viewing agency may remand the matter to the State Agency for further action or consideration if applicable State law permits such remanding.

(11) If a State Agency (or a reviewing agency, under paragraph (a)(9) or (a)(10) of this section) makes a decision regarding a proposed new institutional health service which the State Agency determines is not consistent with the goals of the applicable health systems plan (established under section 1513(b)(2) of the Act) or the priorities of the applicable annual implementation plan (established under section 1513(b)(3) of the Act), the State Agency (or the reviewing agency, as appropriate) shall submit to the appropriate Health Systems Agency a written, detailed statement of the reasons for the inconsistency.

(12) Preparation and publication, at least annually, of reports by the State Agency of the reviews being conducted (including a statement concerning the status of each such review) and of the reviews completed by the agency since the publication of the last report and a general statement of the findings and decisions made in the course of such reviews.

(13) Access by the general public to all applications reviewed by the State Agency and to all other written materials pertinent to any agency review.

(14) In the case of construction projects, submission to the State Agency by the persons proposing such projects of letters of intent in such detail as may be necessary to inform the agency of the scope and nature of the projects at the earliest possible opportunity in the course of planning of such construction projects.

(15) Provision that if the State Agency does not make a decision regarding a proposed new institutional health service within the period of time specified for State Agency review, the proposal shall be deemed to have been found not to be needed.

(b) Procedures 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 being reviewed.

(c) The procedures may provide that the requirements of paragraph (a) (3),

(4), (7), or (14) of this section shall be deemed satisfied if the appropriate health systems agency has provided for the corresponding procedure found at 42 CFR 122.306(a) (3), (4), (7), or (11).

§ 123.408 Exceptions to use of procedures.

After following the procedure set forth at § 123.406(b), a State Agency may, with respect to any type or group or reviews, request from the Secretary an exception to the requirement of § 123.403(c) that it utilize review procedures which meet the requirements of § 123.407. Such request shall be in writing, shall contain a detailed explanation of the reasons for the request and of the substitute review procedures that the agency intends to follow if the exception is approved, and shall be accompanied by copies of all written comments submitted under § 123.406(b) to the State Agency with respect to the request for an exception. The Secretary may grant such an exeception if he determines that the proposed substitute procedures are less costly or more effective, are consistent with the purposes of the Act, and do not adversely and substantially affect the rights of persons affected by the subject reviews. The State Agency shall distribute copies of substitute procedures approved by the Secretary in accordance with the requirements of § 123.406(c).

§ 123.409 Criteria for State Agency review.

(a) The State Agency shall adopt, and utilize as appropriate, specific criteria for conducting the reviews covered by this subpart, which criteria shall include 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) 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 State 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.

(a) The State 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 State 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 costs, 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; and

(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 other agencies of the State responsible for providing and financing long-term care (including home health services) has been considered.

[42 FR 18607, Apr. 8, 1977]

§ 123.411 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 State Agency shall not 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 the 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: Provided, That the State Agency may impose a limitation on the duration of the certificate of need which shall expire at the end of such time unless the health service is offered prior thereto.

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