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SF 2576

2nd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 2nd Engrossment

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A bill for an act
relating to health care providers; regulating the purchase and lease of new
ambulances; establishing a manufacturer's duty to repair, refund, or replace;
authorizing construction of certain hospitals; changing public interest review
requirements for entities seeking hospital license; providing an alternative
approval process for new hospital construction; requiring a study of medical
facility construction; amending Minnesota Statutes 2004, sections 144.552;
325F.665, subdivision 1; Minnesota Statutes 2005 Supplement, section 144.551,
subdivision 1, as amended; proposing coding for new law in Minnesota Statutes,
chapter 144.

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

Section 1.

Minnesota Statutes 2005 Supplement, section 144.551, subdivision 1, as
amended by Laws 2006, chapter 172, section 1, is amended to read:


Subdivision 1.

Restricted construction or modification.

(a) The following
construction or modification may not be commenced:

(1) any erection, building, alteration, reconstruction, modernization, improvement,
extension, lease, or other acquisition by or on behalf of a hospital that increases the bed
capacity of a hospital, relocates hospital beds from one physical facility, complex, or site
to another, or otherwise results in an increase or redistribution of hospital beds within
the state; and

(2) the establishment of a new hospital.

(b) This section does not apply to:

(1) construction or relocation within a county by a hospital, clinic, or other health
care facility that is a national referral center engaged in substantial programs of patient
care, medical research, and medical education meeting state and national needs that
receives more than 40 percent of its patients from outside the state of Minnesota;

(2) a project for construction or modification for which a health care facility held
an approved certificate of need on May 1, 1984, regardless of the date of expiration of
the certificate;

(3) a project for which a certificate of need was denied before July 1, 1990, if a
timely appeal results in an order reversing the denial;

(4) a project exempted from certificate of need requirements by Laws 1981, chapter
200, section 2;

(5) a project involving consolidation of pediatric specialty hospital services within
the Minneapolis-St. Paul metropolitan area that would not result in a net increase in the
number of pediatric specialty hospital beds among the hospitals being consolidated;

(6) a project involving the temporary relocation of pediatric-orthopedic hospital
beds to an existing licensed hospital that will allow for the reconstruction of a new
philanthropic, pediatric-orthopedic hospital on an existing site and that will not result in a
net increase in the number of hospital beds. Upon completion of the reconstruction,
the licenses of both hospitals must be reinstated at the capacity that existed on each site
before the relocation;

(7) the relocation or redistribution of hospital beds within a hospital building or
identifiable complex of buildings provided the relocation or redistribution does not result
in: (i) an increase in the overall bed capacity at that site; (ii) relocation of hospital beds
from one physical site or complex to another; or (iii) redistribution of hospital beds within
the state or a region of the state;

(8) relocation or redistribution of hospital beds within a hospital corporate system
that involves the transfer of beds from a closed facility site or complex to an existing site
or complex provided that: (i) no more than 50 percent of the capacity of the closed facility
is transferred; (ii) the capacity of the site or complex to which the beds are transferred
does not increase by more than 50 percent; (iii) the beds are not transferred outside of a
federal health systems agency boundary in place on July 1, 1983; and (iv) the relocation or
redistribution does not involve the construction of a new hospital building;

(9) a construction project involving up to 35 new beds in a psychiatric hospital in
Rice County that primarily serves adolescents and that receives more than 70 percent of its
patients from outside the state of Minnesota;

(10) a project to replace a hospital or hospitals with a combined licensed capacity
of 130 beds or less if: (i) the new hospital site is located within five miles of the current
site; and (ii) the total licensed capacity of the replacement hospital, either at the time of
construction of the initial building or as the result of future expansion, will not exceed 70
licensed hospital beds, or the combined licensed capacity of the hospitals, whichever is
less;

(11) the relocation of licensed hospital beds from an existing state facility operated
by the commissioner of human services to a new or existing facility, building, or complex
operated by the commissioner of human services; from one regional treatment center
site to another; or from one building or site to a new or existing building or site on the
same campus;

(12) the construction or relocation of hospital beds operated by a hospital having a
statutory obligation to provide hospital and medical services for the indigent that does not
result in a net increase in the number of hospital beds, notwithstanding section 144.552, 27
beds, of which 12 serve mental health needs, may be transferred from Hennepin County
Medical Center to Regions Hospital under this clause;

(13) a construction project involving the addition of up to 31 new beds in an existing
nonfederal hospital in Beltrami County;

(14) a construction project involving the addition of up to eight new beds in an
existing nonfederal hospital in Otter Tail County with 100 licensed acute care beds;

(15) a construction project involving the addition of 20 new hospital beds
used for rehabilitation services in an existing hospital in Carver County serving the
southwest suburban metropolitan area. Beds constructed under this clause shall not be
eligible for reimbursement under medical assistance, general assistance medical care,
or MinnesotaCare;

(16) a project for the construction or relocation of up to 20 hospital beds for the
operation of up to two psychiatric facilities or units for children provided that the operation
of the facilities or units have received the approval of the commissioner of human services;

(17) a project involving the addition of 14 new hospital beds to be used for
rehabilitation services in an existing hospital in Itasca County;

(18) a project to add 20 licensed beds in existing space at a hospital in Hennepin
County that closed 20 rehabilitation beds in 2002, provided that the beds are used only
for rehabilitation in the hospital's current rehabilitation building. If the beds are used for
another purpose or moved to another location, the hospital's licensed capacity is reduced
by 20 beds;

(19) a critical access hospital established under section 144.1483, clause (9), and
section 1820 of the federal Social Security Act, United States Code, title 42, section
1395i-4, that delicensed beds since enactment of the Balanced Budget Act of 1997, Public
Law 105-33, to the extent that the critical access hospital does not seek to exceed the
maximum number of beds permitted such hospital under federal law; deleted text beginor
deleted text end

(20) notwithstanding section 144.552, a project for the construction of a new hospital
in the city of Maple Grove with a licensed capacity of up to 300 beds provided that:

(i) the project, including each hospital or health system that will own or control the
entity that will hold the new hospital license, is approved by a resolution of the Maple
Grove City Council as of March 1, 2006;

(ii) the entity that will hold the new hospital license will be owned or controlled by
one or more not-for-profit hospitals or health systems that have previously submitted a
plan or plans for a project in Maple Grove as required under section 144.552, and the
plan or plans have been found to be in the public interest by the commissioner of health
as of April 1, 2005;

(iii) the new hospital's initial inpatient services must include, but are not limited
to, medical and surgical services, obstetrical and gynecological services, intensive
care services, orthopedic services, pediatric services, noninvasive cardiac diagnostics,
behavioral health services, and emergency room services;

(iv) the new hospital:

(A) will have the ability to provide and staff sufficient new beds to meet the growing
needs of the Maple Grove service area and the surrounding communities currently being
served by the hospital or health system that will own or control the entity that will hold
the new hospital license;

(B) will provide uncompensated care;

(C) will provide mental health services, including inpatient beds;

(D) will be a site for workforce development for a broad spectrum of
health-care-related occupations and have a commitment to providing clinical training
programs for physicians and other health care providers;

(E) will demonstrate a commitment to quality care and patient safety;

(F) will have an electronic medical records system, including physician order entry;

(G) will provide a broad range of senior services;

(H) will provide emergency medical services that will coordinate care with regional
providers of trauma services and licensed emergency ambulance services in order to
enhance the continuity of care for emergency medical patients; and

(I) will be completed by December 31, 2009, unless delayed by circumstances
beyond the control of the entity holding the new hospital license; and

(v) as of 30 days following submission of a written plan, the commissioner of health
has not determined that the hospitals or health systems that will own or control the entity
that will hold the new hospital license are unable to meet the criteria of this clausedeleted text begin.deleted text endnew text begin;
new text end

new text begin (21) a project approved under section 144.553;
new text end

new text begin (22) a project for the construction of a hospital with up to 25 beds in Cass County
within a 20-mile radius of the state Ah-Gwah-Ching facility, provided the hospital's
license holder is approved by the Cass County Board; or
new text end

new text begin (23) a project for an acute care hospital in Fergus Falls that will increase the bed
capacity from 108 to 110 beds by increasing the rehabilitation bed capacity from 14 to 16
and closing a separately licensed 13-bed skilled nursing facility.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2004, section 144.552, is amended to read:


144.552 PUBLIC INTEREST REVIEW.

(a) new text beginThe following entities must submit a plan to the commissioner:
new text end

new text begin (1)new text end a hospital seeking to increase its number of licensed bedsnew text begin;new text end or

new text begin (2)new text end an organization seeking to obtain a hospital license deleted text beginmust submit a plan to
the commissioner of health
deleted text endnew text begin and notified by the commissioner under section 144.553,
subdivision 1, paragraph (c), that it is subject to this section
new text end.

The plan must include information that includes an explanation of how the expansion will
meet the public's interest. When submitting a plan to the commissioner, an applicant shall
pay the commissioner for the commissioner's cost of reviewing the plan, as determined
by the commissioner and notwithstanding section 16A.1283. Money received by the
commissioner under this section is appropriated to the commissioner for the purpose of
administering this section.

(b) Plans submitted under this section shall include detailed information necessary
for the commissioner to review the plan and reach a finding. The commissioner may
request additional information from the hospital submitting a plan under this section and
from others affected by the plan that the commissioner deems necessary to review the
plan and make a finding.

(c) The commissioner shall review the plan and, within 90 days, but no more than
six months if extenuating circumstances apply, issue a finding on whether the plan is in
the public interest. In making the recommendation, the commissioner shall consider
issues including but not limited to:

(1) whether the new hospital or hospital beds are needed to provide timely access to
care or access to new or improved services;

(2) the financial impact of the new hospital or hospital beds on existing acute-care
hospitals that have emergency departments in the region;

(3) how the new hospital or hospital beds will affect the ability of existing hospitals
in the region to maintain existing staff;

(4) the extent to which the new hospital or hospital beds will provide services to
nonpaying or low-income patients relative to the level of services provided to these groups
by existing hospitals in the region; and

(5) the views of affected parties.

new text begin Prior to making a recommendation, the commissioner shall conduct a public hearing in the
affected hospital service area to take testimony from interested persons.
new text end

(d) Upon making a recommendation under paragraph (c), the commissioner shall
provide a copy of the recommendation to the chairs of the house and senate committees
having jurisdiction over health and human services policy and finance.

Sec. 3.

new text begin [144.553] ALTERNATIVE APPROVAL PROCESS FOR NEW
HOSPITAL CONSTRUCTION.
new text end

new text begin Subdivision 1. new text end

new text begin Letter of intent; publication; acceptance of additional proposals.
new text end

new text begin (a) An organization seeking to obtain a hospital license must submit a letter of intent to the
commissioner, specifying the community in which the proposed hospital would be located
and the number of beds proposed for the new hospital. When multiple letters of intent are
received, the commissioner shall determine whether they constitute requests for separate
projects or are competing proposals to serve the same or a similar service area.
new text end

new text begin (b) Upon receipt of a letter under paragraph (a), the commissioner shall publish a
notice in the State Register that includes the information received from the organization
under paragraph (a). The notice must state that another organization interested in seeking
a hospital license to serve the same or a similar service area must notify the commissioner
within 30 days.
new text end

new text begin (c) If no responses are received from additional organizations under paragraph (b),
the commissioner shall notify the entity seeking a license that it is required to submit a
plan under section 144.552 and shall notify the chairs of the house of representatives and
senate committees having jurisdiction over health and human services policy and finance
that the project is subject to sections 144.551 and 144.552.
new text end

new text begin Subd. 2. new text end

new text begin Needs assessment. new text end

new text begin (a) If one or more responses are received by the
commissioner under subdivision 1, paragraph (b), the commissioner shall complete within
90 days a needs assessment to determine if a new hospital is needed in the proposed
service area.
new text end

new text begin (b) The organizations that have filed or responded to a letter of intent under
subdivision 1 shall provide to the commissioner within 30 days of a request from the
commissioner a statement justifying the need for a new hospital in the service area and
sufficient information, as determined by the commissioner, to allow the commissioner to
determine the need for a new hospital. The information may include, but is not limited
to, a demographic analysis of the proposed service area, the number of proposed beds,
the types of hospital services to be provided, and distances and travel times to existing
hospitals currently providing services in the service area.
new text end

new text begin (c) The commissioner shall make a determination of need for the new hospital. If
the commissioner determines that a new hospital in the service area is not justified, the
commissioner shall notify the applicants in writing, stating the reasons for the decision.
new text end

new text begin Subd. 3. new text end

new text begin Process when hospital need is determined. new text end

new text begin (a) If the commissioner
determines that a new hospital is needed in the proposed service area, the commissioner
shall notify the applicants of that finding and shall select the applicant determined under
the process established in this subdivision to be best able to provide services consistent
with the review criteria established in this subdivision.
new text end

new text begin (b) The commissioner shall:
new text end

new text begin (1) determine market-specific criteria that shall be used to evaluate all proposals.
The criteria must include standards regarding:
new text end

new text begin (i) access to care;
new text end

new text begin (ii) quality of care;
new text end

new text begin (iii) cost of care; and
new text end

new text begin (iv) overall project feasibility;
new text end

new text begin (2) establish additional criteria at the commissioner's discretion. In establishing the
criteria, the commissioner shall consider the need for:
new text end

new text begin (i) mental health services in the service area, including both inpatient and outpatient
services for adults, adolescents, and children;
new text end

new text begin (ii) a significant commitment to providing uncompensated care, including discounts
for uninsured patients and coordination with other providers of care to low-income
uninsured persons; and
new text end

new text begin (iii) coordination with other hospitals so that specialized services are not
unnecessarily duplicated and are provided in sufficient volume to ensure the maintenance
of high-quality care; and
new text end

new text begin (3) define a service area for the proposed hospital. The service area shall consist of:
new text end

new text begin (i) in the 11-county metropolitan area, in St. Cloud, and in Duluth, the zip codes
located within a 20-mile radius of the proposed new hospital location; and
new text end

new text begin (ii) in the remainder of the state, the zip codes within a 30-mile radius of the
proposed new hospital location.
new text end

new text begin (c) The commissioner shall publish the criteria determined under paragraph (b) in the
State Register within 60 days of the determination under subdivision 2. Once published,
the criteria shall not be modified with respect to the particular project and applicants
to which they apply. The commissioner shall publish with the criteria guidelines for a
proposal and submission review process.
new text end

new text begin (d) For 60 days after the publication under paragraph (c), the commissioner shall
accept proposals to construct a hospital from organizations that have submitted a letter
of intent under subdivision 1, paragraph (a), or have notified the commissioner under
subdivision 1, paragraph (b). The proposal must include a plan for the new hospital and
evidence of compliance with the criteria specified under paragraph (b). Once submitted,
the proposal may not be revised except:
new text end

new text begin (1) to submit corrections of material facts; or
new text end

new text begin (2) in response to a request from the commissioner to provide clarification or
further information.
new text end

new text begin (e) The commissioner shall determine within 90 days of the deadline for applications
under paragraph (d), which applicant has demonstrated that it is best able to provide
services consistent with the published criteria. The commissioner shall make this
determination by order following a hearing according to this paragraph. The hearing
shall not constitute or be considered to be a contested case hearing under chapter 14 and
shall be conducted solely under the procedures specified in this paragraph. The hearing
shall commence upon at least 30 days' notice to the applicants by the commissioner.
The hearing may be conducted by the commissioner or by a person designated by the
commissioner. The designee may be an administrative law judge. The purpose of the
hearing shall be to receive evidence to assist the commissioner in determining which
applicant has demonstrated that it best meets the published criteria.
new text end

new text begin The parties to the hearing shall consist only of those applicants who have submitted
a completed application. Each applicant shall have the right to be represented by
counsel, to present evidence deemed relevant by the commissioner, and to examine and
cross-examine witnesses. Persons who are not parties to the proceeding but who wish to
present comments or submit information may do so in the manner determined by the
commissioner or the commissioner's designee. Any person who is not a party shall have
no right to examine or cross-examine witnesses. The commissioner may participate as an
active finder of fact in the hearing and may ask questions to elicit information or clarify
answers or responses.
new text end

new text begin (f) Prior to making a determination selecting an application, the commissioner shall
hold a public hearing in the proposed hospital service area to accept comments from
members of the public. The commissioner shall take this information into consideration
in making the determination. The commissioner may appoint an advisory committee,
including legislators and local elected officials who represent the service area and outside
experts to assist in the recommendation process. The commissioner shall issue an order
selecting an application following the closing of the record of the hearing as determined
by the hearing officer. The commissioner's order shall include a statement of the reasons
the selected application best meets the published criteria.
new text end

new text begin (g) Within 30 days following the determination under paragraph (e), the
commissioner shall recommend the selected proposal to the legislature.
new text end

new text begin Subd. 4. new text end

new text begin Payment of commissioner's expenses. new text end

new text begin Notwithstanding section
16A.1283, applicants who are a party at any stage of the administrative process established
in this section shall pay the cost of that stage of the process, as determined by the
commissioner. The cost of the needs assessment, criteria development, and hearing shall
be divided equally among the applicants. Money received by the commissioner under
this subdivision is appropriated to the commissioner for the purpose of administering
this section.
new text end

Sec. 4.

Minnesota Statutes 2004, section 325F.665, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

new text begin(a) new text endFor the purposes of this section, the deleted text beginfollowingdeleted text end terms
new text begin in paragraphs (b) to (i) new text endhave the meanings given themdeleted text begin:deleted text endnew text begin.
new text end

deleted text begin (a)deleted text end new text begin(b) new text end"Consumer" means the purchaser or lessee, other than for purposes of resale
or sublease, of a new motor vehicle used for personal, family, or household purposes at
least 40 percent of the time, new text beginand new text enda person to whom the new motor vehicle is transferred
for the same purposes during the duration of an express warranty applicable to the motor
vehicledeleted text begin;deleted text endnew text begin. The term also includes an ambulance service licensed under chapter 144E that
has purchased or leased a new motor vehicle of the type specified in paragraph (f), and a
person to whom the ambulance is transferred for the same purpose during the duration of
any applicable express warranty.
new text end

deleted text begin (b)deleted text end new text begin(c) new text end"Manufacturer" means a person engaged in the business of manufacturing,
assembling or distributing motor vehicles, who will, under normal business conditions
during the year, manufacture, assemble or distribute to dealers at least ten new motor
vehiclesdeleted text begin;deleted text endnew text begin.
new text end

deleted text begin (c)deleted text end new text begin(d) new text end"Manufacturer's express warranty" and "warranty" mean the written warranty
of the manufacturer of a new motor vehicle of its condition and fitness for use, including
any terms or conditions precedent to the enforcement of obligations under that warrantydeleted text begin;deleted text endnew text begin.
new text end

deleted text begin (d)deleted text end new text begin(e) new text end"Lease" means a contract in the form of a lease or bailment for the use of
personal property by a natural person for a period of time exceeding four months, used for
personal, family, or household purposes at least 40 percent of the time, whether or not the
lessee has the option to purchase or otherwise become the owner of the property at the
expiration of the leasedeleted text begin;deleted text endnew text begin.
new text end

deleted text begin (e)deleted text end new text begin(f) new text end"Motor vehicle" means (1) a passenger automobile as defined in section
168.011, subdivision 7, including pickup trucks and vans, deleted text beginanddeleted text end (2) the self-propelled
motor vehicle chassis or van portion of recreational equipment as defined in section
168.011, subdivision 25, which is sold or leased to a consumer in this statedeleted text begin;deleted text endnew text begin, and (3) the
self-propelled motor vehicle chassis or van portion of an ambulance as defined in section
144E.001, subdivision 2.
new text end

deleted text begin (f)deleted text end new text begin(g) new text end"Informal dispute settlement mechanism" means an arbitration process
or procedure by which the manufacturer attempts to resolve disputes with consumers
regarding motor vehicle nonconformities and repairs that arise during the vehicle's
warranty perioddeleted text begin;deleted text endnew text begin.
new text end

deleted text begin (g)deleted text end new text begin(h) new text end"Motor vehicle lessor" means a person who holds title to a motor vehicle
leased to a lessee under a written lease agreement or who holds the lessor's rights under
such agreementdeleted text begin; anddeleted text endnew text begin.
new text end

deleted text begin (h)deleted text end new text begin(i) new text end"Early termination costs" means expenses and obligations incurred by a
motor vehicle lessor as a result of an early termination of a written lease agreement and
surrender of a motor vehicle to a manufacturer under subdivision 4, including penalties
for prepayment of finance arrangements.

Sec. 5. new text beginSTUDY OF MEDICAL FACILITY CONSTRUCTION.
new text end

new text begin The commissioner of health shall study and report to the legislature by February 15,
2007, on the need for a new process for approving the construction of medical facilities
or the addition of services at existing medical facilities. The report shall consider the
following issues:
new text end

new text begin (1) what type of investment in medical facilities should be subject to prior approval,
including the types of facilities that should be included, the types of services that should
be included, and the threshold level of investment that would make a project subject
to an approval process;
new text end

new text begin (2) what entity should be responsible for approving investments in medical facilities;
new text end

new text begin (3) what decision-making process should be used when multiple providers propose
to invest in similar facilities or services within the same geographic area;
new text end

new text begin (4) what information would be required to effectively determine the need for new
medical facilities or services; and
new text end

new text begin (5) other issues identified by the commissioner as relevant to health care delivery
capacity in Minnesota.
new text end

new text begin The report shall include recommendations for legislative changes necessary to
implement a new process for approving the expansion or construction of medical facilities
or major changes in services provided at existing facilities.
new text end

Sec. 6. new text beginSUNSET.
new text end

new text begin Section 3 expires on January 1, 2009.
new text end

Sec. 7. new text beginEFFECTIVE DATE; APPLICATION.
new text end

new text begin Section 4 is effective August 1, 2006, and applies to new motor vehicle sales and
leases made on or after that date.
new text end