OLR Bill Analysis

sSB 980 (File 529, as amended by Senate “A”)*

AN ACT CONCERNING CERTIFICATES OF NEED.

SUMMARY:

This bill changes several aspects of the Office of Health Care Access's (OHCA) Certificate of Need (CON) program. It:

*Senate Amendment “A” limits the circumstances under which a health care facility that intends to transfer ownship or control must ask OHCA for a CON, reinstates provisions requiring notice of affiliate control transfers and governing powers changes, exempts DCF-licensed and –funded programs, restricts the exemption for introduction of outpatient services to hospitals, and makes conforming changes.

EFFECTIVE DATE: July 1, 2009, except for the provision on psychiatric residential facilities, which is effective on October 1, 2009.

OWNERSHIP AND CONTROL

Under current law, a health care institution or facility must submit a letter of intent to OHCA before transferring all or part of its ownership or control. OHCA then determines whether a CON review is needed. The bill eliminates the requirement that an institution or facility notify OHCA whenever partial ownership or control is to be transferred. Instead, it defines a transfer of ownership or control to mean an action that affects or changes the governance or controlling body of the institution or facility. Transfers include mergers, affiliations, or any sale or transfer of a facility's or institution's net assets. The law already requires facilities and institutions to notify OHCA when they intend to (1) change the governing powers of the parent company's or an affiliate's board and (2) change or transfer the powers or control of an affiliate's governing or controlling body.

The law applies to hospitals, outpatient surgical facilities, imaging centers, and mental health facilities, among other institutions, and their parents, subsidiaries, affiliates, and joint ventures.

CON EXEMPTIONS AND WAIVERS

Outpatient Facilities

The bill exempts from CON review an acute care, children's, mental health, or chronic disease hospital's plan to provide services at an alternative location in its “primary service area. ” (The bill does not define “primary service area”; in practice, the CON applicant determines its primary service area if it was providing these services on July 1, 2009. ) The exemption applies when (1) service is transferred completely from the original to the new location and (2) service is provided at both locations. The hospital must submit to OHCA information about the alternate location, the type of services it intends to provide there, and the reasons for providing them at an alternate location. The exemption applies to services like physical, speech, and occupational therapy; occupational injury and disease management; and “company-contracted services,” (i. e. , services the institution or facility obtains through contracting with a third party).

Department of Children and Families (DCF) Programs

The bill adds DCF-licensed or –funded programs to the list of entities that are exempts from CON review. By law, facilities and institutions on this exempt list must register with OHCA by submitting all the information otherwise required for a letter of intent. They must do this 14 to 60 days before beginning the activity that would otherwise require review. They must also renew their exemption every two years.

Cineangiography

The bill exempts the acquisition of new cineangiography equipment from CON review. Cineangiography equipment is used to diagnose heart and vascular conditions by filming the passage of a contrast medium through blood vessels.

Imaging Equipment Replacement

The bill permits OHCA to waive CON review for certain institutions, facilities, and providers that want to replace imaging equipment. It applies to entities that received a CON exemption for the acquisition of the original equipment under a 2005 act (PA 05-93, as amended by PA 06-28). To obtain the initial exemption, that act required an entity to (1) prove that it had acquired the equipment before July 1, 2005 for less than $ 400,000 and had put it into operation before July 1, 2006 or (2) obtain a CON or a determination that one was not needed by July 1, 2005.

PSYCHIATRIC RESIDENTIAL TREATMENT FACILITIES

The bill requires OHCA to review all proposals to establish a psychiatric residential treatment facility, change its ownership or control, or make $ 3 million or more in capital expenditures for such a facility. The review is required even for proposals from nonprofit facilities, institutions, and providers that contract with the state and from DCF-licensed or –funded programs, which, under current law and the bill, OHCA can exempt from CON review under certain conditions. Under federal law, a psychiatric residential treatment facility is a facility, other than a hospital, that provides inpatient psychiatric services to people under age 21.

COMMITTEE ACTION

Public Health Committee

Joint Favorable