S 1436 Session 109 (1991-1992)
S 1436 General Bill, By Leatherman, R.L. Helmly, Matthews, Peeler, J.V. Smith and
N.W. Smith
A Bill to amend Section 44-7-120, as amended, Code of Laws of South Carolina,
1976, relating to the purpose of the Certificate of Need and Health Licensure
Act, so as to change references from the State Medical Facilities Plan to the
State Health Plan; to amend Section 44-7-130, as amended, relating to
definitions, so as to revise the definition of "affected person", "health care
facility", "health service", and to add the definition of "like equipment with
similar capabilities"; to amend Section 44-7-160, as amended, relating to
circumstances requiring certificate of need, so as to delete provisions
relating to acquisition of medical equipment owned by or located in a health
care facility; to amend Section 44-7-170, as amended, relating to transactions
and institutions exempt from the Article, so as to delete provisions relating
to the initiation of services through contractual arrangements for shared
mobile diagnostic and therapeutic devices; to amend Section 44-7-180, as
amended, relating to the State Medical Facilities Plan, so as to change this
Plan to the State Health Plan, to provide for a health planning committee, its
members and terms, and to provide that the committee shall advise in the
preparation of the plan, to revise the content, approval, and revision
procedures for the plan; to amend Section 44-7-200, as amended, relating to
certificate of need applications, so as to prohibit certain department
personnel from communicating with other persons about pending applications; to
amend Section 44-7-210, as amended, relating to procedures following
completion of a certificate of need application, so as to provide for project
review criteria and procedures; to amend Section 44-7-230, as amended,
relating to the nontransferability of certificate of need, so as to require
project reports and inspections to assure compliance and to extend a
certificate of need from six months to one year on major hospital construction
projects; to amend Section 44-7-240, as amended, relating to a state
construction program, so as to change the reference from State Facilities Plan
to State Health Plan; to provide for certificate of need exemptions for
medical equipment under certain conditions; and to provide for staggered terms
for members appointed to the Health Planning Committee.
03/30/92 Senate Introduced and read first time SJ-6
03/30/92 Senate Referred to Committee on Medical Affairs SJ-7
04/29/92 Senate Polled out of committee Medical Affairs SJ-262
04/29/92 Senate Read second time SJ-264
04/29/92 Senate Ordered to third reading with notice of
amendments SJ-264
Indicates Matter Stricken
Indicates New Matter
COMMITTEE REPORT
April 29, 1992
S. 1436
Introduced by SENATORS Leatherman, Peeler, J. Verne Smith, Helmly,
Matthews and Nell W. Smith
S. Printed 4/29/92--S.
Read the first time March 30, 1992.
THE COMMITTEE ON MEDICAL AFFAIRS
To whom was referred a Bill (S. 1436), to amend Section 44-7-120,
as amended, Code of Laws of South Carolina, 1976, relating to the
purpose of the Certificate of Need and Health Licensure Act, etc.,
respectfully
REPORT:
That they have duly and carefully considered the same, and
recommend that the same do pass:
ALEXANDER S. MACAULAY, for Committee.
A BILL
TO AMEND SECTION 44-7-120, AS AMENDED, CODE OF LAWS
OF SOUTH CAROLINA, 1976, RELATING TO THE PURPOSE OF
THE CERTIFICATE OF NEED AND HEALTH LICENSURE ACT,
SO AS TO CHANGE REFERENCES FROM THE STATE MEDICAL
FACILITIES PLAN TO THE STATE HEALTH PLAN; TO AMEND
SECTION 44-7-130, AS AMENDED, RELATING TO DEFINITIONS,
SO AS TO REVISE THE DEFINITION OF "AFFECTED
PERSON", "HEALTH CARE FACILITY",
"HEALTH SERVICE", AND TO ADD THE DEFINITION
OF "LIKE EQUIPMENT WITH SIMILAR
CAPABILITIES"; TO AMEND SECTION 44-7-160, AS
AMENDED, RELATING TO CIRCUMSTANCES REQUIRING
CERTIFICATE OF NEED, SO AS TO DELETE PROVISIONS
RELATING TO ACQUISITION OF MEDICAL EQUIPMENT
OWNED BY OR LOCATED IN A HEALTH CARE FACILITY; TO
AMEND SECTION 44-7-170, AS AMENDED, RELATING TO
TRANSACTIONS AND INSTITUTIONS EXEMPT FROM THE
ARTICLE, SO AS TO DELETE PROVISIONS RELATING TO THE
INITIATION OF SERVICES THROUGH CONTRACTUAL
ARRANGEMENTS FOR SHARED MOBILE DIAGNOSTIC AND
THERAPEUTIC DEVICES; TO AMEND SECTION 44-7-180, AS
AMENDED, RELATING TO THE STATE MEDICAL FACILITIES
PLAN, SO AS TO CHANGE THIS PLAN TO THE STATE HEALTH
PLAN, TO PROVIDE FOR A HEALTH PLANNING COMMITTEE,
ITS MEMBERS AND TERMS, AND TO PROVIDE THAT THE
COMMITTEE SHALL ADVISE IN THE PREPARATION OF THE
PLAN, TO REVISE THE CONTENT, APPROVAL, AND REVISION
PROCEDURES FOR THE PLAN; TO AMEND SECTION 44-7-200,
AS AMENDED, RELATING TO CERTIFICATE OF NEED
APPLICATIONS, SO AS TO PROHIBIT CERTAIN DEPARTMENT
PERSONNEL FROM COMMUNICATING WITH OTHER PERSONS
ABOUT PENDING APPLICATIONS; TO AMEND SECTION
44-7-210, AS AMENDED, RELATING TO PROCEDURES
FOLLOWING COMPLETION OF A CERTIFICATE OF NEED
APPLICATION, SO AS TO PROVIDE FOR PROJECT REVIEW
CRITERIA AND PROCEDURES; TO AMEND SECTION 44-7-230,
AS AMENDED, RELATING TO THE NONTRANSFERABILITY OF
CERTIFICATE OF NEED, SO AS TO REQUIRE PROJECT
REPORTS AND INSPECTIONS TO ASSURE COMPLIANCE AND
TO EXTEND A CERTIFICATE OF NEED FROM SIX MONTHS TO
ONE YEAR ON MAJOR HOSPITAL CONSTRUCTION PROJECTS;
TO AMEND SECTION 44-7-240, AS AMENDED, RELATING TO A
STATE CONSTRUCTION PROGRAM, SO AS TO CHANGE THE
REFERENCE FROM STATE FACILITIES PLAN TO STATE
HEALTH PLAN; TO PROVIDE FOR CERTIFICATE OF NEED
EXEMPTIONS FOR MEDICAL EQUIPMENT UNDER CERTAIN
CONDITIONS; AND TO PROVIDE FOR STAGGERED TERMS FOR
MEMBERS APPOINTED TO THE HEALTH PLANNING
COMMITTEE.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 44-7-120 of the 1976 Code, as last amended by
Act 670 of 1988, is further amended to read:
"Section 44-7-120. The purpose of this article is to promote
cost containment, prevent unnecessary duplication of health care
facilities and services, guide the establishment of health facilities and
services which will best serve public needs, and ensure that high quality
services are provided in health facilities in this State. To achieve these
purposes, this article requires:
(1) the issuance of a Certificate of Need prior to the
before undertaking of any a project prescribed
by this article;
(2) adoption of procedures and criteria for submittal of an
application and appropriate review prior to before
issuance of a Certificate of Need;
(3) preparation and publication of a State Health
Medical Facilities Plan;
(4) the licensure of facilities rendering medical, nursing, and other
health care."
SECTION 2. Section 44-7-130(1) of the 1976 Code, as last amended
by Act 670 of 1988, is further amended to read:
"(1) `Affected person' means the applicant, any
a person residing within the geographic area served or to be
served by the applicant, health care facilities persons
located in the health service area in which the project is to be located
and which who provide similar services to the proposed
project, health care facilities which prior to persons
who before receipt by the department of the proposal being
reviewed have formally indicated an intention to provide similar services
in the future, persons who pay for health services in the health
service area in which the project is to be located and who have notified
the department of their interest in certificate of need applications, the
State Consumer Advocate, and the State Ombudsman. Persons
from another state who would otherwise be considered `affected persons'
are not included unless that state provides for similar involvement of
persons from South Carolina in its certificate of need
process."
SECTION 3. 44-7-130(10) of the 1976 Code, as last amended by Act
670 of 1988, is further amended to read:
"(10) `Health care facility" means acute care hospitals,
psychiatric hospitals, alcohol and substance abuse hospitals, tuberculosis
hospitals, nursing homes, kidney disease treatment centers, including
free-standing hemodialysis centers, ambulatory surgical facilities,
rehabilitation facilities, residential treatment facilities for children and
adolescents, habilitation centers for mentally retarded persons or
persons with related conditions, and any other facility for which
Certificate of Need review is required by federal law."
SECTION 4. Section 44-7-130(11) of the 1976 Code, as last
amended by Act 670 of 1988, is further amended to read:
"(11) `Health service' means clinically related, diagnostic,
treatment, or rehabilitative services, and includes alcohol, drug
abuse, and mental health services for which specific standards or criteria
are prescribed in the State Medical Facilities Health
Plan."
SECTION 5. Section 44-7-130 of the 1976 Code, as last amended
by Part II, Section 64, Act 612 of 1990, is further amended by adding an
appropriately numbered item to read:
"( ) `Like equipment with similar capabilities' means medical
equipment which does not increase the potential volume or type of
procedures possible."
SECTION 6. Section 44-7-160 of the 1976 Code, as last amended by
Act 670 of 1988, is further amended to read:
"Section 44-7-160. Any A person or health
care facility as defined in this article is required to obtain a Certificate
of Need from the department prior to before
undertaking any of the following:
(1) the construction or other establishment of a new health care
facility;
(2) a change in the existing bed complement of a health care
facility through the addition of one or more beds or change in the
classification of licensure of one or more beds;
(3) an expenditure by or on behalf of a health care facility in
excess of an amount to be prescribed by regulation which, under
generally acceptable accounting principles consistently applied, is
considered a capital expenditure except those expenditures exempted in
Section 44-7-170(B)(1). The cost of any studies, surveys,
designs, plans, working drawings, specifications, and other activities
essential to the development, acquisition, improvement, expansion, or
replacement of any plant or equipment must be included in determining
if the expenditure exceeds the prescribed amount;
(4) a capital expenditure by or on behalf of a health care facility
which is associated with the addition or substantial expansion of a health
service for which specific standards or criteria are prescribed in the State
Medical Facilities Health Plan;
(5) the offering of any a health service by or on
behalf of a health care facility which has not been offered by the facility
in the preceding twelve months and which has an annual operating cost
in excess of an amount to be prescribed by regulation and for which
specific standards or criteria are prescribed in the State Medical
Facilities Health Plan;
(6) the acquisition of medical equipment to be owned by or
located in a health care facility, if the total project cost is in excess of
that prescribed by regulation;
(7)(6) the acquisition of medical equipment
which is to be used for diagnosis or treatment of an inpatient of a
health care facility if the total project cost is in excess of that
prescribed by regulation;
(8)(7) the acquisition or change in ownership or in
controlling interest of a health care facility or entity owning a health care
facility directly or indirectly by purchase, lease, gift, donation, sale of
stock, or comparable arrangement if the acquisition or change in
ownership or controlling interest may result in an increase in cost to the
facility or increase in government-sponsored reimbursement;
(9)(8) the acquisition of an existing health care
facility by any a person who has failed to notify the
department and seeks an exemption prior to before
entering into a contractual arrangement to acquire an existing facility;
(10)(9) an expenditure or financial obligation
made in preparation for the offering or developing of any
a project which requires certification of need pursuant to this
section if the expenditure or financial obligation is in excess of an
amount to be prescribed by regulation."
SECTION 7. Section 44-7-170(B) of the 1976 Code, as last amended
by Act 670 of 1988, is further amended to read:
"(B) The Certificate of Need provisions of this article do not
apply to:
(1) an expenditure by or on behalf of a health care facility for
nonmedical projects for services such as refinancing existing debt,
parking garages, laundries, roof replacements, computer systems,
telephone systems, heating and air conditioning systems, upgrading
facilities which do not involve additional square feet or additional health
services, replacement of like equipment with similar capabilities, or
similar projects as described in regulations;
(2) the initiation of services through contractual arrangements
for shared mobile diagnostic and therapeutic devices such as
computerized tomography, magnetic resonance imaging, lithotripsy, or
nuclear medicine services;
(3)(2) facilities owned and operated by the
South Carolina State Department of Mental Health and
the South Carolina Department of Mental Retardation, except an
addition of one or more beds to the total number of beds of the
departments' health care facilities existing on July 1, 1988;
(4)(3) educational and penal institutions
maintaining infirmaries for the exclusive use of their respective student
bodies and inmate populations;
(5)(4) any federal health care facility sponsored
and operated by this State."
SECTION 8. Section 44-7-180 of the 1976 Code, as last amended by
Act 670 of 1988, is further amended to read:
"Section 44-7-180. (A) There is created a health
planning committee comprised of fourteen members. The Governor
shall appoint twelve members, at least one member from each
congressional district. Each of the following groups must be equally
represented among the Governor's appointees: health care consumers,
health care financiers to include business and insurance, and health care
providers. The chairman of the board shall appoint one member. The
South Carolina Consumer Advocate or the Consumer Advocate's
designee is an ex officio nonvoting member. Members are appointed for
four-year terms, may serve only two consecutive terms, and are allowed
the usual mileage and subsistence as provided for members of boards,
committees, and commissions.
(A)(B) With the advice of the health planning
committee, the department shall prepare and submit to the board
for adoption a State Medical Facilities Health Plan
for use in the administration of the Certificate of Need Program provided
in this article. The plan at a minimum must include:
(1) an inventory of existing health care facilities, beds,
specified health services, and equipment;
(2) projections of need for additional health care facilities,
beds, health services, and equipment; and
(3) standards for distribution of health care facilities, beds,
specified health services, and equipment including scope of services to
be provided, utilization, and occupancy rates, travel time,
regionalization, other factors relating to proper placement of services,
and proper planning of health care facilities; and
(4) a general statement as to the project review criteria
considered most important in evaluating certificate of need applications
for each type of facility, service, and equipment.
(B) The State Medical Facilities Health
Plan must address and include projections and standards for specified
health services and equipment which have a potential to substantially
impact health care cost and accessibility.
(C) Upon approval by the health planning committee, the
State Health Plan must be submitted at least once every two years to the
board for final revision and adoption. Once adopted by the
board, the This plan may later be revised
through the same planning and approval process upon
approval of the board. The department shall adopt by regulation a
procedure to allow public review and comment, including regional
public hearings, prior to before adoption or
revision of the plan."
SECTION 9. Section 44-7-200 of the 1976 Code, as last amended by
Act 471 of 1990, is further amended to read:
"Section 44-7-200. (A) An application for a Certificate of
Need must be submitted to the department in a form established by
regulation. The application must address all applicable standards and
requirements set forth in departmental regulations, Project Review
Criteria of the department, and the State Medical Facilities
Health Plan. The application must include the payment of a
non-refundable initial application fee of five hundred dollars. The
department shall deduct this fee from the Certificate of Need filing fee
which is payable in accordance with departmental regulations when the
application is determined to be complete.
(B) Within twenty days before submission of an application, the
applicant shall publish notification that an application is to be submitted
to the department in a newspaper serving the area where the project is
to be located for three consecutive days. The notification must contain
a brief description of the scope and nature of the project. No application
may be accepted for filing by the department unless accompanied by
proof that publication has been made for three consecutive days within
the prior twenty-day period and payment of the initial application fee has
been received.
(C) Upon publication of this notice and until a contested case
hearing is requested pursuant to Section 44-7-210:
(1) members of the board and persons appointed by the board
to hear appeals from department staff decisions may not communicate
directly or indirectly with any person in connection with the application;
and
(2) no person shall communicate, or cause another to
communicate, as to the merits of the application with members of the
board and persons appointed by the board to hear appeals from
department staff decisions.
A person who violates this subsection is subject to the penalties
provided in Section 1-23-360.
(C)(D) After receipt of an application with proof
of publication and payment of the initial application fee, the department
shall publish in the State Register a notice that an application has been
accepted for filing. Within thirty days of acceptance of the application,
the department may request additional information as may be necessary
to complete the application. The applicant has thirty days from the date
of the request to submit the additional information. If the applicant fails
to submit the requested information within the thirty-day period, the
application is considered withdrawn."
SECTION 10. Section 44-7-210 of the 1976 Code, as last amended
by Act 471 of 1990, is further amended to read:
"Section 44-7-210. (A) After the department has
determined that an application is complete, affected persons must be
notified in accordance with departmental regulations. The notification
of affected persons begins the review period. During the review
period, the department shall determine the relative importance of the
project review criteria for this project and shall notify the applicant of
this determination. The applicant has thirty days from the date of the
receipt of this notice to submit any additional information. The
review period for a completed application is sixty days from the date of
notification of affected persons, or up to sixty days from the date
that applicants are notified of the relative importance of project review
criteria provided for in this section, whichever is longer. One
extension of up to sixty days may be granted by the department in
accordance with departmental regulations with the exception of an
extension that is granted to comply with a request for a public hearing.
(B) The department may hold a public hearing, if timely
requested, to gather information and obtain public comment and opinion
about the proposed project.
(C) The department may not issue a Certificate of Need unless an
application complies is in substantial compliance with
the State Medical Facilities Health Plan, Project Review
Criteria, and other regulations. Based on project review criteria and
other regulations, the department may refuse to issue a Certificate of
Need even if an application complies with the State Health Plan.
In the case of competing applications, the department shall award a
Certificate of Need, if appropriate, on the basis of which, if any, most
fully complies with the requirements, goals, and purposes of this article
and the State Medical Facilities Health Plan, Project
Review Criteria, and the regulations adopted by the department.
(D) On the basis of staff review of the application, the staff of the
department shall make a proposed decision to grant or deny the
Certificate of Need. Notice of the proposed decision must be sent
to the applicant and affected persons who have asked to be notified.
The proposed decision becomes the final agency decision within ten
days after the receipt of a notice of the proposed decision by the
applicant unless one of the following occurs:
(1) A reconsideration hearing before by the
staff of the department is requested in writing within the ten-day period
by an affected a person showing good cause for
reconsideration of the proposed decision.; or
(2) A contested case hearing before the board, or its designee,
regarding the grant or denial of the Certificate of Need is requested in
writing within the ten-day period by the applicant or other affected
person with standing to contest the grant or denial of the application.
A reconsideration hearing must be conducted
Reconsideration by the staff must occur within thirty days from
receipt of the request.
(E) The department's proposed decision is not final until the
completion of reconsideration or contested case proceedings. The
burden of proof in a reconsideration or contested case hearing must be
upon the moving party. The contested case hearing before the board or
its designee is conducted as a contested case under the Administrative
Procedures Act. The issues considered at the contested case hearing
are limited to those presented or considered during the staff review and
decision process."
SECTION 11. Section 44-7-230(A) of the 1976 Code, as last
amended by Act 670 of 1988, is further amended to read:
"(A) The Certificate of Need, if issued, is valid only for the
project described in the application including location, beds and services
to be offered, physical plant, capital or operating costs, or other factors
as set forth in the application, except as may be modified in accordance
with regulations. The department shall require periodic reports and
make inspections to determine compliance with the Certificate of
Need. Implementation of the project or operation of the facility
or medical equipment that is not in accordance with the Certificate
of Need application or conditions subsequently agreed to by the
applicant and the department may be considered a violation of this
article."
SECTION 12. Section 44-7-230(D) of the 1976 Code, as last
amended by Act 471 of 1990, is further amended to read:
"(D) A Certificate of Need is valid for six months from the
date of issuance except for projects involving construction or
replacement of, or major renovations or additions to, an acute care
hospital. For these projects the Certificate of Need is valid for one year
from the date of issuance. A Certificate of Need must be issued
with a timetable submitted by the applicant and approved by the
department to be followed for completion of the project. The holder of
the Certificate of Need shall submit periodic progress reports on meeting
the timetable as may be required by the department. Failure to meet the
timetable results in the revocation of the Certificate of Need by the
department unless the department determines that extenuating
circumstances beyond the control of the holder of the Certificate of Need
are the cause of the delay. The department may grant two extensions of
up to six months each upon evidence that substantial progress has been
made in accordance with procedures set forth in regulations. The board
may grant further extensions of up to six months each only if it
determines that substantial progress has been made in accordance with
the procedures set forth in regulations."
SECTION 13. Section 44-7-240 of the 1976 Code, as last amended
by Act 670 of 1988, is further amended to read:
"Section 44-7-240. The department may establish a
construction program providing for adequate facilities in this State and,
insofar as possible, shall provide for the distribution of facilities and
services throughout this State in such manner as to make all types of
health services reasonably accessible to all persons in this State. The
State Medical Facilities Health Plan as required by this
article may be used for purposes of establishing the relative need of
projects for which applications are submitted under this construction
program. Submittal of applications and review and approval of projects
for which federal funds are requested must be in accordance with
regulations adopted by the department and applicable federal act."
SECTION 14. Medical equipment lawfully leased or purchased
before the effective date of this act is exempt from the provisions of
Section 44-7-160(6) provided that an application for an exemption is
made within six months of the effective date of this act. The application
must be in the form required by the department and must include current
utilization data for the equipment.
SECTION 15. Of the twelve members initially appointed by the
Governor to the health planning committee created by this act, six
members, to be designated by the Governor, are appointed for two- year
terms.
SECTION 16. This act takes effect upon approval by the
Governor.
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