of the Public Health Service Act, as amended.

§ 51.2 Definitions.

All terms not defined herein shall have the same meanings as given them in the Act. As used in this subpart:

(a) "Act" means section 314 of the Public Health Service Act, as amended (42 U.S.C. 246).

(b) "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 may be delegated.

(c) "State program" refers to the State plan for comprehensive health planning which contains the information, proposals, and assurances submitted by the State agency pursuant to section 314(a) of the Act and the regulations of this subpart.

(d) "State agency" means the single State agency (which may be an interdepartmental agency) designated in the State program for administering or supervising the administration of the State's health planning functions under the State program.

§ 51.3 Submission of State programs.

In order to receive funds from an allotment under this subpart, a State must submit to and have approved by the Secretary a State program which incorporates by referer ce the information and meets the requirements specified in the Act and in the regulations of this subpart. Such program shall be submitted by the State agency officially designated and authorized to administer it and carry out the functions prescribed hereunder, after reasonable opportunity has been provided to the Governor of the State for his review and comment. Documents incorporated by reference become a part of the State program as though fully set forth therein. Such documents must be (a) clearly identified as to subject, date, and location, (b) officially adopted and disseminated in accordance with applicable procedures, and (c) made available to the Secretary and to the public for inspection.

§ 51.4 State program requirements.

(a) Responsibility of State agency. The State program must provide that the State agency will either administer or supervise the administration of the activities to be carried out under it. In order to assure adequate supervision by the State agency of the administration of activities under the State program carried out by other agencies, institutions, organizations, or individuals, the State program must incorporate by reference documents showing that the State agency (1) is able to obtain from such other agencies, institutions, organizations, or individuals the data needed for formulation and evaluation of, and accountability for, planning activities; (2) has established methods for performing continuing professional and administrative evaluations of such activities; and (3) is in a position to take such steps as may be necessary to assure that such activities meet Federal and State requirements.

(b) State health planning council. The State program must incorporate by reference documents showing that a State health planning council has been established to advise the State agency in carrying out its functions under the approved State program. Council membership shall include representatives of State agencies (other than the designated State agency) and local agencies and of nongovernmental organizations and groups concerned with health (including representation of the regional medical programs established under Title IX of the Act which are included in whole or in part within the State), and one or more representatives of Federal agencies concerned with health: Provided, That, if there is located in the State one or more hospitals or other health care facilities of the Veterans' Administration, the membership of the council shall include as an ex officio member the individual whom the Administrator of Veterans' Affairs shall have designated to serve on such council as the representative of the hospitals or other health care facilities or such Administration which are located in the State; and the requirement of representation of Federal agencies concerned with health shall be satisfied by the inclusion of such Veterans'

Administration representative. A majority of the council members must be consumer representatives whose major career or occupation is neither the organization, financing, or delivery of health services, nor research in or the teaching of health sciences. Membership of the council shall generally reflect the various socioeconomic groups and geographic areas of the State. The council shall meet as often as necessary and not less often than twice a year for the purposes of consulting with and advising the State agency with respect to:

(1) The scope of planning activities to be undertaken by the State agency; (2) The commendations to be made by the State agency as a result of such activities; and

(3) Necessary review and modifications of the State program.

(c) Expenditure of grant funds. The State program must incorporate by reference written policies and procedures for the expenditure of funds under the program, which shall provide that:

(1) The scope of comprehensive health planning will encompass the need for services (including home health services), facilities, and manpower to meet the physical, mental, and environmental health needs of the people of the State, and the financial and organizational resources through which these needs may be met;

(2) Such planning will be concerned with both publicly and privately supported health services and activities;

(3) A method for determining priorities of planning activity will be established to insure that the most critical planning problems are scheduled for early attention;

(4) Methods will be established for obtaining and utilizing, in the formulation of planning priorities and recommendations, effective and appropriate informational support, including statistical data and, where feasible, social, economic, demographic, and similar base data consistent with those to be utilized for other comprehensive planning activities in the State;

(5) To administer or supervise the administration of the planning functions under the State program and to provide staff assistance to the State

health planning council, the State agency will establish positions, including the full-time position of comprehensive health planning director, to be filled by persons with appropriate qualifications: Provided, That the Secretary may, in particular cases, approve arrangements for administering or supervising the administration of the State agency's planning activities through other than a full-time director where he finds that such other arrangements will result in the effective administration of such activities;

(6) The State agency will cooperate with and assist in the development of needed regional, metropolitan area, and other local area health planning agencies and be prepared to act upon, and to inform the Secretary of its actions with respect to, grant applications under section 314(b) of the Act.

(d) Encouraging cooperative efforts. The State programs must incorporate by reference written policies and procedures for encouraging cooperative efforts among governmental and nongovernmental agencies, organizations, and groups concerned with health and related services, facilities, and manpower. As a minimum, such policies and procedures must provide methods for:

(1) Coordinating the State agency's planning activities with specialized health planning and other related planning activities, such as the development of mental retardation plans, construction plans for health and medical facilities, community mental health plans, regional medical programs, environmental quality plans, and State physical and economic planning;

(2) Considering the most effective and efficient manner of meeting health needs in the fields of welfare, education, and rehabilitation; and

(3) Considering the special needs of high-risk population groups for preventive and health care services.

(e) Federal funds to supplement State funds otherwise available. The State program must contain satisfactory assurances that Federal funds will not supplant funds that would otherwise be made available by the State for the purpose of comprehensive health planning and that Federal

funds will, to the extent practicable, be used to increase the level of nonFederal funds available for such purpose. Substantial compliance with such assurance will be deemed to have been met if the level of non-Federal funds made available to and spent by the State for comprehensive health planning is at least no lower for any fiscal year than it was in the immediately preceding fiscal year, except that the Secretary may also take into consideration the extent to which the level of such funds for any fiscal year may have included funds for an activity of a nonrecurring nature.

(f) Methods of administration. The State program shall:

(1) Provide for the establishment and maintenance of personnel standards on a merit basis for persons employed by the State in carrying out the State program. Conformity with the Standards for a Merit System of Personnel Administration, 45 CFR Part 70, issued by the Secretary of Health, Education, and Welfare, including any amendments thereto, and any standards prescribed by the U.S. Civil Service Commission pursuant to section 208 of the Intergovernmental Personnel Act of 1970 (Pub. L. 91-648; 84 Stat. 1915) modifying or superseding such Standards, will be deemed to meet this requirement as determined by said Commission. Laws, rules, regulations, and policy statements, and amendments thereto, effectuating such methods of personel administration shall be incorporated by reference in the State plan;

(2) Incorporate by reference written policies and procedures for informing interested parties and organizations and the general public about the agency's activities and recommendations;

(3) Contain an assurance that no more than 50 percent of the funds available to the State agency under the State program will be used for contracting with other agencies and organizations to conduct planning functions under the State program without specific approval from the Secretary; and

(4) Incorporate by reference written policies and procedures by which criteria will be developed as a basis for approval or disapproval of applications

for area-wide health planning project grants under section 314(b) of the Act.

(g) Reports and records. (1) The State program must contain an assurance that, in addition to any other reports or records required by the regulations of this subpart or which may reasonably be required by the Secretary under the Act:

(i) The State agency will maintain adequate records to show the disposition of all funds (Federal and non-Federal) expended for activities under the approved State program;

(ii) The Secretary will be provided copies of each recommendation, plan or portion of a plan adopted by the State agency;

(iii) An annual narrative summary of the planning activities undertaken during the preceding year will be submitted to the Secretary; and

(iv) Expenditure reports on forms prescribed by the Secretary will be submitted within 60 days after the close of the Federal fiscal year.

(2) All records required by the Act and the regulations of this subpart shall be retained for 3 years after the submission of the annual expenditure report required by paragraph (g)(1)(iv) of this section: Provided, That (i) all records pertaining to audit questions which have arisen before the end of such 3-year period shall be retained until resolution of all such questions, and (ii) records for nonexpendable property which was acquired under the State plan shall be retained for 3 years after its final distribution.

(3) All records required by the Act and the regulations of this subpart shall be available to the Comptroller General of the United States and the Secretary, or their authorized representatives, for purposes of making audits, examinations, excerpts and transcriptions.

(h) Review and modification. The State program must contain an assurance that the State agency will review and evaluate its approved program at least once annually and submit appropriate modifications to the Secretary. As a minimum, the State agency shall submit annual modifications of the State program which will (1) reflect budgetary and expenditure requirements for the next fiscal year, (2) set

forth priorities established for planning activity to be undertaken in the next fiscal year, and (3) update any assurances or other informational requirements included in the State program.

(i) Program for capital expenditures. (1) The State program must incorporate by reference a written program providing for assisting, through consultation, provision of information, and advice, each health care facility and health maintenance organization in the State to develop a program for capital experitures for replacement, modernization, and expansion in accordance with criteria which will meet the needs of the State for health care facilities, equipment and services without duplication and otherwise in the most efficient and economical manner. Such criteria will be established by the Secretary after consultation with the State, and will be based on the following considerations:

(i) Whether a proposed project is needed or projected as necessary to meet the needs in the community in terms of health services required: Provided, That projects for highly specialized services which will draw from patient population outside the community will receive appropriate consideration;

(ii) Whether a proposed project can be adequately staffed and operated when completed;

(iii) Whether a proposed capital expenditure is economically feasible and can be accommodated in the patient charge structure of the health care facility or health maintenance organization without unreasonable increases;

(iv) Whether a project will foster cost containment or improved quality of care through improved efficiency and productivity, including promotion of cost-effective factors such as ambulatory care, preventive health care services, home health care, and design and construction economies, or through increased competition between different health services delivery systems.

(2) The State agency furnishing such assistance shall periodically review such capital expenditure program of each health care facility or health maintenance organization in

the State and recommend appropriate modification thereof.

(3) The assistance and review required under this paragraph may be provided either by the State comprehensive health planning agency itself, or, under such State agency's control and supervision, by a local public or private nonprofit agency, or by another State agency qualified and authorized to provide such assistance and designated in the State program as the agency with the primary responsibility therefor.

(4) For purposes of this section, the term "health care facility" includes hospitals, psychiatric hospitals, tuberculosis hospitals, skilled nursing facilities, home health agencies, and providers of outpatient physical therapy services (including speech pathology services) as defined in section 1861(e), (f), (g), (j), (o) and (p), respectively, of the Social Security Act (except that such term shall not apply with respect to outpatient physical therapy services performed by a physical therapist in his office or in a patient's home); kidney disease treatment centers, including freestanding hemodialysis units; intermediate care facilities as defined in section 1905(c) of the Social Security Act; and organized ambulatory health care facilities such as health centers, family planning clinics, and facilities providing surgical treatment to patients not requiring hospitalization (surgicenters), which are not part of a hospital but which are organized and operated to provide medical care to outpatients.

(5) For purposes of this section, the term "health maintenance organization" means a public or private organization, organized under the laws of any State which

(i) Provides or otherwise makes available to enrolled participants health care services, including at least the following basic health care services; usual physician's services, hospitalization, laboratory, X-ray, emergency and preventive services, and out-ofarea coverage;

(ii) Is compensated (except for copayments) for the provision of the basic health care services listed in paragraph (i)(5)(i) of this section to

enrolled participants on a predetermined periodic rate basis; and

(iii) Provides physicians' services primarily (A) directly through physicians who are either employees or partners of such organization, or (B) through arrangements with individual physicians or one or more groups of physicians (organized on a group practice or individual practice basis).

(j) Accounting procedures. The State program shall incorporate by reference such w.itten fiscal control and fund accounting procedures as are necessary to assure the proper disbursement of and accounting for funds paid to the State under this subpart. Such procedures shall provide for an accurate and timely recording of receipts and funds from State and Federal sources, of expenditures made from such funds for comprehensive health planning purposes under the State program, and of any unearned balances of Federal funds paid to the State, and for the determination of allowability and the allocation of costs in accordance with Subpart Q of 45 CFR Part 74. Controls shall be established by the State agency to insure that expenditures charged to comprehensive State health planning funds are for allowable purposes and that documentation is readily available to verify the accuracy of such charges.

[37 FR 17834, Sept. 1, 1972, as amended at 38 FR 26194, Sept. 19, 1973; 33 FR 31381, Nov. 13, 1973]

§ 51.5 State allotments.

(a) Determination. The allotment of funds for any year to each State shall be the product of:

(1) The percentage which the State's weighted population bears to the total of the weighted populations of all States, multiplied by;

(2) The amount of appropriated funds available for allotment for the fiscal year; except that the allotment for any State which, as a result of such computation, is less than one percent of the amount available for allotment shall be increased to one percent of such amount and the allotments to other States shall be proportionately reduced as necessary but not below an amount equal to one percent. For the purposes of this section, the term