to note that some of these problems are also addressed in the changes provided for in your bill, H. R. 10460. Mr. Chairman, we urge you and the committee to favorably Detailed rationales and legislative

consider our recommendations in revising the law.

language for each of our suggested amendments are appended.

National Guidelines for Health Planning

As a first step in ensuring a sound and effective planning process, at the local and state levels, we strongly believe that the National Guidelines for Health Planning should serve as a flexible guide to the development of local health plans and objectives. Mandatory federal guidelines imposed uniformly by each HSA and in each state, with modifications only through a cumbersome exceptions process (as previously proposed by HEW in regulations), would prevent the development of viable health service plans adapted to local needs. They would also make the federal government the preeminent planner and others mere agents carrying out the will of those at the top.

We believe that whenever standards, numbers, and formulas are developed

in HEW guidelines, they should be considered in the light of and adapted to local situations. To clarify the relationships between local and national authorities,

as intended in the original law, the Association proposes an amendment to Section 1513(b) which will make it clear that the National Guidelines be taken into consideration

by HSAs, in the formulation of health plans, rather than be imposed as inflexible, mandatory rules, to be rigidly followed at the local level.

Functions and Procedures of Planning Agencies

We firmly believe that the scope of CON should be broadened and that the functions and procedures of planning agencies should be more adequately defined, to increase the

effectiveness and equity of the health planning program. amendments which are designed to achieve these goals.

Following are several

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A.

B.

The first of these amendments would expand the scope of the requirement for state

CON laws to encompass health capital expenditures without regard to ownership or location. We believe that the private offices of health practitioners should be subject to CON review to the extent that those offices are proposing to obtain highly specialized equipment or develop facilities that are typically provided in an institutional setting. It is our belief that the scope of the CON process should not be limited to a portion of the health system. For example, the requirement for CON must prevent not only the undue proliferation of hospital-based CAT scanners, but also the proliferation of such scanners in other settings. In addition to the application of CON to the physician's office as we have described, CON coverage should also apply to such activities as

health maintenance organizations, ambulatory surgical centers, extended-care facilities, and home health services. Health facilities and services can now be established in a variety of settings, without following local and state health plans and without obtaining CON approval while in other settings these same facilities and services are subject to rigorous controls.

We also are recommending a group of related amendments that are designed to clarify the advisory roles of HSAs and Statewide Health Coordinating Councils (SHCCs) with regard to review of applications for various types of federal funds. Current law suggests that the federal government has delegated to HSAs, and, in some instances, to SHCCs, the decision-making authority over applications for federal health grants to local entities or to states. We do not believe that this is, or should be, the practice.

The distinction which we propose between advisory and decision-making roles would keep local planning agencies in the business of planning and out of the realm of making grant awards. The final decision regarding federal project grants rests with the responsible federal agency, taking into account the recommendations of local planning units.

In a related issue, we believe that the provisions of P.L.93-641 which would provide area health services development funds to HSAs should be changed. This authority dilutes the focus of HSA planning activity by extending the functions of the agency to grant making and grant managing. While we agree that these development funds should be available to meet certain identified local needs, we believe that grant making and grant managing in this program should be the responsibility of the state agency, rather than of the HSA. Statewide health services development funds should be earmarked for projects which have been identified and recommended by HSAs.

C. Additional amendments we propose would consolidate all of the P.L.93-641 requirements for review procedures into Section 1532, where most of them now appear. These amendments would (1) require that proposed projects shall be deemed to be approved unless they are rejected by written opinion within the 90-day statutory review period; (2) provide for a public forum to be held by the HSA, at the local level, at which all interested persons may appear and present statements or evidence on the application being considered or the review being conducted; and (3) permit a formal hearing to be requested by either the HSA or the applicant, prior to the decision of the state agency, on a CON application or appropriateness review.

D.

Our Association believes that the planning process would be strengthened if HSAs were permitted initially to phase in their functions in an orderly manner, according to their capabilities and resources. We are proposing an amendment to Section 1513 (b) to accomplish this purpose. We believe that our amendment would improve the credibility and effectiveness of HSAs by requiring them to perform functions within-rather than beyond--their capabilities and resources.

Composition of Planning Body Governing Boards

The underlying philosophy of P.L.93-641 is that health care planning is to be developed

through an effective coalition, at the local level, of consumer and provider

representatives.

Confusion and ambiguity in the language of the statute regarding representational requirements on HSA governing boards have, in some instances, impeded the achievement of this important goal of the Act. developed amendments to Sections 1503(b), 1512(b), and 1524(b) that would assure

Accordingly, we have

direct representation of hospital administrators on the governing boards of planning agencies, and that would redefine the term "indirect provider" to facilitate selection of interested, informed, and effective consumer representatives.

A. Current law does not require that hospitals be represented by persons directly involved in hospital administration. Therefore, institutions may be represented by individuals who are not in the best position to reflect the views of hospital management. We propose amendments to ensure that representatives of hospital administration be included at all levels of the planning process, and be eligible for membership on an HSA board if either their residence or place of principal employment is within the health service area.

B.

Although the potential for economic conflicts of interest is a valid concern, the definition of "indirect provider" in Section 1531 is overly broad. We believe that the definition misclassifies as providers persons who have only tangential, incidental, or indirect ties to the health system. The definition also includes others, such as insurers, whose roles and responsibilities are those of purchasers. Such persons should be classified as consumer representatives.

Accordingly, the Association recommends amendments that would revise the definition of "indirect provider" to exclude (1) members of the immediate family of an indirect provider, (2) any individual who receives less than one quarter

of his or her gross income from a health care interest, a direct provider, or certain other health activities, and (3) insurers who do not provide health services to the public, either directly or through affiliates or subsidiaries.

Appropriateness Review

We suggest that the appropriateness review sections in P.L.93-641 are unnecessary and recommend their deletion from the law. A definition of this function has not been developed, and standards and guidelines have not been proposed to assist HSAs and state agencies with implementation-reflections of the difficulties this requirement poses.

A major problem is created by the fact that the law now requires HSAs and state agencies to review, on a periodic basis, each individual service and facility within the area or the state to determine its appropriateness. The magnitude of this burden can be appreciated when one considers that there are over 7,000 hospitals, many of which provide a broad range of services; more than 22,000 nursing homes; and many other institutional providers--all of which require appropriateness review. We believe that such a requirement adds an impossible burden to planning agencies, which have more urgent tasks to accomplish.

We believe that the overall assessment of the appropriateness of facilities and services is a part of the preparation of an HSP. On the other hand, we do not believe that an individual review for appropriateness of the myriad of services offered in an area is an effective use of planning resources. Therefore, we recommend the deletion of appropriateness review from the functions of HSAs, as detailed in Section 1513(g), and State Health Planning and Development Agencies (SHPDAs), as stated in Sections 1523 (a) (b) and 1523(b)(3).