PA 06-64—SB 386

Public Health Committee

AN ACT CONCERNING REVISIONS TO THE OFFICE OF HEALTH CARE ACCESS STATUTES

SUMMARY: This act makes a number of changes to the Office of Health Care Access' (OHCA) certificate of need (CON) program. CON is a regulatory process for reviewing certain proposed capital expenditures by health care facilities, acquisition of major medical equipment, institution of new services or functions, termination of services, transfer of ownership, and decreases in bed capacity. Generally, CON approval is OHCA's formal determination that a health facility improvement, medical equipment purchase, or service change is needed.

The act amends the CON process by (1) modifying the letter of intent phase of CON in emergency situations, (2) allowing OHCA to waive CON for specific termination or relocation of certain services, and (3) modifying the existing waiver from CON for replacement equipment.

The act makes a number of minor and technical changes to OHCA statutes. It extends the time by which hospitals must report certain information to OHCA, changes some of the salary and benefits data they must report, and modifies their reporting of uncompensated care information. It also repeals several statutory provisions concerning obsolete budget and net revenue system procedures and references to the uncompensated care pool. The uncompensated care pool program has been replaced by the disproportionate share program (DSH) and OHCA no longer regulates hospital net revenue limits.

EFFECTIVE DATE: July 1, 2006

CON LETTER OF INTENT (§§ 6 & 7)

By law, the CON process begins when an applicant submits a “letter of intent” (LOI) to OHCA. It must be filed before the CON application can be submitted. The law requires that the LOI be on file with OHCA for at least 60 days before a CON can be considered submitted.

Existing law allows OHCA to waive the LOI phase of a CON in an emergency situation so that a health care facility can comply with federal, state, or local health, fire, building, or life safety code requirements. The act expands this LOI waiver option to emergency situations where the facility must maintain continued access to a health care service it provides. These waivers do not exempt the applicant from CON review, the public hearing, or any other aspect of the CON process.

CON WAIVER FOR SPECIFIC TERMINATION OR RELOCATION OF SERVICES (§§ 1 & 8)

The law allows OHCA to exempt any nonprofit facility, institution, or provider from CON requirements, other than terminating a service or facility, if certain conditions are met. The act limits any CON exemption for nonprofits to those under contract with a state agency or department.

The act also allows OHCA to grant a CON exemption for a nonprofit wanting to terminate a service or facility that is currently under contract with a state agency or department. OHCA can do this if (1) the commissioner, executive director, chairperson, or chief court administrator of the state agency or department contracting with the nonprofit entity confirms in writing to OHCA that the service needs of the area previously served will continue to be met in a better or satisfactory manner and how this will be done and (2) the OHCA commissioner or her designee concurs.

If a nonprofit wants to relocate its services, the act requires the OHCA commissioner or her designee to determine that the needs of the area previously served will continue to be met in a better or satisfactory manner before exempting the nonprofit from CON.

The act also exempts from CON requirements Department of Mental Health and Addiction Services–funded alcohol and drug treatment programs seeking to terminate or relocate services.

CON FOR REPLACEMENT EQUIPMENT (§ 9)

The law allows OHCA to waive CON requirements when a health care facility, institution, or provider proposes to replace major medical or radiological equipment if:

1. the facility, institution, or provider previously obtained a CON for the equipment being replaced;

2. the replacement value is not more than the original cost plus 10% for each 12-month period that has passed since the original CON; and

3. the replacement value or expenditure is less than $2 million.

The act repeals the second condition.

OTHER CHANGES

Report Filing Changes (§§ 5 & 19)

The act extends from February 28 to March 31 the time by which short-term acute care general hospitals and children's hospitals must submit budget data to OHCA for the hospital budget year that began the preceding October 1.

The law requires acute care hospitals to submit to OHCA an annual report on their previous fiscal year (which ends on September 30); an audit of their charges, payments and uncompensated care; and hospital budget system data for their 12 months' actual filing requirements. The act extends the reporting deadline from February 28 to March 31 and requires the audit to be independent.

Hospital Salary Data (§ 12)

The law requires short-term acute care general and children's hospitals to file annually certain salary and fringe benefit data with OHCA. The act eliminates a requirement that the report include average salaries of administrative, supervisory, and direct services personnel in each department by job classification. It also repeals a provision that the report, at OHCA's discretion, include a breakdown of hospital and department budgets by administrative, supervisory, and direct service categories; by total dollars; and by full-time or equivalent staff. The law continues to require a report on the salaries and fringe benefits for the hospitals' ten highest paid positions (CGS § 19a-644(a)).

Uncompensated Care Reporting (§ 13)

By law, OHCA and the Department of Social Services must review annually the level of uncompensated care, including emergency assistance to families, each hospital provides to indigent people. Hospitals must file annually with OHCA their policies on free or reduced cost services to the indigent, excluding medical assistance (Medicaid) recipients, and their debt collection practices. Each hospital must get an independent audit of the level of charges, payments, and discharges by primary payer related to Medicare, Medicaid, and CHAMPUS (the federal Civilian Health and Medical Program of the Uniformed Services). This act adds TriCare (the Department of Defense's health plan for all uniformed services) to this list.

Previously, hospitals had to submit the audits and financial statements by February 28 annually. Under the act, hospitals must provide the audit results by March 31 annually and the financial statements must be audited.

BACKGROUND

Medicaid Disproportionate Share Hospital (DSH) Payments

Medicaid DSH payments are additional payments in the Medicaid program that help hospitals finance care to low-income and uninsured patients. Federal law requires state Medicaid programs to take into account the situation of hospitals that serve a disproportionate number of low-income patients when determining payment rates for inpatient hospital care. This is known as the Medicaid DSH adjustment.

Related Act

PA 06-28 increases the CON threshold for all capital expenditures, including major medical equipment, to $3 million.

OLR Tracking: JK: RC: PF: RO