(v) Any changes in health benefits to be provided by non-health maintenance alternatives during the period for which the estimated contribution is to be determined; and

(vi) Any other anticipated material change in the experience rating basis under any health benefits contract for the benefit period.

(g) An employer or its designee shall retain for at least three years the data used to compute its level of contribution to the alternatives included in the health benefits plan. Such data may be reviewed by the Secretary either on his own initiative or in response to a request which sets forth reasonable grounds supporting such a request, to determine whether the level of contributions determined by the employer complies with this subpart.

§ 110.808 Relationship of section 1310(a) of the Public Health Service Act to the National Labor Relations Act as amended and the Railway Labor Act, as amended.

The obligation of an employer subject to this subpart to include the option of membership in a qualified health maintenance organization in any health benefits plan offered to its eligible employees shall be carried out consistently with the obligations imposed on such employer under the National Labor Relations Act and the Railway Labor Act.

Subpart I-Continued Regulation of Health Maintenance Organizations [Reserved]

Subpart J-Fair Hearing [Reserved]

Sec.

122.305 Adoption and public notice of review procedures and criteria.

122.306 Procedures for health systems

agency review.

122.307 Exceptions to use of procedures. 122.308 Criteria for health systems agency review.

122.309 Inpatient facilities; required findings.

122.310 Health maintenance organizations; required finding.

AUTHORITY: Sec. 215, 58 Stat. 690 (42 U.S.C. 216); sec. 1515 and 1516 of the Public Health Service Act, 88 Stat. 2239, 2241; (41 U.S.C. 3001-4, 3001-5).

SOURCE: 41 FR 12824, Mar. 26, 1976, unless otherwise noted.

Any terms not defined herein shall have the same meaning as given them in Title XV of the Act.

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

(b) "A-95 Agency" means an areawide planning and development clearinghouse established under Title IV of the Intergovernmental Cooperation Act of 1968.

(c) “Conditionally designated health systems agency" means an entity which has been designated as a health systems agency on a conditional basis pursuant to section 1515(b)(1) of the Act.

(d) "Designation agreement” means an agreement entered into or renewed pursuant to section 1515 of the Act.

(e) "Fully designated health systems agency" means an entity which has been designated as a health systems agency pursuant to section 1515(c)(1) of the Act.

(f) "Governing body" means, in the case of a nonprofit private entity or similar legal mechanism, the governing body of such entity or mechanism and, in the case of a public regional planning body or single unit of general local government, the governing body for health planning of such body or

single unit as required by section 1512(b)(3) of the Act which is responsible for the health planning and development functions of such body or single unit.

(g) "Governor" means the chief executive officer of a State or his desig

nee.

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

(i) "Health service area" means an area designated by the Secretary pursuant to section 1511 of the Act as a health service area.

(j) "Health systems agency" or "agency" means a conditionally or fully designated health systems agency as defined in paragraphs (c) and (e) of this section.

(k) "Health resources" includes health services, health professions personnel, and health facilities, except that such term does not include Christian Science sanitoriums operated, or listed and certified, by the First Church of Christ Scientist, Boston, Massachusetts. For purposes of this subpart, "health professions personnel" means individuals whose main occupation is the delivery of health services.

(1) “Non-metropolitan area" means an area no part of which is within an area designated as a standard metropolitan statistical area by the Office of Management and Budget.

(m) "PSRO" means an entity designated as a Professional Standards Review Organization under section 1152 of the Social Security Act.

(n) "Nonprofit", as applied to any entity, means that no part of the net earnings of such entity inures or may lawfully inure to the benefit of any private shareholder or individual.

(0) "Provider of health care" means an individual:

(1) Who is a direct provider of health care (including, but not limited to, a physician (doctor of medicine or doctor of osteopathy, dentist, nurse, podiatrist, or physician assistant in that the individuals' 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, out-patient 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, any entity described in paragraph (o)(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 a 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 research into or instruction in the provision of health care; and

(D) Entities or associations or organizations composed of entities or individuals engaged in producing drugs or such other articles;

(iii) Is a member of the immediate family of an individual described in paragraph (o)(1) or paragraph (o)(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.

(p) "Jurisdiction", as applied to any unit of general local government,

means the geographical area within which such unit exercises general purpose political authority.

(q) "Unit of general local government" means (1) any city, municipality, county, township, town, borough, parish, village or other general purpose subdivision of a State; (2) a recognized Indian tribal government; or (3) an Alaska Native Village as defined in the Alaska Native Claims Settlement Act.

(r) "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.

(s) "State" means any one of the several States, the District of Columbia and the Commonwealth of Puerto Rico.

(t) "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.

(u) "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.

Subpart B-Designation of Health Systems Agencies

§ 122.101 Purpose and scope.

(a) Section 1515 of the Public Health Service Act authorizes the Secretary to enter into agreements with eligible entities for the designation of such entities as health systems agencies for health service areas established pursuant to section 1511 of the Act as geographical regions appropriate for the effective planning and development of physical and mental health services. Each such health systems agency shall have as its primary responsibility the provision of effective health planning for its health service area and the promotion of the development within the area of health services, manpower, and facilities which meet identified needs, reduce documented inefficiencies, and

implement the health plans of the

agency.

(b) The regulations of this subpart are applicable to agreements, pursuant to section 1515 of the Public Health Service Act, under which the Secretary conditionally or fully designates an entity as a health systems agency for a health service area.

§ 122.102 Eligibility.

To be eligible to enter into an agreement under section 1515 of the Act for designation as a health systems agency for a health service area, an entity must be:

(a) A nonprofit private corporation (or similar legal mechanism such as a public benefit corporation) which is incorporated in the State in which the largest part of the population of the health service area resides. Such corporation may not be a subsidiary of, or be otherwise controlled by, any other private or public corporation or other legal entity. For purposes of this subpart, a corporation or similar legal mechanism is controlled by another private or public corporation or other legal entity where such corporation or entity is legally empowered to exercise authority over its performance of the health planning and development functions. Such corporation or similar legal mechanism must be authorized only to engage in health planning and development functions and may not provide health services except for providing (directly or indirectly) health care for its employees.

(b) A single or multipurpose public regional planning body whose planning area is identical to the health service area, and which (1) has a governing board composed of a majority of elected officials of units of general local government or (2) was, prior to January 4, 1975, in existence and authorized by State law to carry out health planning and review functions such as those described in section 1513 of the Act; Provided however, That such public regional planning body may not be an agency of state government; or

(c) A single unit of general local government if the area of the jurisdiction of that unit is identical to the health service area.

Provided, That a health

systems agency may not be an educational institution or operate such an institution. For purposes of this subpart, (1) an educational institution means an institution whose primary purpose is the provision of educational programs, and (2) an entity shall be deemed to operate such an institution where it has the direct responsibility for administering an educational institution or supervising its administration.

§ 122.103 Application.

An application under this subpart shall be submitted at such time and in such form and manner as the Secretary may prescribe, and shall be executed by an individual authorized to act for the applicant and to assume for the applicant the obligations imposed by the Act, the regulations of this subpart, and any additional terms or conditions of the agreement entered into pursuant to § 122.106 or 122.107 of this subpart. '

§ 122.104 Contents of applications.

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

(a) In the case of an application for conditional designation pursuant to section 1515(b) of the Act and this subpart:

(1) A copy of the Articles of Incorporation and by-laws of the applicant (or, in the case of a public regional planning body or single unit of general local government, its charter, authorizing statute, ordinance, or executive order and any internal rules or regulations governing its operations) which must meet the requirements of § 122.104(b)(1) of this subpart or, if the entity is not incorporated (or, in the case of a public regional planning body or single unit of general local government, is not chartered or otherwise authorized by statute, ordinance, or executive order) or does not have by-laws (or, with respect to a public regional planning body or single unit of general local government, has not

'Applications and instructions may be obtained at the Regional Offices of the Department of Health, Education, and Welfare for the region in which the applicant is located.

adopted rules or regulations governing its operations) at the time of application, a description of the proposed articles of incorporation or proposed charter, authorizing statute, ordinance, or executive order and by-laws or proposed rules or regulations and the time-table for obtaining such incorporation or authorization and adopting such by-laws or rules or regulations governing its operations) prior to entering into an agreement pursuant to § 122.106 of this subpart.

(2) A description of the health care needs and resources within the health service area.

(3) A detailed description of the functions which the applicant proposes to carry out during the period of the Conditional Designation Agreement, the manner in which it proposes to carry out such functions, and a time-phased plan for the orderly assumption of all the responsibilities and functions of a health systems agency as set forth in section 1513 of the Act (hereinafter referred to as the "work program").

(4) In the case of an applicant which has decided to establish subarea advisory councils, a detailed description of the need for and proposed use of such subarea advisory councils.

(5) A detailed description of the current and projected staff to be employed by the applicant during the period of the conditional designation agreement, including their qualifications (including proposed qualifications where positions are not filled), authority, functions, numbers, assignments, and the manner in which they will be organized to carry out the agency's work program.

(6) A detailed description of the services and the approximate cost of the services the applicant expects to be provided by contractors and consultants.

(7) A detailed description of the facilities, equipment, financial, and other resources available to the applicant.

(8) A detailed description of the manner in which the residents of the health service area have been involved in the formation of the applicant entity and the submission of the application under this subpart including

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