SF 4437

as introduced - 91st Legislature (2019 - 2020) Posted on 10/06/2020 11:31am

A bill for an act
relating to health care; authorizing construction of or modification to a hospital in
a medically underserved county outside the seven-county metropolitan area;
amending Minnesota Statutes 2018, section 144.553, subdivisions 1, 2, 3; Minnesota
Statutes 2019 Supplement, sections 144.551, subdivision 1; 144.552.

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

Section 1.

Minnesota Statutes 2019 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 in an existing
hospital in Carver County serving the southwest suburban metropolitan area;

(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;

(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 clause;

(21) a project approved under section 144.553;

(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;

(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;

(24) notwithstanding section 144.552, a project for the construction and expansion of a
specialty psychiatric hospital in Hennepin County for up to 50 beds, exclusively for patients
who are under 21 years of age on the date of admission. The commissioner conducted a
public interest review of the mental health needs of Minnesota and the Twin Cities
metropolitan area in 2008. No further public interest review shall be conducted for the
construction or expansion project under this clause;

(25) a project for a 16-bed psychiatric hospital in the city of Thief River Falls, if the
commissioner finds the project is in the public interest after the public interest review
conducted under section 144.552 is complete;

(26)(i) a project for a 20-bed psychiatric hospital, within an existing facility in the city
of Maple Grove, exclusively for patients who are under 21 years of age on the date of
admission, if the commissioner finds the project is in the public interest after the public
interest review conducted under section 144.552 is complete;

(ii) this project shall serve patients in the continuing care benefit program under section
256.9693. The project may also serve patients not in the continuing care benefit program;
and

(iii) if the project ceases to participate in the continuing care benefit program, the
commissioner must complete a subsequent public interest review under section 144.552. If
the project is found not to be in the public interest, the license must be terminated six months
from the date of that finding. If the commissioner of human services terminates the contract
without cause or reduces per diem payment rates for patients under the continuing care
benefit program below the rates in effect for services provided on December 31, 2015, the
project may cease to participate in the continuing care benefit program and continue to
operate without a subsequent public interest review;

(27) a project involving the addition of 21 new beds in an existing psychiatric hospital
in Hennepin County that is exclusively for patients who are under 21 years of age on the
date of admission; deleted text begin or
deleted text end

(28) a project to add 55 licensed beds in an existing safety net, level I trauma center
hospital in Ramsey County as designated under section 383A.91, subdivision 5, of which
15 beds are to be used for inpatient mental health and 40 are to be used for other services.
In addition, five unlicensed observation mental health beds shall be added deleted text begin . deleted text end new text begin ; or
new text end

new text begin (29) a project to construct a new hospital in a medically underserved county outside the
seven-county metropolitan area, or a project to increase the bed capacity of a hospital in a
medically underserved county outside the seven-county metropolitan area. For purposes of
this clause, "medically underserved county" means a county any portion of which is
designated by the federal secretary of health and human services as a health professional
shortage area.
new text end

Sec. 2.

Minnesota Statutes 2019 Supplement, section 144.552, is amended to read:

144.552 PUBLIC INTEREST REVIEW.

(a) The following entities must submit a plan to the commissioner:

(1) a hospital seeking to increase its number of licensed beds new text begin and located either in the
seven-county metropolitan area or in a county outside the seven-county metropolitan area
that is not a medically underserved county new text end ; or

(2) an organization seeking to obtain a hospital license new text begin to construct a hospital in the
seven-county metropolitan area or in a county outside the seven-county metropolitan area
that is not a medically underserved county, new text end and notified by the commissioner under section
144.553, subdivision 1, paragraph deleted text begin (c) deleted text end new text begin (d) new text end , that it is subject to this section.

new text begin (b) The following entities may submit a plan to the commissioner:
new text end

new text begin (1) a hospital seeking to increase its number of licensed beds and located in a medically
underserved county outside the seven-county metropolitan area; or
new text end

new text begin (2) an organization seeking to obtain a hospital license to construct a new hospital in a
medically underserved county outside the seven-county metropolitan area.
new text end

new text begin (c) For purposes of this section, "medically underserved county" has the meaning given
in section 144.551, subdivision 1, paragraph (b), clause (29).
new text end

new text begin (d) 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 and monitoring 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. If the commissioner does not issue a finding within
the time limit specified in paragraph deleted text begin (c) deleted text end new text begin (f) new text end , the commissioner must return to the applicant
the entire amount the applicant paid to the commissioner. For a hospital that is seeking an
exception to the moratorium under section 144.551, the plan must be submitted to the
commissioner no later than August 1 of the calendar year prior to the year when the exception
will be considered by the legislature.

deleted text begin (b) deleted text end new text begin (e) new text end 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. If the commissioner determines that additional information is required from the
hospital submitting a plan under this section, the commissioner shall notify the hospital of
the additional information required no more than 30 days after the initial submission of the
plan. A hospital submitting a plan from whom the commissioner has requested additional
information shall submit the requested additional information within 14 calendar days of
the commissioner's request.

deleted text begin (c) deleted text end new text begin (f) new text end The commissioner shall review the plan and, within 150 calendar days of the date
when the commissioner sends the applicant organization a notice of complete application
letter, issue a finding on whether the plan is in the public interest. The commissioner shall
provide a copy of the notice of complete application letter to the chairs and ranking minority
members of the house of representatives and senate committees with jurisdiction over health
and human services policy and finance. 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 given the number of available beds. For the purposes
of this clause, "available beds" means the number of licensed acute care beds that are
immediately available for use or could be brought online within 48 hours without significant
facility modifications;

(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.

deleted text begin (d) deleted text end new text begin (g) new text end If the plan is being submitted by an existing hospital seeking authority to construct
a new hospital, the commissioner shall also consider:

(1) the ability of the applicant to maintain the applicant's current level of community
benefit as defined in section 144.699, subdivision 5, at the existing facility; and

(2) the impact on the workforce at the existing facility including the applicant's plan for:

(i) transitioning current workers to the new facility;

(ii) retraining and employment security for current workers; and

(iii) addressing the impact of layoffs at the existing facility on affected workers.

deleted text begin (e) deleted text end new text begin (h) new text end If the commissioner receives multiple plan submissions under this section within
the same review period, the commissioner shall review the plans in the order they were
received. Time periods under this section shall begin for each review once the commissioner
has sent the applicant organization a notice of complete application letter. The commissioner
shall provide to the chairs and ranking minority members of the house of representatives
and senate committees having jurisdiction over health and human services policy and finance
updates every 30 days on the progress of the review of any plan submitted under this section.

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

deleted text begin (g) deleted text end new text begin (j) new text end Upon making a recommendation under paragraph deleted text begin (c) deleted text end new text begin (f) new text end , the commissioner shall
provide a copy of the recommendation to the chairs of the house of representatives and
senate committees having jurisdiction over health and human services policy and finance.

deleted text begin (h) deleted text end new text begin (k) new text end If an exception to the moratorium is approved under section 144.551 after a
review under this section, the commissioner shall monitor the implementation of the
exception up to completion of the construction project. Thirty days after completion of the
construction project, the hospital shall submit to the commissioner a report on how the
construction has met the provisions of the plan originally submitted under the public interest
review process or a plan submitted pursuant to section 144.551, subdivision 1, paragraph
(b), clause (20).

Sec. 3.

Minnesota Statutes 2018, section 144.553, subdivision 1, is amended to read:

Subdivision 1.

Letter of intent; publication; acceptance of additional proposals.

new text begin (a)
An organization seeking to obtain a hospital license to construct a new hospital in the
seven-county metropolitan area, or in a county outside the seven-county metropolitan area
that is not a medically underserved county, must comply with this section. An organization
seeking to obtain a hospital license to construct a new hospital in a medically underserved
county outside the seven-county metropolitan area must comply with this section. For
purposes of this section, "medically underserved county" has the meaning given in section
144.551, subdivision 1, paragraph (b), clause (29).
new text end

deleted text begin (a) deleted text end new text begin (b) new text end An organization seeking to obtain a hospital license new text begin and required or electing to
comply with this section new text end 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.

deleted text begin (b) deleted text end new text begin (c) new text end Upon receipt of a letter under paragraph deleted text begin (a) deleted text end new text begin (b) new text end , the commissioner shall publish
a notice in the State Register that includes the information received from the organization
under paragraph deleted text begin (a) deleted text end new text begin (b) new text end . 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.

deleted text begin (c) deleted text end new text begin (d) new text end If no responses are received from additional organizations under paragraph deleted text begin (b) deleted text end new text begin
(c) new text end , the commissioner shall notify the entity seeking a license that it deleted text begin is deleted text end new text begin may be new text end 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.

Sec. 4.

Minnesota Statutes 2018, section 144.553, subdivision 2, is amended to read:

Subd. 2.

Needs assessment.

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

(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.

(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.

Sec. 5.

Minnesota Statutes 2018, section 144.553, subdivision 3, is amended to read:

Subd. 3.

Process when hospital need is determined.

(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.

(b) The commissioner shall:

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

(i) access to care;

(ii) quality of care;

(iii) cost of care; and

(iv) overall project feasibility;

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

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

(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

(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

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

(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

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

(c) If the plan is being submitted by an existing hospital, the commissioner shall also
consider:

(1) the ability of the applicant to maintain the applicant's current level of community
benefit as defined in section 144.699, subdivision 5, at the existing facility; and

(2) the impact on the workforce at the existing facility including the applicant's plan for:

(i) transitioning current workers to the new facility;

(ii) retraining and employment security for current workers; and

(iii) addressing the impact of layoffs at the existing facility on affected workers.

(d) The commissioner shall publish the criteria determined under paragraphs (b) and (c)
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.

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

(1) to submit corrections of material facts; or

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

(f) The commissioner shall determine within 90 days of the deadline for applications
under paragraph (e), 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.

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.

(g) 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 shall 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 legislative appointees shall include, at a minimum,
the chairs of the senate and house of representatives committees with jurisdiction over health
care policy. 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.

(h) Within 30 days following the determination under paragraph (f), the commissioner
shall recommend the selected proposal to the legislature.

(i) If an exception to the moratorium is approved under section 144.551 after a review
under this section, the commissioner shall monitor the implementation of the exception up
to completion of the construction project. Thirty days after completion of the construction
project, the hospital shall submit to the commissioner a report on how the construction has
met the provisions of the plan originally submitted under the public interest review process
or a plan submitted pursuant to section 144.551, subdivision 1, paragraph (b), clause (20).