SB-0576, As Passed House, December 7, 2004

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 576

                                                                             A bill to amend 1978 PA 368, entitled                                             

"Public health code,"                                                       

by amending sections 20145 and 20161 (MCL 333.20145 and                     

333.20161), section 20145 as amended by 2002 PA 683 and section             

20161 as amended by 2004 PA 393.                                            

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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

2   construction project involving new construction, additions,                 

3   modernizations, or conversions of a health facility or agency               

4   with a capital expenditure of $1,000,000.00 or more, a person               

5   shall obtain a construction permit from the department.  The                

6   department shall not issue the permit under this subsection                 

7   unless the applicant holds a valid certificate of need if a                 

8   certificate of need is required for the project pursuant to                 

9   part 222.                                                                   

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

2   department may promulgate rules to require construction permits             

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

4   submission of plans for other construction projects to expand or            

5   change service areas and services provided.                                 

6       (3) If a construction project requires a construction permit                

7   under subsection (1) or (2), but does not require a certificate             

8   of need under part 222, the department shall require the                    

9   applicant to submit information considered necessary by the                 

10  department to assure that the capital expenditure for the project           

11  is not a covered capital expenditure as defined in section                  

12  22203(9).                                                                   

13      (4) If a construction project requires a construction permit                

14  under subsection (1), but does not require a certificate of need            

15  under part 222, the department shall require the applicant to               

16  submit information on a 1-page sheet, along with the application            

17  for a construction permit, consisting of all of the following:              

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

19  funding source.                                                             

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

21  address and phone number.                                                   

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

23  operating costs.                                                            

24      (d) The current governing board membership of the applicant.                

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

26      (5) The information filed under subsection (4) shall be made                

27  publicly available by the department by the same methods used to            

1   make information about certificate of need applications publicly            

2   available.                                                                  

3       (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.  In performing a construction                

7   permit review for a health facility or agency under this section,           

8   the department shall, at a minimum, apply the standards contained           

9   in the document entitled "Minimum Design Standards for Health               

10  Care Facilities in Michigan" published by the department and                

11  dated March 1998.  The standards are incorporated by reference              

12  for purposes of this subsection.  The department may promulgate             

13  rules that are more stringent than the standards if necessary to            

14  protect the public health, safety, and welfare.                             

15      (7) The department shall promulgate rules to further                        

16  prescribe the scope of construction projects and other                      

17  alterations subject to review under this section.                           

18      (8) The department may waive the applicability of this                      

19  section to a construction project or alteration if the waiver               

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

21      (9) Upon request by the person initiating a construction                    

22  project, the department may review and issue a construction                 

23  permit to a construction project that is not subject to                     

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

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

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

27  conducted under this section.  The fee is .5% of the first                  

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

2   $1,000,000.00 of capital expenditure, up to a maximum of                    

3   $30,000.00 $60,000.00.                                                    

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

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

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

7       Sec. 20161.  (1) The department shall assess fees and other                 

8   assessments for health facility and agency licenses and                     

9   certificates of need on an annual basis as provided in this                 

10  article.  Except as otherwise provided in this article, fees and            

11  assessments shall be paid in accordance with the following                  

12  schedule:                                                                   

13    (a) Freestanding surgical outpatient                                      

14  facilities.............................. $238.00 per facility.              

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

16    (c) Nursing homes, county medical care                                    

17  facilities, and hospital long-term care                                     

18  units................................... $2.20 per licensed bed.            

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

20    (e) Clinical laboratories............. $475.00 per laboratory.            

21    (f) Hospice residences................ $200.00 per license                

22                                           survey; and $20.00 per             

23                                           licensed bed.                      

24    (g) Subject to subsection (13),                                           

25  quality assurance assessment for                                            

26  nongovernmentally owned nursing homes                                       

27  and hospital long-term care units....... an amount resulting in             

1                                            not more than 6% of                

2                                            total industry                     

3                                            revenues.                          

4     (h) Subject to subsection (14),                                           

5   quality assurance assessment for                                            

6   hospitals............................... at a fixed or variable             

7                                            rate that generates                

8                                            funds not more than the            

9                                            maximum allowable under            

10                                           the federal matching               

11                                           requirements, after                

12                                           consideration for the              

13                                           amounts in subsection              

14                                           (14)(a) and (j).                   

15      (2) If a hospital requests the department to conduct a                      

16  certification survey for purposes of title XVIII or title XIX of            

17  the social security act, the hospital shall pay a license fee               

18  surcharge of $23.00 per bed.  As used in this subsection, "title            

19  XVIII" and "title XIX" mean those terms as defined in section               

20  20155.                                                                      

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

22  $1,500.00 for each application.  For a project requiring a                  

23  projected capital expenditure of more than  $150,000.00

24  $500,000.00 but less than  $1,500,000.00 $4,000,000.00, an                 

25  additional fee of  $2,000.00 $4,000.00 shall be added to the               

26  base fee.  For a project requiring a projected capital                      

27  expenditure of  $1,500,000.00 $4,000,000.00 or more, an                    

Senate Bill No. 576 (H-4) as amended December 7, 2004

1   additional fee of  $3,500.00 $7,000.00 shall be added to the               

2   base fee.  [The department of community health shall use the fees collected under this subsection only to fund the certificate of need program.  Funds remaining in the certificate of need program at the end of the fiscal year shall not lapse to the general fund but shall remain available to fund the certificate of need program in subsequent years.]

3       (4) If licensure is for more than 1 year, the fees described                

4   in subsection (1) are multiplied by the number of years for which           

5   the license is issued, and the total amount of the fees shall be            

6   collected in the year in which the license is issued.                       

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

8   department at the time an application for a license, permit, or             

9   certificate is submitted.  If an application for a license,                 

10  permit, or certificate is denied or if a license, permit, or                

11  certificate is revoked before its expiration date, the department           

12  shall not refund fees paid to the department.                               

13      (6) The fee for a provisional license or temporary permit is                

14  the same as for a license.  A license may be issued at the                  

15  expiration date of a temporary permit without an additional fee             

16  for the balance of the period for which the fee was paid if the             

17  requirements for licensure are met.                                         

18      (7) The department may charge a fee to recover the cost of                  

19  purchase or production and distribution of proficiency evaluation           

20  samples that are supplied to clinical laboratories pursuant to              

21  section 20521(3).                                                           

22      (8) In addition to the fees imposed under subsection (1), a                 

23  clinical laboratory shall submit a fee of $25.00 to the                     

24  department for each reissuance during the licensure period of the           

25  clinical laboratory's license.                                              

26      (9)  Except for the licensure of clinical laboratories, not                 

27  more than half the annual The cost of licensure activities  as             

1   determined by the department  shall be  provided supported by              

2   license fees.                                                               

3       (10) The application fee for a waiver under section 21564 is                

4   $200.00 plus $40.00 per hour for the professional services and              

5   travel expenses directly related to processing the application.             

6   The travel expenses shall be calculated in accordance with the              

7   state standardized travel regulations of the department of                  

8   management and budget in effect at the time of the travel.                  

9       (11) An applicant for licensure or renewal of licensure under               

10  part 209 shall pay the applicable fees set forth in part 209.               

11      (12) Except as otherwise provided in this section, the fees                 

12  and assessments collected under this section shall be deposited             

13  in the state treasury, to the credit of the general fund.                   

14      (13) The quality assurance assessment collected under                       

15  subsection (1)(g) and all federal matching funds attributed to              

16  that assessment shall be used only for the following purposes and           

17  under the following specific circumstances:                                 

18      (a) The quality assurance assessment and all federal matching               

19  funds attributed to that assessment shall be used to finance                

20  medicaid nursing home reimbursement payments.  Only licensed                

21  nursing homes and hospital long-term care units that are assessed           

22  the quality assurance assessment and participate in the medicaid            

23  program are eligible for increased per diem medicaid                        

24  reimbursement rates under this subdivision.                                 

25      (b) The quality assurance assessment shall be implemented on                

26  May 10, 2002.                                                               

27      (c) The quality assurance assessment is based on the number                 

1   of licensed nursing home beds and the number of licensed hospital           

2   long-term care unit beds in existence on July 1 of each year,               

3   shall be assessed upon implementation pursuant to subdivision (b)           

4   and subsequently on October 1 of each following year, and is                

5   payable on a quarterly basis, the first payment due 90 days after           

6   the date the assessment is assessed.                                        

7       (d) Beginning October 1, 2007, the department shall no longer               

8   assess or collect the quality assurance assessment or apply for             

9   federal matching funds.                                                     

10      (e) Upon implementation pursuant to subdivision (b), the                    

11  department of community health shall increase the per diem                  

12  nursing home medicaid reimbursement rates for the balance of that           

13  year.  For each subsequent year in which the quality assurance              

14  assessment is assessed and collected, the department of community           

15  health shall maintain the medicaid nursing home reimbursement               

16  payment increase financed by the quality assurance assessment.              

17      (f) The department of community health shall implement this                 

18  section in a manner that complies with federal requirements                 

19  necessary to assure that the quality assurance assessment                   

20  qualifies for federal matching funds.                                       

21      (g) If a nursing home or a hospital long-term care unit fails               

22  to pay the assessment required by subsection (1)(g), the                    

23  department of community health may assess the nursing home or               

24  hospital long-term care unit a penalty of 5% of the assessment              

25  for each month that the assessment and penalty are not paid up to           

26  a maximum of 50% of the assessment.  The department of community            

27  health may also refer for collection to the department of                   

1   treasury past due amounts consistent with section 13 of 1941                

2   PA 122, MCL 205.13.                                                         

3       (h) The medicaid nursing home quality assurance assessment                  

4   fund is established in the state treasury.  The department of               

5   community health shall deposit the revenue raised through the               

6   quality assurance assessment with the state treasurer for deposit           

7   in the medicaid nursing home quality assurance assessment fund.             

8       (i) The department of community health shall not implement                  

9   this subsection in a manner that conflicts with 42 USC 1396b(w).            

10      (j) The quality assurance assessment collected under                        

11  subsection (1)(g) shall be prorated on a quarterly basis for any            

12  licensed beds added to or subtracted from a nursing home or                 

13  hospital long-term care unit since the immediately preceding                

14  July 1.  Any adjustments in payments are due on the next                    

15  quarterly installment due date.                                             

16      (k) In each fiscal year governed by this subsection, medicaid               

17  reimbursement rates shall not be reduced below the medicaid                 

18  reimbursement rates in effect on April 1, 2002 as a direct result           

19  of the quality assurance assessment collected under                         

20  subsection (1)(g).                                                          

21                                                                               (l) In fiscal year 2004-2005, $21,900,000.00 of the quality                         

22  assurance assessment collected pursuant to subsection (1)(g)                

23  shall be appropriated to the department of community health to              

24  support medicaid expenditures for long-term care services.  These           

25  funds shall offset an identical amount of general fund/general              

26  purpose revenue originally appropriated for that purpose.                   

27      (14) The quality assurance dedication is an earmarked                       

1   assessment collected under subsection (1)(h).  That assessment              

2   and all federal matching funds attributed to that assessment                

3   shall be used only for the following purposes and under the                 

4   following specific circumstances:                                           

5       (a) Part of the quality assurance assessment shall be used to               

6   maintain the increased medicaid reimbursement rate increases as             

7   provided for in subdivision (d).  A portion of the funds                    

8   collected from the quality assurance assessment may be used to              

9   offset any reduction to existing intergovernmental transfer                 

10  programs with public hospitals that may result from                         

11  implementation of the enhanced medicaid payments financed by the            

12  quality assurance assessment.  Any portion of the funds collected           

13  from the quality assurance assessment reduced because of existing           

14  intergovernmental transfer programs shall be used to finance                

15  medicaid hospital appropriations.                                           

16      (b) The quality assurance assessment shall be implemented on                

17  October 1, 2002.                                                            

18      (c) The quality assurance assessment shall be assessed on all               

19  net patient revenue, before deduction of expenses, less medicare            

20  net revenue, as reported in the most recently available medicare            

21  cost report and is payable on a quarterly basis, the first                  

22  payment due 90 days after the date the assessment is assessed.              

23  As used in this subdivision, "medicare net revenue" includes                

24  medicare payments and amounts collected for coinsurance and                 

25  deductibles.                                                                

26      (d) Upon implementation pursuant to subdivision (b), the                    

27  department of community health shall increase the hospital                  

1   medicaid reimbursement rates for the balance of that year.  For             

2   each subsequent year in which the quality assurance assessment is           

3   assessed and collected, the department of community health shall            

4   maintain the hospital medicaid reimbursement rate increase                  

5   financed by the quality assurance assessments.                              

6       (e) The department of community health shall implement this                 

7   section in a manner that complies with federal requirements                 

8   necessary to assure that the quality assurance assessment                   

9   qualifies for federal matching funds.                                       

10      (f) If a hospital fails to pay the assessment required by                   

11  subsection (1)(h), the department of community health may assess            

12  the hospital a penalty of 5% of the assessment for each month               

13  that the assessment and penalty are not paid up to a maximum of             

14  50% of the assessment.  The department of community health may              

15  also refer for collection to the department of treasury past due            

16  amounts consistent with section 13 of 1941 PA 122, MCL 205.13.              

17      (g) The hospital quality assurance assessment fund is                       

18  established in the state treasury.  The department of community             

19  health shall deposit the revenue raised through the quality                 

20  assurance assessment with the state treasurer for deposit in the            

21  hospital quality assurance assessment fund.                                 

22      (h) In each fiscal year governed by this subsection, the                    

23  quality assurance assessment shall only be collected and expended           

24  if medicaid hospital inpatient DRG and outpatient reimbursement             

25  rates and disproportionate share hospital and graduate medical              

26  education payments are not below the level of rates and payments            

27  in effect on April 1, 2002 as a direct result of the quality                

1   assurance assessment collected under subsection (1)(h), except as           

2   provided in subdivision (i).                                                

3       (i) The quality assurance assessment collected under                        

4   subsection (1)(h) shall no longer be assessed or collected after            

5   September 30, 2007, or in the event that the quality assurance              

6   assessment is not eligible for federal matching funds.  Any                 

7   portion of the quality assurance assessment collected from a                

8   hospital that is not eligible for federal matching funds shall be           

9   returned to the hospital.                                                   

10      (j) In fiscal year 2004-2005, $18,900,000.00 of the quality                 

11  assurance assessment collected pursuant to subsection (1)(h)                

12  shall be appropriated to the department of community health to              

13  support medicaid expenditures for hospital services and therapy.            

14  These funds shall offset an identical amount of general                     

15  fund/general purpose revenue originally appropriated for that               

16  purpose.                                                                    

17      (15) The quality assurance assessment provided for under this               

18  section is a tax that is levied on a health facility or agency.             

19      (16) As used in this section, "medicaid" means that term as                 

20  defined in section 22207.