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H. B. 2476
(By Delegates Kiss and Petersen)
[Introduced February 14, 1995; referred to the
Committee on Finance.]
A BILL to amend and reenact sections two, three and six, article
two-d, chapter sixteen of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, relating
generally to certificate of need procedure for personal care
services; providing definition of terms; requiring
certificate of need; and setting forth criteria for
certificate of need.
Be it enacted by the Legislature of West Virginia:
That sections two, three and six, article two-d, chapter
sixteen of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended and reenacted to read as
follows:
ARTICLE 2D. CERTIFICATE OF NEED.
§16-2D-2. Definitions.
As used in this article, unless otherwise indicated by the
context:
(a) "Affected person" means:
(1) The applicant;
(2) An agency or organization representing consumers;
(3) Any individual residing within the geographic area
served or to be served by the applicant;
(4) Any individual who regularly uses the health care
facilities within that geographic area;
(5) The health care facilities which provide services
similar to the services of the facility under review and which
will be significantly affected by the proposed project;
(6) The health care facilities which, prior to receipt by
the state agency of the proposal being reviewed, have formally
indicated an intention to provide similar services in the future;
(7) Third-party payors who reimburse health care facilities
similar to those proposed for services;
(8) Any agency which establishes rates for health care
facilities similar to those proposed; or
(9) Organizations representing health care providers.
(b) "Ambulatory health care facility" means a facility which
is free-standing and not physically attached to a health care
facility and which provides health care to noninstitutionalized
and nonhomebound persons on an outpatient basis. This definition
does not include the private office practice of any one or more
health professionals licensed to practice in this state pursuant
to the provisions of chapter thirty of this code: Provided, That
such exemption from review of private office practice shall not
be construed to include such practices where major medical
equipment otherwise subject to review under the provisions of
this article is acquired, offered or developed: Provided,
however, That such exemption from review of private office practice shall not be construed to include certain health
services otherwise subject to review under the provisions of
subdivision (1), subsection (a), section four of this article.
(c) "Ambulatory surgical facility" means a facility which is
free-standing and not physically attached to a health care
facility and which provides surgical treatment to patients not
requiring hospitalization. This definition does not include the
private office practice of any one or more health professionals
licensed to practice surgery in this state pursuant to the
provisions of chapter thirty of this code: Provided, That such
exemption from review of private office practice shall not be
construed to include such practices where major medical equipment
otherwise subject to review under the provisions of this article
is acquired, offered or developed: Provided, however, That such
exemption from review of private office practice shall not be
construed to include certain health services otherwise subject to
review under the provisions of subdivision (1), subsection (a),
section four of this article.
(d) "Applicant" means: (1) The governing body or the person
proposing a new institutional health service who is, or will be,
the health care facility licensee wherein the new institutional
health service is proposed to be located, and (2) in the case of
a proposed new institutional health service not to be located in
a licensed health care facility, the governing body or the person
proposing to provide such new institutional health service.
Incorporators or promoters who will not constitute the governing
body or persons responsible for the new institutional health service may not be an applicant.
(e) "Bed capacity" means the number of beds for which a
license is issued to a health care facility, or, if a facility is
unlicensed, the number of adult and pediatric beds permanently
staffed and maintained for immediate use by inpatients in patient
rooms or wards.
(f) "Capital expenditure" means an expenditure:
(1) Made by or on behalf of a health care facility; and
(2) (A) Which (i) under generally accepted accounting
principles is not properly chargeable as an expense of operation
and maintenance, or (ii) is made to obtain either by lease or
comparable arrangement any facility or part thereof or any
equipment for a facility or part; and (B) which (i) exceeds the
expenditure minimum, or (ii) is a substantial change to the bed
capacity of the facility with respect to which the expenditure is
made, or (iii) is a substantial change to the services of such
facility. For purposes of subparagraph (i), paragraph (B),
subdivision (2) of this definition, the cost of any studies,
surveys, designs, plans, working drawings, specifications, and
other activities, including staff effort and consulting and other
services, essential to the acquisition, improvement, expansion,
or replacement of any plant or equipment with respect to which an
expenditure described in paragraph (B), subdivision (2) of this
definition is made shall be included in determining if such
expenditure exceeds the expenditure minimum. Donations of
equipment or facilities to a health care facility which if
acquired directly by such facility would be subject to review shall be considered capital expenditures, and a transfer of
equipment or facilities for less than fair market value shall be
considered a capital expenditure for purposes of such
subdivisions if a transfer of the equipment or facilities at fair
market value would be subject to review. A series of
expenditures, each less than the expenditure minimum, which when
taken together are in excess of the expenditure minimum, may be
determined by the state agency to be a single capital expenditure
subject to review. In making its determination, the state agency
shall consider: Whether the expenditures are for components of
a system which is required to accomplish a single purpose;
whether the expenditures are to be made over a two-year period
and are directed towards the accomplishment of a single goal
within the health care facility's long-range plan; or whether the
expenditures are to be made within a two-year period within a
single department such that they will constitute a significant
modernization of the department.
(g) "Expenditure minimum" means seven hundred fifty thousand
dollars per fiscal year.
(h) "Health," used as a term, includes physical and mental
health.
(i) "Health care facility" is defined as including
hospitals, skilled nursing facilities, kidney disease treatment
centers, including free-standing hemodialysis units, intermediate
care facilities, ambulatory health care facilities, ambulatory
surgical facilities, home health agencies, rehabilitation
facilities and health maintenance organizations; community mental health and mental retardation facilities, whether under public or
private ownership, or as a profit or nonprofit organization and
whether or not licensed or required to be licensed in whole or in
part by the state. For purposes of this definition, "community
mental health and mental retardation facility" means a private
facility which provides such comprehensive services and
continuity of care as emergency, outpatient, partial
hospitalization, inpatient and consultation and education for
individuals with mental illness, mental retardation or drug or
alcohol addiction.
(j) "Health care provider" means a person, partnership,
corporation, facility or institution licensed or certified or
authorized by law to provide professional health care service in
this state to an individual during that individual's medical
care, treatment or confinement.
(k) "Health maintenance organization" means a public or
private organization, organized under the laws of this state,
which:
(1) Is a qualified health maintenance organization under
Section 1310(d) of the Public Health Service Act, as amended,
Title 42 United States Code Section 300e-9(d); or
(2) (A) Provides or otherwise makes available to enrolled
participants health care services, including substantially the
following basic health care services: Usual physician services,
hospitalization, laboratory, X ray, emergency and preventive
services and out-of-area coverage; and
(B) Is compensated except for copayments for the provision of the basic health care services listed in paragraph (A),
subdivision (2), subsection (k) of this definition to enrolled
participants on a predetermined periodic rate basis without
regard to the date the health care services are provided and
which is fixed without regard to the frequency, extent or kind of
health service actually provided; and
(C) Provides physicians' services primarily (i) directly
through physicians who are either employees or partners of such
organization, or (ii) through arrangements with individual
physicians or one or more groups of physicians organized on a
group practice or individual practice basis.
(l) "Health services" means clinically related preventive,
diagnostic, treatment or rehabilitative services, including
alcohol, drug abuse and mental health services.
(m) "Home health agency" is an organization primarily
engaged in providing directly or through contract arrangements,
professional nursing services, home health aide services, and
other therapeutic and related services, including, but not
limited to, physical, speech and occupational therapy and
nutritional and medical social services to persons in their place
of residence on a part-time or intermittent basis.
(n) "Hospital" means an institution which is primarily
engaged in providing to inpatients, by or under the supervision
of physicians, diagnostic and therapeutic services for medical
diagnosis, treatment, and care of injured, disabled or sick
persons, or rehabilitation services for the rehabilitation of
injured, disabled or sick persons. This term also includes psychiatric and tuberculosis hospitals.
(o) "Intermediate care facility" means an institution which
provides, on a regular basis, health-related care and services to
individuals who do not require the degree of care and treatment
which a hospital or skilled nursing facility is designed to
provide, but who, because of their mental or physical condition,
require health-related care and services above the level of room
and board.
(p) "Long-range plan" means a document formally adopted by
the legally constituted governing body of an existing health care
facility or by a person proposing a new institutional health
service. Each long-range plan shall consist of the information
required by the state agency in regulations adopted pursuant to
section eight of this article.
(q) "Major medical equipment" means a single unit of medical
equipment or a single system of components with related functions
which is used for the provision of medical and other health
services and which costs in excess of three hundred thousand
dollars, except that such term does not include medical equipment
acquired by or on behalf of a clinical laboratory to provide
clinical laboratory services if the clinical laboratory is
independent of a physician's office and a hospital and it has
been determined under Title XVIII of the Social Security Act to
meet the requirements of paragraphs ten and eleven of Section
1861(s) of such act, Title 42 United States Code Sections 1395x
(10) and (11). In determining whether medical equipment costs
more than three hundred thousand dollars, the cost of studies, surveys, designs, plans, working drawings, specifications, and
other activities essential to the acquisition of such equipment
shall be included. If the equipment is acquired for less than
fair market value, the term "cost" includes the fair market
value.
(r) "Medically underserved population" means the population
of an urban or rural area designated by the state agency as an
area with a shortage of personal health services or a population
having a shortage of such services, after taking into account
unusual local conditions which are a barrier to accessibility or
availability of such services. Such designation shall be in
regulations adopted by the state agency pursuant to section eight
of this article, and the population so designated may include the
state's medically underserved population designated by the
Federal Secretary of Health and Human Services under Section
330(b)(3) of the Public Health Service Act, as amended, Title 42
United States Code Section 254(b)(3).
(s) "New institutional health service" means such service as
described in section three of this article.
(t) "Offer", when used in connection with health services,
means that the health care facility or health maintenance
organization holds itself out as capable of providing, or as
having the means for the provision of, specified health services.
(u) "Person" means an individual, trust, estate,
partnership, committee, corporation, association and other
organizations such as joint-stock companies and insurance
companies, a state or a political subdivision or instrumentality thereof or any legal entity recognized by the state.
(v) "Personal care services" means medically oriented
activities or tasks ordered by a physician and which is
implemented according to a nursing plan of care which has been
completed by, and which is supervised by, a registered nurse and
billed to the state. These services include those activities
which are intended to enable persons to meet their physical needs
and to be treated by a physician in their place of residence.
The term shall include, but not be limited to, services related
to personal hygiene, dressing, feeding, nutrition, environmental
support functions and health related tasks.
(v)(w) "Physician" means a doctor of medicine or osteopathy
legally authorized to practice by the state.
(w)(x) "Proposed new institutional health service" means
such service as described in section three of this article.
(x)(y) "Psychiatric hospital" means an institution which
primarily provides to inpatients, by or under the supervision of
a physician, specialized services for the diagnosis, treatment
and rehabilitation of mentally ill and emotionally disturbed
persons.
(y)(z) "Rehabilitation facility" means an inpatient facility
which is operated for the primary purpose of assisting in the
rehabilitation of disabled persons through an integrated program
of medical and other services which are provided under competent
professional supervision.
(z)(aa) "Review agency" means an agency of the state,
designated by the governor as the agency for the review of state agency decisions.
(aa)(bb) "Skilled nursing facility" means an institution or
a distinct part of an institution which is primarily engaged in
providing to inpatients skilled nursing care and related services
for patients who require medical or nursing care, or
rehabilitation services for the rehabilitation of injured,
disabled or sick persons.
(bb)(cc) "State agency" means the health care cost review
authority created, established, and continued pursuant to article
twenty-nine-b of this chapter.
(cc)(dd) "State health plan" means the document approved by
the governor after preparation by the former statewide health
coordinating council, or that document as approved by the
governor after amendment by the health care planning council or
its successor agency.
(dd)(ee) "Health care planning council" means the body
established by section five-a of this article to participate in
the preparation and amendment of the state health plan and to
advise the state agency.
(ee)(ff) "Substantial change to the bed capacity" of a
health care facility means any change, with which a capital
expenditure is associated, that increases or decreases the bed
capacity, or relocates beds from one physical facility or site to
another, but does not include a change by which a health care
facility reassigns existing beds as swing beds between acute care
and long-term care categories: Provided, That a decrease in bed
capacity in response to federal rural health initiatives shall be excluded from this definition.
(hh)(gg) "Substantial change to the health services" of a
health care facility means the addition of a health service which
is offered by or on behalf of the health care facility and which
was not offered by or on behalf of the facility within the
twelve-month period before the month in which the service is
first offered, or the termination of a health service which was
offered by or on behalf of the facility, but does not include the
providing of hospice care, ambulance service, wellness centers or
programs, adult day care, or respite care by acute care
facilities.
(gg)(hh) "To develop", when used in connection with health
services, means to undertake those activities which upon their
completion will result in the offer of a new institutional health
service or the incurring of a financial obligation, in relation
to the offering of such a service.
§16-2D-3. Certificate of need.
Except as provided in section four of this article, any new
institutional health service may not be acquired, offered or
developed within this state except upon application for and
receipt of a certificate of need as provided by this article.
Any new personal care service offered by any person, facility,
corporation or entity, other than an agency of the state, may not
be offered or developed in this state, if the service is to be
funded in whole, or in part, by state or federal medicaid funds,
except upon application for and receipt of a certificate of need
as provided in section six of this article. Whenever a new institutional health service for which a certificate of need is
required by this article is proposed for a health care facility
for which, pursuant to section four of this article, no
certificate of need is or was required, a certificate of need
shall be issued before the new institutional health service is
offered or developed. No person may knowingly charge or bill for
any health services associated with any new institutional health
service that is knowingly acquired, offered or developed in
violation of this article, and any bill made in violation of this
section is legally unenforceable. For purposes of this article,
a proposed "new institutional health service" includes:
(a) The construction, development, acquisition or other
establishment of a new health care facility or health maintenance
organization;
(b) The partial or total closure of a health care facility
or health maintenance organization with which a capital
expenditure is associated;
(c) Any obligation for a capital expenditure incurred by or
on behalf of a health care facility, except as exempted in
section four of this article, or health maintenance organization
in excess of the expenditure minimum or any obligation for a
capital expenditure incurred by any person to acquire a health
care facility. An obligation for a capital expenditure is
considered to be incurred by or on behalf of a health care
facility:
(1) When a contract, enforceable under state law, is entered
into by or on behalf of the health care facility for the construction, acquisition, lease or financing of a capital asset;
(2) When the governing board of the health care facility
takes formal action to commit its own funds for a construction
project undertaken by the health care facility as its own
contractor; or
(3) In the case of donated property, on the date on which
the gift is completed under state law;
(d) A substantial change to the bed capacity of a health
care facility with which a capital expenditure is associated;
(e) (1) The addition of health services which are offered by
or on behalf of a health care facility or health maintenance
organization and which were not offered on a regular basis by or
on behalf of the health care facility or health maintenance
organization within the twelve-month period prior to the time the
services would be offered; and
(2) The addition of ventilator services for any nursing
facility bed by any health care facility or health maintenance
organization;
(f) The deletion of one or more health services, previously
offered on a regular basis by or on behalf of a health care
facility or health maintenance organization which is associated
with a capital expenditure;
(g) A substantial change to the bed capacity or health
services offered by or on behalf of a health care facility,
whether or not the change is associated with a proposed capital
expenditure, if the change is associated with a previous capital
expenditure for which a certificate of need was issued and if the change will occur within two years after the date the activity
which was associated with the previously approved capital
expenditure was undertaken;
(h) The acquisition of major medical equipment;
(i) A substantial change in an approved new institutional
health service for which a certificate of need is in effect. For
purposes of this subsection, "substantial change" shall be
defined by the state agency in regulations adopted pursuant to
section eight of this article.
§16-2D-6. Minimum criteria for certificate of need reviews.
(a) Except as provided in subsections (f) and (g), section
nine of this article, in making its determination as to whether
a certificate of need shall be issued, the state agency shall, at
a minimum, consider all of the following criteria that are
applicable: Provided, That in the case of a health maintenance
organization or an ambulatory care facility or health care
facility controlled, directly or indirectly, by a health
maintenance organization or combination of health maintenance
organizations, the criteria considered shall be only those set
forth in subdivision (12) of this subsection: Provided, however,
That the criteria set forth in subsection (f) of this section
applies to all hospitals, nursing homes and health care
facilities when ventilator services are to be provided for any
nursing facility bed:
(1) The recommendation of the designated health systems
agency for the health service area in which the proposed new
institutional health service is to be located;
(2) The relationship of the health services being reviewed
to the state health plan and to the applicable health systems
plan and annual implementation plan adopted by the designated
health systems agency for the health service area in which the
proposed new institutional health service is to be located;
(3) The relationship of services reviewed to the long-range
development plan of the person providing or proposing the
services;
(4) The need that the population served or to be served by
the services has for the services proposed to be offered or
expanded, and the extent to which all residents of the area, and
in particular low income persons, racial and ethnic minorities,
women, handicapped persons, other medically underserved
population, and the elderly, are likely to have access to those
services;
(5) The availability of less costly or more effective
alternative methods of providing the services to be offered,
expanded, reduced, relocated or eliminated;
(6) The immediate and long-term financial feasibility of the
proposal as well as the probable impact of the proposal on the
costs of and charges for providing health services by the person
proposing the new institutional health service;
(7) The relationship of the services proposed to the
existing health care system of the area in which the services are
proposed to be provided;
(8) In the case of health services proposed to be provided,
the availability of resources, including health care providers, management personnel, and funds for capital and operating needs,
for the provision of the services proposed to be provided and the
need for alternative uses of these resources as identified by the
state health plan, applicable health systems plan and annual
implementation plan;
(9) The appropriate and nondiscriminatory utilization of
existing and available health care providers;
(10) The relationship, including the organizational
relationship, of the health services proposed to be provided to
ancillary or support services;
(11) Special needs and circumstances of those entities which
provide a substantial portion of their services or resources, or
both, to individuals not residing in the health service areas in
which the entities are located or in adjacent health service
areas. The entities may include medical and other health
professional schools, multidisciplinary clinics and specialty
centers;
(12) To the extent not precluded by subdivision (1),
subsection (f), section nine of this article, the special needs
and circumstances of health maintenance organizations. These
needs and circumstances are limited to:
(A) The needs of enrolled members and reasonably anticipated
new members of the health maintenance organization for the health
services proposed to be provided by the organization; and
(B) The availability of the new health services from
nonhealth maintenance organization providers or other health
maintenance organizations in a reasonable and cost-effective manner which is consistent with the basic method of operation of
the health maintenance organization. In assessing the
availability of these health services from these providers, the
agency shall consider only whether the services from these
providers:
(i) Would be available under a contract of at least five
years' duration;
(ii) Would be available and conveniently accessible through
physicians and other health professionals associated with the
health maintenance organization;
(iii) Would cost no more than if the services were provided
by the health maintenance organization; and
(iv) Would be available in a manner which is
administratively feasible to the health maintenance organization;
(13) The special needs and circumstances of biomedical and
behavioral research projects which are designed to meet a
national need and for which local conditions offer special
advantages;
(14) In the case of a reduction or elimination of a service,
including the relocation of a facility or a service, the need
that the population presently served has for the service, the
extent to which that need will be met adequately by the proposed
relocation or by alternative arrangements, and the effect of the
reduction, elimination or relocation of the service on the
ability of low income persons, racial and ethnic minorities,
women, handicapped persons, other medically underserved
population, and the elderly, to obtain needed health care;
(15) In the case of a construction project: (A) The cost
and methods of the proposed construction, including the costs and
methods of energy provision and (B) the probable impact of the
construction project reviewed on the costs of providing health
services by the person proposing the construction project and on
the costs and charges to the public of providing health services
by other persons;
(16) In the case of health services proposed to be provided,
the effect of the means proposed for the delivery of proposed
health services on the clinical needs of health professional
training programs in the area in which the services are to be
provided;
(17) In the case of health services proposed to be provided,
if the services are to be available in a limited number of
facilities, the extent to which the schools in the area for
health professions will have access to the services for training
purposes;
(18) In the case of health services proposed to be provided,
the extent to which the proposed services will be accessible to
all the residents of the area to be served by the services;
(19) In accordance with section five of this article, the
factors influencing the effect of competition on the supply of
the health services being reviewed;
(20) Improvements or innovations in the financing and
delivery of health services which foster competition, in
accordance with section five of this article, and serve to
promote quality assurance and cost effectiveness;
(21) In the case of health services or facilities proposed
to be provided, the efficiency and appropriateness of the use of
existing services and facilities similar to those proposed;
(22) In the case of existing services or facilities, the
quality of care provided by the services or facilities in the
past;
(23) In the case where an application is made by an
osteopathic or allopathic facility for a certificate of need to
construct, expand, or modernize a health care facility, acquire
major medical equipment, or add services, the need for that
construction, expansion, modernization, acquisition of equipment,
or addition of services shall be considered on the basis of the
need for and the availability in the community of services and
facilities for osteopathic and allopathic physicians and their
patients. The state agency shall consider the application in
terms of its impact on existing and proposed institutional
training programs for doctors of osteopathy and medicine at the
student, internship, and residency training levels;
(24) The special circumstances of health care facilities
with respect to the need for conserving energy;
(25) The contribution of the proposed service in meeting the
health related needs of members of medically underserved
populations which have traditionally experienced difficulties in
obtaining equal access to health services, particularly those
needs identified in the state health plan, applicable health
systems plan and annual implementation plan, as deserving of
priority. For the purpose of determining the extent to which the proposed service will be accessible, the state agency shall
consider:
(A) The extent to which medically underserved populations
currently use the applicant's services in comparison to the
percentage of the population in the applicant's service area
which is medically underserved, and the extent to which medically
underserved populations are expected to use the proposed services
if approved;
(B) The performance of the applicant in meeting its
obligation, if any, under any applicable federal regulations
requiring provision of uncompensated care, community service, or
access by minorities and handicapped persons to programs
receiving federal financial assistance, including the existence
of any civil rights access complaints against the applicant;
(C) The extent to which medicare, medicaid and medically
indigent patients are served by the applicant; and
(D) The extent to which the applicant offers a range of
means by which a person will have access to its services,
including, but not limited to, outpatient services, admission by
a house staff and admission by personal physician;
(26) The existence of a mechanism for soliciting consumer
input into the health care facility's decision making process.
(b) The state agency may include additional criteria which
it prescribes by regulations adopted pursuant to section eight of
this article.
(c) Criteria for reviews may vary according to the purpose
for which a particular review is being conducted or the types of health services being reviewed.
(d) An application for a certificate of need may not be made
subject to any criterion not contained in this article or not
contained in regulations adopted pursuant to section eight of
this article.
(e) In the case of any proposed new institutional health
service, the state agency may not grant a certificate of need
under its certificate of need program unless, after consideration
of the appropriateness of the use of existing facilities
providing services similar to those being proposed, the state
agency makes, in addition to findings required in section nine of
this article, each of the following findings in writing: (1)
That superior alternatives to the services in terms of cost,
efficiency and appropriateness do not exist and the development
of alternatives is not practicable; (2) that existing facilities
providing services similar to those proposed are being used in an
appropriate and efficient manner; (3) that in the case of new
construction, alternatives to new construction, such as
modernization or sharing arrangements, have been considered and
have been implemented to the maximum extent practicable; (4) that
patients will experience serious problems in obtaining care of
the type proposed in the absence of the proposed new service; and
(5) that in the case of a proposal for the addition of beds for
the provision of skilled nursing or intermediate care services,
the addition will be consistent with the plans of other agencies
of the state responsible for the provision and financing of long-
term care facilities or services including home health services.
(f) In the case where an application is made by a hospital,
nursing home or other health care facility to provide ventilator
services which have not previously been provided for a nursing
facility bed, the state agency shall consider the application in
terms of the need for the service and whether the cost exceeds
the level of current medicaid services. No facility may, by
providing ventilator services, provide a higher level of service
for a nursing facility bed without demonstrating that the change
in level of service by provision of the additional ventilator
services will result in no additional fiscal burden to the state.
(g) In the case where application is made by any, person or
entity to provide personal care services which are to be billed
for medicaid reimbursement, the state agency shall consider the
application in terms of the need for the service and whether the
cost exceeds the level of the cost of current medicaid services.
No person or entity may provide personal care services to be
billed for medicaid reimbursement without demonstrating that the
provision of the personal care service will result in no
additional fiscal burden to the state. The state agency will
also consider the total fiscal liability to the state for all
applications which have been submitted.
NOTE: The purpose of this bill is to require the
certificate of need for providers of personal care services who
bill medicaid.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.