Bill Text: NY S08395 | 2017-2018 | General Assembly | Introduced

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Bill Title: Relates to streamlining and adding criteria to the certificate of need process by the public health and health planning council.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2018-05-04 - REFERRED TO HEALTH [S08395 Detail]

Download: New_York-2017-S08395-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________
                                          8395
                    IN SENATE
                                       May 4, 2018
                                       ___________
        Introduced by Sen. HANNON -- (at request of the Department of Health) --
          read  twice  and  ordered printed, and when printed to be committed to
          the Committee on Health
        AN ACT to amend the public health law, in relation to  streamlining  and
          adding criteria to the certificate of need process
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1. Subdivision 3 of section 2801-a of the public  health  law,
     2  as amended by section 57 of part A of chapter 58 of the laws of 2010, is
     3  amended to read as follows:
     4    3.  The  public health and health planning council shall not approve a
     5  certificate of incorporation, articles of  organization  or  application
     6  for  establishment  unless it is satisfied, insofar as applicable, as to
     7  (a) the public need for the existence of the institution at the time and
     8  place and under the circumstances proposed, provided, however,  that  in
     9  the  case of an institution proposed to be established or operated by an
    10  organization defined in subdivision one of section one hundred  seventy-
    11  two-a  of  the  executive law, the needs of the members of the religious
    12  denomination concerned, for care or treatment in accordance  with  their
    13  religious or ethical convictions, shall be deemed to be public need; (b)
    14  the  character,  competence,  and  standing  in  the community[,] of the
    15  proposed incorporators, directors, sponsors, members, principal members,
    16  stockholders,  [members]  principal  stockholders,  or  operators;  with
    17  respect to any proposed incorporator, director, sponsor, member, princi-
    18  pal member, stockholder, [member] principal stockholder, or operator who
    19  is  already  or within the past [ten] seven years has been an incorpora-
    20  tor, director, sponsor, member, principal member, principal stockholder,
    21  [principal member,] or operator of  any  hospital,  private  proprietary
    22  home  for  adults, residence for adults, or non-profit home for the aged
    23  or blind which has been issued an operating  certificate  by  the  state
    24  department of social services, or a halfway house, hostel or other resi-
    25  dential  facility  or  institution for the care, custody or treatment of
    26  the mentally disabled which is subject to approval by the department  of
    27  mental  hygiene,  no  approval shall be granted unless the public health
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD14492-01-8
        S. 8395                             2
     1  and health planning council, having afforded an adequate opportunity  to
     2  members  of  health systems agencies, if any, having geographical juris-
     3  diction of the area where the institution is to be located to be  heard,
     4  shall  affirmatively find by substantial evidence as to each such incor-
     5  porator, director, sponsor, member, principal member,  principal  stock-
     6  holder,  or  operator that a substantially consistent high level of care
     7  is being or was being rendered in each such hospital,  home,  residence,
     8  halfway house, hostel, or other residential facility or institution with
     9  which  such  person is or was affiliated; for the purposes of this para-
    10  graph, the public health and health planning council shall  adopt  rules
    11  and  regulations, subject to the approval of the commissioner, to estab-
    12  lish the criteria to  be  used  to  determine  whether  a  substantially
    13  consistent high level of care has been rendered, provided, however, that
    14  there  shall not be a finding that a substantially consistent high level
    15  of care has been rendered where there have been violations of the  state
    16  hospital  code,  or  other  applicable  rules  and regulations, that (i)
    17  threatened to directly affect the  health,  safety  or  welfare  of  any
    18  patient  or  resident,  and  (ii)  were  recurrent  or were not promptly
    19  corrected, unless the proposed incorporator, director, sponsor,  member,
    20  principal member, stockholder, principal stockholder, or operator demon-
    21  strates,  and  the public health and health planning council finds, that
    22  the violations cannot be attributed to the action or  inaction  of  such
    23  proposed  incorporator,  director,  sponsor,  member,  principal member,
    24  stockholder, principal stockholder,  or  operator  due  to  the  timing,
    25  extent or manner of such affiliation; (c) the financial resources of the
    26  proposed  institution  and  its sources of future revenues; and (d) such
    27  other matters as it shall deem pertinent.
    28    § 2. Section 2801-a of the public health law is amended  by  adding  a
    29  new subdivision 3-b to read as follows:
    30    3-b.  Notwithstanding  any  other  provisions  of  this chapter to the
    31  contrary, the public health and health planning council may approve  the
    32  establishment  of diagnostic or treatment centers to be issued operating
    33  certificates for the purpose of providing primary care,  as  defined  by
    34  the  commissioner  in regulations, without regard to the requirements of
    35  public need and financial resources as set forth in subdivision three of
    36  this section.
    37    § 3. Section 2801-a of the public health law is amended  by  adding  a
    38  new subdivision 3-c to read as follows:
    39    3-c.  Notwithstanding  any  other  provisions  of  this chapter to the
    40  contrary, the commissioner is  authorized  to  establish  in  regulation
    41  minimum  thresholds for the level of experience that must be met as part
    42  of the public health and health planning council's consideration of  the
    43  character,  competence  and  standing  in  the community of the proposed
    44  incorporators, directors, sponsors, stockholders, members  or  operators
    45  of  a  residential  health  care  facility  pursuant to paragraph (b) of
    46  subdivision three of this section. Such thresholds may include  but  are
    47  not  limited to: (a) defining the type of prior experience required; (b)
    48  establishing a minimum period of time during which such prior experience
    49  was obtained; and (c) establishing a minimum percentage of the ownership
    50  interest and/or voting rights of the applicant that must be held  by  an
    51  individual who meets such minimum experience requirements.
    52    §  4. Paragraphs (b) and (c) of subdivision 4 of section 2801-a of the
    53  public health law, as amended by section 57 of part A of chapter  58  of
    54  the laws of 2010, are amended to read as follows:
    55    (b) [(i)] Any transfer, assignment or other disposition of ten percent
    56  or more of [an] direct or indirect interest or voting rights in [a part-
        S. 8395                             3

     1  nership  or  limited  liability  company, which is the] an operator of a
     2  hospital to a new partner [or], member, or stockholder, or any transfer,
     3  assignment or other disposition of a  direct  or  indirect  interest  or
     4  voting  rights  of  such  an  operator which results in the ownership or
     5  control of more than ten percent of the interest  or  voting  rights  of
     6  such  operator  by  any  partner,  member, or stockholder not previously
     7  approved by the public health and health planning council for that oper-
     8  ator shall be approved by the public health and health planning council,
     9  in accordance with the provisions of subdivisions two and three of  this
    10  section,  except  that:  (A)  any  such  change  shall be subject to the
    11  approval by the public health and health planning council in  accordance
    12  with  paragraph  (b)  of  subdivision  three  of  this section only with
    13  respect to the new partner [or], member, or stockholder, and any remain-
    14  ing partners [or], members, or stockholders who have not been previously
    15  approved for that facility in accordance with such  paragraph,  and  (B)
    16  such  change  shall not be subject to paragraph (a) of subdivision three
    17  of this section. In the absence of such approval, the operating  certif-
    18  icate of such hospital shall be subject to revocation or suspension.
    19    [(ii)]  (c)(i)  With  respect to a transfer, assignment or disposition
    20  involving less than ten percent of [an] a direct or indirect interest or
    21  voting rights in [such partnership  or  limited  liability  company]  an
    22  operator of a hospital to a new stockholder, partner or member, no prior
    23  approval  of  the  public  health  and  health planning council shall be
    24  required. However, no such transaction  shall  be  effective  unless  at
    25  least  ninety  days  prior  to  the intended effective date thereof, the
    26  [partnership or limited liability company] operator fully completes  and
    27  files  with  the  public  health and health planning council notice on a
    28  form, to be developed by the public health and health planning  council,
    29  which shall disclose such information as may reasonably be necessary for
    30  the  public  health  and health planning council to determine whether it
    31  should bar the transaction for any of the reasons set forth in item (A),
    32  (B), (C) or (D) below. Within ninety days from the date  of  receipt  of
    33  such  notice,  the public health and health planning council may bar any
    34  transaction under this subparagraph: (A) if the equity position  of  the
    35  [partnership  or  limited  liability  company]  operator,  determined in
    36  accordance with  generally  accepted  accounting  principles,  would  be
    37  reduced  as  a result of the transfer, assignment or disposition; (B) if
    38  the transaction would result in  the  ownership  of  a  [partnership  or
    39  membership]  direct or indirect interest or voting rights by any persons
    40  who have been convicted of a felony described  in  subdivision  five  of
    41  section  twenty-eight  hundred  six  of  this  article; (C) if there are
    42  reasonable grounds to believe that the  proposed  transaction  does  not
    43  satisfy  the  character and competence criteria set forth in subdivision
    44  three of this section; or (D) upon the recommendation of the department,
    45  if the transaction, together with all transactions under  this  subpara-
    46  graph for the [partnership] operator, or successor, during any five year
    47  period  would,  in the aggregate, involve twenty-five percent or more of
    48  the interest in the [partnership] operator. The public health and health
    49  planning council shall state specific reasons  for  barring  any  trans-
    50  action  under  this  subparagraph  and shall so notify each party to the
    51  proposed transaction.
    52    [(iii) With respect to a transfer, assignment  or  disposition  of  an
    53  interest  or  voting  rights  in  such  partnership or limited liability
    54  company to any remaining partner or member, which  transaction  involves
    55  the withdrawal of the transferor from the partnership or limited liabil-
    56  ity  company, no prior approval of the public health and health planning
        S. 8395                             4

     1  council shall be required. However, no such transaction shall be  effec-
     2  tive  unless  at  least ninety days prior to the intended effective date
     3  thereof, the partnership or limited liability  company  fully  completes
     4  and files with the public health and health planning council notice on a
     5  form,  to be developed by the public health and health planning council,
     6  which shall disclose such information as may reasonably be necessary for
     7  the public health and health planning council to  determine  whether  it
     8  should bar the transaction for the reason set forth below. Within ninety
     9  days  from  the  date  of  receipt of such notice, the public health and
    10  health planning council may bar any transaction under this  subparagraph
    11  if  the equity position of the partnership or limited liability company,
    12  determined in accordance with generally accepted accounting  principles,
    13  would be reduced as a result of the transfer, assignment or disposition.
    14  The  public  health  and  health  planning  council shall state specific
    15  reasons for barring any transaction under this subparagraph and shall so
    16  notify each party to the proposed transaction.
    17    (c) Any transfer, assignment or other disposition of  ten  percent  or
    18  more  of the stock or voting rights thereunder of a corporation which is
    19  the operator of a hospital or which is a member of a  limited  liability
    20  company which is the operator of a hospital to a new stockholder, or any
    21  transfer,  assignment or other disposition of the stock or voting rights
    22  thereunder of such a corporation  which  results  in  the  ownership  or
    23  control  of  more  than ten percent of the stock or voting rights there-
    24  under of such corporation by any person not previously approved  by  the
    25  public  health and health planning council, or its predecessor, for that
    26  corporation shall be subject to approval by the public health and health
    27  planning council, in accordance with the provisions of subdivisions  two
    28  and  three  of  this section and rules and regulations pursuant thereto;
    29  except that: any such transaction shall be subject to  the  approval  by
    30  the  public  health and health planning council in accordance with para-
    31  graph (b) of subdivision three of this section only with  respect  to  a
    32  new stockholder or a new principal stockholder; and shall not be subject
    33  to paragraph (a) of subdivision three of this section. In the absence of
    34  such  approval,  the  operating  certificate  of  such hospital shall be
    35  subject to revocation or suspension.]
    36    (ii) No prior approval of the public health and health planning  coun-
    37  cil shall be required with respect to a transfer, assignment or disposi-
    38  tion of ten percent or more of [the stock] a direct or indirect interest
    39  or voting rights [thereunder of a corporation which is the] in an opera-
    40  tor  of  a hospital [or which is a member of a limited liability company
    41  which is the owner of a hospital] to any person previously  approved  by
    42  the  public  health and health planning council, or its predecessor, for
    43  that [corporation] operator.  However,  no  such  transaction  shall  be
    44  effective  unless  at  least ninety days prior to the intended effective
    45  date thereof, the [stockholder] operator fully completes and files  with
    46  the  public  health  and  health  planning council notice on forms to be
    47  developed by the public health and health planning council, which  shall
    48  disclose  such information as may reasonably be necessary for the public
    49  health and health planning council to determine whether  it  should  bar
    50  the  transaction.  Such  transaction  will  be  final as of the intended
    51  effective date unless, prior thereto, the public health and health plan-
    52  ning council shall state specific reasons for barring such  transactions
    53  under  this paragraph and shall notify each party to the proposed trans-
    54  action. Nothing in this paragraph shall be  construed  as  permitting  a
    55  person  not previously approved by the public health and health planning
    56  council for that [corporation] operator  to  become  the  owner  of  ten
        S. 8395                             5
     1  percent  or  more  of  the [stock of a corporation which is] interest or
     2  voting rights, directly or indirectly, in the operator of a hospital [or
     3  which is a member of a limited liability company which is the owner of a
     4  hospital]  without first obtaining the approval of the public health and
     5  health planning council.
     6    (iii) In the absence of approval by  the  public  health  or  planning
     7  council  or  the  provision  of notice to such council as required under
     8  this paragraph, the operating certificate  of  such  hospital  shall  be
     9  subject to revocation or suspension.
    10    §  5.  Subdivisions  2 and 3 of section 2802 of the public health law,
    11  subdivision 2 as amended by section 6 of part R of  chapter  59  of  the
    12  laws  of  2016,  subdivision  3 as amended by chapter 609 of the laws of
    13  1982 and paragraph (e) of subdivision 3 as amended by chapter 731 of the
    14  laws of 1993, are amended to read as follows:
    15    2. The commissioner shall not act upon an application for construction
    16  of a hospital until the public health and health  planning  council  and
    17  the  health  systems  agency  have had a reasonable time to submit their
    18  recommendations, and unless (a) the applicant has obtained all approvals
    19  and consents required by law  for  its  incorporation  or  establishment
    20  (including the approval of the public health and health planning council
    21  pursuant  to the provisions of this article) provided, however, that the
    22  commissioner may act upon an application for construction by  an  appli-
    23  cant possessing a valid operating certificate when the application qual-
    24  ifies  for  review without the recommendation of the council pursuant to
    25  regulations adopted by the council and approved by the commissioner,  or
    26  as  otherwise  authorized  by  this section; and (b) the commissioner is
    27  satisfied as to the public need for the construction, at  the  time  and
    28  place  and  under  the circumstances proposed, provided however that, in
    29  the case of an application by a hospital established or operated  by  an
    30  organization  defined in subdivision one of section four hundred eighty-
    31  two-b of the social services law, the needs of the members of the  reli-
    32  gious  denomination  concerned, for care or treatment in accordance with
    33  their religious or ethical convictions, shall be  deemed  to  be  public
    34  need;  and further provided that: (i) an application by a general hospi-
    35  tal or diagnostic and treatment center, established under this  article,
    36  to  construct a facility to provide primary care services, as defined in
    37  regulation, may be approved without regard for public need; or  (ii)  an
    38  application  by a general hospital or a diagnostic and treatment center,
    39  established under this article, to undertake construction that does  not
    40  involve  a  change  in  capacity,  the types of services provided, major
    41  medical equipment, facility replacement, or the geographic  location  of
    42  services, may be approved without regard for public need.
    43    3.  Subject  to  the provisions of paragraph (b) of subdivision two of
    44  this section, the commissioner in approving the construction of a hospi-
    45  tal shall take into consideration and be empowered to  request  informa-
    46  tion  and  advice  as  to (a) the availability of facilities or services
    47  such as preadmission, ambulatory or home care services which  may  serve
    48  as alternatives or substitutes for the whole or any part of the proposed
    49  hospital construction;
    50    (b)  the need for special equipment in view of existing utilization of
    51  comparable equipment at the time and place and under  the  circumstances
    52  proposed;
    53    (c)  the  possible  economies and improvements in service to be antic-
    54  ipated from the operation of joint central services including,  but  not
    55  limited  to  laboratory,  research,  radiology,  pharmacy,  laundry  and
    56  purchasing;
        S. 8395                             6
     1    (d) the adequacy of financial resources and sources of future revenue,
     2  provided that the commissioner may, but is not required to, consider the
     3  adequacy of  financial  resources  and  sources  of  future  revenue  in
     4  relation  to  completed applications under subparagraphs (i) and (ii) of
     5  paragraph (b) of subdivision two of this section; and
     6    (e)  whether  the facility is currently in substantial compliance with
     7  all applicable codes, rules and regulations, provided, however, that the
     8  commissioner shall not disapprove an application  solely  on  the  basis
     9  that  the  facility  is  not currently in substantial compliance, if the
    10  application is specifically:
    11    (i) to correct life safety code or patient care deficiencies;
    12    (ii) to correct deficiencies which are necessary to protect the  life,
    13  health, safety and welfare of facility patients, residents or staff;
    14    (iii)  for replacement of equipment that no longer meets the generally
    15  accepted operational standards existing for such equipment at  the  time
    16  it was acquired; and
    17    (iv) for decertification of beds and services.
    18    §  6.  Subdivision  4  of  section  3605  of the public health law, as
    19  amended by section 62 of part A of chapter 58 of the laws  of  2010,  is
    20  amended to read as follows:
    21    4.  The public health and health planning council shall not approve an
    22  application for licensure unless it is satisfied as  to  the  character,
    23  competence  and  standing in the community of the applicant's incorpora-
    24  tors, directors, sponsors, stockholders or operators.  The  commissioner
    25  is  authorized  to  establish  in  regulation minimum thresholds for the
    26  level of experience that must be met as part of the  public  health  and
    27  health  planning  council's  consideration  of character, competence and
    28  standing for purposes  of  this  subdivision,  and  subdivision  two  of
    29  section  thirty-six  hundred six, and subdivision two of section thirty-
    30  six hundred eleven of this article.  Such thresholds may include but are
    31  not limited to: (a) defining the type of prior experience required;  (b)
    32  establishing a minimum period of time during which such prior experience
    33  was obtained; and (c) establishing a minimum percentage of the ownership
    34  interest  and/or  voting rights of the applicant that must be held by an
    35  individual who meets such minimum experience requirements.
    36    § 7. Subdivisions 1 and 2 of section 3611-a of the public health  law,
    37  as  amended  by  section 67 of part A of chapter 58 of the laws of 2010,
    38  are amended to read as follows:
    39    1. Any change in the person who, or any transfer, assignment, or other
    40  disposition of an interest or voting rights of ten percent or  more,  or
    41  any  transfer,  assignment  or  other  disposition  which results in the
    42  ownership or control of an interest or voting rights of ten  percent  or
    43  more,  in  a  limited liability company [or], a partnership, or a corpo-
    44  ration which is the operator of a licensed home care services agency  or
    45  a  certified  home  health  agency, or any transfer, assignment or other
    46  disposition of a direct or indirect interest or voting rights of such an
    47  operator which results in the ownership or  control  of  more  than  ten
    48  percent  of  the interest or voting rights of such operator by any part-
    49  ner, member, or stockholder shall be approved by the public  health  and
    50  health  planning  council, in accordance with the provisions of subdivi-
    51  sion four of section thirty-six hundred five of this article relative to
    52  licensure or subdivision two of section thirty-six hundred six  of  this
    53  article relative to certificate of approval, except that:
    54    (a)  Public  health  and  health  planning  council  approval shall be
    55  required only with respect to the person, or the member or partner  that
    56  is acquiring the interest or voting rights; and
        S. 8395                             7
     1    (b)  With respect to certified home health agencies, such change shall
     2  not be subject to the public need assessment described in paragraph  (a)
     3  of subdivision two of section thirty-six hundred six of this article.
     4    (c)  (i)  No  prior  approval of the public health and health planning
     5  council shall be required with respect  to  a  transfer,  assignment  or
     6  disposition of:
     7    [(i)]  (A)  an  interest  or  voting  rights  to any person previously
     8  approved by the public health and health planning council, or its prede-
     9  cessor, for that operator; or
    10    [(ii)] (B) an interest or voting rights of less than  ten  percent  in
    11  the operator. [However, no]
    12    (ii)  No  such  transaction  under  subparagraph (i) of this paragraph
    13  shall be effective unless at least ninety days  prior  to  the  intended
    14  effective  date  thereof, the [partner or member] operator completes and
    15  files with the public health and health planning council notice on forms
    16  to be developed by the public health council, which shall disclose  such
    17  information  as  may  reasonably  be necessary for the public health and
    18  health planning council to determine whether it should  bar  the  trans-
    19  action. Such transaction will be final as of the intended effective date
    20  unless,  prior  thereto,  the  public health and health planning council
    21  shall state specific reasons for barring such  transactions  under  this
    22  paragraph and shall notify each party to the proposed transaction.
    23    2.  [Any  transfer,  assignment or other disposition of ten percent or
    24  more of the stock or voting rights thereunder of a corporation which  is
    25  the operator of a licensed home care services agency or a certified home
    26  health  agency,  or any transfer, assignment or other disposition of the
    27  stock or voting rights thereunder of such a corporation which results in
    28  the ownership or control of more than ten percent of the stock or voting
    29  rights thereunder of such corporation by any person shall be subject  to
    30  approval  by the public health and health planning council in accordance
    31  with the provisions of subdivision four of  section  thirty-six  hundred
    32  five of this article relative to licensure or subdivision two of section
    33  thirty-six  hundred  six  of  this  article  relative  to certificate of
    34  approval, except that:
    35    (a) Public health  and  health  planning  council  approval  shall  be
    36  required  only with respect to the person or entity acquiring such stock
    37  or voting rights; and
    38    (b) With respect to certified home health agencies, such change  shall
    39  not  be subject to the public need assessment described in paragraph (a)
    40  of subdivision two of section thirty-six hundred six of this article. In
    41  the absence of such approval, the license  or  certificate  of  approval
    42  shall be subject to revocation or suspension.
    43    (c) No prior approval of the public health and health planning council
    44  shall  be required with respect to a transfer, assignment or disposition
    45  of an interest or voting rights to any person previously approved by the
    46  public health and health planning council, or its predecessor, for  that
    47  operator.  However,  no  such  transaction  shall be effective unless at
    48  least one hundred twenty days prior to the intended effective date ther-
    49  eof, the partner or member completes and files with  the  public  health
    50  and  health  planning  council  notice  on  forms to be developed by the
    51  public health and health planning council,  which  shall  disclose  such
    52  information  as  may  reasonably  be necessary for the public health and
    53  health planning council to determine whether it should  bar  the  trans-
    54  action. Such transaction will be final as of the intended effective date
    55  unless,  prior  thereto,  the  public health and health planning council
    56  shall state specific reasons for barring such  transactions  under  this
        S. 8395                             8

     1  paragraph  and  shall notify each party to the proposed transaction.] In
     2  the absence of approval by the public health or planning council or  the
     3  provision  of notice to such council as required under this section, the
     4  license  or  certificate  of  approval shall be subject to revocation or
     5  suspension.
     6    § 8. This act shall take effect immediately.