Conditions on Certificates of Need: Approval at What Price?

Section 1122 of the Social Security Act Amendments of 1972, 42 U.S.C. §1320a-I.

State health planning and development agencies (SHPDAs) are charged to administer state certificate of need programs by §1523(a)(4)(B) of the Public Health Service Act, 42 U.S.C. §300m-2(a)(4)(B).

Health Planning and Resources Development Amendments of 1979, Pub. L. No. 96-79, amending, inter alia, various sections of Title XV of the Public Health Service Act (the latter hereinafter referred to as the “Act”).

Section 117 of Pub. L. No. 96-79 added new §1527 to the Public Health Service Act, codified at 42 U.S.C. §300m-6.

Representative Satterfield David E. III (D-Va.) was the sponsor of the bill which evolved into the conditions amendment, §1527(a)(2), 42 U.S.C. §300m-6(a)(2).

Horty Hoff , An Analysis of the Satterfield Amendment to the Federal Health Planning Act: Practical Benefits to Hospitals (National Council of Community Hospitals, 1979) (hereinafter cited as “Horty-Hoff”).

Simpson , Conditions on Certificate of Need Approvals: A Legal Framework and Some Practical Suggestions (Western Center for Health Planning, 1980) (hereinafter cited as “Simpson”).

Horty-Hoff , supra note 6, at 2.

Simpson , supra note 7, at 7, 9.

Section 1527(a)(2), 42 U.S.C. §300m-6(a)(2).

See Horty-Hoff , supra note 6, at 2, 5–7 and Simpson , supra note 7, at 5.

Horty-Hoff , supra note 6, at 7, citing 125 Cong. Rec. H6235-36 (daily ed. July 19, 1979) (remarks of Rep. Satterfield). See also H. R. Rep. No. 96–90, 96th Cong., 1st Sess., 78 (1979) (expressing the view of the Interstate and Foreign Commerce Committee that such conditions “are not appropriate”).

Horty-Hoff , supra note 6, at 6.

Id. at 5.

Simpson , supra note 7, at 4–5 (noting contexts other than health planning in which conditional approvals are a “familiar tool of administrative agency procedure”).

Id. at 5, citing 125 Cong. Rec. H6237 (daily ed., July 19, 1979) (remarks of Rep. Preyer and Rep. Waxman).

Horty-Hoff , supra note 6, at 8, referring to H. R. 3917, as reported by the Subcommittee on Health and Environment of the House Interstate and Foreign Commerce Committee; Simpson , supra note 7, at 5.

Horty-Hoff , supra note 6, at 15; Simpson , supra note 7, at 5.

Simpson , supra note 7, at 9. The test, according to Simpson, is whether the condition is or is not “based upon Federal or State law.” Id. at 5, quoting S. Rep. No. 96–309, 96th Cong., 1st Sess., 82 (1979).

Horty-Hoff , supra note 6, at 16. Hence their ubiquitous reference to the conditions amendment as the “Satterfield amendment.”

Section 1527(a)(2)(A), 42 U.S.C. §300m-6(a)(2)(A).

Section 1532(c), 42 U.S.C. §300n-1(c). Should Congress subsequently amend §1532(c) to add more review criteria, those additional criteria would be permissible sources of CON conditions. This is not the case with respect to the federal regulatory criteria. See notes 30 and 31, infra, and accompanying text.

See generally Horty-Hoff , supra note 6, at 20-24.

Id. at 21.

Id. at 24.

Simpson , supra note 7, at 9.

Id. at 9-10.

Id. at 9.

Id. As an example, Simpson notes that the determination of whether a proposed specialty service would be accessible to low-income persons “depends on the accessibility of the entire facility to such persons.” Id.

Section 1527(a)(2)(B), 42 U.S.C. §300m-6(a)(2)(B).

44 Fed. Reg. 19315, 19320 (1979), codified at 42 C.F.R., Part 122, Subpart D and Part 123, Subpart E (1979).

Horty-Hoff , supra note 6, at 24-25; Simpson , supra note 7, at 6.

Horty-Hoff , supra note 6, at 24.

Simpson , supra note 7, at 6.

Id. at 6, citing S. Ref. No. 96-309, 96th Cong., 1st Sess., 82 (1979).

Horty-Hoff , supra note 6, at 25 n.13.

The post-Pub. L. No. 96-79 CON regulations were published as a Notice of Proposed Rulemaking at 45 Fed. Reg. 20026 (1980), and were promulgated as final regulations at 45 Fed. Reg. 69740 (1980) (These revised regulations are now codified in the 1980 edition of volume 42 of the Code of Federal Regulations).

In addition, the number of CON review criteria was increased from 14 to 21.

See Section 1527(a)(2)(B), 42 U.S.C. §300m-6(a)(2)(B).

The Secretary of HHS is apparently cognizant of this limitation, as evidenced by the discussion in the explanatory Appendix to the final regulations of new §123.413, dealing with “Required findings on access.” This new regulatory section provides that, where the SHPDA approves a project, but finds that the project does not satisfy the SHPDA's access criteria based on §123.412(a)(5), (6), the SHPDA “may … impose the condition that the applicant take affirmative steps to meet those criteria.” 45 Fed. Reg. at 69754, 42 C.F.R. §123.413(b). Apparently in response to public comments received following the NPRM questioning the validity of the provision for affirmative action access-related conditions, the Secretary clarified that this provision “gives planning agencies no more authority than they have under the Act” and that such conditions are “discretionary” with the States. 45 Fed. Reg. at 69773.

Section 1527(a)(2)(C), 42 U.S.C. §300m-6(a)(2)(C).

Horty-Hoff , supra note 6, at 26.

Id.

Id. at 26-29 (relying on the phrase “an authorization prescribed by State law”).

Id. at 29-31 (relying on the phrase “prescribed by regulation by the State Agency”).

Id. at 31-32, citing the last sentence of §1527(a)(2), 42 U.S.C. §300m-6(a)(2).

Simpson , supra note 7, at 7 n.19.

Id.

Id.

See 43 Fed. Reg. 11229-41 (1978); 43 Fed. Reg. 21273-82 (1978).

Simpson , supra note 7, at 5.

Horty-Hoff , supra note 6, at 7, 10 (characterizing such a condition as one of the “abuses” the conditions amendment was designed to prevent). Consider, however, whether a condition requiring a change in the governing body of a hospital would be valid if it were lawfully promulgated by the SHPDA pursuant to subparagraph (C).

See §1532(c)(3), 42 U.S.C. §300n-1(c)(3), and 42 C.F.R. §123.409(a)(3)(i) (referring to “the need that the population served or to be served” has for the proposed services).

Simpson , supra note 7, at 8.

Id., citing 42 C.F.R. §123-409(a)(3)(i).

Horty-Hoff , supra note 6, at 13.

Id. at 19.

Id. at 2, 5.

Id. at 12, 15, 26.

Simpson , supra note 7, at 10, citing 42 C.F.R. §123.409(a)(5).

Simpson , supra note 7, at 10.

Horty-Hoff , supra note 6, at 20-24.

42 C.F.R. §123.409(a)(8).

Horty-Hoff , supra note 6, at 24-25.

See §1532(c)(1), 42 U.S.C. §300n-1(c)(1) and 42 C.F.R. §123.409(a)(1).

See generally Simpson , supra note 7, at 10-11, 13–20.

Horty-Hoff , supra note 6, at 14.

Id. at 14-15.

Simpson , supra note 7, at 1.