Exempts economic development projects from certificate of need requirements under chapter 323D, Hawaii Revised Statutes, the health planning and resources development and health care cost control law (law). Eliminates the certificate of need requirement under the law unless specified by the state health planning and development agency.

A BILL FOR AN ACT

SECTION 1. The regulatory structure for the state health planning and development agency certificate of need program, which was put in place in 1975, is an outgrowth of federal legislation that is predicated on the idea that the most satisfactory means of controlling health care costs is the allocation of health care resources by government through a highly centralized health planning mechanism.

For over two decades, the State established strong controls over the health care delivery system through the certificate of need program, which allocated the provision of services among providers and regulated health care facility and health care services expansion. The evolution of market-based means of controlling costs, most notably the growth of managed care, and the rapid development of new medical techniques and innovations in medical technology exposed inefficiencies inherent in centralized health care planning, which was unable to respond quickly to the changing needs of the health care system.

The certificate of need program is a relic of the highly regulated environment, and its original purpose, which was to control costs by limiting the proliferation of health care service through state control of those services has been undermined by significant changes in the economics of the health care system, which have taken place since its inception. Decisions as to health care services, the acquisition of medical technology, and the expansion of facilities can best be made by health care providers, based on their expertise in delivering health care services to the community.

For reasons of maintaining the quality of certain health care services, limiting the proliferation of those services may be essential to protect the viability of the services and the providers rendering them.

However, the State has determined that economic development projects are vital to the economic development of the State. Therefore, it is essential to promote greater efficiency in the State’s health care delivery system, eliminate the certificate of need requirement for economic development projects in the interest of the well-being of the public, and ensure the maintenance of quality health care throughout the State.

SECTION 2. Section 323D-2, Hawaii Revised Statutes, is amended to read as follows:

"§323D-2 Definitions. As used in this chapter:

["Applicant" means any person who applies for a certificate of need under part V.

"Assisted living facility" means a combination of housing, health care services, and personalized support services designed to respond to individual needs, and to promote choice, responsibility, independence, privacy, dignity, and individuality. In this context, "health care services" means the provision of services in an assisted living facility that assists the resident in achieving and maintaining the highest state of positive well-being (i.e., psychological, social, physical, and spiritual) and functional status. This may include nursing assessment and monitoring, and the delegation of nursing tasks by registered nurses pursuant to chapter 457, care management, monitoring, records management, arranging for, and/or coordinating health and social services.

"Capital expenditure" means any purchase or transfer of money or anything of value or enforceable promise or agreement to purchase or transfer money or anything of value incurred by or in behalf of any person for construction, expansion, alteration, conversion, development, initiation, or modification as defined in this section. The term includes the:

"Certificate of need" means an authorization, when required pursuant to section 323D-43, to construct, expand, alter, or convert a health care facility or to initiate, expand, develop, or modify a health care service.

"Construct", "expand", "alter", "convert", "develop", "initiate", or "modify" includes the erection, building, reconstruction, modernization, improvement, purchase, acquisition, or establishment of a health care facility or health care service; the purchase or acquisition of equipment attendant to the delivery of health care service and the instruction or supervision therefor; the arrangement or commitment for financing the offering or development of a health care facility or health care service; any obligation for a capital expenditure by a health care facility; and studies, surveys, designs, plans, working drawings, specifications, procedures, and other actions necessary for any such undertaking, which will:

"Economic development project" means a health care facility or health care services project of more than five acres or more than $5,000,000.

"Expenditure minimum" means $4,000,000 for capital expenditures, $1,000,000 for new or replacement medical equipment and $400,000 for used medical equipment.

"Extended care adult residential care home" means an adult residential care home providing twenty-four-hour living accommodation for a fee, for adults unrelated to the licensee. The primary caregiver shall be qualified to provide care to nursing facility level individuals who have been admitted to a medicaid waiver program, or persons who pay for care from private funds and have been certified for this type of facility. There shall be two categories of extended care adult residential care homes, which shall be licensed in accordance with rules adopted by the department of health:

"Health" includes physical and mental health.

"Health care facility" and "health care service" include any program, institution, place, building, or agency, or portion thereof, private or public, other than federal facilities or services, whether organized for profit or not, used, operated, or designed to provide medical diagnosis, treatment, nursing, rehabilitative, or preventive care to any person or persons. The terms include, but are not limited to, health care facilities and health care services commonly referred to as hospitals, extended care and rehabilitation centers, nursing homes, skilled nursing facilities, intermediate care facilities, hospices for the terminally ill that require licensure or certification by the department of health, kidney disease treatment centers including freestanding hemodialysis units, outpatient clinics, organized ambulatory health care facilities, emergency care facilities and centers, home health agencies, health maintenance organizations, and others providing similarly organized services regardless of nomenclature.

"Health care provider" means a health care facility, physician, dentist licensed under chapter 448, chiropractor licensed under chapter 442, optometrist licensed under chapter 459, podiatrist licensed under chapter 463E, psychologist licensed under chapter 465, occupational therapist subject to chapter 457G, and physical therapist licensed under chapter 461J.

"Organized ambulatory health care facility" means a facility not part of a hospital, which is organized and operated to provide health services to outpatients. The state agency may adopt rules to establish further criteria for differentiating between the private practice of medicine and organized ambulatory health care facilities.

"Person" means an individual or a natural person, a trust or estate, a society, a firm, an assembly, a partnership, a corporation, a professional corporation, an association, the State, any political subdivision of the State, a county, a state agency or any instrumentality of the State, a county agency or any instrumentality of a county.

"Physician" means a doctor of medicine or osteopathy who is legally authorized to practice medicine and surgery by the State.

["Primary care clinic" means a clinic for outpatient services providing all preventive and routine health care services, management of chronic diseases, consultation with specialists when necessary, and coordination of care across health care settings or multiple providers or both. Primary care clinic providers include:

"Review panel" means the panel established pursuant to section 323D-42.]

"State agency" means the state health planning and development agency established in section 323D-11.

"State health services and facilities plan" means the comprehensive plan for the economical delivery of health services in the State prepared by the statewide council.

"Statewide council" means the statewide health coordinating council established in section 323D-13.

"Subarea" means one of the geographic subareas designated by the state agency pursuant to section 323D-21.

"Subarea council" means a subarea health planning council established pursuant to section 323D-21.

"Substantially modify, decrease, or increase the scope or type of health service" refers to the establishment of a new health care facility or health care service or the addition of a clinically related (i.e., diagnostic, curative, or rehabilitative) service not previously provided or the termination of such a service which had previously been provided."

SECTION 3. Section 323D-54, Hawaii Revised Statutes, is amended to read as follows:

"§323D-54 Exemptions from certificate of need requirements. (a) Nothing in this part or rules with respect to the requirement for certificates of need applies to:

(b) No certificate of need shall be issued unless the state agency has determined that:

(c) The state agency may adopt criteria for certificate of need review that are consistent with this section. The criteria may include but are not limited to need, cost, quality, accessibility, availability, and acceptability.

Each decision of the state agency to issue a certificate of need shall, except in an emergency situation that poses a threat to public health, be consistent with the state health services and facilities plan in effect under section 323D-15. Each certificate of need issued shall be valid for a period of one year from the date of issuance unless the period is extended for good cause by the state agency and expenditures for the project shall not exceed the maximum amount of the expenditures approved in the certificate of need."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.