House Introduced Bill 6009

HOUSE BILL No. 6009

September 15, 1998, Introduced by Rep. Brackenridge and referred to the Committee on Health Policy.

A bill to amend 1978 PA 368, entitled

"Public health code,"

by amending sections 2612, 20101, 20145, 20161, 20164, 20165,

20166, 21420, 21551, and 21563 (MCL 333.2612, 333.20101,

333.20145, 333.20161, 333.20164, 333.20165, 333.20166, 333.21420,

333.21551, and 333.21563), section 2612 as added by 1990 PA 138,

sections 20101 and 20166 as amended by 1988 PA 332, section 20145

as amended by 1993 PA 88, section 20161 as amended by 1996 PA

267, section 20164 as amended by 1990 PA 179, section 20165 as

amended by 1998 PA 108, section 21420 as amended by 1982 PA 245,

section 21551 as amended by 1990 PA 331, and section 21563 as

added by 1990 PA 252; and to repeal acts and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1 Sec. 2612. (1) The department may establish with Michigan

2 state university and other parties determined appropriate by the

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1 department a nonprofit corporation pursuant to the nonprofit

2 corporation act, Act No. 162 of the Public Acts of 1982, being

3 sections 450.2101 to 450.3192 of the Michigan Compiled Laws 1982

4 PA 162, MCL 450.2101 TO 450.3192. The purpose of the corporation

5 shall be to establish and operate a center for rural health. In

6 fulfilling its purpose, the corporation shall do all of the

7 following:

8 (a) Develop a coordinated rural health program that

9 addresses critical questions and problems related to rural health

10 and provides mechanisms for influencing health care policy.

11 (b) Perform and coordinate research regarding rural health

12 issues.

13 (c) Periodically review state and federal laws and judicial

14 decisions pertaining to health care policy and analyze the impact

15 on the delivery of rural health care.

16 (d) Provide technical assistance and act as a resource for

17 the rural health community in this state.

18 (e) Suggest changes in medical education curriculum that

19 would be beneficial to rural health.

20 (f) Assist rural communities with all of the following:

21 (i) Applications for grants.

22 (ii) The recruitment and retention of health professionals.

23 (iii) Needs assessments and planning activities for rural

24 health facilities.

25 (g) Serve as an advocate for rural health concerns.

26 (h) Conduct periodic seminars on rural health issues.

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1 (i) Establish and implement a visiting professor program.

2 (j) Conduct consumer oriented rural health education

3 programs.

4 (k) Designate a certificate of need ombudsman to provide

5 technical assistance and consultation to rural health care pro-

6 viders and rural communities regarding certificate of need pro-

7 posals and applications under part 222. The ombudsman shall also

8 act as an advocate for rural health concerns in the development

9 of certificate of need review standards under part 222.

10 (2) The incorporators of the corporation shall select a

11 board of directors consisting of a representative from each of

12 the following organizations:

13 (a) The Michigan state medical society or its successor.

14 The representative appointed SELECTED under this subdivision

15 shall be a physician practicing in a county with a population of

16 not more than 100,000.

17 (b) The Michigan osteopathic physicians' society or its

18 successor. The representative appointed SELECTED under this

19 subdivision shall be a physician practicing in a county with a

20 population of not more than 100,000.

21 (c) The Michigan nurses association or its successor. The

22 representative appointed SELECTED under this subdivision shall

23 be a nurse practicing in a county with a population of not more

24 than 100,000.

25 (d) The Michigan HEALTH AND hospital association or its

26 successor. The representative selected under this subdivision

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1 shall be from a hospital in a county with a population of not

2 more than 100,000.

3 (e) The Michigan primary care association or its successor.

4 The representative appointed SELECTED under this subdivision

5 shall be a health professional practicing in a county with a pop-

6 ulation of not more than 100,000.

7 (f) The Michigan association for local public health or its

8 successor. The representative appointed SELECTED UNDER THIS

9 SUBDIVISION SHALL BE from a county health department for a county

10 with a population of not more than 100,000 or from a district

11 health department with at least 1 member county with a population

12 of not more than 100,000.

13 (g) The office of the governor.

14 (h) The department of public COMMUNITY health.

15 (i) The department of commerce CONSUMER AND INDUSTRY

16 SERVICES.

17 (j) The Michigan senate. The individual selected under this

18 subdivision shall be from a district located at least in part in

19 a county with a population of not more than 100,000.

20 (k) The Michigan house of representatives. The individual

21 selected under this subdivision shall be from a district located

22 at least in part in a county with a population of not more than

23 100,000.

24 (3) The board of directors of the corporation shall appoint

25 an internal management committee for the center for rural

26 health. The management committee shall consist of

27 representatives from each of the following:

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1 (a) The college of human medicine of Michigan state

2 university.

3 (b) The college of osteopathic medicine of Michigan state

4 university.

5 (c) The college of nursing of Michigan state university.

6 (d) The college of veterinary medicine of Michigan state

7 university.

8 (e) The cooperative extension service of Michigan state

9 university.

10 (f) The department of public COMMUNITY health.

11 Sec. 20101. (1) The words and phrases defined in sections

12 20102 to 20109 apply to all parts in this article except part

13 222 and have the meanings ascribed to them in those sections.

14 (2) In addition, article 1 contains general definitions and

15 principles of construction applicable to all articles in this

16 code.

17 Sec. 20145. (1) Before contracting for and initiating a

18 construction project involving new construction, additions, mod-

19 ernizations, or conversions of a health facility or agency with a

20 capital expenditure of $1,000,000.00 or more, a person shall

21 obtain a construction permit from the department. The permit

22 shall not be issued under this subsection unless the applicant

23 holds a valid certificate of need if a certificate of need is

24 required for the project pursuant to part 222.

25 (2) To protect the public health, safety, and welfare, the

26 department may promulgate rules to require construction permits

27 for projects other than those described in subsection (1) and the

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1 submission of plans for other construction projects to expand or

2 change service areas and services provided.

3 (3) If a construction project requires a construction

4 permit under subsection (1) or (2), but does not require a cer-

5 tificate of need under part 222, the department shall require the

6 applicant to submit information considered necessary by the

7 department to assure that the capital expenditure for the project

8 is not a covered capital expenditure as defined in section

9 22203(9).

10 (3) (4) If a construction project requires a construction

11 permit under subsection (1), but does not require a certificate

12 of need under part 222, the department shall require the appli-

13 cant to submit information on a 1-page sheet, along with the

14 application for a construction permit, consisting of all of the

15 following:

16 (a) A short description of the reason for the project and

17 the funding source.

18 (b) A contact person for further information, including

19 address and phone number.

20 (c) The estimated resulting increase or decrease in annual

21 operating costs.

22 (d) The current governing board membership of the

23 applicant.

24 (e) The entity, if any, that owns the applicant.

25 (4) (5) The information filed under subsection (4) (3)

26 be made publicly available by the department. by the same

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1 methods used to make information about certificate of need

2 applications publicly available.

3 (5) (6) The review and approval of architectural plans and

4 narrative shall require that the proposed construction project is

5 designed and constructed in accord with applicable statutory and

6 other regulatory requirements.

7 (6) (7) The department shall promulgate rules to further

8 prescribe the scope of construction projects and other alter-

9 ations subject to review under this section.

10 (7) (8) The department may waive the applicability of this

11 section to a construction project or alteration if the waiver

12 will not affect the public health, safety, and welfare.

13 (8) (9) Upon request by the person initiating a construc-

14 tion project, the department may review and issue a construction

15 permit to a construction project that is not subject to

16 subsection (1) or (2) if the department determines that the

17 review will promote the public health, safety, and welfare.

18 (9) (10) The department shall assess a fee for each review

19 conducted under this section. The fee shall be .5% of the first

20 $1,000,000.00 of capital expenditure and .85% of any amount over

21 $1,000,000.00 of capital expenditure, up to a maximum of

22 $30,000.00.

23 (11) As used in this section, "capital expenditure" means

24 that term as defined in section 22203(2), except that it does not

25 include the cost of equipment that is not fixed equipment.

26 Sec. 20161. (1) Fees EXCEPT AS OTHERWISE PROVIDED IN THIS

27 ARTICLE, FEES for health facility and agency licenses and

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1 certificates of need shall be assessed on an annual basis by the

2 department. as provided in this act. Except as otherwise pro-

3 vided in this article, fees shall be paid in accordance with the

4 following fee schedule:

5 (a) Freestanding surgical out-

6 patient facilities............... $ 238.00 per facility.

7 (b) Hospitals.................. $ 8.28 per licensed bed.

8 (c) Nursing homes, county medi-

9 cal care facilities, and hospital

10 long-term care units............. $ 2.20 per licensed bed.

11 (d) Homes for the aged......... $ 6.27 per licensed bed.

12 (e) Health maintenance

13 organizations.................... $1,000.00 for an initial

14 license; 80 cents per sub-

15 scriber for a 3-YEAR renewal

16 license; (3-year); $100.00

17 for a certificate of authority

18 for planning.

19 (f) Clinical laboratories...... $ 475.00 per laboratory.

20 (g) Health care delivery and

21 financing system under section

22 21042............................ $1,000.00 for an initial

23 license; effective January 1,

24 1987, $1,000.00 for 3-year

25 renewal license for prepaid

26 institutional programs,

27 $5,000.00 for 3-year renewal

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1 license for organizations

2 determined by the department to

3 offer a single form of health

4 care service, and 80 cents per

5 subscriber for all other 3-year

6 renewal licenses under

7 section 21042.

8 (h) Hospice residences......... $200.00 per license survey; and

9 $20.00 per licensed bed.

10 (2) If a hospital requests the department to conduct a cer-

11 tification survey for purposes of title XVIII or title XIX of the

12 social security act, the hospital shall pay a license fee sur-

13 charge of $23.00 per bed. AS USED IN THIS SUBSECTION, "TITLE

14 XVIII" AND "TITLE XIX" MEAN THOSE TERMS AS DEFINED IN SECTION

15 20155.

16 (3) The base fee for a certificate of need is $750.00 for

17 each application. For a project requiring a projected capital

18 expenditure of more than $150,000.00 but less than $1,500,000.00,

19 an additional fee of $2,000.00 shall be added to the base fee.

20 For a project requiring a projected capital expenditure of

21 $1,500,000.00 or more, an additional fee of $3,500.00 shall be

22 added to the base fee.

23 (3) (4) With the exception of health maintenance organiza-

24 tions, if licensure is for more than 1 year, the fees described

25 in subsection (1) shall be multiplied by the number of years for

26 which the license is issued, and the total amount of the fees

27 shall be collected in the year in which the license is issued.

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1 (4) (5) Fees described in this section are payable to the

2 department at the time an application for a license , OR permit

3 , or certificate is submitted. If an application for a license

4 , OR permit , or certificate is denied or if a license , OR

5 permit , or certificate is revoked before its expiration date,

6 the fees paid to the department shall not be refunded.

7 (5) (6) The fee for a provisional license or temporary

8 permit shall be the same as for a license. A license may be

9 issued at the expiration date of a temporary permit without an

10 additional fee for the balance of the period for which the fee

11 was paid if the requirements for licensure are met.

12 (6) (7) The department may charge a fee to recover the

13 cost of purchase or production and distribution of proficiency

14 evaluation samples that are supplied to clinical laboratories

15 pursuant to section 20521(3).

16 (7) (8) In addition to the fees imposed under subsection

17 (1), a fee of $25.00 shall be submitted to the department for

18 each reissuance during the licensure period of a clinical labora-

19 tory license.

20 (8) (9) Except for the licensure of clinical laboratories,

21 not more than half the annual cost of licensure activities as

22 determined by the department shall be provided by license fees.

23 (9) (10) The application fee for a waiver under

24 section 21564 shall be IS $200.00 plus $40.00 per hour for the

25 professional services and travel expenses directly related to

26 processing the application. The travel expenses shall be

27 calculated in accordance with the state standardized travel

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1 regulations of the department of management and budget in effect

2 at the time of the travel.

3 (10) (11) An applicant for licensure or renewal of licen-

4 sure under part 209 shall pay the applicable fees set forth in

5 part 209.

6 (11) (12) The fees collected under this section shall be

7 deposited in the state treasury, to the credit of the general

8 fund.

9 Sec. 20164. (1) A HEALTH FACILITY OR AGENCY license, certi-

10 fication, provisional license, or limited license is valid for

11 not more than 1 year after the date of issuance, except as pro-

12 vided in section 20511 or part 209 or 210. A HEALTH FACILITY OR

13 AGENCY license for a facility licensed REGULATED under part 215

14 shall be IS valid for 2 years, except that provisional and

15 limited licenses may be valid for 1 year.

16 (2) A HEALTH FACILITY OR AGENCY license, certification, or

17 certificate of need is not transferable and shall state the per-

18 sons, buildings, and properties to which it applies.

19 Applications for licensure or certification because of transfer

20 of ownership or essential ownership interest shall not be acted

21 upon until satisfactory evidence is provided of compliance with

22 part 222.

23 (3) If ownership is not voluntarily transferred, the depart-

24 ment shall be notified immediately and the new owner shall apply

25 for a license and certification not later than 30 days after the

26 transfer.

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1 Sec. 20165. (1) Except as otherwise provided in this

2 section, after notice of intent to an applicant or licensee to

3 deny, limit, suspend, or revoke the applicant's or licensee's

4 license or certification and an opportunity for a hearing, the

5 department may deny, limit, suspend, or revoke the license or

6 certification or impose an administrative fine on a licensee if 1

7 or more of the following exist:

8 (a) Fraud or deceit in obtaining or attempting to obtain a

9 license or certification or in the operation of the licensed

10 health facility or agency.

11 (b) A violation of this article or a rule promulgated under

12 this article.

13 (c) False or misleading advertising.

14 (d) Negligence or failure to exercise due care, including

15 negligent supervision of employees and subordinates.

16 (e) Permitting a license or certificate to be used by an

17 unauthorized health facility or agency.

18 (f) Evidence of abuse regarding a patient's health, welfare,

19 or safety or the denial of a patient's rights.

20 (g) Failure to comply with section 10102a(7).

21 (h) Failure to comply with part 222 or a term, condition,

22 or stipulation of a certificate of need issued under part 222, or

23 both.

24 (H) (i) A violation of section 20197(1).

25 (2) The department may deny an application for a license or

26 certification based on a finding of a condition or practice that

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1 would constitute a violation of this article if the applicant

2 were a licensee.

3 (3) Denial, suspension, or revocation of an individual emer-

4 gency medical services personnel license under part 209 is gov-

5 erned by section 20958.

6 (4) If the department determines under subsection (1) that a

7 health facility or agency has violated section 20197(1), the

8 department shall impose an administrative fine of $5,000,000.00

9 on the health facility or agency.

10 Sec. 20166. (1) Notice of intent to deny, limit, suspend,

11 or revoke a license or certification shall be given by certified

12 mail or personal service, shall set forth the particular reasons

13 for the proposed action, and shall fix a date, not less that

14 THAN 30 days after the date of service, on which the applicant or

15 licensee shall be given the opportunity for a hearing before the

16 director or the director's authorized representative. The hear-

17 ing shall be conducted in accordance with the administrative pro-

18 cedures act of 1969 and rules promulgated by the department. A

19 full and complete record shall be kept of the proceeding and

20 shall be transcribed when requested by an interested party, who

21 shall pay the cost of preparing the transcript.

22 (2) On the basis of a hearing or on the default of the

23 applicant or licensee, the department may issue, deny, limit,

24 suspend, or revoke a license or certification. A copy of the

25 determination shall be sent by certified mail or served person-

26 ally upon the applicant or licensee. The determination becomes

27 final 30 days after it is mailed or served, unless the applicant

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1 or licensee within the 30 days appeals the decision to the

2 circuit court in the county of jurisdiction or to the Ingham

3 county circuit court.

4 (3) The department may establish procedures, hold hearings,

5 administer oaths, issue subpoenas, or order testimony to be taken

6 at a hearing or by deposition in a proceeding pending at any

7 stage of the proceeding. A person may be compelled to appear and

8 testify and to produce books, papers, or documents in a

9 proceeding.

10 (4) In case of disobedience of a subpoena, a party to a

11 hearing may invoke the aid of the circuit court of FOR the

12 jurisdiction in which the hearing is held to require the

13 attendance and testimony of witnesses. The circuit court may

14 issue an order requiring an individual to appear and give

15 testimony. Failure to obey the order of the circuit court may be

16 punished by the court as a contempt.

17 (5) The department shall not deny, limit, suspend, or

18 revoke a license on the basis of an applicant's or licensee's

19 failure to show a need for a health facility or agency unless the

20 health facility or agency has not obtained a certificate of need

21 required by part 222.

22 Sec. 21420. Notwithstanding any other provision of this

23 act, all hospices shall be A HOSPICE IS exempt from license

24 fees and certificate of need fees for 3 years after the first

25 hospice is licensed under this article.

26 Sec. 21551. (1) A hospital licensed under this article and

27 located in a nonurbanized area may apply to the department to

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1 temporarily delicense not more than 50% of its licensed beds for

2 not more than 5 years.

3 (2) A IF A hospital that is granted a temporary delicen-

4 sure of beds under subsection (1) may apply APPLIES to the

5 department for an extension of THE temporary delicensure, for

6 those beds THE DEPARTMENT SHALL GRANT AN EXTENSION for up to an

7 additional 5 years to the extent that the hospital actually met

8 the requirements of subsection (6) during the initial period of

9 delicensure. granted under subsection (1). The department shall

10 grant an extension under this subsection unless the department

11 determines under part 222 that there is a demonstrated need for

12 the delicensed beds in the subarea in which the hospital is

13 located. If the department does not grant an extension under

14 this subsection, the hospital shall request relicensure of the

15 beds pursuant to subsection (7) or allow the beds to become per-

16 manently delicensed pursuant to subsection (8).

17 (3) Except as otherwise provided in this section, for a

18 period of 90 days after January 1, 1991 UNTIL APRIL 1, 1991, if

19 a hospital is located in a distressed area and has an annual

20 indigent volume consisting of not less than 25% indigent

21 patients, the hospital may apply to the department to temporarily

22 delicense not more than 50% of its licensed beds for a period of

23 not more than 2 years. Upon receipt of a complete application

24 under this subsection, the department shall temporarily delicense

25 the beds indicated in the application. The department shall not

26 grant an extension of temporary delicensure under this

27 subsection.

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1 (4) An application under subsection (1) or (3) shall be on a

2 form provided by the department. The form shall contain all of

3 the following information:

4 (a) The number and location of the specific beds to be

5 delicensed.

6 (b) The period of time during which the beds will be

7 delicensed.

8 (c) The alternative use proposed for the space occupied by

9 the beds to be delicensed.

10 (5) A hospital that files an application under

11 subsection (1) or (3) may file an amended application with the

12 department on a form provided by the department. The hospital

13 shall state on the form the purpose of the amendment. If the

14 hospital meets the requirements of this section, the department

15 shall so amend the hospital's original application.

16 (6) An alternative use of space made available by the deli-

17 censure of beds under this section shall not result in a viola-

18 tion of this article or the rules promulgated under this

19 article. Along with the application, an applicant for delicen-

20 sure under subsection (1) or (3) shall submit to the department

21 plans that indicate to the satisfaction of the department that

22 the space occupied by the beds proposed for temporary delicensure

23 will be used for 1 or more of the following:

24 (a) An alternative use that over the proposed period of tem-

25 porary delicensure would defray the depreciation and interest

26 costs that otherwise would be allocated to the space along with

27 the operating expenses related to the alternative use.

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1 (b) To correct a licensing deficiency previously identified

2 by the department.

3 (c) Nonhospital purposes including, but not limited to, com-

4 munity service projects, if the depreciation and interest costs

5 for all capital expenditures that would otherwise be allocated to

6 the space, as well as any operating costs related to the proposed

7 alternative use, would not be considered as hospital costs for

8 purposes of reimbursement.

9 (7) The department shall relicense beds that are temporarily

10 delicensed under this section if all of the following require-

11 ments are met:

12 (a) The hospital files with the department a written request

13 for relicensure not less than 90 days before the earlier of the

14 following:

15 (i) The expiration of the period for which delicensure was

16 granted.

17 (ii) The date upon which the hospital is requesting

18 relicensure.

19 (iii) The last hospital license renewal date in the delicen-

20 sure period.

21 (b) The space to be occupied by the relicensed beds is in

22 compliance with this article and the rules promulgated under this

23 article, including all licensure standards in effect at the time

24 of relicensure, or the hospital has a plan of corrections that

25 has been approved by the department.

26 (8) If a hospital does not meet all of the requirements of

27 subsection (7) or if a hospital decides to allow beds to become

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1 permanently delicensed as described in subsection (2), then all

2 of the temporarily delicensed beds shall be automatically and

3 permanently delicensed effective on the last day of the period

4 for which the department granted temporary delicensure.

5 (9) The department shall continue to count beds temporarily

6 delicensed under this section in the department's bed inventory

7 for purposes of determining hospital bed need under part 222 in

8 the subarea in which the beds are located. The department shall

9 indicate in the bed inventory which beds are licensed and which

10 beds are temporary delicensed under this section. The department

11 shall not include a hospital's temporarily delicensed beds in the

12 hospital's licensed bed count.

13 (10) A hospital that is granted temporary delicensure of

14 beds under this section shall not transfer the beds to another

15 site or hospital without first obtaining a certificate of need.

16 (9) (11) A hospital that has beds that are subject to a

17 hospital bed reduction plan or to a department action to enforce

18 this article shall not use beds temporarily delicensed under this

19 section to comply with the bed reduction plan.

20 (10) (12) As used in this section:

21 (a) "Distressed area" means a city that meets all of the

22 following criteria:

23 (i) Had a negative population change from 1970 1980 to the

24 date of the 1980 1990 federal decennial census.

25 (ii) From 1972 to 1989, had an increase in its state equal-

26 ized valuation that is less than the statewide average.

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1 (iii) Has a poverty level that is greater than the statewide

2 average, according to the 1980 1990 federal decennial census.

3 (iv) Was eligible for an urban development action grant from

4 the United States department of housing and urban development in

5 1984 and was listed in 49 F.R. No. 28 (February 9, 1984) or

6 49 F.R. No. 30 (February 13, 1984).

7 (v) Had an unemployment rate that was higher than the state-

8 wide average for 3 of the 5 years from 1981 to 1985.

9 (b) "Indigent volume" means the ratio of a hospital's indi-

10 gent charges to its total charges expressed as a percentage as

11 determined by the department of social services COMMUNITY

12 HEALTH after November 12, 1990, pursuant to chapter 8 of the

13 department of social services guidelines ADOPTED BY THE FORMER

14 DEPARTMENT OF SOCIAL SERVICES, NOW THE FAMILY INDEPENDENCE

15 AGENCY, AND entitled "medical assistance program manual".

16 (c) "Nonurbanized area" means an area that is not an urban-

17 ized area.

18 (d) "Urbanized area" means that term as defined by the

19 office of federal statistical policy and standards of the United

20 States department of commerce in the appendix entitled "general

21 procedures and definitions", 45 F.R. p. 962 (January 3, 1980),

22 which document is incorporated by reference.

23 Sec. 21563. (1) The department, in consultation with the ad

24 hoc advisory committee appointed under section 21562, shall

25 promulgate rules for designation of a rural community hospital,

26 maximum number of beds, and the services provided by a rural

27 community hospital. The director shall submit proposed rules,

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1 based on the recommendations of the committee, for public hearing

2 not later than 6 months after receiving the report under

3 section 21562(5).

4 (2) The designation as a rural community hospital shall be

5 shown on a hospital's license and shall be for the same term as

6 the hospital license. Except as otherwise expressly provided in

7 this part or in rules promulgated under this section, a rural

8 community hospital shall be licensed and regulated in the same

9 manner as a hospital otherwise licensed under this article. The

10 provisions of part 222 applicable to hospitals also apply to a

11 rural community hospital and to a hospital designated by the

12 department under federal law as an essential access community

13 hospital or a rural primary care hospital. This part and the

14 rules promulgated under this part do not preclude the establish-

15 ment of differential reimbursement for rural community hospitals,

16 essential access community hospitals, and rural primary care

17 hospitals.

18 Enacting section 1. Section 20143 and part 222 of the

19 public health code, 1978 PA 368, MCL 333.20143 and 333.22201 to

20 333.22260, are repealed.

21 Enacting section 2. This amendatory act takes effect

22 December 31, 1998.

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