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June 20, 2014

Public Health Council Approves Amendments to Determination of Need Regulations

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On June 18, 2014, the Public Health Council (“PHC”) approved for adoption amendments to the Determination of Need (“DoN”) regulations to comply with the requirements of Chapter 224 of the Acts of 2012 ("Chapter 224"). The regulatory changes will become effective on August 1, 2014. The following is a summary of the changes that were adopted:

Health Policy Commission (“HPC”): The HPC is now a party of record for all DoN applications. This means that the HPC must receive notice of all DoN applications and copies of all documentation submitted. The HPC may comment on any application, provide written recommendations to the Department of Public Health ("DPH"), and recommend whether DPH should request an independent cost analysis (see below).

Attorney General (“AG”): The AG now has the right to request a hearing on any DoN application, to intervene in any application where there is a hearing regardless of whether the hearing was requested by the AG, and to offer comments. The AG also has the right to ask questions of any party that chooses to speak at a public hearing held by DPH on an application. All DoN applicants must provide the AG with the legal notice of the DoN filing and the AG has 30 days to request a hearing. The AG may review and comment on any independent cost analysis conducted.

Independent Cost Analysis: DPH may require the applicant to demonstrate that the application is consistent with HPC cost containment goals by requesting that the applicant have an independent cost analysis performed at its own expense. If DPH requests this analysis, the 4 month period for DoN review will be stayed until complete. The applicant must provide the analysis to the HPC and all parties of record.

Review Period: DPH must act on a DoN application within 4 months of filing (except as noted above regarding the cost analysis). DPH also may extend the review period for up to 2 months after the applicant has provided all of the information that DPH requested during the initial 4 month review period.

Filing Fee: The DoN application fee will double from 0.1% to 0.2% of the total capital expenditure for the project.

Ambulatory Surgery:

• The DoN regulations now reflect the changes to the definition of ambulatory surgery for DoN purposes that became effective with the passage of Chapter 224. Specifically, “ambulatory surgery” means outpatient surgery whether performed in a freestanding ambulatory surgery center (“ASC”), or in a hospital. This means that DoN approval is now required for changes that relate to ambulatory surgery regardless of whether it is provided in a freestanding clinic or at the main campus or satellite of a hospital.

• The regulations also now permit uncontested DoN applications for ASC changes of ownership to be approved through the delegated review process, thereby not being subject to a vote of the PHC.

The handouts presented to the PHC regarding these regulatory changes include: Amendments to 105 CMR 100.000: Determination of Need Program, June 18, 2014 and Request to Promulgate Amendments to CMR 100.000.

Andrew Levine is a partner at Donoghue, Barrett & Singal, where he provides regulatory guidance, business and corporate legal services, as well as strategic advice, to healthcare clients. You can find him on Google+ and LinkedIn.

About the Authors

Crystal Bloom

Crystal Bloom is a partner and a senior healthcare regulatory attorney in Donoghue Barrett & Singal's Health Law group. She provides state and federal regulatory guidance and corporate legal services to healthcare providers. You can find her on LinkedIn.

Andrew Levine

Andrew Levine is a partner and head of the firm's regulatory practice. He provides regulatory guidance, business and corporate legal services, as well as strategic advice to healthcare clients. You can find him on Google+ and LinkedIn.

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