Connecticut Health Law

Health care providers both inside and outside of Connecticut will have their eyes trained on the General Assembly’s Joint Committee on Public Health next week when it takes up Governor’s Bill No. 795, An Act Establishing the Office of Health Care Strategy and Improving the Certificate of Need Program. The Bill represents the culmination of a year-long effort to reassess the state’s CON program that was headed by a specially appointed 16-member CON Task Force charged with determining “if changes are necessary to ensure quality of care and access for all state residents, and the preservation of an open and competitive market.”

The Task Force issued a wide-ranging final report to Governor Malloy on January 15, 2017 recommending – sometimes by majority vote but other times only by a plurality – various changes to modify the scope of CON regulation, update the manner by which CON applications are reviewed and processed by the Office of Health Care Access (OHCA) and expand OHCA’s enforcement and monitoring authority.  In early February, the Governor submitted Bill No. 795 which, if implemented in its present form, would bring about sweeping amendments to Connecticut’s CON law, including the following:

• Establishment of new facilities: Under the proposed amendments, only the establishment of new hospitals (defined to include licensed general, short-term acute care and children’s hospitals or a specialty hospital that provides chronic disease treatment, maternity, inpatient psychiatric, rehabilitation or hospice services), outpatient surgical facilities (OSFs) and freestanding emergency departments would require CON approval.
• Acquisition of imaging equipment: Under the proposed amendments, CON approval to acquire advanced imaging equipment would no longer be required for hospitals and other providers that can demonstrate that self-referral is not an issue for them and that Medicaid beneficiaries and indigent persons will be provided access to services.
• Reduction of services: The proposed amendments require that hospitals and hospital systems receive CON approval for the reduction of inpatient or outpatient services. (Under current law, no CON is required for hospital service reductions.)
• Relocation of services: The proposed legislation would require CON approval for the relocation of a health care facility (including an OSF), except where the relocation would be to an area identified in the Statewide Health Care Facilities and Services Plan (Statewide Plan) as being underserved or having reduced access to specific types of health care services. In these cases, notification to OHCA through a CON Determination request would be required.
• Termination of services: The proposal would eliminate the current requirement that a CON be obtained for the termination of surgical services by an OSF. However, the termination of an Emergency Department or inpatient or outpatient services offered by a hospital or hospital system would still require CON approval except that terminations due to insufficient volume or lack of available practitioners to support the effective delivery of care may be accomplished through the CON Determination process.
• What else gets eliminated: The requirement to obtain CON approval to establish cardiac services, to increase licensed bed capacity, or for a hospital or OSF to add two or more operating rooms within any three-year period has been eliminated.
• Increased obligations on providers: The proposed law increases the obligations of CON applicants in a number of ways. Prior to any public hearing, in addition to publishing notice of the filing of their CON application, the applicant will also be required to request publication of a notice in at least two websites within the affected community. For all CON applications, OHCA may retain an independent consultant to help review the application, with the consultant being paid by the applicant. Additionally, CON applications involving the transfer of ownership of a hospital or any other health care facility to a hospital or hospital system will be subject to a cost and market impact review (CMIR), which will be funded by the applicant up to $200,000. (The CMIR process previously only applied to transfer of ownership of a hospital or hospital system if the purchaser had net patient revenue above $1.5 billion or was a for-profit entity.)
• CON application guidelines: While under current law, OHCA applies blanket guidelines and principles in its deliberations on CON applications, the bill establishes different criteria for different types of applications. These criteria emphasize access to services by Medicaid beneficiaries and indigent persons; improving quality, accessibility and cost effectiveness of health care; and alignment of the proposal with the Statewide Plan.
• CON compliance mechanisms: Where the transfer of ownership of a hospital or another health care facility or large group practice to a hospital or hospital system is approved, OHCA will hire an independent consultant to serve as a post-transfer compliance reporter for three years after closing. If the reporter finds that the purchaser has breached a condition of approval in the CON, they may implement a performance improvement plan, institute an action to enjoin the purchaser from violating the CON, or impose a civil monetary penalty. Upon the filing of the CON application, the purchaser in these situations must initially fund an escrow account with $200,000 to pay for the independent consultant’s services. Additionally, civil penalties for failure to file a CON or other required information with OHCA could be assessed if the failure was due to mere negligence; the current standard is willfulness.
• Establishment of Office of Health Strategy: The Bill would establish a new Office of Health Strategy which would, among other things, direct and oversee OHCA.

We emphasize that these are just proposed changes at this point and that many different constituencies are expected to weigh in on Bill No. 795 as the legislative process unfolds this Spring. At present, the Bill has been referred to the Joint Committee on Public Health, and a public hearing is scheduled for March 20, 2017