Publications: Health Facilities and Services Review Board Notice of Proposed Amendments

Illinois continues to expand the scope of its authority over health care facilities. On April 27, 2012, the Health Facilities and Services Review Board (the “IHFSRB”) proposed amendments (the “Proposed Amendments”) to the Health Facilities Planning Procedural Rules (the “Rules”) to reflect recent changes to the Health Facilities Planning Act (the “Act”); clarify and expand operational requirements in the process for applying for a certificate of exemption (“Exemption”) or a certificate of need (“CON”); and repeal obsolete provisions. Please note that this alert focuses on certain substantive changes to the Rules other than substantive changes which correspond to prior changes to the Act. A number of these earlier statutory changes have significant implications as well.

Public comment on the Proposed Amendments may be provided through the public hearing currently scheduled for May 14, 2012 or through written comment provided to the IHFSRB before June 11, 2012.

After the effective date of the Proposed Amendments, if enacted, these amendments will be applied to all applications in the review process and all projects for which permits or exemptions have been issued but have not been completed. While these changes would impact most CON or Exemption applicants, they do not revise the clinical or financial criteria under which such applications are reviewed.

Following is a summary of certain of the Proposed Amendments.

• Elements of a Transaction or Project Subject to the Act
  Prior to a 2009 revision to the Act, components of construction or modification projects that were part of a single construction contract or financed by a single debt instrument automatically were deemed “interdependent” and thus required to be included as one “project.” This had the effect of bringing certain projects that otherwise would not require a CON under the Act. While the Proposed Amendments would mirror the modification to the Act, which states that such projects are not interdependent simply due to one construction contract or debt instrument, the Proposed Amendments would create a definition of “interdependent components” which states the inverse and appears to be at odds with the Act.
• Projects Eligible for a Certificate of Exemption
  While the existing Rules allow for Exemptions for certain health care facility or category of service discontinuations, the Proposed Amendments would prevent any type of discontinuation from qualifying for an Exemption. Furthermore, the Proposed Amendments would eliminate the ability for an applicant to apply for an Exemption for the acquisition of major medical equipment that will not be owned by, operated on behalf of, or located in a health care facility or that will not be used to provide services to an inpatient of a health care facility and would eliminate an Exemption for the establishment or expansion of a neonatal intensive care service or beds. These projects would be required to comply with the more rigorous CON application requirements.
• Modifications
  The Proposed Amendments would change certain modification requirements for applications submitted to the IHFSRB. Under the current Rules, an increase in the number of beds for a project results in a Type A modification; the Proposed Amendments would make bed increases and decreases Type A modifications. The Proposed Amendments would provide applicants with some flexibility with respect to a project’s proposed categories of service, as only increases in the proposed categories of service would result in a Type A modification. Lastly, the Proposed Amendments would revise the provisions regarding modifications in a project’s cost or gross square footage in excess of 10%. Based on the language proposed, however, it is unclear whether the IHFSRB’s intent is to include a decrease in a project’s cost or gross square footage as the basis for a Type A modification, or if the Proposed Amendments would limit these modifications only to increases. Type A modifications result in additional IHFSRB staff review time and opportunity for an additional public hearing, which delays the IHFSRB’s consideration of a project. As a result, applicants will need to accurately estimate certain aspects of a project to avoid such delays.
• Alterations
  The Proposed Amendments would revise the process and criteria for effecting alterations to a project. For example, under the Proposed Amendments, any allowable alteration of a CON would require the IHFSRB’s approval before such an alteration is executed. Previously, certain alterations required only notice to the IHFSRB and could be reported within 30 days after the alteration. In addition, an increase in project cost up to 7% (rather than the prior limit of 5%) would now be an allowable alteration, although the IHFSRB’s prior approval would still be required.
• Ambulatory Surgical Treatment Center CON Requirement
  The addition of any surgical specialty to an ambulatory surgical treatment center (“ASTC”) which has not been previously approved by the IHFSRB would now require a CON. Currently, multi-specialty ASTCs are not required to seek a CON for the addition of a new specialty, although the IHFSRB’s recent practice has been to subject multi-specialty ASTCs to the CON process for new specialties as a “condition” to permit issuance.
• Other Notable Proposed Amendments
  • The Proposed Amendments introduce a requirement that a permit acceptance agreement be issued to the permit holder following the approval of a CON application. This agreement will specify and consolidate all post-permit requirements, including any obligation that the IHFSRB may impose as a “condition” to permit issuance. Lack of compliance would provide a basis for the IHFSRB to invalidate the CON, or issue conditions, fines or other penalties or sanctions. The introduction of the permit acceptance agreement would appear to offer an avenue to enforce permit conditions through contractual means.
  • Under the Proposed Amendments, the IHFSRB would not accept new information presented by applicants during the IHFSRB meeting at which the application is being considered (this has been a long standing practice of the IHFSRB). It is unclear how the IHFSRB will interpret this provision, as it is broadly worded and not subject to any materiality standard. New or additional information would continue to be accepted as a result of a modification to the project or in response to IHFSRB request or issuance of an Intent to Deny.
  • The Proposed Amendments would revise certain time periods associated with CON and Exemption applications, which serve to give applicants more flexibility but also may delay the project review period. For example, applicants would be able to defer the IHFSRB’s consideration of an application that has been issued an Intent to Deny for 12 months (currently 6 months); the IHFSRB staff could extend the review period of a CON application for up to 120 days for the analysis of additional information (currently 60 days); CON permit holders would have 90 days to provide notice of project completion (currently 30 days) and approved exemptions projects would be required to be completed within 24 months.
  • Once an application is deemed complete, any communication between staff and an applicant would be required to be documented by staff and made part of the public record.
  • The Proposed Amendments would repeal procedures governing public hearings which currently require that hearings are held in the proposed project’s community and that all interested persons attending such hearing are given a reasonable opportunity to present their views.
  • The Proposed Amendments would revise the formula used to calculate CON application fees for applications with a project cost exceeding $1,250,000. Currently, the formula discounts costs associated with non-clinical uses; the Proposed Amendments would apply a fixed percentage across the total project costs, resulting in a higher fee for applications with non-clinical uses.
  • The Proposed Amendments would expand the events which may cause an Exemption or CON to become invalid, which would include, but not be limited to, failure to submit post-permit reports, implementation of a prohibited alteration and relinquishment of an Exemption or CON without the IHFSRB’s approval. To properly relinquish a CON or Exemption, the Proposed Amendments would require permit holders to file a request for relinquishment.
  • The Proposed Amendments would permit the Chairman of the IHFSRB to approve an application for permit that meets all of the IHFSRB’s review criteria and is unopposed.

State agencies are limited to adopting rules which a statute has authorized. Rules must be posted in the Illinois Register. The Joint Committee on Administrative Rules (“JCAR”) reviews rules in part based on public comments about whether the rules comply with the law. Consequently, public comment on proposed rules and briefing JCAR members can make a difference in the substance of rules. The time period for public comment on the Proposed Amendments expires on June 11, 2012.

To view a complete copy of the Proposed Amendments, including those addressing more recent key statutory changes, click here.