SB599: Bill Text

SB599,25,18 (a) "Commercial insurance" includes a group or individual disability insurance policy, as defined in s. 632.895 (1) (a), an employer's self-insured health care plan and worker's compensation.

SB599,25,21 (b) "Deduction" means the portion of a charge that was incurred by a patient but was not received from 3rd-party payers or governmental or private payment. "Deduction" includes charity care but does not include bad debt.

SB599,25,23 (c) "Expense" means the cost of operation, including bad debt, that is charged to a hospital during the hospital's fiscal year.

SB599,26,2 (d) "Gross patient revenue" means the total charges to medicare, as defined in s. 49.498 (1) (f), the medical assistance program, other public programs, commercial insurance and other self-payers or nonpublic payers, that are generated by a hospi tal from inpatient and outpatient services.

SB599,26,4 (e) "Net income" means total revenue and nonoperating gains in excess of ex penses and nonoperating losses.

SB599,26,5 (f) "Net patient revenue" means gross patient revenue minus deductions.

SB599,26,7 (g) "Nonoperating gains" means gifts, donations, endowments, return on in vestments and any other gains that are not related to patient care.

SB599,26,10 (h) "Nonoperating losses" means state and federal corporate income and real estate taxes and other losses that are not directly related to patient care or hospital- related patient services.

SB599,26,13 (i) "Other public programs" include programs operated by or contracted for by county departments under s. 46.215, 46.22 or 46.23 and the relief program under ch. 49.

SB599,26,16 (j) "Other revenue" means revenue from services, other than health care ser vices, provided to patients and revenue from sales to and services provided to nonpa tients.

SB599,26,17 (k) "Total revenue" means the sum of net patient revenue and other revenue.

SB599,27,3 (2) Beginning July 1, 1997, the commission shall, within 90 days after the com mencement of each fiscal year, estimate the total amount of revenue required for ad ministration by the commission of this subchapter during that fiscal year and assess that estimated total amount to hospitals, under the rates established by rule under s. 196.993 (2) and in proportion to each hospital's respective net income during the hospital's most recently concluded entire fiscal year. The commission may not assess under this subsection a hospital that has a net income of 3% or less over the net in come for the hospital's next most recently concluded entire fiscal year. Each hospital that is assessed shall pay the assessment by the December 1 following the assess ment. The commission shall credit all payments of assessments to the appropriation under s. 20.155 (3) (gm).

SB599,27,6 196.9998 Capital expenditure review program. (1) Applicability. Begin ning on July 1, 1997, no person may do any of the following without first obtaining the commission's approval:

SB599,27,14 (a) Except as provided in sub. (2), obligate for a capital expenditure, by or on behalf of a hospital, that exceeds $1,000,000. The cost of the studies, surveys, plans and other activities essential to the proposed capital expenditure shall be included in determining the value of the capital expenditure. Any donation of equipment or facilities that, if acquired directly, would be subject to review under this section is a capital expenditure. Any transfer of equipment or facilities for less than fair market value that, if transferred at fair market value, would be subject to review under this section is a capital expenditure.

SB599,27,19 (b) Implement services new to the hospital that exceed $500,000 in a 12-month period, including an organ transplant program, burn center, neonatal intensive care program, cardiac program or air transport services; implement other services or pro grams specified by the commission by rule; or add psychiatric or chemical dependen cy beds.

SB599,27,23 (c) Obligate for an expenditure by or on behalf of a hospital, independent practi tioner, limited liability company, partnership, unincorporated medical group or ser vice corporation, as defined in s. 180.1901 (2), that exceeds $500,000 for clinical medi cal equipment.

SB599,27,24 (d) Purchase or otherwise acquire a hospital.

SB599,27,25 (e) Construct or operate an ambulatory surgery center or a home health agency.

SB599,28,4 (2) Exemptions from capital expenditure review. (a) Subsection (1) does not apply if a person has, prior to the effective date of this subsection .... [revisor inserts date], entered into a legally enforceable contract, promise or agreement with another to do any of the activities specified in sub. (1) (a) to (e).

SB599,28,11 (b) A person may obligate for a capital expenditure by or on behalf of a hospital without obtaining the approval of the commission if the expenditure is for heating, air conditioning, ventilation, electrical systems, energy conservation, telecommu nications, computer systems or nonsurgical outpatient services, unless any such ex penditure is a constituent of another project reviewable under sub. (1) or unless any such expenditure would exceed 20% of a hospital's gross annual patient revenue for its last fiscal year.

SB599,28,12 (3) Innovative medical technology exemption. (a) In this subsection:

SB599,28,17 1. "Clinical trial" means clinical research conducted under approved protocols in compliance with federal requirements applicable to investigations involving hu man subjects, including the requirement for an informed consent advising the pa tient clearly of the risks associated with participating in the clinical development and evaluation project.

SB599,28,20 2. "Innovative medical technology" means equipment or procedures that are potentially useful for diagnostic or therapeutic purposes and that introduce new technology in the diagnosis and treatment of illness.

SB599,28,25 (b) The commission may grant an exemption from the requirements of approval under this section for the research, development and evaluation of innovative medi cal technology, the development of the clinical applications of this technology or the research, development and evaluation of a major enhancement to existing medical technology if all of the following occur:

SB599,29,3 1. The commission receives an application for an exemption from a person in tending to undertake a capital expenditure in excess of $500,000 or intending to un dertake a substantial change in a health service.

SB599,29,7 2. Prior to applying for an exemption, preliminary animal studies or prelimi nary clinical investigation establishes that the innovative medical technology or ma jor enhancement to existing medical technology has a reasonable probability of ad vancing clinical diagnosis or therapy.

SB599,29,10 3. In the development and evaluation of the clinical applications, the applicant undertakes scientifically sound studies to determine clinical efficacy, safety, cost-ef fectiveness and appropriate utilization levels in a clinical setting.

SB599,29,13 4. The clinical trials, evaluation or research are conducted according to scientif ically sound protocols subject to peer review and approval in accord with the require ments applicable to investigations and clinical evaluation involving human subjects.

SB599,29,15 5. The innovative medical technology is being installed to conduct necessary research, development and evaluation.

SB599,29,21 6. The applicant does not include any recovery of capital expenses incurred as part of an exemption under this subsection in its expense and revenue budget for pur poses of rate setting until the applicant receives the approval of the federal food and drug administration and of the commission under this section for general medical use. The applicant may recover operating expenses only after all of the following oc cur:

SB599,29,22 a. Approval by the federal food and drug administration for safety and efficacy.

SB599,29,23 b. A 3rd party agrees to pay for these expenses.

SB599,30,3 (c) The commission may not grant more than 2 exemptions for any particular type of innovative medical technology or for any particular major enhancement to existing medical technology.

SB599,30,9 (4) Public hearing requirement. (a) Any person intending to undertake a proj ect or activity subject to this section shall cause to be published a class 1 notice under ch. 985 in the official newspaper designated under s. 985.04 or 985.05 or, if none ex ists, in a newspaper likely to give notice in the area of the proposed project or activity. The notice shall describe the proposed project or activity and describe the time and place for the public hearing required under par. (b).

SB599,30,22 (b) No sooner than 30 days after the date of publication of the notice under par. (a), the person shall conduct a public hearing on the proposed project or activity. The hearing shall be on the expected impact of the proposed project or activity on health care costs, the expected improvement, if any, in the local health care delivery system, and any other issue related to the proposed project or activity. Management staff, if any, of the person seeking to undertake the project or activity and, if possible, at least 3 members of the governing board of a not-for-profit health care provider, if any, seeking to undertake the project or activity shall attend the public hearing to review public testimony. The person seeking to undertake the project or activity shall record accurate minutes of the meeting, shall include copies of the minutes and any written testimony presented at the hearing in an application concerning the project or activity that is submitted under sub. (7) and shall submit the application within 10 days after the date of the public hearing.

SB599,31,2 (5) Notification requirement. Any person intending to undertake a project subject to this section shall notify the commission in writing of this intent at least 30 days prior to submitting an application for review. Any application expires unless the commission declares it complete within one year after the date the applicant noti fies the commission of its intent to undertake the project.

SB599,31,7 (6) Application fee. Each application for review of a project or activity subject to this section shall be accompanied by a fee that is established in rules promulgated by the commission. The commission shall promulgate rules that establish applica tion fees that are sufficient to fund all of the commission's expenses under this sec tion.

SB599,31,14 (7) Review requirements. (a) The commission's review of an application be gins on the date that it receives a completed application, including the fee under sub. (6). On or before the 20th day of the month following receipt of a completed applica tion, the commission shall send a notice of receipt of a completed application to the applicant and shall publish a class 2 notice under ch. 985 containing this information in a daily newspaper with general circulation in the area where the proposed project would be located.

SB599,31,22 (b) The commission may group applications for the same or similar types of faci lities, services or applications that are proposed, for concurrent review. The commis sion shall base its review under this paragraph on a comparative analysis of these applications, using the criteria specified in sub. (8) and a ranking of its priorities. The applicant has the burden of proving, by a preponderance of the evidence, that each of the criteria specified in sub. (8) has been met or does not apply to the project. The commission shall, by rule, establish its review requirements under this para graph.

SB599,32,3 (8) Review criteria. The commission shall use the following criteria in review ing each application under this section, plus any additional criteria that it develops by rule. The commission shall consider cost containment as its first priority in apply ing these criteria, and shall consider the recommendations and comments of affected parties. The commission may not approve any project under this section unless the applicant demonstrates all of the following:

SB599,32,4 (a) The project is consistent with the state health services plan under sub. (16).

SB599,32,5 (b) A need for the project, as determined by current and projected utilization.

SB599,32,8 (c) The project would efficiently and economically use resources, including fi nancing for capital investment and operating expenses, when measured against al ternative uses of resources.

SB599,32,9 (d) Sufficient cash reserves and cash flow to pay operating and capital costs.

SB599,32,13 (e) Increases in operating and capital costs resulting from the project are rea sonable, including the direct charge to the consumer and the charges to be paid by medical assistance and by disability insurers. The commission shall determine the effect on these rates of the applicant's project for review under this paragraph.

SB599,32,14 (f) Financing is available at market rates.

SB599,32,15 (g) Health care personnel are available and would be effectively used.

SB599,32,16 (h) Proposed construction costs are consistent with industry averages.

SB599,32,18 (j) Any proposed addition of area and construction or renovation alternatives are cost-effective.

SB599,32,19 (k) The project is consistent with efficiency standards and criteria.

SB599,32,24 (L) The applicant is participating in a utilization review program that is appli cable to a statistical sampling of all hospital patients regardless of payment source, that requires public disclosure of all review data in a form useful to the commission but protects the identities of individual patients and health care professionals and that is conducted by persons who are free from any substantial conflict of interest.

SB599,33,2 (m) The applicant has prepared a plan acceptable to the commission for the pro vision of health care to indigents.

SB599,33,7 (9) Review process. (a) The commission shall hold a public meeting upon the request of an affected party to review projects seeking approval, at which all affected parties may present testimony. The commission may consider projects seeking ap proval that are within a related area at joint public meetings. The commission shall keep minutes or other record of testimony presented at the public meeting.

SB599,33,17 (b) The commission shall issue an initial finding to approve or reject the project within 75 days after the date that it publishes its notice under sub. (7) (a), unless all applicants consent to an extension of this period. The commission may not require substantial modification of any project as a condition of approval without the appli cant's consent. The commission may extend by 60 days the review cycle of all projects being reviewed concurrently under sub. (7) (b), if it finds that completing the reviews within 75 days after the date it publishes its notice under sub. (7) (a) is not practicable due to the volume of applications received. The commission shall submit its decision to the applicant. Unless the applicant makes a timely request for a hearing under par. (c), the commission's initial finding under this paragraph is its final action.

SB599,33,23 (c) 1. Any applicant whose project is rejected may request a public hearing to review the commission's initial finding under par. (b), if the request is submitted in writing within 10 days after the commission's decision, or may initiate a hearing un der s. 227.42. The commission shall commence the hearing under par. (b) within 30 days after receiving a timely request, unless all parties consent to an extension of this period.

SB599,34,3 2. Except as provided in s. 227.42, ss. 227.43 to 227.50 do not apply to hearings under this paragraph. The commission shall promulgate rules to establish all of the following:

SB599,34,4 a. Procedures for scheduling hearings under this paragraph.

SB599,34,7 b. Procedures for conducting hearings under this paragraph, including meth ods of presenting arguments, cross-examination of witnesses and submission of ex hibits.

SB599,34,9 c. Procedures following the completion of a hearing under this paragraph, in cluding the establishment of time limits for issuance of a decision.

SB599,34,11 d. Standards relating to ex parte communication in hearings under this para graph.

SB599,34,12 e. Procedures for reconsideration and rehearing.

SB599,34,13 3. The commission shall issue all decisions in writing.

SB599,34,17 4. Each applicant at any hearing under this paragraph has the burden of prov ing, by clear and convincing evidence, that the commission's initial finding was con trary to the weight of the evidence on the record when considered as a whole, arbi trary and capricious or contrary to law.

SB599,34,21 (10) Judicial review. Any applicant adversely affected by a decision of the com mission under sub. (9) (c) may petition for judicial review of the decision under s. 227.52. The scope of judicial review shall be as provided in s. 227.57 and the record before the reviewing court shall consist of all of the following:

SB599,34,23 (a) The application and all supporting material received prior to the commis sion's initial finding under sub. (9) (b).

SB599,34,24 (b) The record of the public meeting under sub. (9) (a).

SB599,35,2 (c) The commission's analysis of the project and its compliance with the criteria specified in sub. (8).

SB599,35,3 (d) The record of the hearing held under sub. (9) (c).

SB599,35,4 (e) The commission's decision and analysis issued under sub. (9) (b) or (c) 3.

SB599,35,7 (11) Validity and contents of an approval. (a) An approval is valid for one year from the date of issuance. The commission may grant a single extension of up to 6 months.

SB599,35,9 (b) The commission shall specify the maximum expenditure that may be obli gated for a project.

SB599,35,14 (c) Each approval shall include the proposed timetable for implementing and completing the project and, for the 3-year period following completion of the project, the project's depreciation and interest schedule, staff required for the project, the proposed per diem rate needed to pay capital costs and the proposed per diem rate needed to pay operating costs.

SB599,35,20 (12) Rate approval. Rate reimbursement to cover the cost of the project estab lished for medical assistance under s. 49.45 (3) (e) may not exceed the rates proposed in the approval under sub. (11) (c) by more than 5% during the 3-year period follow ing completion of the project. This subsection does not apply if the hospital demon strates to the satisfaction of the commission that the excess was due to conditions beyond its control.

SB599,36,2 (13) Capital budget reporting. Each hospital shall annually, by January 1, beginning January 1, 1997, report to the commission a proposed capital budget for the 5-year period that begins with July 1, 1997. This budget shall specify all antici pated capital expenditures subject to this section and anticipated application dates, if any. This requirement does not apply to the purchase or other acquisitions of a hos pital under sub. (1) (d). An application under sub. (5) from a hospital to approve a project is not complete until the commission receives this information.

SB599,36,3 (14) Rule making. The commission shall promulgate all of the following rules:

SB599,36,4 (a) Establishing review requirements under sub. (7) (b).

SB599,36,5 (b) Establishing procedures and standards under sub. (9) (c) 2.

SB599,36,7 (c) Establishing a method for defining an acute care service area under sub. (16) (b).

SB599,36,8 (d) Establishing appropriate fees for applications, as specified in sub. (6).

SB599,36,11 (15) Enforcement. (a) No person may recover through charges or rates any depreciation, interest or principal payments or any operating expenses associated with a project subject to this section that does not have the commission's approval.

SB599,36,14 (b) 1. If a project whose cost falls below the minimum threshold specified in sub. (1) (a), (b) or (c) incurs costs exceeding the threshold, the person who operates the project shall submit an application for the commission's approval under sub. (1).

SB599,36,17 2. If a project that has received the commission's approval incurs a cost overrun, the person who operates the project shall submit another application for the commis sion's approval under sub. (1).

SB599,36,18 (c) No person may subdivide a project to avoid the requirements of this section.

SB599,36,25 (d) The commission's approval of any project is revoked if the capital expendi tures specified in the approval have not been obligated, if financing in an amount suf ficient to complete the project has not been obtained or if substantial and continuing progress has not been undertaken within the period specified in the approval. In addition, the commission's approval of any project is revoked if the person who oper ates a project misses any other deadlines specified in the approval and fails to make a good faith effort to meet these deadlines.

SB599,37,4 (e) The commission may reject the application for approval of a project operated by any person who has repeatedly been subject to the penalties specified in this sub section or may impose restrictions as part of its approval to ensure compliance with this section.

SB599,37,10 (16) State health services plan. (a) The commission shall adopt a state health services plan using information provided by the office of health care information in the office of the commissioner of insurance, at least once every 3 years that includes a description of the hospital system in the state and identifies health care needs and surpluses with respect to existing health care services, facilities and equipment and other components the commission finds useful.

SB599,37,15 (b) The commission may not accept any application for a project under this sec tion for the addition of hospital beds that would exceed the number of beds described by the state health services plan for the acute care service area where the project would be located. The commission shall establish its method for defining an acute care service area by rule.

SB599, s. 14 Section 14. 632.75 (5) of the statutes is amended to read:

SB599,37,20 632.75 (5) Payments for hospital services. No insurer may reimburse a hospi tal for patient health care costs at a rate exceeding the rate established under ch. 54, 1985 stats., or s. 146.60, 1983 stats., for care provided prior to July 1, 1987 subch. II of ch. 196.