Illinois Health Facilities Planning Board Adopts Newly Revised Part 1110 Rules

February 6, 2009

The Illinois Health Facilities Planning Board (“HFPB”) made substantial revisions to the Certificate of Need rules governing processing, classification policies and review criteria. The revised Part 1110 rules will become effective on February 6, 2009. The HFPB updated various sections in Part 1110 of its rules, modifying the review criteria for several categories of service, reorganizing information requirements, repealing certain provisions and adding a category of service. Repealed provisions contained review criteria for projects involving bed increases and changes, modernization, and freestanding emergency center medical services.

In revising Part 1110, the HFPB developed a new format for establishing need for projects and otherwise documenting the ability of applicants to undertake proposed projects. The new format is designed to provide a uniform approach to the review and assessment of proposed projects. Under the revised rules, the rule section associated with each revised category of service provides a table in which the HFPB specifies required review criteria for the project type. The intent of this format is to assist an applicant in readily determining which criteria must be addressed for the intended project such as establishment of a service, expansion of existing services or modernization of services.

The general review criteria under Section 1110.230 have expanded. Among the changes, the revised rules flesh out the types of information required when addressing the purpose of the project. The required information includes the intended service area’s demographics or characteristics that may affect the need for services in the future, the population’s morbidity or mortality rates, and the population’s financial ability to access health care.

In addition, projects for the discontinuation of a category of service or facility will now have to address Part 1120, Financial Viability and Economic Feasibility Requirements. The Part 1110 criteria for discontinuation projects are also more extensive under the new rules.

The HFPB also added long term acute care hospitals (LTACH) as a new category of service. These new LTACH rules come after the federal government, pursuant to the Medicare, Medicaid, and SCHIP Extension Act of 2007, placed a three year moratorium on the establishment and classification of new LTACHs, LTACH satellite facilities and LTACH beds in existing LTACHs or satellite facilities. The moratorium is scheduled to end December 28, 2010. Unless and until the moratorium ends, one would not expect most LTACH providers to file for CON approval for this new category of service.

The review criteria for revised categories of service now include a requirement that staffing availability be documented. The Planning Board staff has not frequently indicated concerns about the availability of staffing, nonetheless, these provisions have returned to the rules. Certainly competitive compensation and benefit plans help ensure the availability of staff, however, staffing costs are also a key driver of escalating health care costs. It could be suggested that an analysis of the operating costs associated with staffing new or expanded facilities would be more relevant to health planning activities.

Also, the new rules formalize the criteria for constructing “shell space” in a response to the legislative mandate that such standard for unfinished space be included in rule revisions.

Under the revised rules, the HFPB significantly increased the amount of documentation a CON applicant must submit to satisfy the review criteria for its project. Providers may find the new requirements more onerous and the process will likely require additional expenses and human resources. Generally, an applicant must submit more detailed information, some of which must be supported by third-party data. For example, if a projected demand for service is based upon rapid population growth in an applicant’s market area, the applicant must, among other things, define its market area based upon historical patient original data by zip code or census tract and document population changes in terms of births, deaths and net migration for a period of time equal to or in excess of the projection horizon.

The HFPB staff members are currently working to make available a new form CON application which conforms to the revised rules.

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