sec. 2. Minnesota Statutes 2004, section 144A.071, subdivision 4c, is amended to read:
4.5 		Subd. 4c.Exceptions for replacement beds after June 30, 2003. (a) The 
4.6 	commissioner of health, in coordination with the commissioner of human services, may 
4.7 	approve the renovation, replacement, upgrading, or relocation of a nursing home or 
4.8 	boarding care home, under the following conditions:
4.9 	(1) to license and certify an 80-bed city-owned facility in Nicollet County to be 
4.10 	constructed on the site of a new city-owned hospital to replace an existing 85-bed facility 
4.11 	attached to a hospital that is also being replaced. The threshold allowed for this project 
4.12 	under section  144A.073 shall be the maximum amount available to pay the additional 
4.13 	medical assistance costs of the new facility; 
4.14 	(2) to license and certify 29 beds to be added to an existing 69-bed facility in St. 
4.15 	Louis County, provided that the 29 beds must be transferred from active or layaway status 
4.16 	at an existing facility in St. Louis County that had 235 beds on April 1, 2003.
4.17 	The licensed capacity at the 235-bed facility must be reduced to 206 beds, but the payment 
4.18 	rate at that facility shall not be adjusted as a result of this transfer. The operating payment 
4.19 	rate of the facility adding beds after completion of this project shall be the same as it was 
4.20 	on the day prior to the day the beds are licensed and certified. This project shall not 
4.21 	proceed unless it is approved and financed under the provisions of section  144A.073; and
4.22 	(3) to license and certify a new 60-bed facility in Austin, provided that: (i) 45 of 
4.23 	the new beds are transferred from a 45-bed facility in Austin under common ownership 
4.24 	that is closed and 15 of the new beds are transferred from a 182-bed facility in Albert Lea 
4.25 	under common ownership; (ii) the commissioner of human services is authorized by the 
4.26 	2004 legislature to negotiate budget-neutral planned nursing facility closures; and (iii) 
4.27 	money is available from planned closures of facilities under common ownership to make 
4.28 	implementation of this clause budget-neutral to the state. The bed capacity of the Albert 
4.29 	Lea facility shall be reduced to 167 beds following the transfer. Of the 60 beds at the 
4.30 	new facility, 20 beds shall be used for a special care unit for persons with Alzheimer's 
4.31 	disease or related dementias.; and
4.32 	(4) to license and certify up to 80 beds transferred from an existing state-owned 
4.33 	nursing facility in Cass County to a new facility located on the grounds of the 
4.34 	Ah-Gwah-Ching campus. The operating cost payment rates for the new facility shall be 
4.35 	determined based on the interim and settle-up payment provisions of Minnesota Rules, 
5.1 	part 9549.0057, and the reimbursement provisions of section 256B.431. The property 
5.2 	payment rate for the first three years of operation shall be $35 per day. For subsequent 
5.3 	years, the property payment rate of $35 per day shall be adjusted for inflation as provided 
5.4 	in section 256B.434, subdivision 4, paragraph (c), as long as the facility has a contract 
5.5 	under section 256B.434.
5.6 	(b) Projects approved under this subdivision shall be treated in a manner equivalent 
5.7 	to projects approved under subdivision 4a.