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OLR Bill Analysis
sSB 9
AN ACT PROMOTING HOSPITAL FINANCIAL STABILITY.
SUMMARY
This bill modifies the state’s Certificate of Need (CON) program for
health care entities, administered by the Office of Health Strategy’s
(OHS) Health Systems Planning Unit (HSPU). Under the program,
health care entities must generally receive CON approval when
establishing new facilities or services, changing ownership, acquiring
certain equipment, or terminating certain services.
The bill adds to the types of transactions that require CON approval:
(1) transfers of a controlling interest in any entity with at least a 20%
interest of a health care facility, institution, or large group practice (i.e.,
eight or more full-time equivalent physicians); (2) transfers of at least
10% of a hospital’s assets; and (3) issuance of dividends over any three-
year period that exceed 20% of a hospital’s net worth.
Among other changes to CON transactions, the bill (1) eliminates
current law’s CON requirement for acquiring computed tomography
(CT) scanners and (2) requires HSPU to automatically issue a CON for
non-hospital ownership transfers, temporarily until December 31, 2025.
The bill also modifies the criteria HSPU must use when reviewing
CON applications to, among other things, include whether the (1)
applicant’s actions or inactions contributed to the conditions that
resulted in a request to terminate services and (2) applicant satisfactorily
showed the proposal will not affect its finances in a way that would
impair its future operations.
Additionally, the bill makes the following changes affecting health
care facility oversight: 2024SB-00009-R000381-BA.DOCX
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1. authorizes the Department of Public Health (DPH) to impose a
civil penalty of up to $25,000 against a health care institution for
noncompliance with statutory or regulatory requirements, in
addition to various other disciplinary actions authorized under
existing law (e.g., license suspension or revocation, probation, or
a letter of reprimand) (§ 1);
2. requires DPH to establish emergency department diversion
requirements for hospitals when they reroute incoming
ambulances to other hospitals and subjects hospitals and
emergency medical services (EMS) organizations to disciplinary
action for noncompliance with the requirements (§ 2);
3. requires hospitals to report quarterly to OHS, starting by October
31, 2024, on specified financial information (e.g., invoices unpaid
for more than 90 days and their balances) and subjects them to a
civil penalty of up to $10,000 for each incident of noncompliance
(§ 6); and
4. requires OHS to report quarterly, starting by November 30, 2024,
to the Office of Policy and Management secretary summaries of
the reports it receives from hospitals for the prior calendar
quarter (§ 6).
Lastly, the bill makes minor, technical, and conforming changes.
EFFECTIVE DATE: July 1, 2024, except that the provisions (1)
modifying CON program requirements take effect October 1, 2024, and
(2) changing CON definitions take effect upon passage.
§ 1 — DPH DISCIPLINARY AUTHORITY FOR HEALTH CARE
INSTITUTIONS
The bill authorizes the DPH commissioner, after a hearing held in
accordance with the Uniform Administrative Procedure Act, to impose
a civil penalty of up to $25,000 on a health care institution (e.g., a
hospital, freestanding emergency department, outpatient surgical
facility, or long-term care facility) when she finds that the institution
substantially failed to comply with statutory or regulatory 2024SB-00009-R000381-BA.DOCX
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requirements, including licensing regulations.
Existing law already authorizes the commissioner to take various
other disciplinary actions for these reasons, such as license suspension,
revocation, or censure; probation; a corrective action plan; or a letter of
reprimand.
§ 2 — HOSPITAL EMERGENCY DEPARTMENT DI VERSIONS
The bill requires DPH to establish emergency department diversion
requirements for hospitals when they reroute incoming ambulances to
other hospitals because (1) their emergency department’s resources are
fully committed and unavailable to incoming ambulance patients (i.e.,
“saturation”) or (2) they lack medical capability.
Specifically, DPH must establish the following:
1. hospital emergency department diversion requirements that
include, at a minimum, each hospital to adopt related policies
and their required content;
2. the permissible grounds for which a hospital may declare an
emergency department diversion and procedures it must follow
after doing so;
3. requirements for hospitals receiving diverted patients (i.e.,
“receiving hospitals”); and
4. requirements for licensed or certified EMS organizations when a
hospital declares an emergency department diversion.
Before declaring an emergency department diversion, the bill
requires a hospital to notify DPH as the commissioner prescribes. It also
subjects violators to (1) a civil penalty of up to $25,000 for hospitals and
(2) various DPH disciplinary actions (e.g., license suspension,
revocation, or censure) for EMS organizations.
Under the bill, the DPH commissioner must adopt regulations to
implement the emergency department diversion requirements and may
implement policies and procedures while doing so if she publishes her 2024SB-00009-R000381-BA.DOCX
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intent to adopt regulations on the eRegulations system within 20 days
after implementing the policies and procedures. The policies and
procedures are valid until the final regulations are adopted.
§§ 3-5 — CERTIFICATE OF NEED
Definition of “Person”
The bill adds public companies and entities (e.g., nonprofits, business
trusts, and estates) to the statutory definition of “person” for purposes
of the CON program. Under current law, “person” also includes any
individual, partnership, corporation, limited liability company,
association, government subdivision, agency, or private organization of
any character.
By law, HSPU may impose civil penalties on a “person” that fails to
file required data or information, as it may do for health care facilities
and large group practices.
Transactions Requiring CON Approval
By law, health care institutions must generally receive approval from
HSPU when establishing new facilities or services, changing ownership,
acquiring certain equipment, or terminating services.
The bill adds to the types of transactions that require CON approval
the following:
1. transfers of a controlling interest in any entity (e.g., corporation,
nonprofit, limited liability company, or partnership) that directly
or indirectly controls or possesses at least 20% interest of a health
care facility, institution, or large group practice, instead of only
ownership transfers that impact the facility, institution, or
practice itself;
2. transfers of at least 10% of a hospital’s assets, including real estate
transfers; and
3. the issuing of dividends over any three-year period that exceed
20% of a hospital’s net worth. 2024SB-00009-R000381-BA.DOCX
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Temporary Automatic CON Approvals for Non-Hospital
Ownership Transfers
The bill requires HSPU to automatically issue a CON for ownership
transfers for large group practices and health care facilities other than
hospitals that submit a CON determination request (i.e., non-hospital
ownership transfers). HSPU must do this until December 31, 2025,
regardless of existing CON laws.
CON Exemptions for CT Scanners
The bill eliminates the CON requirement for acquiring CT scanners.
Current law requires a CON when acquiring MRI, CT, PET, and
PET/CT scanners, unless they are replacements for scanners previously
approved through the CON process.
CON Review Criteria
The bill adds to the factors HSPU must consider when reviewing a
CON application the following:
1. for service terminations, whether and to what extent the
applicant’s actions or inactions caused or contributed to the
conditions that result in filing the application; and
2. whether the applicant satisfactorily demonstrated that the
proposal will not negatively impact the health care facility’s
finances in a way that jeopardizes or substantially impairs its
future operations.
Under current law, the unit must consider whether there is a clear
public need for the applicant’s proposal. The bill specifies that this
includes a public health or community health need identified in a
community health needs assessment, community service plan,
community health improvement plan, community profile, the
applicant’s long-term plan, or other similar report.
Current law also requires the unit to consider several other criteria
related to health care quality, access, cost effectiveness, and financial
feasibility. The bill makes minor changes to these criteria, principally by
separating these different components into distinct criteria. 2024SB-00009-R000381-BA.DOCX
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By law, HSPU may revise the review criteria by regulation. The bill
allows the OHS executive director to implement policies and procedures
to update the criteria while in the process of adopting them in
regulations. Before implementing the policies and procedures, the bill
requires her to (1) hold a public hearing at least 30 days before and (2)
publish her intent to adopt regulations on the OHS website and
eRegulations system within 20 days after implementing them. The
policies and procedures are valid until the final regulations are adopted.
Cost and Market Impact Reviews
By law, HSPU must conduct a cost and market impact review (CMIR)
of CON applications that propose to transfer a hospital’s ownership if
the purchaser is (1) an in- or out-of-state hospital or hospital system that
had net patient revenue exceeding $1.5 billion for fiscal year 2013 or (2)
organized or operated for profit (CGS § 19a-639f).
The bill expressly authorizes HSPU, when reviewing these CON
applications, to consider the CMIR preliminary report and the response
to it, the final report, and the parties’ written comments on reports that
are part of the review. HSPU may do this if it determined disclosing the
reports is appropriate and each party in the CON proceeding was given
at least 14 days after the final CMIR report was issued to submit written
comments on these reports.
Additionally, when the HSPU approves a CON for these hospital
ownership transfers, current law requires the unit to hire an
independent consultant to serve as a post-transfer compliance reporter
for three years following the transfer’s completion. The bill specifies that
three years is the minimum time period the reporter must serve.
§ 6 — HOSPITAL FINANCIAL REPORTING TO OH S
The bill requires hospitals to report quarterly, starting by October 31,
2024, to the OHS executive director on the following information for the
prior calendar quarter:
1. any vendor invoices unpaid for more than 90 days after their
receipt, regardless of whether the hospital disputed them, and 2024SB-00009-R000381-BA.DOCX
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their outstanding balances;
2. the number of days of cash on hand;
3. the operating and total margins;
4. unpaid rent or utilities;
5. fees, taxes, or assessments owed to public utilities; and
6. unpaid employee health insurance premiums, including unpaid
contributions, claims, or other obligations supporting employees
under self-insured plans.
The bill requires the executive director to develop a uniform template
for hospitals to use to submit the quarterly reports to OHS and to post
the template on the OHS website. The template must (1) include
definitions for the terms it uses and (2) allow for hospitals to explain
disputed charges.
Under the bill, hospitals may request an extension of up to 15 days to
comply with the reporting requirement, as the executive director
prescribes. She may grant an extension request for good cause.
Hospitals who violate the bill’s reporting requirements are subject to
a civil penalty of up to $10,000 for each incident of noncompliance.
Before imposing a penalty, the bill requires the executive director to
notify the hospital of the alleged violation and associated penalty and
allow the hospital to request OHS to review its findings. A hospital must
request the review within 15 days after receiving the notice and the
executive director cannot impose the penalty until the review is
completed. Any penalties OHS collects must be deposited into the
General Fund.
The bill also requires OHS to report quarterly, starting by November
30, 2024, to the Office of Policy and Management secretary summaries
of the reports it receives from hospitals for the prior calendar quarter.
BACKGROUND 2024SB-00009-R000381-BA.DOCX
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Related Bills
SB 440, favorably reported by the Public Health Committee, makes
various changes to the CON program, such as modifying the types of
transactions that require, and are exempt from, CON approval;
transferring responsibility, from HSPU to the attorney general, for
conducting cost and market impact reviews of certain hospital
ownership transfers; and shortening the deadlines for certain CON
processes.
HB 5316, favorably reported by the Public Health Committee, makes
various changes to CON program requirements for large group
practices.
COMMITTEE ACTION
Public Health Committee
Joint Favorable Substitute
Yea 24 Nay 12 (03/22/2024)