SB17: Bill Text

LRB-0302/2

TAY:mfd:km

1997 - 1998 LEGISLATURE

1997 Senate BILL 17

January 15, 1997 - Introduced by Senators Decker, Moen, Wineke and Risser, cosponsored by Representatives Bock, Springer, Notestein, Boyle, R. Potter and Wood. Referred to Committee on Health, Human Services, Aging, Corrections, Veterans and Military Affairs.

SB17,1,7 An Act to repeal 20.155 (3) (a); to amend 49.49 (2) (c) 1., 49.74, 50.36 (1), 146.37 (1g), chapter 196 (title), 196.01 (intro.) and 632.75 (5); and to create 20.155 (3), 49.45 (3) (e) 11., 153.05 (4n), subchapter I (title) of chapter 196 [precedes 196.01] and subchapter II of chapter 196 [precedes 196.991] of the statutes; relating to: requiring the public service commission to establish maximum hospital rates, providing an exemption from emergency rule procedures, granting rule-making authority, making an appropriation and providing a penalty.

Analysis by the Legislative Reference Bureau

Under current law, the public service commission (PSC) is generally responsible for regulating public utilities in this state. This bill extends the PSC's regulatory power to cover rate setting for hospitals. The bill requires the PSC to set maximum rates that a hospital may charge for services. Under the bill, a hospital may request rate changes according to a schedule created by the PSC. As part of the rate change review procedure, the hospital must publish a notice of review stating the process by which interested persons may become parties to the review. The hospital must also submit to the PSC its proposed financial requirements. The financial requirements include, among other things:

1. Necessary operating expenses.

2. Interest expenses on debt incurred for capital or operating costs.

3. Costs of medical education.

4. Costs of services, facilities and supplies that organizations related to the hospital by common ownership or control supply.

5. Unrecovered costs from private parties who fail to pay the full charge for services provided.

6. Fees assessed by the PSC or other regulatory agency.

7. Capital requirements.

The bill sets forth standards for the PSC's decision making including:

1. The need to reduce the rate of hospital cost increases while preserving the quality of health care.

2. Cost-related trend factors based on nationally recognized economic models.

3. Special circumstances of rural and teaching hospitals.

The PSC is authorized under this bill to disallow certain costs and revenues in determining its rate recommendation.

Under the bill, if the hospital does not accept the PSC's recommendations, the hospital must request a settlement conference between its representatives and the PSC staff. If the hospital is dissatisfied with the results of the settlement conference, the hospital may request an informal hearing before the PSC. The PSC may, by order, conduct a formal hearing instead of an informal hearing. If a formal hearing is held, the PSC must issue at the end of the hearing its order establishing maximum rates for the hospital's year under review. If an informal hearing is held, the PSC must issue its order within 50 days after the date on which the hospital requested the hearing.

This bill authorizes hospitals to increase rates selectively if the aggregate increase in its rates does not exceed the amount authorized by the PSC. The hospital must, prior to increasing rates, explain to the PSC its method in applying the increase and allow the PSC 5 working days to determine if the aggregate increase exceeds the authorized amount. If the PSC disapproves the hospital's method in applying the increase, and the hospital fails to modify its method as recommended by the PSC, the PSC may challenge the method in circuit court.

Except under certain circumstances, this bill prohibits the PSC from reducing rates prior to the date of the scheduled succeeding review or during the succeeding review. The bill also prohibits the PSC from directly interfering with the patient-physician decision-making relationship, directly controlling the volume or intensity of hospital utilization or directly restricting the freedom of a hospital to exercise management decisions in complying with rates established by the PSC.

Finally, under the bill, the PSC, with certain exceptions, is responsible for reviewing and approving all of the following proposed projects:

1. A capital expenditure in excess of $1,000,000 made by or on behalf of a hospital.

2. The implementation of new services to a hospital that exceed $500,000 in a 12-month period.

3. An expenditure in excess of $500,000 made by or on behalf of a hospital, independent practitioner, limited liability company, partnership, unincorporated medical group or service corporation for clinical medical equipment.

4. The purchase or acquisition of a hospital.

5. The construction or operation of an ambulatory surgery center or a home health agency.

The bill requires a person intending to undertake a project or activity subject to review to publish a notice describing the project or activity and to conduct a public hearing on the proposed project or activity. The bill also requires the PSC to publish a notice of receipt of an application for review. The PSC must also conduct a public meeting upon the request of an affected party to review projects seeking approval.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB17, s. 1 Section 1. 20.005 (3) (schedule) of the statutes: at the appropriate place, insert the following amounts for the purposes indicated: - See PDF for table

SB17, s. 2 Section 2. 20.155 (3) of the statutes is created to read:

SB17,3,6 20.155 (3) Hospital rate setting and capital expenditure review. (a) General program operations. The amounts in the schedule for hospital rate-setting activities under subch. II of ch. 196.

SB17,4,2 (gm) Assessments. The amounts in the schedule for hospital rate-setting activities of the commission under ch. 196. All moneys received under s. 196.9996 (2) and 1997 Wisconsin Act .... (this act), section 15 (1 ) (d), shall be credited to this appropriation.

SB17,4,5 (gr) Application fees. The amounts in the schedule for the capital expenditure review program under ch. 196. All moneys received under s. 196.9998 (6) shall be credited to this appropriation.

SB17, s. 3 Section 3. 20.155 (3) (a) of the statutes, as created by 1997 Wisconsin Act .... (this act), is repealed.

SB17, s. 4 Section 4. 49.45 (3) (e) 11. of the statutes is created to read:

SB17,4,11 49.45 (3) (e) 11. Notwithstanding subds. 1 to 10, the department may authorize the public service commission to determine reimbursement rates under subch. II of ch. 196.

SB17, s. 5 Section 5. 49.49 (2) (c) 1. of the statutes is amended to read:

SB17,4,17 49.49 (2) (c) 1. A discount or other reduction in price obtained by a provider of services or other entity under chs. 46 to 51 and 58 and subch. II of ch. 196 if the reduction in price is properly disclosed and appropriately reflected in the costs claimed or charges made by the provider or entity under a medical assistance program.

SB17, s. 6 Section 6. 49.74 of the statutes is amended to read:

SB17,4,21 49.74 (title) Institutions subject to chapter chapters 150 and 196. Any institution created under the authority of s. 49.70, 49.71, 49.72 or 49.73 is subject to ch. 150 and subch. II of ch. 196.

SB17, s. 7 Section 7. 50.36 (1) of the statutes is amended to read:

SB17,5,9 50.36 (1) The department shall promulgate, adopt, amend and enforce such rules and standards for hospitals for the construction, maintenance and operation of the hospitals deemed necessary to provide safe and adequate care and treatment of the patients in the hospitals and to protect the health and safety of the patients and employes; and nothing contained herein shall pertain to a person licensed to practice medicine and surgery or dentistry. The building codes and construction standards of the department of commerce shall apply to all hospitals and the department may adopt additional construction codes and standards for hospitals, provided they are not lower than the requirements of the department of commerce. Except for the construction codes and standards of the department of commerce and except as provided in s. 50.39 (3) and subch. II of ch. 196, the department shall be the sole agency to adopt and enforce rules and standards pertaining to hospitals.

SB17, s. 8 Section 8. 146.37 (1g) of the statutes is amended to read:

SB17,6,2 146.37 (1g) Except as provided in s. 153.85, no person acting in good faith who participates in the review or evaluation of the services of health care providers or facilities or the charges for such services conducted in connection with any program organized and operated to help improve the quality of health care, to avoid improper utilization of the services of health care providers or facilities or to determine the reasonable charges for such services, or who participates in the obtaining of health care information under ch. 153, or who participates in hospital rate-setting activities under subch. II of ch. 196, is liable for any civil damages as a result of any act or omission by such person in the course of such review or evaluation. Acts and omissions to which this subsection applies include, but are not limited to, acts or omissions by peer review committees or hospital governing bodies in censuring, reprimanding, limiting or revoking hospital staff privileges or notifying the medical examining board under s. 50.36 or taking any other disciplinary action against a health care provider or facility and acts or omissions by a medical director, as defined in s. 146.50 (1) (j), in reviewing the performance of emergency medical technicians or ambulance service providers.

SB17, s. 9 Section 9. 153.05 (4n) of the statutes is created to read:

SB17,6,7 153.05 (4n) The office shall provide the public service commission with information necessary for performance of duties of the public service commission under s. 196.9998 (16) (a) and as requested of the office by the public service commission.

SB17, s. 10 Section 10. Chapter 196 (title) of the statutes is amended to read:

SB17,6,9 CHAPTER 196

SB17,6,11 REGULATION OF PUBLIC UTILITIES service commission

SB17, s. 11 Section 11. Subchapter I (title) of chapter 196 [precedes 196.01] of the statutes is created to read:

SB17,6,14 chapter 196

SB17,6,15 subchapter I

SB17,6,16 regulation of public utilities

SB17, s. 12 Section 12. 196.01 (intro.) of the statutes is amended to read:

SB17,6,19 196.01 Definitions. (intro.) As used in this chapter subchapter and ch. 197, unless the context requires otherwise:

SB17, s. 13 Section 13. Subchapter II of chapter 196 [precedes 196.991] of the statutes is created to read:

SB17,6,22 Chapter 196

SB17,6,24 Subchapter II Hospital rate setting

SB17,6,25 196.991 Definitions. In this subchapter: