Certificate of Need New Rule Invalidated by Supreme Court

The Washington Supreme Court unanimously agreed with the Washington State Hospital Association that the new expanded Certificate of Need rule defining the “sale, purchase or lease” of a hospital exceeded the Department of Health’s authority.  WSHA successfully argued that the new definition, promulgated by the Department of Health’s Certificate of Need Program, which expanded its jurisdiction to include “any transaction in which the control, either directly or indirectly, of part or all of any existing hospital changes to a different person, including, but not limited to, by contract, affiliation, corporate membership restructuring, or any other transaction,” was overly expansive.

The Supreme Court agreed that pursuant to the wording of the new rule, Certificate of Need approval would be required for any change in control of a hospital, including those changes that commonly occur, for example a change in the composition of the board of directors of a hospital.  The Supreme Court held that the new rule interprets “sale, purchase, or lease” in RCW 70.38.105(4)(b) too broadly and “departs too far from the plain meaning of those terms.”

For more information regarding the Certificate of Need rules please contact Elana Zana.

Washington Certificate of Need – Tertiary Services Review

The Washington State Department of Health issued today an announcement that it is conducting a review of the tertiary services that it requires obtain certificates of need under the current regulations (WAC 246-310-020(1)(d)(i)).  It is seeking comments on whether there should be additions or deletions to the current tertiary services list, which includes:

  1. Specialty burn services;
  2. Intermediate care nursery and/or obstetric services level II;
  3. Neonatal intensive care nursery and/or obstetric services level III;
  4. Transplantation of specific solid organs;
  5. Open heart surgery and/or elective therapeutic cardiac catheterization, including percutaneous coronary interventions generally and elective percutaneous coronary angioplasty (PTCA), specifically;
  6. Inpatient physical rehabilitation services level I; and
  7. Specialized inpatient pediatric services

Those providers seeking to provide the above services must first obtain a certificate of need from the Washington Department of Health before commencing the provision of these services.

The Department of Health is soliciting participation in three phases, the first of which spans from January 1 – February 28, 2015, is an invitation for individuals to propose changes to the current list of tertiary services in order to enable the Department of Health to create a report consolidating the suggestions.

To learn more about the certificate of need tertiary health services review click here.  For assistance in drafting comments to the Department of Health please contact Elana Zana.

WA Certificate of Need Waiver for Psych Beds

The Washington Certificate of Need (“CN”) Program recently announced a temporary change in the CN requirements for acute care hospitals to change the use of existing licensed beds to psychiatric care beds.  Acute care hospitals choosing to convert some of their acute care beds to psychiatric beds will not have to undergo the CN review process.  This exemption however does not extend to the addition of new beds added to the hospital’s licensed bed count, only the conversion of existing beds.  Hospitals will also be allowed to return the use of the exempt psychiatric beds to general acute care services (i.e. med/surg) without full CN review.

In order to take advantage of this exemption, acute care hospitals will still have to submit a “Hospital Change of Use Exemption Hospitals Licensed Under RCW 70.41 Proposing Psychiatric Beds” application to the CN Program with an application fee of $1,925.  If the project is approved it must commence within two years of the exemption issue date (unless a 6 month extension is otherwise granted).  Hospitals applying for this exemption will still need to meet the physical plan standards and staffing ratios required for providing psychiatric care.

For more information about this exemption or Certificate of Need generally please contact Elana Zana.

DOH Issues New Hospital CN Rule & Transparency Requirements

Prior to the end of the year, and in compliance with Governor Inslee’s directive, the Washington Department of Health (DOH) issued new hospital Certificate of Need (CN) rules and transparency requirements for existing hospitals.

Effective January 23rd, hospitals wishing to affiliate with one another (or other types of corporate restructuring) will now have to undergo full CN review.  The new rules modify WAC 246-310-010 and adopt a broad definition of “sale, purchase, or lease” to include affiliations, corporate membership restructuring, “or any other transaction.”  DOH, in response to the over 1,000 public comments received on these new rules (including the transparency rules below) explained:

The purpose of this clarification is to focus on the outcome of these transactions to bring them within CoN review.  CoN evaluation includes review of the reduction or loss of services and the community’s access to alternatives if there is a reduction or loss.

In addition, DOH issued a modification to the hospital licensing requirements.  This modification now requires hospitals to submit to DOH and publish on their own websites (“readily accessible to the public”) the following policies related to access to care:  admission, nondiscrimination, end of life care, and reproductive health care.  Hospitals must comply with this requirement no later than March 24, 2014.  Hospitals that make changes to these policies must also notify DOH of those changes within thirty days.

Since the amendment to the hospital licensing rules require online access to hospitals’ nondiscrimination policies, now is an excellent time for hospitals to review nondiscrimination policies to be sure they are consistent with all applicable laws.  Hospitals are “places of accommodation” under local, state, and federal nondiscrimination laws, which vary by jurisdiction.  For example, federal law prohibits genetic discrimination, which is not covered by Washington state law; state law prohibits discrimination on the basis of marital status, sexual orientation, and gender expression or identity, which are not covered under federal law; and the City of Seattle prohibits discrimination on the basis of political ideology, which is not covered under state or federal law.  Hospital nondiscrimination policies should be tailored to cover all the jurisdictions in which you provide services.  For assistance with drafting a nondiscrimination policy please contact Karen Sutherland.

For more information about the access to care policies or certificate of need generally please contact Elana Zana.

 

 

Proposed CN Rules on Hospital Change of Control & Transparency

The Washington State Department of Health recently released its proposed rules and letter to Governor Inslee with regard to his directive to open rule making on the Certificate of Need (“CN”) hospital change of control regulations and transparency.  The catalyst for these modifications is the recent spate of affiliations among Washington state hospitals.  The Department of Health was instructed to consider “how the structure of affiliations, corporate restructuring, mergers, and other arrangements among health care facilities result in outcomes similar to the traditional methods of sales, purchasing and leasing of hospitals.”  The current rules require a CN for any “sale, purchase, or lease” of a hospital, but does not provide a definition to explain what is encompassed by a “sale, purchase, or lease”.   The Department of Health has issued its proposed rules creating a definition of “sale, purchase, or lease” in WAC 246-310-010 as follows:

“Sale, purchase, or lease” means any transaction in which the control, either directly or indirectly, of part or all of any existing hospital changes to a different person including, but not limited to, by contract, affiliation, corporate membership restructuring, or any  other transaction.”  WAC 246-310-010(54) (proposed)

The Governor’s directive also focused on transparency for consumers:

The Department’s rulemaking process shall also consider ways to improve transparency for consumer information and ease of use, specifically the Department shall ensure hospitals supply non-discrimination, end of life care and reproductive health care policies; and the Department shall ensure that consumers have access to the policies on its webpage. The Department’s rulemaking process shall also consider the factors in RCW 43.06.155, the principles and policies in the implementation of health reform, including the guarantee of choice for patients.

As a result of comments received from stakeholders, the Department of Health determined that the submission and posting of hospital access policies should be located in the hospital licensing rules, rather than in the CN rules.  The proposed rules suggest adding new provisions to the hospital licensing regulations, specifically WAC 246-320-141 governing patient rights and organizational ethics:

(5) No later than sixty days following the effective date of this section, every hospital must submit to the department its policies related to access to care:
(a) Admission;
(b) Nondiscrimination;
(c) End of life care; and
(d) Reproductive health care.
(6) The department shall post a copy of the policies received under subsection (5) of this section on its web site.
(7) If a hospital makes changes or additions to any of the policies listed under subsection (5) of this section, it must submit a copy of the changed or added policy to the department within thirty days after the hospital approves the changes or additions.
(8) Hospitals must post a copy of the policies provided under subsection (5) of this section to its own web site where it is readily accessible to the public, without requiring a login or other restriction.
The Department of Health is soliciting feedback and hosting a hearing on November 26, 2013 at 1 PM to review the proposed rules.  It expects to file permanent rules on December 10, 2013.
If you have any questions regarding these proposed rules or Certificate of Need in general please contact Elana Zana.

Washington Certificate of Need Program Commences Rule Making: Consumer Transparency in Affiliations & Dialysis

The Washington State Certificate of Need Program has announced its commencement of the rule-making process related to hospitals and dialysis.  This action is in response to the directive issued last month by Governor Inslee instructing the CN Program to expedite rule making related to the corporate restructuring, affiliations, acquisitions and mergers occurring in hospitals across the state.  His directive requires that:

The Certificate of Need process should be applied based on the effect that these transactions have on the accessibility of health services, cost containment, and quality, rather than on the terminology used in describing the transactions or the representations made in the preliminary documents.

The Department’s rulemaking process shall also consider ways to improve transparency for consumer information and ease of use, specifically the Department shall ensure hospitals supply non-discrimination, end of life care and reproductive health care policies; and the Department shall ensure that consumers have access to the policies on its webpage. The Department’s rulemaking process shall also consider the factors in RCW 43.06.155, the principles and policies in the implementation of health reform, including the guarantee of choice for patients.

In response to this directive, the CN Program has released concept rules to implement the directive.  These concept rules contain two significant modifications:

1.  A new defined term in WAC 246-310-010: “Sale, purchase, or lease” means any transaction in which the control, directly or indirectly, of part or all of any existing hospital changes to a different person, including but not limited to by contract, affiliation, corporate membership restructuring, or any other transaction.

This change is significant, as the “sale, purchase, or lease” of all or part of an existing hospital is subject to the CN rules and review.  The new definition expands the applicability of the CN rules and review.  Whereas previously affiliations were typically reviewed under Determinations of Reviewability, the expanded definition would subject such transactions to CN approval.

2.  A new section which collects hospital policies, maintains the policies and list of limitations on certain services online, and requires all hospitals to submit these policies and lists within 60 days of the effective date of the new rule.  The proposed new section is reproduced below:

New Section WAC 246-310-XXX Collection of Hospital Policies

1) Every hospital must submit to the department its following policies related to access to care:

a) Admission;

b) Non-discrimination;

c) End of life care; and

d) Reproductive health care.

2) If the effect of one or more of a hospital’s policies required under subsection (1) of this section limits or excludes access to services authorized by law, the hospital must submit to the department a list of services that are limited or not available at the facility.

3) The department shall post a copy of the policies received under subsection (1) of this section and lists received under subsection (2) of this section on its website.

4) If the hospital makes changes to any of the policies listed under subsection (1) of this section, it must submit a copy of the changed policy to the department within thirty days after the hospital approves of the changes.

5) No later than sixty days following the effective date of this rule each hospital must submit to the department the documents identified under subsections (1) and (2) of this section.

These proposed rules will have an impact on future transactions and existing hospitals.  The proposed revisions will be discussed at an August 5th workshop located at the Department of Health.

If you would like further information about these proposed rules or certificate of need in general please contact Elana Zana.

PCI Certificate of Need Regulations Here to Stay

On July 9th the federal court in the Eastern District of Washington granted the Department of Health’s motion for summary judgment, thus ending the drawn out battle between Yakima Valley Memorial Hospital (“YVMH”) and the State over the denial of a certificate of need (“CN”) for elective PCI at YVMH.  The motion, which was remanded back to the district court by the Ninth Circuit, focuses on the question of whether the CN regulations unreasonably discriminate against interstate commerce in violation of the dormant Commerce Clause.  This constitutional challenge questions the burdens the PCI regulations place on interstate commerce as compared to the local benefits of the regulations.  Following an analysis of the PCI regulations and their application to YVMH, the court determined that the PCI regulations do not impose a substantial burden on interstate commerce as compared to the local benefits.  The PCI CN regulations therefore live to fight another day…