1.1 	A bill for an act
1.2 	relating to human services; establishing an alternative approval process to 
1.3 	evaluate certain hospital construction proposals;amending Minnesota Statutes 
1.4 	2004, section 144.552; Minnesota Statutes 2005 Supplement, section 144.551, 
1.5 	subdivision 1; proposing coding for new law in Minnesota Statutes, chapter 144.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2005 Supplement, section 144.551, subdivision 1, 
1.8 	is amended to read:
1.9 		Subdivision 1.Restricted construction or modification. (a) The following 
1.10 	construction or modification may not be commenced:
1.11 	(1) any erection, building, alteration, reconstruction, modernization, improvement, 
1.12 	extension, lease, or other acquisition by or on behalf of a hospital that increases the bed 
1.13 	capacity of a hospital, relocates hospital beds from one physical facility, complex, or site 
1.14 	to another, or otherwise results in an increase or redistribution of hospital beds within 
1.15 	the state; and
1.16 	(2) the establishment of a new hospital.
1.17 	(b) This section does not apply to:
1.18 	(1) construction or relocation within a county by a hospital, clinic, or other health 
1.19 	care facility that is a national referral center engaged in substantial programs of patient 
1.20 	care, medical research, and medical education meeting state and national needs that 
1.21 	receives more than 40 percent of its patients from outside the state of Minnesota;
1.22 	(2) a project for construction or modification for which a health care facility held 
1.23 	an approved certificate of need on May 1, 1984, regardless of the date of expiration of 
1.24 	the certificate;
2.1 	(3) a project for which a certificate of need was denied before July 1, 1990, if a 
2.2 	timely appeal results in an order reversing the denial;
2.3 	(4) a project exempted from certificate of need requirements by Laws 1981, chapter 
2.4 	200, section 2;
2.5 	(5) a project involving consolidation of pediatric specialty hospital services within 
2.6 	the Minneapolis-St. Paul metropolitan area that would not result in a net increase in the 
2.7 	number of pediatric specialty hospital beds among the hospitals being consolidated;
2.8 	(6) a project involving the temporary relocation of pediatric-orthopedic hospital 
2.9 	beds to an existing licensed hospital that will allow for the reconstruction of a new 
2.10 	philanthropic, pediatric-orthopedic hospital on an existing site and that will not result in a 
2.11 	net increase in the number of hospital beds. Upon completion of the reconstruction, 
2.12 	the licenses of both hospitals must be reinstated at the capacity that existed on each site 
2.13 	before the relocation;
2.14 	(7) the relocation or redistribution of hospital beds within a hospital building or 
2.15 	identifiable complex of buildings provided the relocation or redistribution does not result 
2.16 	in: (i) an increase in the overall bed capacity at that site; (ii) relocation of hospital beds 
2.17 	from one physical site or complex to another; or (iii) redistribution of hospital beds within 
2.18 	the state or a region of the state;
2.19 	(8) relocation or redistribution of hospital beds within a hospital corporate system 
2.20 	that involves the transfer of beds from a closed facility site or complex to an existing site 
2.21 	or complex provided that: (i) no more than 50 percent of the capacity of the closed facility 
2.22 	is transferred; (ii) the capacity of the site or complex to which the beds are transferred 
2.23 	does not increase by more than 50 percent; (iii) the beds are not transferred outside of a 
2.24 	federal health systems agency boundary in place on July 1, 1983; and (iv) the relocation or 
2.25 	redistribution does not involve the construction of a new hospital building;
2.26 	(9) a construction project involving up to 35 new beds in a psychiatric hospital in 
2.27 	Rice County that primarily serves adolescents and that receives more than 70 percent of its 
2.28 	patients from outside the state of Minnesota;
2.29 	(10) a project to replace a hospital or hospitals with a combined licensed capacity 
2.30 	of 130 beds or less if: (i) the new hospital site is located within five miles of the current 
2.31 	site; and (ii) the total licensed capacity of the replacement hospital, either at the time of 
2.32 	construction of the initial building or as the result of future expansion, will not exceed 70 
2.33 	licensed hospital beds, or the combined licensed capacity of the hospitals, whichever is 
2.34 	less;
2.35 	(11) the relocation of licensed hospital beds from an existing state facility operated 
2.36 	by the commissioner of human services to a new or existing facility, building, or complex 
3.1 	operated by the commissioner of human services; from one regional treatment center 
3.2 	site to another; or from one building or site to a new or existing building or site on the 
3.3 	same campus;
3.4 	(12) the construction or relocation of hospital beds operated by a hospital having a 
3.5 	statutory obligation to provide hospital and medical services for the indigent that does not 
3.6 	result in a net increase in the number of hospital beds, notwithstanding section 144.552, 27 
3.7 	beds, of which 12 serve mental health needs, may be transferred from Hennepin County 
3.8 	Medical Center to Regions Hospital under this clause;
3.9 	(13) a construction project involving the addition of up to 31 new beds in an existing 
3.10 	nonfederal hospital in Beltrami County;
3.11 	(14) a construction project involving the addition of up to eight new beds in an 
3.12 	existing nonfederal hospital in Otter Tail County with 100 licensed acute care beds;
3.13 	(15) a construction project involving the addition of 20 new hospital beds 
3.14 	used for rehabilitation services in an existing hospital in Carver County serving the 
3.15 	southwest suburban metropolitan area. Beds constructed under this clause shall not be 
3.16 	eligible for reimbursement under medical assistance, general assistance medical care, 
3.17 	or MinnesotaCare;
3.18 	(16) a project for the construction or relocation of up to 20 hospital beds for the 
3.19 	operation of up to two psychiatric facilities or units for children provided that the operation 
3.20 	of the facilities or units have received the approval of the commissioner of human services;
3.21 	(17) a project involving the addition of 14 new hospital beds to be used for 
3.22 	rehabilitation services in an existing hospital in Itasca County;
3.23 	(18) a project to add 20 licensed beds in existing space at a hospital in Hennepin 
3.24 	County that closed 20 rehabilitation beds in 2002, provided that the beds are used only 
3.25 	for rehabilitation in the hospital's current rehabilitation building. If the beds are used for 
3.26 	another purpose or moved to another location, the hospital's licensed capacity is reduced 
3.27 	by 20 beds; or
3.28 	(19) a critical access hospital established under section 144.1483, clause (9), and 
3.29 	section 1820 of the federal Social Security Act, United States Code, title 42, section 
3.30 	1395i-4, that delicensed beds since enactment of the Balanced Budget Act of 1997, Public 
3.31 	Law 105-33, to the extent that the critical access hospital does not seek to exceed the 
3.32 	maximum number of beds permitted such hospital under federal law; or
3.33 	(20) a project approved under section 144.553.

3.34 	Sec. 2. Minnesota Statutes 2004, section 144.552, is amended to read:
3.35 	144.552 PUBLIC INTEREST REVIEW.
4.1 	(a) The following entities must submit a plan to the commissioner:
4.2 	(1)  a hospital seeking to increase its number of licensed beds; or
4.3 	(2)  an organization seeking to obtain a hospital license must submit a plan to 
4.4 	the commissioner of health and notified by the commissioner under section 144.553, 
4.5 	subdivision 1, paragraph (c), that it is subject to this section. 
4.6 	The plan must include information that includes an explanation of how the expansion will 
4.7 	meet the public's interest. When submitting a plan to the commissioner, an applicant shall 
4.8 	pay the commissioner for the commissioner's cost of reviewing the plan, as determined 
4.9 	by the commissioner and notwithstanding section  16A.1283. Money received by the 
4.10 	commissioner under this section is appropriated to the commissioner for the purpose of 
4.11 	administering this section. 
4.12 	(b) Plans submitted under this section shall include detailed information necessary 
4.13 	for the commissioner to review the plan and reach a finding. The commissioner may 
4.14 	request additional information from the hospital submitting a plan under this section and 
4.15 	from others affected by the plan that the commissioner deems necessary to review the 
4.16 	plan and make a finding.
4.17 	(c) The commissioner shall review the plan and, within 90 days, but no more than 
4.18 	six months if extenuating circumstances apply, issue a finding on whether the plan is in 
4.19 	the public interest. In making the recommendation, the commissioner shall consider 
4.20 	issues including but not limited to:
4.21 	(1) whether the new hospital or hospital beds are needed to provide timely access to 
4.22 	care or access to new or improved services;
4.23 	(2) the financial impact of the new hospital or hospital beds on existing acute-care 
4.24 	hospitals that have emergency departments in the region;
4.25 	(3) how the new hospital or hospital beds will affect the ability of existing hospitals 
4.26 	in the region to maintain existing staff;
4.27 	(4) the extent to which the new hospital or hospital beds will provide services to 
4.28 	nonpaying or low-income patients relative to the level of services provided to these groups 
4.29 	by existing hospitals in the region; and
4.30 	(5) the views of affected parties.
4.31 	Prior to making a recommendation, the commissioner shall conduct a public hearing in the 
4.32 	affected hospital service area to take testimony from interested persons.
4.33 	(d) Upon making a recommendation under paragraph (c), the commissioner shall 
4.34 	provide a copy of the recommendation to the chairs of the house and senate committees 
4.35 	having jurisdiction over health and human services policy and finance.

5.1 	Sec. 3. [144.553] ALTERNATIVE APPROVAL PROCESS FOR NEW 
5.2 	HOSPITAL CONSTRUCTION.
5.3 		Subdivision 1.Letter of intent; publication; acceptance of additional proposals.
 5.4 	(a) An organization seeking to obtain a hospital license must submit a letter of intent to the 
5.5 	commissioner, specifying the community in which the proposed hospital would be located 
5.6 	and the number of beds proposed for the new hospital. When multiple letters of intent are 
5.7 	received, the commissioner shall determine whether they constitute requests for separate 
5.8 	projects or are competing proposals to serve the same or a similar service area.
5.9 	(b) Upon receipt of a letter under paragraph (a), the commissioner shall publish a 
5.10 	notice in the State Register that includes the information received from the organization 
5.11 	under paragraph (a). The notice must state that another organization interested in seeking 
5.12 	a hospital license to serve the same or a similar service area must notify the commissioner 
5.13 	within 30 days.
5.14 	(c) If no responses are received from additional organizations under paragraph (b), 
5.15 	the commissioner shall notify the entity seeking a license that it is required to submit a 
5.16 	plan under section 144.552 and shall notify the chairs of the house of representatives and 
5.17 	senate committees having jurisdiction over health and human services policy and finance 
5.18 	that the project is subject to sections 144.551 and 144.552.
5.19 		Subd. 2.Needs assessment. (a) If one or more responses are received by the 
5.20 	commissioner under subdivision 1, paragraph (b), the commissioner shall complete within 
5.21 	90 days a needs assessment to determine if a new hospital is needed in the proposed 
5.22 	service area.
5.23 	(b) The organizations that have filed or responded to a letter of intent under 
5.24 	subdivision 1 shall provide to the commissioner within 30 days of a request from the 
5.25 	commissioner a statement justifying the need for a new hospital in the service area and 
5.26 	sufficient information, as determined by the commissioner, to allow the commissioner to 
5.27 	determine the need for a new hospital. The information may include, but is not limited 
5.28 	to, a demographic analysis of the proposed service area, the number of proposed beds, 
5.29 	the types of hospital services to be provided, and distances and travel times to existing 
5.30 	hospitals currently providing services in the service area.
5.31 	(c) The commissioner shall make a determination of need for the new hospital. If 
5.32 	the commissioner determines that a new hospital in the service area is not justified, the 
5.33 	commissioner shall notify the applicants in writing, stating the reasons for the decision.
5.34 		Subd. 3.Process when hospital need is determined. (a) If the commissioner 
5.35 	determines that a new hospital is needed in the proposed service area, the commissioner 
5.36 	shall notify the applicants of that finding and shall select the applicant determined under 
6.1 	the process established in this subdivision to be best able to provide services consistent 
6.2 	with the review criteria established in this subdivision.
6.3 	(b) The commissioner shall:
6.4 	(1) determine market-specific criteria that shall be used to evaluate all proposals. 
6.5 	The criteria must include standards regarding:
6.6 	(i) access to care;
6.7 	(ii) quality of care;
6.8 	(iii) cost of care; and
6.9 	(iv) overall project feasibility;
6.10 	(2) establish additional criteria at the commissioner's discretion. In establishing the 
6.11 	criteria, the commissioner shall consider the need for:
6.12 	(i) mental health services in the service area, including both inpatient and outpatient 
6.13 	services for adults, adolescents, and children; 
6.14 	(ii) a significant commitment to providing uncompensated care, including discounts 
6.15 	for uninsured patients and coordination with other providers of care to low-income 
6.16 	uninsured persons; and 
6.17 	(iii) coordination with other hospitals so that specialized services are not 
6.18 	unnecessarily duplicated and are provided in sufficient volume to ensure the maintenance 
6.19 	of high-quality care. The criteria determined under this paragraph shall constitute the sole 
6.20 	criteria under which the competing proposals shall be evaluated; and
6.21 	(3) define a service area for the proposed hospital. The service area shall consist of:
6.22 	(i) in the 11-county metropolitan area, in St. Cloud, and in Duluth, the zip codes 
6.23 	located within a 20-mile radius of the proposed new hospital location; and 
6.24 	(ii) in the remainder of the state, the zip codes within a 30-mile radius of the 
6.25 	proposed new hospital location.
6.26 	(c) The commissioner shall publish the criteria determined under paragraph (b) in the 
6.27 	State Register within 60 days of the determination under subdivision 2. Once published, 
6.28 	the criteria shall not be modified with respect to the particular project and applicants 
6.29 	to which they apply. The commissioner shall publish with the criteria guidelines for a 
6.30 	proposal and submission review process.
6.31 	(d) For 60 days after the publication under paragraph (c), the commissioner shall 
6.32 	accept proposals to construct a hospital from organizations that have submitted a letter 
6.33 	of intent under subdivision 1, paragraph (a), or have notified the commissioner under 
6.34 	subdivision 1, paragraph (b). The proposal must include a plan for the new hospital and 
6.35 	evidence of compliance with the criteria specified under paragraph (b). Once submitted, 
6.36 	the proposal may not be revised except:
7.1 	(1) to submit corrections of material facts; or
7.2 	(2) in response to a request from the commissioner to provide clarification or 
7.3 	further information. 
7.4 	(e) The commissioner shall determine within 90 days of the deadline for applications 
7.5 	under paragraph (d), which applicant has demonstrated that it is best able to provide 
7.6 	services consistent with the published criteria. The commissioner shall make this 
7.7 	determination by order following a hearing according to this paragraph. The hearing 
7.8 	shall not constitute or be considered to be a contested case hearing under chapter 14 and 
7.9 	shall be conducted solely under the procedures specified in this paragraph. The hearing 
7.10 	shall commence upon at least 30 days' notice to the applicants by the commissioner. 
7.11 	The hearing may be conducted by the commissioner or by a person designated by the 
7.12 	commissioner. The designee may be an administrative law judge. The purpose of the 
7.13 	hearing shall be to receive evidence to assist the commissioner in determining which 
7.14 	applicant has demonstrated that it best meets the published criteria.
7.15 	The parties to the hearing shall consist only of those applicants who have submitted 
7.16 	a completed application. Each applicant shall have the right to be represented by 
7.17 	counsel, to present evidence deemed relevant by the commissioner, and to examine and 
7.18 	cross-examine witnesses. Persons who are not parties to the proceeding but who wish to 
7.19 	present comments or submit information may do so in the manner determined by the 
7.20 	commissioner or the commissioner's designee. Any person who is not a party shall have 
7.21 	no right to examine or cross-examine witnesses. The commissioner may participate as an 
7.22 	active finder of fact in the hearing and may ask questions to elicit information or clarify 
7.23 	answers or responses.
7.24 	(f) Prior to making a determination selecting an application, the commissioner shall 
7.25 	hold a public hearing in the proposed hospital service area to accept comments from 
7.26 	members of the public. The commissioner shall take this information into consideration in 
7.27 	making the determination. The commissioner must also consider the input and preferences 
7.28 	of legislators and local elected officials who represent the service area regarding the 
7.29 	selection of the hospital provider. The commissioner shall issue an order selecting an 
7.30 	application following the closing of the record of the hearing as determined by the hearing 
7.31 	officer. The commissioner's order shall include a statement of the reasons the selected 
7.32 	application best meets the published criteria.
7.33 	(g) Following the determination under paragraph (e), the commissioner shall 
7.34 	recommend the selected proposal to the legislature on or before March 1 in an 
7.35 	odd-numbered year and within 15 days of the first day of the regular session in 
7.36 	an even-numbered year to be accepted or rejected. Legislative acceptance of the 
8.1 	commissioner's recommendation constitutes approval of the proposal under section 
8.2 	144.551. Legislative rejection of the recommendation concludes the process but does not 
8.3 	prohibit a new application under this section and section 144.552.
8.4 	(h) In the event of legislative failure to act on the recommendation made under this 
8.5 	subdivision, upon the conclusion of the legislative session the commissioner shall make 
8.6 	the commissioner's recommendation the final approval of the project. The commissioner's 
8.7 	decision to grant final approval to the commissioner's recommendation constitutes 
8.8 	approval of the proposal under section 144.551.
8.9 	(i) For purposes of this subdivision, "legislative acceptance" means the 
8.10 	recommended project is approved by law; "legislative rejection" means the recommended 
8.11 	project is rejected by law; and "legislative failure to act" means any other action or lack of 
8.12 	action taken by the legislature.
8.13 		Subd. 4.Payment of commissioner's expenses. Notwithstanding section 
8.14 	16A.1283, applicants who are a party at any stage of the administrative process established 
8.15 	in this section shall pay the cost of that stage of the process, as determined by the 
8.16 	commissioner. The cost of the needs assessment, criteria development, and hearing shall 
8.17 	be divided equally among the applicants. Money received by the commissioner under 
8.18 	this subdivision is appropriated to the commissioner for the purpose of administering 
8.19 	this section.