AN ACT relating to certificate of need.

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AN ACT relating to certificate of need. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 216B.040 is amended to read as follows: 3
(1) The cabinet shall have four (4) separate and distinct functions in administering this 4
chapter: 5
(a) To approve or deny certificates of need in accordance with the provisions of 6
this chapte r, except as to those applications which have been granted 7
nonsubstantive review status by the cabinet; 8
(b) To issue and to revoke certificates of need; 9
(c) To provide a due process hearing and issue a final determination on all actions 10
by the cabinet to deny, revoke, modify, or suspend licenses of health facilities 11
and health services issued by the cabinet; and 12
(d) To enforce, through legal actions on its own motion, the provisions of this 13
chapter and its orders and decisions issued pursuant to its functions. 14
(2) The cabinet shall: 15
(a) Promulgate administrative regulations in accordance with [pursuant to the 16
provisions of] KRS Chapter 13A to establish: 17
1. [To establish ]The certificate of need review procedures, including but 18
not limited to [,] application procedures, notice provisions, procedures 19
for review of completeness of applications, and timetables for review 20
cycles; and[.] 21
2. [To establish ] Criteria for i ssuance and denial of certificates of need , 22
which shall be limited to the following considerations: 23
a. Consistency with plans. Each proposal approved by the cabinet 24
shall be consistent with the state health plan, and shall be subject 25
to biennial budget aut horizations and limitations, and with 26
consideration given to the proposal's impact on health care costs in 27
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the Commonwealth. The state health plan shall contain a need 1
assessment for long -term care beds, which shall be based on a 2
statistically valid analys is of the present and future needs of the 3
state as a whole and counties individually. The need assessment 4
shall be applied uniformly to all areas of the state. The 5
methodology shall be reviewed and updated on an annual basis. 6
The long-term care bed need cr iteria in the state health plan or as 7
set forth by the appropriate certificate of need authority shall give 8
preference to conversion of personal care beds and acute care beds 9
to nursing facility beds, so long as the state health plan or the 10
appropriate cer tificate of need authority establishes a need in the 11
affected counties and the proposed conversions are more cost -12
effective than new construction. The fact that the state health plan 13
shall not address the specific type of proposal being reviewed shall 14
not constitute grounds for disapproval of the proposal. 15
Notwithstanding any other provision of law, the long -term care 16
bed need criteria in the state health plan or as set forth by the 17
appropriate certificate of need authority shall not consider, factor 18
in, or include any continuing care retirement community's nursing 19
home beds established under KRS 216B.015, 216B.020, 20
216B.330, and 216B.332; 21
b. Need and accessibility. The proposal shall meet an identified need 22
in a defined geographic area and be accessible to all residents of 23
the area. A defined geographic area shall be defined as the area the 24
proposal seeks to serve, including its demographics, and shall not 25
be limited to geographical boundaries; 26
c. Interrelationships and linkages. The proposal shall serve to 27
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accomplish appropriate and effective linkages with other services, 1
facilities, and elements of the health care system in the region and 2
state, accompanied by assurance of effort to achieve 3
comprehensive care, proper utilization of services, and efficient 4
functioning of the health care system; 5
d. Costs, economic feasibility, and resources availability. The 6
proposal, when measured against the cost of alternatives for 7
meeting needs, shall be judged to be an effective and economical 8
use of resources, not only o f capital investment, but also ongoing 9
requirements for health manpower and operational financing; 10
e. Quality of services. The applicant shall be prepared to and capable 11
of undertaking and carrying out the responsibilities involved in the 12
proposal in a man ner consistent with appropriate standards and 13
requirements assuring the provision of quality health care services, 14
as established by the cabinet; and 15
f. Hospital-based skilled nursing, intermediate care, and personal 16
care beds shall be considered by the ca binet in determining the 17
need for freestanding long-term care beds; and[.] 18
(b) Conduct public hearings, as requested by: 19
1. An applicant for a certificate of need, in respect to that applicant's 20
certificate of need application; 21
2. A holder of a certificate of need , in respect to a revocation of that 22
holder's certificate of need; or 23
3. A holder of a license, in respect to a denial, suspension, modification, 24
or revocation of that holder's license [certificate-of-need applications, 25
revocations of certificates o f need, and denials, suspensions, 26
modifications, or revocations of licenses]. 27
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(3) The cabinet may: 1
(a) Promulgate[Issue] other administrative regulations in accordance with KRS 2
Chapter 13A necessary for the proper administration of this chapter; 3
(b) Administer oaths, issue subpoenas, subpoenas duces tecum, and all necessary 4
process in proceedings brought before or initiated by the cabinet, and the 5
process shall extend to all parts of the Commonwealth. Service of process in 6
all proceedings brought before or initiated by the cabinet may be made by 7
certified mail, or in the same manner as other process in civil cases, as the 8
cabinet directs; 9
(c) Establish by promulgation of an administrative regulation in accordance 10
with[under] KRS Chapter 13A reasonable applic ation fees for certificates of 11
need; 12
(d) Establish a mechanism for issuing advisory opinions to prospective applicants 13
for certificates of need regarding the requirements of a certificate of need; and 14
(e) Establish a mechanism for biennial review of projects for compliance with the 15
terms of the certificate of need. 16
Section 2. KRS 216B.062 is amended to read as follows: 17
(1) Applications for certificates of need shall be submitted according to timetables 18
established by the cabinet by promulgation of an administrative regulation [, 19
pursuant to the provisions of] in accordance with KRS Chapter 13A. The 20
application for a certificate of need shall include the name and business address of 21
any owner, investor, or stockholder in the project whose ownership interest is 22
greater than ten percent (10%). Once an application has been deemed complete 23
pursuant to the cabinet's administrative regulations, notice shall be given as 24
provided by the administrative regulations of the beginning of the review, the 25
proposed review schedule, and the right of an applicant to request a hearing. The 26
review shall be deemed to commence on the date of notice. The cabinet shall issue 27
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a final decision on an application within [No review shall take longer than] ninety 1
(90) days from the commencement of the review unless the applicant agrees to a 2
deferral of action. 3
(2) Applications proposing the same or similar types of services, facilities, or 4
equipment shall be batched for review purposes, excluding those grant ed 5
nonsubstantive review status. The cabinet shall by promulgation of an 6
administrative regulation in accordance with [under] KRS Chapter 13A establish 7
appropriate batching groups to assure that applications for each type of service, 8
facility, or equipment will be eligible for consideration at set intervals. In each 9
review batch, the cabinet shall review and, if appropriate, com pare all timely -filed 10
applications proposing similar types of services, facilities, or equipment in the same 11
health service areas. 12
Section 3. KRS 216B.085 is amended to read as follows: 13
(1) No later than fifteen (15) days after the date the review commences, an 14
applicant[any affected person] may request a public hearing. Hearings shall be 15
before a person designated by the Office of Administrative Hearings within the 16
Department of Law to serve as hearing officer. The hearing officer shall be 17
authorized to administer oaths, issue subpoenas, subpoenas duces tecum, and all 18
necessary process in the proceedings. 19
(2) If a hearing is requested, the Office of Administrative Hearings within the 20
Department of Law shall set a date, time, and place for a public hearing. 21
Reasonable notice of the hearing shall be given to the applicant [all affected 22
persons] in accordance with administrative regulations promulgated by the cabinet 23
in accordance with KRS Chapter 13A. 24
(3) At the hearing, the applicant[any party to the proceedings] shall have the right to be 25
represented by counsel, and to present oral or written arguments and evidence 26
relevant to the matter which is the subject of the hearing [, and may conduct 27
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reasonable cross-examination under oath of persons who make factual allegations 1
relevant to such matters] . A full and complete record shall be maintained of the 2
hearing. 3
(4) Any decision of the cabinet to issue or deny a certificate of need shall be based 4
solely on the record established with regard to the matter. All decisions granting, 5
denying, or modifying a certificate of need shall be made by the cabinet in writing. 6
The cabinet shall notify the applicant[parties to the proceedings] of the decision 7
and the decision shall be final for purposes of judicial appeal unless a request for 8
reconsideration is filed by the applicant . An approved certificate of need shall be 9
issued forty (40) days after notice of the cabinet's decision [ unless a request for 10
reconsideration is filed or a judicial appeal is taken and issuance is enjoined by the 11
court]. 12
Section 4. KRS 216B.090 is amended to read as follows: 13
(1) An applicant[Any party to the proceedings] may, for good cause shown, request in 14
writing a hearing for purposes of reconsideration of a decision of the cabinet 15
pertaining to a certificate of need or the revocation of a certificate of need under 16
procedures promulgated by administrative regulation in accordance with KRS 17
Chapter 13A. The request shall be filed within fifteen (15) days of the notice of the 18
decision. For purposes of this section , there shall be deemed to be "good cause 19
shown" if the request for a public hearing: 20
(a) Presents significant, relevant information not previous ly available for 21
consideration by the cabinet; 22
(b) Demonstrates that there have been significant changes in the factors or 23
circumstances relied upon by the cabinet in reaching its decision; or 24
(c) Demonstrates that the cabinet has materially failed to foll ow its adopted 25
procedures in reaching its decision[; or 26
(d) States that a public hearing pursuant to KRS 216B.085 was not conducted 27
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prior to a decision to deny a certificate of need]. 1
(2) If a public hearing is granted, it shall be held within thirty (30) days after the 2
decision to grant the request for reconsideration. The hearing shall be conducted in 3
accordance with the provisions of this chapter. The cabinet shall make its decision 4
on reconsideration and shall give notice thereof. The decision of the cabinet shall be 5
final for purposes of judicial appeal. An approved certificate of need shall be issued 6
forty (40) days after notice of the cabinet's decision unless a judicial appeal is taken 7
and issuance is enjoined by the court. 8
Section 5. KRS 216B.095 is amended to read as follows: 9
(1) An applicant may waive the procedures for formal review of an application for a 10
certificate of need and request a nonsubstantive review as provided in this 11
section[below]. The cabinet may grant or deny nonsubstantive review status within 12
ten (10) days of the date the application is deemed completed [ and shall give notice 13
to all affected persons of the decision to conduct a nonsubstantive review. Any 14
affected person other than the applicant may request a hearing by filing a request 15
with the cabinet within ten (10) days of the notice to conduct a nonsubstantive 16
review]. As applicable, hearings shall be conducted as provided in KRS 216B.085. 17
Based solely upon the record established with regard to the matter, the cabinet shall 18
approve or deny a certificate of need on all projects assigned nonsubstantive review 19
status within thirty -five (35) days of the determination of nonsubstantive review 20
status. If the application is denied nonsubstantive rev iew status, it shall 21
automatically be placed in the formal review process. 22
(2) If a certificate of need is denied following a nonsubstantive review, the applicant 23
may request that the application be placed in the next cycle of the formal review 24
process. [Nothing in ] This subsection shall not require an applicant to pursue a 25
formal review before obtaining judicial review pursuant to KRS 216B.115. 26
(3) The cabinet may grant nonsubstantive review status to an application for a 27
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certificate of need which is required: 1
(a) To change the location of a proposed health facility; 2
(b) To replace or relocate a licensed health facility, if there is no substantial 3
change in health services or substantial change in bed capacity; 4
(c) To replace or repair worn equipment if the worn equipment has been used by 5
the applicant in a health facility for five (5) years or more; 6
(d) For cost escalations; or 7
(e) In other circumstances the cabinet [by administrative regulation ] may 8
prescribe by administrative regulation promulgated in accordance with KRS 9
Chapter 13A. 10
(4) Notwithstanding any other provision of this chapter to the contrary [ in this 11
chapter], the cabinet may approve a certificate of need for a project required for the 12
purposes set out in subsection (3)(a) to (e) of this section, unless it finds the facility 13
or service with respect to which the capital expenditure is proposed to be made is 14
not required; or to the extent the facility or services contemplated by the proposed 15
capital expenditure is addressed in the state health plan, the cabinet finds that the 16
capital expenditure is not consistent with the state health plan. 17
(5) The decision of the cabinet approving or denying a certificate of need pursuant to 18
this section shall be fin al for purposes of judicial appeal, unless the applicant 19
requests the application be placed in the formal review process. An approved 20
certificate shall be issued thirty (30) days after notice of the cabinet's decision, 21
unless a judicial appeal is taken and issuance is enjoined by the court. 22
(6) Notwithstanding any other provision of law, the cabinet shall not grant 23
nonsubstantive review status to a certificate of need application that indicates an 24
intent to apply for Medicaid certification of nursing home b eds within a continuing 25
care retirement community established under KRS 216B.015, 216B.020, 216B.330, 26
and 216B.332. 27
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(7) Notwithstanding any provision of state law or the state health plan promulgated by 1
administrative regulation in accordance with KRS 216B .040, the cabinet shall grant 2
nonsubstantive review for a certificate of need proposal to establish an ambulatory 3
surgical center if the applicant complies with the following: 4
(a) The applicant is an ambulatory surgical center that was organized and in 5
operation as the private office of a physician or physician group prior to 6
October 1, 2006; 7
(b) 1. The cabinet's general counsel has submitted a letter to the Accreditation 8
Association for Ambulatory Health Care advising that the cabinet does 9
not object to th e applicant's parent company applying for and obtaining 10
Medicare certification; or 11
2. The applicant is an ambulatory surgical center that has received from the 12
cabinet a favorable advisory opinion dated June 14, 2005, confirming 13
that the applicant would be exempt from the certificate of need or 14
licensure requirement; 15
(c) The applicant's amb ulatory surgical center has been inspected and accredited 16
by the Accreditation Association for Ambulatory Health Care since December 17
31, 2006, and has maintained accreditation with that organization consistently 18
since that time; and 19
(d) The applicant was a party to litigation concerning the ambulatory surgical 20
center and physician office issue and, prior to July 12, 2012, obtained a Court 21
of Appeals ruling in its favor. 22
Section 6. KRS 216B.115 is amended to read as follows: 23
(1) An appeal to the Franklin Circuit Court may be taken from any final decision of the 24
cabinet with respect to a certificate -of-need application, a certificate of need, or a 25
license, by an applicant[any party to the proceedings]. 26
(2) An appeal may be taken by filing a petition for review in the Franklin Circuit Court 27
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within thirty (30) days after notice of the final decision unless a request for 1
reconsideration has been filed, in which case the petition shall be filed within 2
fifteen (15) days of the cab inet's decision not to reconsider or notice of its decision 3
on reconsideration. The petition shall state completely the grounds upon which the 4
review is sought and shall assign all errors relied upon. The petitioner shall serve a 5
copy of the petition to ea ch person who was a party to the proceedings. Summons 6
shall be issued upon the petition directing the adverse party or parties to file an 7
answer within twenty (20) days after service of summons. The cabinet shall, upon 8
being served with the summons and wit hin thirty (30) days thereafter, file a copy of 9
the record, duly certified by the secretary, the cost of the record to be taxed as costs 10
upon appeal. In lieu of filing of the record, an abstract thereof may be filed if all 11
parties to the appeal agree. 12