1.1 	A bill for an act
1.2 	relating to human services; establishing a process to evaluate certain hospital 
1.3 	construction proposals;amending Minnesota Statutes 2004, section 144.552; 
1.4 	Minnesota Statutes 2005 Supplement, section 144.551, subdivision 1; proposing 
1.5 	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) A hospital seeking to increase its number of licensed beds or an organization 
4.2 	seeking to obtain a hospital license must submit a plan to the commissioner of health. The 
4.3 	plan must include information that includes an explanation of how the expansion will 
4.4 	meet the public's interest. When submitting a plan to the commissioner, an applicant shall 
4.5 	pay the commissioner for the commissioner's cost of reviewing the plan, as determined 
4.6 	by the commissioner and notwithstanding section  16A.1283. Money received by the 
4.7 	commissioner under this section is appropriated to the commissioner for the purpose of 
4.8 	administering this section. 
4.9 	(b) Plans submitted under this section shall include detailed information necessary 
4.10 	for the commissioner to review the plan and reach a finding. The commissioner may 
4.11 	request additional information from the hospital submitting a plan under this section and 
4.12 	from others affected by the plan that the commissioner deems necessary to review the 
4.13 	plan and make a finding.
4.14 	(c) The commissioner shall review the plan and, within 90 days, ~~but no more than~~ 
4.15 	~~six months if extenuating circumstances apply,~~ issue a finding on whether the plan is in 
4.16 	the public interest. In making the recommendation, the commissioner shall consider 
4.17 	issues including but not limited to:
4.18 	(1) whether the new hospital or hospital beds are needed to provide timely access to 
4.19 	care or access to new or improved services;
4.20 	(2) the financial impact of the new hospital or hospital beds on existing acute-care 
4.21 	hospitals that have emergency departments in the region;
4.22 	(3) how the new hospital or hospital beds will affect the ability of existing hospitals 
4.23 	in the region to maintain existing staff;
4.24 	(4) the extent to which the new hospital or hospital beds will provide services to 
4.25 	nonpaying or low-income patients relative to the level of services provided to these groups 
4.26 	by existing hospitals in the region; and
4.27 	(5) the views of affected parties.
4.28 	(d) Upon making a recommendation under paragraph (c), the commissioner shall 
4.29 	provide a copy of the recommendation to the chairs of the house and senate committees 
4.30 	having jurisdiction over health and human services policy and finance.

4.31 	Sec. 3. [144.553] ALTERNATIVE APPROVAL PROCESS FOR NEW 
4.32 	HOSPITAL CONSTRUCTION.
4.33 		Subdivision 1.Notice; request for proposals. (a) Immediately upon the completion 
4.34 	of a review under section 144.552 of a project involving the issuance of a hospital license, 
4.35 	if the commissioner determines that the plan submitted under that section is in the public 
5.1 	interest, the commissioner shall publish in the State Register a notice of that finding and 
5.2 	a request for applications from any other entities interested in constructing a hospital in 
5.3 	response to that finding.
5.4 	(b) The commissioner shall accept applications for 30 days from the date the notice 
5.5 	is published. If no other applications are received, the commissioner shall notify the chairs 
5.6 	of the house of representatives and senate committees having jurisdiction over health and 
5.7 	human services policy and finance that no project has been approved under this section 
5.8 	and that section 144.551 applies to the construction of a hospital in this instance.
5.9 	(c) If one or more additional entities applies to construct a hospital in response to 
5.10 	the commissioner's request for applications, the commissioner shall select the applicant 
5.11 	determined under the process established in subdivision 2 to be best able to provide 
5.12 	services consistent with the review criteria established in subdivision 2.
5.13 		Subd. 2.Process when multiple applicants seek approval. (a) When multiple 
5.14 	applicants seek approval to build a hospital, the commissioner shall:
5.15 	(1) determine market-specific criteria that shall be used to evaluate all proposals. 
5.16 	The criteria must include standards regarding:
5.17 	(i) access to care;
5.18 	(ii) quality of care;
5.19 	(iii) cost of care; and 
5.20 	(iv) overall project feasibility; 
5.21 	(2) establish additional criteria at the commissioner's discretion. The criteria 
5.22 	determined under this clause shall constitute the sole criteria under which the competing 
5.23 	proposals shall be evaluated; and
5.24 	(3) define a service area for the proposed hospital. In a community that includes an 
5.25 	existing hospital, the service area shall consist of the zip codes in closest proximity to the 
5.26 	existing hospital that make up 80 percent of that hospital's admissions. In a community 
5.27 	that does not include an existing hospital, the service area shall consist of:
5.28 	(i) in the 11-county metropolitan area, in St. Cloud, and in Duluth, the zip codes 
5.29 	located within a 20-mile radius of the proposed new hospital location; and 
5.30 	(ii) in the remainder of the state, the zip codes within a 30-mile radius of the 
5.31 	proposed new hospital location.
5.32 	(b) The commissioner shall publish the criteria determined under paragraph (a), 
5.33 	clause (1), in the State Register within 60 days of the deadline for applications under 
5.34 	subdivision 1. Once published, the criteria shall not be modified with respect to the 
5.35 	particular project and applicants to which they apply. The commissioner shall publish with 
5.36 	the criteria guidelines for a proposal and submission review process.
6.1 	(c) For 60 days after the publication under paragraph (b), the commissioner shall 
6.2 	accept proposals to construct a hospital. The proposal must include a plan for the new 
6.3 	hospital and evidence of compliance with the criteria specified under paragraph (a), clause 
6.4 	(1). Once submitted, the proposal may not be revised except:
6.5 	(1) to submit corrections of material facts; or
6.6 	(2) in response to a request from the commissioner to provide clarification or 
6.7 	further information.
6.8 	(d) The commissioner shall determine within 90 days of the deadline for applications 
6.9 	under paragraph (c), which applicant has demonstrated that it is best able to provide 
6.10 	services consistent with the published criteria. The commissioner shall make this 
6.11 	determination by order following a hearing according to this paragraph. The hearing 
6.12 	shall not constitute or be considered to be a contested case hearing under chapter 14 and 
6.13 	shall be conducted solely under the procedures specified in this paragraph. The hearing 
6.14 	shall commence upon at least 30 days' notice to the applicants by the commissioner. 
6.15 	The hearing may be conducted by the commissioner or by a person designated by the 
6.16 	commissioner. The designee may be an administrative law judge. The purpose of the 
6.17 	hearing shall be to receive evidence to assist the commissioner in determining which 
6.18 	applicant has demonstrated that it best meets the published criteria.
6.19 	The parties to the hearing shall consist only of those applicants who have submitted 
6.20 	a completed application. Each applicant shall have the right to be represented by 
6.21 	counsel, to present evidence deemed relevant by the commissioner, and to examine and 
6.22 	cross-examine witnesses. Persons who are not parties to the proceeding but who wish to 
6.23 	present comments or submit information may do so in the manner determined by the 
6.24 	commissioner or the commissioner's designee. Any person who is not a party shall have 
6.25 	no right to examine or cross-examine witnesses. The commissioner may participate as an 
6.26 	active finder of fact in the hearing and may ask questions to elicit information or clarify 
6.27 	answers or responses.
6.28 	Notwithstanding section 16A.1283, applicants who are a party to the hearing shall 
6.29 	pay the cost of the hearing, as determined by the commissioner. The cost of the hearing 
6.30 	shall be divided equally among the applicants. Money received by the commissioner 
6.31 	under this paragraph is appropriated to the commissioner for the purpose of administering 
6.32 	this section.
6.33 	(e) The commissioner shall issue an order selecting an application following 
6.34 	the closing of the record of the hearing as determined by the hearing officer. The 
6.35 	commissioner's order shall include a statement of the reasons the application best meets 
6.36 	the published criteria. Prior to making a determination selecting an application, the 
7.1 	commissioner shall, through a process announced by the commissioner, accept comments 
7.2 	from members of the public in the service area for the new hospital. The commissioner 
7.3 	shall take this information into consideration in making the determination. The 
7.4 	commissioner must also consider the input and preferences of legislators and local elected 
7.5 	officials who represent the service area regarding the selection of the hospital provider.
7.6 	(f) Any applicant aggrieved by the commissioner's order is entitled to judicial 
7.7 	review by the Court of Appeals according to sections 14.63 to 14.69. Review by the Court 
7.8 	of Appeals must be based on the administrative record and expedited.
7.9 	(g) Following the determination under paragraph (d), the commissioner shall 
7.10 	submit the matter to the legislature at its next regular session to be accepted or rejected. 
7.11 	Legislative acceptance of the commissioner's recommendation constitutes approval of the 
7.12 	proposal under section 144.551. Legislative rejection of the recommendation concludes 
7.13 	the process but does not prohibit a new application under this section and section 144.552.
7.14 		Subd. 3.Result of legislative failure to act. In the event that the legislature neither 
7.15 	accepts nor rejects the recommendation made under subdivision 2, upon the conclusion of 
7.16 	the legislative session, the commissioner may make the commissioner's recommendation 
7.17 	the final approval of the project. The commissioner's decision to grant final approval to 
7.18 	the commissioner's recommendation constitutes approval of the proposal under section 
7.19 	144.551.