Michigan’s Certificate of Need Program

1. Michigan’s Certificate of Need Program Michigan Department of Community Health

2. Federal Certificate of Need Background • Dist. of Columbia and New York developed CON in 1964. • Federally mandated CON programs were established as a national health care cost containment strategy. The 1974 National Health Planning and Resources Development Act mandated that states have CON programs to be eligible for certain public health funds. • In 1986, the federal mandate for CON was not renewed. • CON regulations are structured, in principle, to improve access to quality health care services while containing costs. Health care organizations are required to demonstrate need before investing in a regulated facility, service or equipment. • Since the repeal of the federal mandate, 37 states have retained some form of a CON program.

3. Certificate of Need ProgramsRange of Services Reviewed Under State CON Programs Source: 2002 National Directory of Health Planning, Policy and Regulatory Agencies, American Health Planning Association.

4. Michigan CON Legislation • Public Act 368 of 1978 mandated the Michigan CON program. • The CON Reform Act of 1988 was passed to create a systematic way to develop standards and reduce the number of services requiring a CON. The act also created the CON Commission. The commission, whose membership is appointed by the Governor, is responsible for developing and approving CON review standards. • Public Act 619 of 2002 modified several sections the Public Health Code pertaining to CON including, but not limited to,: • No CON required for non-clinical capital expenditure projects • Redefined “rural county” • Expanded exceptions to CON under MCL 333.22209 • Expanded the CON Commission • Requires review of standards every three years and changes method for developing standards

5. Michigan CON ProgramRequirements and Standards The following projects must obtain a CON [M.C.L. 333.22209(1)]: • Acquire an existing health facility or begin operation of a health facility at a site that is not currently licensed for that type • Make a change in the bed capacity of a health facility • Initiate, replace, or expand a covered clinical service • Make a covered capital expenditure Capital expenditure projects (i.e., construction, renovation) must obtain a CON if the projects exceeds [M.C.L. 333.22203]: • $2,622,500 for clinical service areas, as of January 2004 Note: Thresholds are indexed annually by the department based on the Consumer Price Index.

6. Air ambulances (helicopters) Cardiac catheterization, including diagnostic, therapeutic, angioplasty, PCI, and electrophysiology Computed tomography (CT) scanners Hospital beds – general acute care Magnetic resonance imaging (MRI) Megavoltage radiation therapy (MRT) Neonatal intensive care units (NICU) Nursing home/hospital long-term care beds Open heart surgery Positron emission tomography (PET) Psychiatric beds – acute inpatient Surgical services – hospital and free-standing Transplantation services – bone marrow, including peripheral stem cell, heart, heart-lung, lung, liver, and pancreas Urinary lithotripters Michigan CON ProgramRequirements and Standards continued… Covered Items, Clinical Services and Equipment:

7. CON Review Section (CRS) Contact from Applicant (phone, meeting, letter) LOI pkg. sent to applicant CRS receives LOI Application forms sent to applicant within 15 days Application to CRS No Application to local review agency Additional information review Request for additional information 30 days Recommendations to CRS in advance of decision date Request info. to CRS & local rev. agency 30 days (non-substantive) 90 days (substantive/comparative) Application deemed complete continued Michigan CON ProgramApplication Review Process

8. Michigan CON ProgramApplication Review Process continued…

9. Michigan CON ProgramApplication Review Process continued…

10. Michigan CON ProgramApplication Review Process continued…

11. Non-substantive Review Substantive Individual Review Potential Comparative 120 days 45 days 30 days Proposed decision Proposed decision Comparative grouping 5 days Approval Denial Final decision 5 days 15 days Not comparative Comparative Final decision 120 days Final decision Request for hearing Single proposed decision 15 days Waive mandatory hearing date 90 days Designated Application Dates Non-substantive review – any workday Substantive review – 1st workday of month Comparative review – 1st workday of Feb., June, or Oct. Request for hearing Hearing 90 days unless waived Reconsideration Approval Final decision Final decision Michigan CON ProgramApplication Review Process continued… Continued

12. Commission, standard advisory committee, MDCH or private consultant develops draft standards. MDCH also provides staff assistance. Proposed standards are disapproved by Commission. Commission approves, disapproves, or revises proposed standards. Proposed standards are approved by Commission. Proposed standards may be returned to MDCH, standard advisory committee, or private consultant for further work. Commission holds public hearing. Sent to joint legislative committee for 30-day comment period. Commission meets to approve, disapprove, or revise proposed FINAL review standards. Standards are disapproved by Commission. Standards are approved by Commission. Approved standards sent to joint legislative committee and Governor for 45-day review period. Standards may be returned for further work. Standards are approved by the joint legislative committee and the Governor. Standards are disapproved by the joint legislative committee and the Governor. Review standards become effective and sent to the Office of Regulatory Reform to be published. Standards do not become effective or returned to the Commission for further work. Michigan CON CommissionStandards Development Process MDCH and the Office of the Attorney General provide input (administrative feasibility and legality) regarding any proposed standards.

13. Tools: Annual Hospital Statistical Questionnaire Hospitals, freestanding surgical facilities, freestanding MRT facilities, and freestanding CT facilities Annual PET scanner survey MRI electronic database Michigan Inpatient Data Base (MIDB) General Measures: Measures for Select Services: Infrastructure (i.e., equipment)  Wait times Procedures  Staffing Weighted volumes  Certifications Michigan CON ProgramSurveillance Tools Michigan CON Authority: Act 368, P.A. 1978 – “ A health facility or agency shall provide the department with data and statistics required to enable the department to carry out functions required by federal and state law, including rules and regulations.”

14. Michigan CON ProgramWeb Site: www.michigan.gov/con • Highlights • Listserv • Standards • Laws • Rules • Forms • Notices • FQA • Contact Info • Updates

15. Question & Answers Contact Information: Certificate of Need Program Lewis Cass Building 320 S. Walnut Street, 3rd Floor Lansing, Michigan 48913 Phone: 517/241-3344 Web Site: www.michigan.gov/con