§ 122.308 Criteria for health systems agency review.

(a) The health systems agency shall adopt, and utilize as appropriate, specific criteria for conducting the reviews covered by this subpart, which criteria shall inlcude at least the following general considerations:

(1) The relationship of the health services being reviewed to the applicable health systems plan and annual implementation plan adopted pursuant to section 1513(b) (2) and (3), respectively, of the Act.

(2) The relationship of services reviewed to the long-range development plan (if any) of the person providing or proposing such services.

(3) The need that the population served or to be served by such services has for such services.

(4) The availability of less costly or more effective alternative methods of providing such services.

(5) The immediate and long-term financial feasibility of the proposal, as well as the probable impact of the proposal on the costs of and charges for providing health services by the person proposing the new institutional health service.

(6) The relationship of the services proposed to be provided to the existing health care system of the area in which such services are proposed to be provided.

(7) The availability of resources (including health manpower, management personnel, and funds for capital and operating needs) for the provision of the services proposed to be provided and the availability of alternative uses of such resources for the provision of other health services.

(8) The relationship, including the organizational relationship, of the health services proposed to be provided to ancillary or support services.

(9) The special needs and circumstances of those entities which provide a substantial portion of their services or resources, or both, to individuals not residing in the health service areas in which the entities are located or in adjacent health service areas. Such entities may include medical and other health professions schools, multidisciplinary clinics and specialty centers.

(10) The special needs and circumstances of health maintenance organizations for which assistance may be provided under Title XIII of the Act. Such needs and circumstances include the needs of and costs to members and projected members of the health maintenance organization in obtaining health services and the potential for a reduction in the use of inpatient care in the community through an extension of preventive health services and the provision of more systematic and comprehensive health services. The consideration of a new institutional health service proposed by a health maintenance organization shall also address the availability and cost of obtaining the proposed new institutional health service from the existing providers in the area that are not health maintenance organizations. The criteria established by the health systems agency pursuant to this paragraph shall be consistent with standards and procedures established by the Secretary under section 1306(c) of the Act (see 42 CFR 110.204).

(11) The special needs and circumstances of biomedical and behavioral research projects which are designed to meet a national need and for which local conditions offer special advantages.

(12) In the case of a construction project

(i) The costs and methods of the proposed construction, including the costs and methods of energy provision, and

(ii) The probable impact of the construction project reviewed on the costs of providing health services by the person proposing such construction project.

(b) Criteria adopted for reviews in accordance with paragraph (a) of this section may vary according to the purpose for which a particular review is being conducted or the type of health service reviewed.

ommend that a State grant a certifiIcate of need under its certificate of need program, or otherwise make a finding that such proposed new institutional health service is needed, unless:

(a) The health systems agency makes written findings as to:

(1) The efficiency and appropriateness of the use of existing inpatient facilities providing inpatient services similar to those proposed; and

(2) The capital and operating costs (and their potential impact on patient charges), efficiency, and appropriateness of the proposed new institutional health service; and

(b) The health systems agency makes each of the following findings in writing:

(1) That superior alternatives to such inpatient services in terms of cost, efficiency, and appropriateness do not exist and that the development of such alternatives is not practicable.

(2) That in the case of new construction, alternatives to new construction (e.g., modernization or sharing arrangements) have been considered and have been implemented to the maximum extent practicable;

(3) That patients will experience serious problems in terms of cost, availability, or accessibility, or such other problems as may be identified by the reviewing agency, in obtaining inpatient care of the type proposed in the absence of the proposed new service.

(4) That in the case of a proposal for the addition of beds for the provision of skilled nursing or intermediate care, the relationship of the addition to the plans of agencies of the State responsible for providing and financing longterm care (including home health services) has been considered.

[42 FR 18606, Apr. 8, 1977]

§ 122.310 Health maintenance organizations; required finding.

In the case of any new institutional health service proposed to be provided by or through a health maintenance organization, a health systems agency shall not recommend that a State Agency deny a certificate of need with respect to such service (or otherwise make a finding under this subpart

that such service is not needed) in those cases (a) when the State Agency has granted a certificate of need which authorized the development of the service, or expenditures in preparation for such offering or development (or has otherwise made a finding that such development or expenditure is needed), and (b) when the offering of this new institutional health service will be consistent with the basic objectives, time schedules, and plans of the previously approved application.

PART 123-STATE

HEALTH PLANNING AND DEVELOPMENT AGENCIES

Subpart E-[Reserved]

Subpart F-Special Provisions for Certain States-Section 1536 of the Act

123.501 Additional grants to State Agencies. 123.502 Additional requirements of State Agencies.

123.503 Special provisions for memberships of Statewide Health Coordinating Councils.

123.504 Preliminary State health plan.

AUTHORITY: Sec. 215, 58 Stat. 690 (42 U.S.C. 216); Secs. 1521-25, 1532, 1536, of the Public Health Service Act; 88 Stat. 2242-49.

SOURCE: 43 FR 10120, Mar. 10, 1978, unless otherwise noted.

§ 123.1

Subpart A-Definitions

Definitions.

As used in this part:

(a) "Act" means the Public Health Service Act, as amended.

(b) "Conditionally designated State Agency" means an agency of the government of a State which has been designated as a State health planning and development agency on a conditional basis pursuant to section 1521(b)(2) of the Act.

(c) "Designation agreement" means an agreement entered into or renewed pursuant to section 1521 of the Act.

(d) "Fully designated State Agency" means an agency of the government of a State which has been designated as a State health planning and development agency pursuant to section 1521(b)(3) of the Act.

(e) "Governor" means the chief executive officer of a State or his designee.

(f) "Grant period" means the period with respect to which assistance is provided under Subpart C of this part.

(g) "Health care facility" means a health care facility as defined in Part 100 of this title.

(h) "Health maintenance organization" means a health maintenance organization as defined in Part 100 of this title.

(i) "Health service area" means an area designated by the Secretary pur

suant to section 1511 of the Act as a health service area.

(j) "Health systems agency" means a conditionally or fully designated health systems agency designated pursuant to section 1515 of the Act and 42 CFR Part 122.

(k) "Provider of health care" means an individual

(1) Who is a direct provider of health care (including (but not limited to) a physician, dentist, nurse, optometrist, podiatrist, or physician assistant) in that the individual's primary current activity is the provision of health care to individuals or the administration of facilities or institutions (including but not limited to hospitals, long-term care facilities, substance abuse treatment facilities, outpatient facilities, and health maintenance organizations) in which such care is provided and, when required by State law, the individual has received professional training in the provision of such care or in such administration and is licensed or certified for such provision or administration, or

(2) Who is an indirect provider of health care in that the individual:

(i) Holds a fiduciary position with or has a fiduciary interest in, an entity described in paragraph (i)(2)(ii) (B) or (D) of this section; (for purposes of this paragraph, a "fiduciary position or interest" as applied to any entity means a position or interest with respect to such entity affected with the character of a trust, including members of boards of directors and officers, majority shareholders, agents and attorneys); or

(ii) Receives (either directly or through his spouse) more than onetenth of his gross annual income from any one or combination of the following:

(A) Fees or other compensation for research into or instruction in the provision of health care;

(B) Entities or associations or organizations composed of entities or individuals engaged in the provision of health care or in such research or instruction;

(C) Producing or supplying drugs or other articles for individuals or entities for use in the provision of or in re

search into or instruction in the provision of health care; and

(D) Entities or associations or organizations composed of such entities or individuals

engaged in producing

drugs or such other articles; or

(iii) Is a member of the immediate family of an individual described in paragraph (i)(1) or paragraph (i)(2) (i), (ii), or (iv) of this section (for purposes of this paragraph, “immediate family" as applied to any individual includes only his parents, spouse, children, brothers and sisters who reside in the same household); or

(iv) Is engaged in issuing any policy or contract of individual or group health insurance or hospital or medical service benefits.

(1) "Secretary" means the Secretary of Health, Education, and Welfare and any other officer or employee of the Department of Health, Education, and Welfare to whom the authority involved has been delegated.

(m) "State" means any one of the several States, the District of Columbia, the Commonwealth of Puerto

Rico, the Virgin Islands, Guam, the Trust Territory of the Pacific Islands, and American Samoa and the Northern Mariana Islands.

(n) "State health planning and development agency" or "State Agency" means an agency of State government selected by the Governor and designated in an agreement entered into pursuant to section 1521 of the Act to carry out the State's health planning and development program.

(0) "Statewide Health Coordinating Council" or "SHCC" means the body established pursuant to section 1524 of the Act to advise the State health planning and development agency.

Subpart B-Designation of State Health Planning and Development Agencies

§ 123.101 Purpose and scope.

(a) Section 1521 of the Public Health Service Act authorizes the Secretary to enter into an agreement with the Governor of each State for the designation of a State health planning and development agency for such State for the purpose of the performance within

the State of the physical and mental health planning and development functions prescribed by section 1523 of the Act. Each such State health planning and development agency shall administer the State administrative program prescribed by section 1522 of the Act and shall, except as authorized under § 123.107, perform within the State the functions prescribed by section 1523 of the Act.

(b) The regulations of this subpart are applicable to agreements, pursuant to section 1521 of the Public Health Service Act, for the conditional or full designation of a State health planning and development agency for a State. § 123.102 Application.

The Secretary may not enter into a designation agreement under this subpart unless an application has been submitted to the Secretary for such an agreement. The application shall be submitted by a State at such time and in such form and manner as the Secretary may prescribe and shall be executed by the Governor.

§ 123.103 Contents of applications.

In addition to such other information as the Secretary may require, an approvable application shall contain:

(a) General. (1) A State administrative program which meets the applicable requirements of § 123.104 of this subpart.

(2) In the case of an application for designation of a State Agency on a conditional basis pursuant to section 1521(b)(2) of the Act, a proposed plan for the orderly assumption and implementation of the health planning and development functions prescribed by section 1523 of the Act and § 123.106(b) of this subpart.

(3) Assurances satisfactory to the Secretary that the agency selected by the Governor as the State Agency has the authority and resources to administer the State administrative program of the State and to carry out the health planning and development functions prescribed by section 1523 of the Act (or, in the case of an application for designation of a State Agency on a conditional basis pursuant to section 1521(b)(2) of the Act), that such

agency will have such authority and resources as may be required to implement its approved plan for the orderly assumption and implementation of such functions.

(4) In the case of an application for full designation pursuant to section 1521(b)(3) of the Act, a description of the Statewide Health Coordinating Council, which has been established for the State under section 1524 of the Act and Subpart D of this part, including a description of the manner in which the SHCC is organized and functions.

(5) A description of the proposed health planning and development activities of the State and a description of the proposed relationships between the agency selected by the Governor as the State Agency and other agencies of State government responsible for health programs of the State, including the agencies responsible for programs in alcoholism, drug abuse, mental health, and health manpower education and training (such as the Board of Higher Education or Commission on Education), and the manner in which planning for these programs will be coordinated with long-range health service needs within the State.

(6) A statement as to whether the State intends to develop a State medical facilities plan for the purpose of participating in the program authorized by Title XVI of the Act, and, if the State does so intend, a description of the manner in which the State Agency will administer or supervise the administration of such plan.

(b) State health plan. In addition to the requirement of paragraph (a), a State Agency must submit:

(1) A copy of its preliminary State health plan as part of its application for full designation, except that a State Agency which will have been conditionally designated for 24 months or less at the time that it enters into a full designation agreement need not submit a preliminary State health plan until it next applies for full designation; and

(2) A copy of the State health plan prepared and adopted by the SHCC as part of the State Agency's next appli

cation for full designation following the submission of the preliminary State health plan required in paragraph (b)(1) of this section, and as part of each subsequent application for designation.

§ 123.104 State administrative program.

(a) General. A State administrative program (hereinafter referred to as the "State Program") is a program for the performance within the State by its State Agency of the functions prescribed by section 1523 of the Act and § 123.106(b). The Secretary may not approve a State Program for a State unless it:

(1) Meets the applicable requirements of paragraph (b) of this section;

(2) Has been submitted to the Secretary by the Governor of the State as part of the application for a designation agreement; and

(3) Has been submitted to the Secretary only after the Governor of the State has afforded to members of the general public of the State a reasonable opportunity to express their views on the proposed State Program both in writing and at a public meeting sponsored by the State. At a minimum, notice of the time, place, and purpose of such meeting shall be given to members of the public at least two weeks prior to such meeting and at least 30 days prior to the date of submission of the application to the Secretary. Such notice shall also provide that a copy of the proposed State Program will be available for public inspection and copying at a specified address, and shall invite written comments thereon by members of the public. A summary of the comments made at the public meeting and copies of any written comments of members of the public shall be appended to the application.

(b) Program requirements. To be approved by the Secretary under this subpart, a State Program must:

(1) Provide for the performance within the State (after the designation of a State Agency and in accordance with the designation agreement) of the functions prescribed by section 1523 of the Act and § 123.106(b) and specify the State Agency of the State