Section 401.3. New institutional health services

(a) No person shall offer, develop, construct or otherwise establish or undertake to establish within the State a new institutional health service without first obtaining a certificate of need from the Department.

(b) A new institutional health service shall mean the following:

(1) The construction, development or other establishment of a health care facility or health maintenance organization.

(2) An expenditure by or on behalf of a health care facility or Health Maintenance Organization (HMO) in excess of the minimum capital expenditure threshold established by Federal law or regulation which, under generally accepted accounting principles, consistently applied is a capital expenditure. For the purpose of this subsection, any expenditure which is not properly chargeable under generally accepted accounting principles as an expense of operation and maintenance shall be deemed a capital expenditure. An acquisition of a building, property, or equipment by or on behalf of a health care facility or a HMO under lease or comparable arrangement, or through donation, which would have required review if the acquisition had been by purchase, shall be deemed a capital expenditure subject to review.

(3) An expenditure by or on behalf of a health care facility or a health maintenance organization in excess of the minimum capital expenditure threshold established by Federal law or regulation made in preparation for the offering or development of a new institutional health service and any binding arrangement or commitment by either of them for financing the offering or development of the new institutional health service.

(4) Expenditures for the acquisition of an existing health care facility or health maintenance organization shall not be subject to review if notice has been provided to the Department under subsection (c), and the Department finds within 30 days of receipt of the notice that the services or bed capacity of the facility to be acquired will not be changed in being acquired within 1 year from the date of the change of ownership. This does not prohibit facilities from increasing, redistributing, or relocating beds by 10 beds or 10%, whichever is less, of the bed capacity as allowed by paragraph (6).

(5) The acquisition of major medical equipment not owned by or located in a health care facility if the equipment will be used to provide service for inpatients of a health care facility, or if notice has not been provided to the Department under subsection (c).

(6) The obligation of any capital expenditure by or on behalf of a health care facility which results in the addition of a health service not provided in or through the facility in the previous 12 months or which increases the total number of beds, or redistributes beds among various categories other than levels of care in a nursing home, or relocates such beds from one physical facility or site to another, by more than 10 beds or 10% of total bed capacity, whichever is less, over a 2-year period. For purposes of this paragraph, categories of beds in a hospital are those categories of beds established and defined in the instructions and definitions of the Department’s Annual Hospital Questionnaire. Although dialysis stations are not defined as beds in the annual hospital questionnaire, facilities with dialysis stations may increase the number of stations in accordance with this subsection, except that the 10 beds or 10% rule will apply to the number of dialysis stations only. The total bed capacity of the hospital if the dialysis unit is located in a hospital, is separate and distinct from dialysis stations. The 2-year periods shall begin on the date of licensure. Increases not added during a 2-year period cannot be accumulated and carried over to another period, nor will a change in ownership allow increases of more than 10 beds or 10% of total capacity in a 2-year period.

(7) The addition of a health service which is offered in or through a health care facility having an annual operating expense in excess of the minimum operating expense threshold established by Federal law or regulation and which was not offered on a regular basis in or through the health care facility within the 12-month period prior to the time such services would be offered. A health service shall be considered to be offered by or through a health care facility or a health maintenance organization if the service is offered or made available on a regular basis to inpatients or outpatients of a health care facility.

(c) Before any person enters into a contractual arrangement to acquire major medical equipment which will not be owned by or located in health care facility or before any person acquires an existing health care facility, the person shall notify the Department of his intent to acquire such equipment or existing health care facility.

(1) The notice shall be in writing and shall be made at least 30 days before contractual arrangements are entered into to acquire the major medical equipment or the existing health care facility.

(2) In the case of the intended acquisition of major medical equipment, the notice shall contain information regarding the use that will be made of the equipment. In the case of the intended acquisition of an existing health care facility, the notice shall contain information with regard to the services to be offered in the facility and its bed capacity.

(3) Within 30 days after the receipt of the notice, the Department will inform the person providing the notice whether or not the proposed acquisition of either the major medical equipment or the existing health care facility is a new institutional health service. If the Department determines that the acquisition will be a new institutional health service, the acquisition shall be subject to this chapter.

(4) A decision of the Department that an acquisition requires a certificate of need may be appealed to the Hearing Board.

The provisions of this § 401.3 amended April 13, 1984, effective April 14, 1984, 14 Pa.B. 1294. Immediately preceding text appears at serial pages (52910) to (52911).

Notation

Authority

The provisions of this § 401.3 issued under section 2102(a) and (g) of The Administrative Code of 1929 (71 P. S. § 532(a) and (g)); and section 201(14) of the Health Care Facilities Act (35 P. S. § 448.201(14)).