SF 3098

1st Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to human services; establishing an alternative approval process to
evaluate certain hospital construction proposals; amending Minnesota Statutes
2004, section 144.552; Minnesota Statutes 2005 Supplement, section 144.551,
subdivision 1; 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,
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; deleted text begin or
deleted text end

(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 new text begin ; or
new text end

new text begin (20) a project approved under section 144.553 new text end .

Sec. 2.

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

144.552 PUBLIC INTEREST REVIEW.

(a) new text begin The 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 beds new text begin ; new text end or

new text begin (2) new text end an organization seeking to obtain a hospital license deleted text begin must submit a plan to
the commissioner of health deleted text end new 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 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. The criteria determined under this paragraph shall constitute the sole
criteria under which the competing proposals shall be evaluated; 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 must also consider the input and preferences
of legislators and local elected officials who represent the service area regarding the
selection of the hospital provider. 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) Following the determination under paragraph (e), the commissioner shall
recommend the selected proposal to the legislature on or before March 1 in an
odd-numbered year and within 15 days of the first day of the regular session in
an even-numbered year to be accepted or rejected. Legislative acceptance of the
commissioner's recommendation constitutes approval of the proposal under section
144.551. Legislative rejection of the recommendation concludes the process but does not
prohibit a new application under this section and section 144.552.
new text end

new text begin (h) In the event of legislative failure to act on the recommendation made under this
subdivision, upon the conclusion of the legislative session the commissioner shall make
the commissioner's recommendation the final approval of the project. The commissioner's
decision to grant final approval to the commissioner's recommendation constitutes
approval of the proposal under section 144.551.
new text end

new text begin (i) For purposes of this subdivision, "legislative acceptance" means the
recommended project is approved by law; "legislative rejection" means the recommended
project is rejected by law; and "legislative failure to act" means any other action or lack of
action taken by 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