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OLR Bill Analysis
SB 440
AN ACT CONCERNING CERTIFICATES OF NEED.
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.
It adds to the transactions that require CON approval (1) investments
in health care facilities or large group practices of 10 or more physicians
by private equity companies that acquire a direct or indirect controlling
interest, (2) relocation of certain services outside the municipality where
they are currently provided, and (3) those involving private equity
companies that result in an increase or decrease in health care facilities’
assets.
The bill eliminates CON requirements, temporarily until June 30,
2030, for (1) cardiac catheterization or cardiac surgery units, psychiatric
units, substance use disorder units, and rural health services; (2)
upgrades to radiology technology; and (3) increases in children’s
behavioral health beds, among other things.
It also permanently eliminates CON requirements for, among others,
the (1) relocation of outpatient services within the same municipality or
within 20 miles from where they are currently located and (2) increase
or reduction in health care facilities’ licensed bed capacity of up to 12
beds within a two-year period starting October 1, 2024.
Additionally, the bill does the following: 2024SB-00440-R000314-BA.DOCX
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1. shortens the deadlines for several CON processes, including
application reviews and determinations, public hearings, and
related notifications (§ 2);
2. allows applicants to request HSPU to (a) meet with them before
they submit an application or (b) expedite the timeline for an
application review (§ 2);
3. transfers, from HSPU to the attorney general (AG), responsibility
for conducting cost and market impact reviews for certain
hospital ownership transfers (§ 4);
4. requires OHS to study the state’s CON process and report the
study results to the Public Health Committee by January 1, 2025
(§ 3); and
5. starting October 1, 2024, prohibits an insurance company that
invests in any health care institution from exercising operational
or managerial control or decision-making authority related to the
institution’s health care service delivery (§ 5).
Lastly, the bill makes various technical and conforming changes.
EFFECTIVE DATE: October 1, 2024, except the CON study provision
takes effect upon passage.
§ 1 — CON TRANSACTIONS
Transactions Requiring a CON
The bill adds the following to the transactions requiring CON
approval:
1. the relocation of outpatient, behavioral health care, substance use
disorder, women’s health care, or emergency medical services
outside of the municipality where they are currently provided
(for outpatient services, this applies only to those relocated more
than 20 miles from their current location);
2. investments in a health care facility by a private equity company
that (a) acquires a direct or indirect controlling interest in a health 2024SB-00440-R000314-BA.DOCX
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care facility or (b) has decision making authority over the facility
or the ability to control its operations or management;
3. transactions in which a private equity company (a) acquires a
direct or indirect controlling interest in a large group practice of
10 or more full-time equivalent physicians or (b) has decision
making authority over the practice or the ability to control its
operations or management; and
4. transactions involving a private equity company in which a
health care facility’s assets would be increased or reduced (the
bill does not specify by how much).
Transactions Exempt From CON Requirements
The bill temporarily exempts the following transactions from CON
requirements until June 30, 2030:
1. the establishment or expansion of diagnostic or therapeutic
cardiac catheterization or cardiac surgery units, psychiatric units,
substance use disorder units, or rural health services (the bill
does not define this term);
2. upgrades to radiologic technology (the bill does not define this
term);
3. increases in children’s behavioral health beds (the bill does not
specify by how much);
4. increases in capacity for existing services offered by health care
facilities (the bill does not define this); and
5. increases in the number of operating rooms at health care
facilities existing on or before October 1, 2024 (the bill does not
specify by how much).
The bill also permanently eliminates CON requirements for the
following:
1. the relocation of outpatient services (a) within the municipality 2024SB-00440-R000314-BA.DOCX
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where they are currently provided or (b) no more than 20 miles
from the current location where they are provided and
2. increases or reductions in a health care facility’s licensed bed
capacity of up to 12 beds within any two-year period, starting
October 1, 2024.
§ 2 — CON APPLICATION REVIEWS AND DETERMI NATIONS
Pre-Application Informational Meeting
The bill permits applicants, before submitting a CON application, to
request an informational meeting with HSPU to discuss application
process requirements. The unit must hold the informational meeting
within one week after the date it receives the applicant’s request.
CON Deadlines
Existing law establishes a process for HSPU to review and make
determinations on CON applications. The bill shortens deadlines for
certain steps in this process as described below.
Application Review Period. By law, when HSPU determines it
received a completed CON application, it must notify the applicant and
post the notice on its website to begin the review process. For
applications that do not have a public hearing (see below), the bill
reduces the time within which HSPU must review and issue a decision
after posting the notice as follows:
1. from 60 to 20 days, for applications to transfer ownership of a
large group practice in response to a request for proposal (RFP)
or other voluntary offer for sale, and
2. from 90 to 30 days, for all other applications.
Under the bill, if HSPU does not issue a decision within these
deadlines, the application is deemed approved.
The bill also reduces, from 60 to 20 days, the time by which HSPU
may extend the review period for a completed application when the
applicant requests it or shows good cause. 2024SB-00440-R000314-BA.DOCX
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Expedited Review Period. The bill permits an applicant to request
an expedited timeline for a CON determination as HSPU prescribes. It
requires HSPU to (1) develop a process for approving these requests and
(2) after accepting a request, make a determination on the application
no more than 14 days after the date the completed application is
submitted.
Public Hearings. By law, HSPU may hold a public hearing on any
CON application, and must do so for the following completed
applications:
1. hospital ownership transfers;
2. voluntary large group practice ownership transfers, if 25 or more
people, or a person representing 25 or more people, requests it in
writing; and
3. any other applications, if three or more people, or someone
representing an entity of five or more people, requests it in
writing.
The bill reduces, from 30 to 10 days after HSPU deems an application
complete, the time within which a public hearing request must be made.
It also requires HSPU to provide at least five days’ advanced notice of
the hearing to the applicant and the public, instead of two weeks, as
under current law.
After HSPU closes the public hearing record, the bill requires the unit
to issue a decision on the application within 20 days, instead of 60 days
as under current law. Under the bill, if HSPU does not issue a decision
within 20 days, the application is deemed approved.
Independent Consultants
The bill authorizes HSPU to contract with independent consultants
or others the OHS executive director deems necessary to help review
and issue decisions on applications submitted starting October 1, 2024.
Starting by July 1, 2025, the bill requires the executive director to 2024SB-00440-R000314-BA.DOCX
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begin posting quarterly on the OHS website all costs incurred from
contracting with the independent consultants.
§ 3 — CON STUDY
The bill requires the OHS executive director to study the state’s CON
process, including the following:
1. examining the health care systems costs resulting from delays or
inefficiencies in the CON process;
2. holding at least three public hearings that allow providers,
insurers, the public, and other stakeholders to give testimony on
the CON process; and
3. developing recommendations to improve the CON process by
reducing delays; streamlining administrative processes; and
hiring trained, experienced staff instead of contracting with
third-party experts.
Under the bill, the executive director must report the study results to
the Public Health Committee by January 1, 2025.
§ 4 — COST AND MARKET IMPA CT REVIEWS
Existing law requires the state to 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 a
hospital system that had net patient revenue exceeding $1.5 billion for
fiscal year 2013 or (2) organized or operated for profit.
The bill transfers, from HSPU to the AG, responsibility for
conducting the CMIR and requires the unit to notify the AG of the need
for a review within 21 days after it receives a properly filed application
for a hospital ownership transfer. To effectuate the transfer, the bill
requires the AG to do the following:
1. initiate a CMIR by sending the transacting parties a written notice
that includes a description of the basis for the CMIR and a request
for information and documents; 2024SB-00440-R000314-BA.DOCX
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2. conduct any inquiry, investigation, or hearing needed to
complete the CMIR (e.g., issue subpoenas, take testimony under
oath, or require the production of records or documents);
3. keep any nonpublic information and documents he obtains while
conducting the CMIR confidential and only disclose them (a)
with the consent of the person who produced them or (b) in a
preliminary or final report if it is in the public interest, after
taking into account privacy, trade secret, or anti-competitive
considerations;
4. make factual findings and issue a preliminary CMIR report
within 90 days after determining the transacting parties
substantially complied with any request for information or
documents, or on a later date mutually agreed to with the
transacting parties;
5. issue a final CMIR report within 60 days after issuing the
preliminary report;
6. hire an independent consultant to conduct the CMIR, which he
must select from a pool of three applicants proposed by the
transacting parties; and
7. submit the bills for the consultant’s services to the hospital
purchaser, who must pay the bills, up to $200,000 per application,
within 30 days after receiving them.
Under existing law, after the final CMIR report is issued, the AG may
then investigate whether the transacting parties engaged in or, after the
proposed ownership transfer, are expected to engage in (1) unfair
methods of competition, (2) anti-competitive behavior, or (3) other
conduct that violates the Connecticut Unfair Trade Practices Act or any
other state or federal law.
By law, the attorney general may take appropriate legal action to
protect consumers in the health care market and the final report may be
evidence in any such action. 2024SB-00440-R000314-BA.DOCX
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A hospital ownership transfer cannot be completed until at least 30
days after the AG issues the final CMIR report or while any of the above
actions brought by the AG are pending.
BACKGROUND
Related Bills
sSB 9, favorably reported by the Public Health Committee, makes
various changes to the CON program, such as adding to the types of
transactions requiring CON approval and modifying criteria HSPU
must use when reviewing CON applications.
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
Yea 36 Nay 1 (03/21/2024)