GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1993

H	1 

HOUSE BILL 314

Short Title:  GPAC/Certificates of Need.	(Public)
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Sponsors: (by request) Representatives G. Miller, Blue, Barnes, Diamont, Hackney, Hensley, H. Hunter, Nesbitt, and Robinson.
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Referred to:  Health and Human Services.
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February 25, 1993

A BILL TO BE ENTITLED
AN ACT TO IMPLEMENT THE RECOMMENDATIONS OF THE GOVERNMENT PERFORMANCE AUDIT COMMITTEE REGARDING CERTIFICATES OF NEED.
The General Assembly of North Carolina enacts:
––-ICF/MR CON MORATORIUM.
Section 1.  (a)	The General Assembly finds that intermediate care facilities for the mentally retarded (ICFs/MR) continue to be developed in North Carolina even though most states have decreased the number of individuals residing in these facilities and that North Carolina continues to admit a significant number of individuals to State-operated ICFs/MR while most other states are moving to deinstitutionalize the mentally retarded.  The General Assembly further finds that North Carolina rates for private ICFs/MR are ranked among the highest in the country.
(b)	Effective July 1, 1993, through June 30, 1995, the Division of Facility Services, Department of Human Resources, shall not grant a Certificate of Need for the development of any new intermediate care facility for the mentally retarded.  The Department of Human Resources shall ensure that stringent screening and assessment take place to ensure appropriate utilization of home- and community-based services that will be required during the moratorium and to avoid a sudden surge in the growth of new beds, after the moratorium is lifted. 
(c)	The base budget of the Division of Medical Assistance, Department of Human Resources, is reduced by two million four hundred thousand dollars ($2,400,000) for the 1994-95 fiscal year due to the implementation of this section.
(d)	This section becomes effective July 1, 1993, and applies to applications for new certificates of need received on or after that date.
––-CON BED NEED FORMULA CHANGE.
Sec. 2.  (a)	The General Assembly finds that the Certificate of Need process has not been effective in controlling the development and expansion of hospital beds and that its current methodology for projecting need for additional long-term care facilities beds can be improved.
(b)	Effective July 1, 1994, the Division of Facility Services, Department of Human Resources, shall implement a changed Certificate of Need bed need formula.  This changed formula shall be developed by expanding the size of the current health planning areas to include larger geographic regions and by expanding beyond the need to rely solely on current rates of institutionalization, in order to take cognizance of people who have been identified as actually needing services or who should be directed away from intermediate care facilities for the mentally retarded (ICFs/MR) care to home- and community-based services, thus providing a more actual projection of bed need.
(c)	This section becomes effective July 1, 1993.
––-CON CAPITAL EXPENDITURE LIMIT.
Sec. 3.  (a)	The General Assembly finds that North Carolina's Certificate of Need capital expenditure threshold does not address major medical equipment purchases and that costly new technologies such as lithotripters, magnetic resonance imaging scanners, and linear accelerators are not subject to Certificate of Need review because expenditures for these services can fall under the two million dollar ($2,000,000) capital expenditures threshold.  The General Assembly further finds that these technologies are costly services and increase the cost of medical services to all consumers.
(b)	G.S. 131E-176(16)b. reads as rewritten:
"(16)	b.	The obligation by any person of any capital expenditure on behalf of or for a health service facility as defined in subsection (9b) of this section exceeding five hundred thousand dollars ($500,000), other than one to acquire an existing health service facility or to replace such a facility destroyed or irreparably damaged by accident or natural disaster.  The cost of any studies, surveys, designs, plans, working drawings, specifications, and other activities, including staff effort and consulting and other services, essential to the acquisition, improvement, expansion, or replacement of any plant or equipment with respect to which an expenditure is made shall be included in determining if the expenditure exceeds five hundred thousand dollars ($500,000);".
(c)	This section becomes effective October 1, 1993, and applies to applications for Certificate of Need requested on or after that date.
––-CON SELF-FUNDED.
Sec. 4.  (a)	The General Assembly finds that, while other states with Certificate of Need agencies have increased fees or downsized staff to fund their programs without state revenue, the application fees generated by North Carolina's Certificate of Need process currently cover only seventy-five percent (75%) of program expenses.
(b)	Effective October 1, 1993, the Division of Facility Services, Department of Human Resources, shall increase all application fees for a Certificate of Need by fifty percent (50%).
(c)	Effective October 1, 1993, G.S. 131E-177(9) reads as rewritten:
"(9)	Establish and collect fees for submitting applications for certificates of need, which fees shall be based on the total cost of the project for which the applicant is applying.  This fee shall not exceed twenty-two thousand five hundred dollars ($22,500) and shall not be less than six hundred dollars ($600.00)."
(d)	The base budget of the Division of Facility Services, Department of Human Resources, is reduced by two hundred thousand dollars ($200,000) for the 1993-94 fiscal year due to the implementation of this section.
(e)  Unless otherwise stated, this section becomes effective July 1, 1993, and applies to application fees for applications requested on or after October 1, 1993.