An Act To Repeal Certificate of Need as It Applies to Hospitals, Ambulatory Surgical Units and Physician Offices
Maine Legislature, Session 122, LD 1487
Committee: Health and Human Services
Sponsors: SHIELDS, TURNER, BOWLES, LEWIN, MARRACHE, SAVIELLO, DAVIS, ROSEN, WESTON
Amends: 22 MRSA §328, 22 MRSA §329, 22 MRSA §330, 22 MRSA §331, 22 MRSA §345, 22 MRSA §347, 22 MRSA §348, 38 MRSA §1310-X

Legislative Document 
No. 1487 
H.P.1043 
House of Representatives, March 24, 2005 
An Act To Repeal Certificate of Need as It Applies to Hospitals, 
Ambulatory Surgical Units and Physician Offices 
Reference to the Committee on Health and Human Services suggested and ordered printed. 
Presented by Representative SHIELDS of Auburn. 
Cosponsored by Senator TURNER of Cumberland and 
17/~ 
1J1.11l(}£~ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: BOWLES of Sanford, DUGA Y of Cherryfield, LEWIN of Eliot, 
MARRACHE of Waterville, SAVIELLO of Wilton, Senators: DAVIS of Piscataquis, ROSEN 
of Hancock, WESTON of Waldo. 
Printed on ret.:ycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 22 MRSA §328, sub-§2, as enacted by PL 2001, c. 664, 
§2, is repealed. 
Sec. 2. 22 MRSA §328, sub-§4. as enacted by PL 2001, c. 664, 
§2, is amended to read: 
4. 
Construction. 
"Construction," when used in connection 
with "aeaJ:t.h.--eaFe nursing facility," means 
the establishment, 
erection, building, purchase or other acquisition of a 
aeaJ:ta 
eaFe nursing facility. 
Sec. 3. 22 MRSA §328, sub-§8, as amended by PL 2003, c. 469, 
Pt. C, §3, is repealed. 
Sec. 4. 22 MRS A §328. sub-§14, as enacted by PL 2001, c. 664, 
§2, is repealed. 
Sec. 5. 22 MRSA §328, sub-§16, as amended by PL 2003, c. 469, 
Pt. C, §4, is repealed. 
Sec. 6. 22 MRSA §328, sub-§17, as enacted by PL 2001, c. 664, 
§2, is amended to read: 
17. 
Modification. 
"Modification" 
means 
the 
alteration, 
improvement, expansion, extension, renovation or replacement of a 
aeal&B--€aFe nursing facility or health maintenance organization 
or portions thereof, 
including the initial equipment, 
and the 
replacement of equipment or existing buildings. 
Sec. 7. 22 MRSA §328, sub-§17-A, as corrected by RR 2003, c. 
1, §15, are amended to read: 
17-A. 
New health service. 
"New health service" means: 
A. 
The obligation of any capital expenditures by or on 
behalf of a aealta-eaFe nursing facility of $110,000 or more 
that is associated with the addi tion of a health service 
that was not offered on a regular basis by or on behalf of 
the aeal&a-eaFe nursing facility within the l2-month period 
prior to the time the services would be offered; or 
B. 
The addition of a health service that is to be offered 
by or on behalf of a aeal&a-€aFe nursing facility that was 
not offered on a regular basis by or on behalf of the aealta 
eaFe nursing facility within the 12-month period prior to 
the time the services would be offered and that, for the 3rd 
fiscal year of operation, 
including a partial first year 
following addition of that service, is projected to entail 
Page l-LRll02(1) 
incremental annual operating costs directly attributable to 
the addition of that health service of at least $400,000f-e~~ 
bT---~-aQQ4~4e~--~&-~~-p~ivate-~~~-e~--a-~~~-ea~e 
p~aetitieBe~T--~--Qe~~&&Q--4~--~~~--~47--~-~--69Q6T 
sQsSeetieB-~~-~~-Bew-~~~l~-&aa&-£~~~-~~~~-e~ 
ffie~eT-~~-aepa~tffieBt-~~~-eaBSQlt-~~~-tae-~~-QQality 
~e~Qffi-~~1r-~aQ&e~b-~~~4~~~~~-~e--~1t-~-64-AT 
seetieB--~~~--~-~--&G--aete£ffiiBiB~--~~--~--p~ejeet 
~Qali~ies-~-a-~-teeRBela~y-~~-tRe-~~~~-a~-~-p~ivate 
p~aetitiaBe~T---g~~&&~~-~~~-~--~~~-a~Q--aBBQally 
tRe~ea~te~T-~£€-~~~~~~&~-~a~-~€¥4€w-~-&e-Qpaatea 
sy-~~-eGffiffi~&&~&&F-~~-~~~~-~h€-~-iB-~~-beBsQffie~ 
P~iee--~&QeH-~~~--~~r--~~~-~~~-~e--tRe--p~ivate 
e~~iee-«--a-Rea-ltR--oaH~--pFaetj,.&j,.a&eFr--'-'~€W--bea-1-t-h--se~viee!! 
aees-~-iBelQae-~~-laeatiaB-~--a-~-p~aetitieBe~-~~-a 
~ee~~apRie-a~eaT 
"New health service" does 
not include 
a 
Rea-ltR--ea~e nursing 
facility that 
extends 
a 
current 
service within 
the 
defined 
primary service area of the 
Rea~tR--ea~e nursing facility by 
purchasing within a 12-month time period new equipment costing in 
the aggregate less than 
tRe-~.ffi:~~-p-FG"..],de.G.-4~-~~-~68T 
sQsSeetieB-~9 $1,200,000; 
Sec. 8. 22 MRSA §328, sub-§§19 and 20, as enacted by PL 200l, 
c. 664, §2, are amended to read: 
19. 
Obligation. 
that is considered to 
ea~e nursing facility: 
An 
be 
"obligation" for a capital expenditure 
incurred by or on behalf of a RealtR 
A. 
When a contract, enforceable under the law of the State, 
is entered into by or on behalf of 
facili ty 
for 
the 
construction, 
financing of a capital asset; 
the Rea~&a-ea~e nursing 
acquisition, 
lease 
or 
B. 
When the governing board of the 
facili ty takes formal action to commit 
construction project undertaken by the 
facility as its own contractor; or 
Real~R--ea~e nursing 
its own funds for a 
Reab&B--€a£e nursing 
c. 
In the case of donated property, on the date on which 
the gift is completed under the applicable law of the State. 
20. 
Offer. 
"Offer," when used in connection with "health 
services," means that the Rea~&a-ea~e nursing facility or health 
maintenance organization holds itself out as capable of providing 
or having the means to provide a health service. 
Sec. 9. 22 MRSA §328, sub-§22. ,C, as enacted by PL 2001, c. 
664, §2, is amended to read: 
C. 
A aea,l€B.--eaFe nursing facility, 
a health maintenance 
organization or a health care practitioner that demonstrates 
that it provides similar services or, by timely filing a 
letter of intent with the department for inclusion in the 
record, indicates an intention to provide similar services 
in the future to patients residing in the health service 
area and whose services would be directly and substantially 
affected by the application under review; 
Sec. 10. 22 MRSA §328. sub-§23. as enacted by PL 2001, c. 664, 
§2, is amended to read: 
23. 
Predevelopment 
activity. 
"Predevelopment 
activity" 
means any appropriately capitalized expenditure by or on behalf 
of a 
aea~t,.a.-€iH:e nursing facility made in preparation for the 
offering or development of 
a 
new health service for which 
a 
certificate 
of 
need 
would 
be 
required 
and 
arrangements 
or 
commitments made for financing the offering or development of the 
new 
health 
service 
and 
includes 
site acquisitions, 
surveys, 
studies, expenditures for architectural designs, plans, working 
drawings and specifications. 
Sec. 11. 22 MRS A §329. sub-§l. as enacted by PL 2001, c. 664, 
§2, is amended to read: 
1. 
Transfer of ownership; acquisition by lease, donation, 
transfer; acquisition of control. 
Any transfer of ownership or 
acquisition under 
lease or 
comparable 
arrangement 
or 
through 
donation or any acquisition of control of a 
Rea~1;a-€aFe nursing 
facility 
under 
lease, 
management 
agreement 
or 
comparable 
arrangement or through donation that would have required review 
if the transfer or acquisition had been by purchase, except in 
emergencies when that acquisition of control is at the direction 
of the department; 
Sec. 12. 22 MRSA §329. sub-§3. as amended by PL 2003, c. 469, 
Pt. C, §7, is further amended to read: 
3. 
Capital expenditures. 
Except as provided in subsection 
6, 
the obligation by or 
on behalf of 
a 
aea,l~B.--eaFe nursing 
facility of 
any 
capital 
expenditure 
of 
$2,400,000 
or 
more. 
Capital expenditures in the case of a natural disaster, major 
accident or equipment failure for replacement equipment or for 
parking lots and garages, information and communications systems 
and physician office space do not require a certificate of need. 
Beginning 
September 
30, 
2004 
and 
annually 
thereafter, 
the 
threshold amount for review must be updated by the commissioner 
to reflect the change in the Consumer Price Index medical index; 
Sec. 13. 22 MRSA §329, sub-§5, as enacted by PL 2001, c. 664, 
§2, is repealed. 
Sec. 14. 22 MRSA §329, sub-§7, ,A, as enacted by PL 2001, c. 
664, §2, is repealed. 
Sec. 15. 22 MRSA §329, sub-§8, as enacted by PL 2001, c. 664, 
§2, is repealed. 
Sec. 16. 22 MRSA §330, sub-§§1 and 2, as enacted by PL 2001, c. 
664, §2, are amended to read: 
1. 
Healing through prayer. 
A hea1~h-€aFe nursing facility 
operated by a religious group relying solely on spiritual means 
through prayer for healing; 
2. 
Activities; acquisitions. 
Activities or acquisitions by 
or on behalf of a health maintenance organization or a 
hea±~h 
eaFe nursing facility controlled, directly or indirectly, by a 
health 
maintenance 
organization 
or 
combination 
of 
health 
maintenance organizations to the extent mandated by the National 
Health Policy, Planning and Resources Development Act of 1974, as 
amended, and its accompanying regulations; 
Sec. 17. 22MRSA§330.sub-§4. as enacted by PL 2001, c. 664, 
§2, is amended to read: 
4. 
Hospice. 
Hospice services and programs; and 
Sec. 18. 22 MRSA §330, sub-§5-A, as enacted by PL 2003, c. 
510, Pt. A, §15, is amended to read: 
5-A. 
Assisted 
housing. 
Assisted 
housing 
programs 
and 
services regulated under chapter 1664t~ 
Sec. 19. 22 MRSA §330, sub-§6, as enacted by PL 2001, c, 664, 
§2, is repealed. 
Sec. 20. 22 MRSA §330, sub-§7, as amended by PL 2003, c. 621, 
§1, is repealed. 
Sec. 21. 22 MRSA §331, sub-§I, "D and E, as enacted by PL 
2001, c. 664, §2, are amended to read: 
D. 
There is a change in the site or the location of the 
proposed heal~h-eaFe nursing facility; or 
E. 
There is a substantial change proposed in the design of 
the Bea~tB-ea~e nursing facility or the type of construction. 
Sec. 22. 22 MRS A §336. sub-§§l and 2. as enacted by PL 2001, c. 
664, §2, are amended to read: 
1. 
Maintenance projects. 
The commissioner shall issue a 
certificate of need for 
a project that primarily involves the 
maintenance of 
a 
Bea~tB nursing facility if the 
commissioner 
determines that the project: 
A. 
Will result in no or a minimal additional expense to the 
public or to the Bea~tB-ea~e nursing facility's clients; 
B. 
Will be in compliance with other applicable state and 
local laws and regulations; and 
C. 
Will significantly 
significantly adversely 
person currently being 
facili ty. 
improve or, in the al ternati ve, not 
affect the health and welfare of any 
served by the Bea,l-tR--eaFe nursing 
2. 
Life safety codes; previous certificate of need. 
The 
commissioner shall issue a certificate of need for a project that 
is required solely to meet federal, state or local life safety 
codes if the project involves a 
Bea~tB nursing facilitYT-ffiajEH 
meEi.iea,l-~,*i-~meRt or a 
new health service that has previously 
received a certificate of need. 
Sec. 23. 22 MRSA §345. as enacted by PL 2001, c. 664, §L is 
amended to read: 
§345. Division of project to evade cost limitation prohibited 
A Beal&B--eai<e nursing facility or other party required to 
obtain a 
certificate of need may not separate portions of 
a 
single project into components, 
including, but not limited to, 
si te facility and equipment, 
to evade the cost limitations or 
other requirements of section 329. 
Sec. 24. 22 MRSA §347, as enacted by PL 2001, c. 664, §2, is 
amended to read: 
§347. WithhOlding of license 
A new Beal&B--eai<e nursing facility, as defined in section 
328, is eligible to obtain a license under the applicable state 
law if the 
facility has 
obtained 
a 
certificate 
of 
need 
as 
required by this chapter. The license of any facility does not 
extend to include and may not otherwise be deemed to allow the 
• 
delivery of any services, the use of any equipment that has been 
acquired, 
the use of any portion of a facility or any other 
change for 
which 
a 
certificate of need 
as 
required by this 
chapter 
has 
not 
been obtained. 
Any 
unauthorized delivery of 
services, use of equipment or a portion of a facility or other 
change is in violation of the respective chapter under which the 
facility is licensed. 
Sec. 25. 22 MRSA §348~ as corrected by RR 2001, c. 2, Pt. A, 
§29, is amended to read: 
§348. Withholding of funds 
A .aeal-th--eaEOe 
nUJ;:Jij.ng facility or other provider may be 
eligible to apply for or receive any reimbursement, payment or 
other 
financial 
assistance 
from 
any 
state 
agency 
or 
other 
3rd-party payor, either directly or indirectly, for any capital 
expenditure or operating costs attributable to any project for 
which a certificate of need is required by this chapter only if 
the certificate of need has been obtained. 
For the purposes of 
this section, the department shall determine the eligibility of a 
facility to receive reimbursement for all projects subject to the 
provisions of this chapter. 
Sec. 26. 38 MRSA §1310-X. sub-§4. ~A~ as amended by PL 2003, 
c. 551, §17, is further amended to read: 
A. 
A commercial 
biomedical waste disposal 
or 
treatment 
facility, if at least 51'0 of the facility is owned by a 
±~eeasee hospital or hospitals 
as--eet~aee--~a--~~~±e--66T 
see~~ea-~~~-~&~~-l4 or a group of hospitals that are 
licensed 
under 
Title 
acting 
through 
a 
statewide 
association of Maine hospitals or a wholly owned affiliate 
of the association; and 
Sec. 27. 
MaineCare report on reimbursement methods. 
The 
Department of Health and Human Services shall conduct a review of 
the current method of reimbursement to health care providers, 
including physicians, 
and the rates of that reimbursement and 
provide a comparison of the impact on the MaineCare program if 
alternative methods of reimbursement are implemented, including, 
but 
not 
limited 
to, 
reimbursement 
on 
a 
diagnostic-related 
groupings, or DRG, basis. 
The review must include information on 
the methods of reimbursement used by private health insurance 
carriers and Medicare and other publicly funded programs. 
The 
department shall submit a report detailing the review required by 
this section to the Joint Standing Committee on Health and Human 
Services by January 15, 2006. 
The Joint Standing Committee on 
Health and Human Services may report out legislation to make 
changes in how MaineCare reimburses health care providers to the 
SUMMARY 
This bill removes hospitals. ambulatory surgical facilities. 
physician offices 
and other health care facilities 
from 
the 
certificate of need process. 
The bill retains certificate of 
need for nursing facilities. 
The bill also requires the Department of Health and Human 
Services 
to 
submit 
a 
report 
on 
alternative 
methods 
of 
reimbursement under the MaineCare program to the Legislature by 
January 15, 2006.