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health systems agencies designated under part B, and not less than three shall be members of Statewide Health Coordinating Councils under section 1524. The two major political parties shall have equal ^°^*' P- ^^''^'^^ representation among the voting members on the Council. "(2) The term of office of voting members of the Council shall be '^"'"^ °^ °"^'=^six years, except that— " (A) of the members first appointed to the Council, four shall be appointed for terms of two years and four shall be appointed for terms of four years, as designated by the Secretary at the time of appointment; and " (B) any member appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed only for the remainder of such term. A member may serve after the expiration of his term until his successor has taken office. "(3) The chairman of the Council shall be selected by the voting members from among their number. The term of office of the chairman of the Council shall be the lesser of three years or the period remaining in his term of office as a member of the Council. " (c)(1) Except as provided in paragraph (2), the members of compensation. the Council shall each be entitled to receive the daily equivalent of the annual rate of basic pay in effect for grade GS-18 of the General 5u Schedule for each day (including traveltime) during which they are note. s e 5332 engaged in the actual performance of duties vested in the Council. " (2) Members of the Council who are full-time officers or employees of the United States shall receive no additional pay on account of their service on the Council. " (3) While away from their homes or regular places of business in Travel exthe performance of services for the Council, members of the Council P^"^^^shall be allowed travel expenses, including per diem in lieu of subsistence, in the same manner as persons employed intermittently in the Government service are allowed expenses under section 5703(b) of title 5, United States Code. " (d) The Council may appoint, fix the pay of, and prescribe the functions of such personnel as are necessary to carry out its functions. In addition, the Council may procure the services of experts and consultants"^ consultants as authorized by section 3109 of title 5, United States Code, but without regard to the last sentence of such section. "(e) The provisions of section 14(a) of the Federal Advisory Committee Act shall not apply with respect to the Council. s use app„ i. "PART B — H E A L T H SYSTEMS AGENCIES "HEALTH SERVICE AREAS

"SEC. 1511. (a) There shall be established, in accordance with this J2 USC'^'oT/?'" section, health service areas throughout the United States with respect to which health systems agencies shall be designated under section 1515. Each health service area shall meet the following requirements: Requirements. " (1) The area shall be a geographic region appropriate for the effective planning and development of health services, determined on the basis of factors including population and the availability of resources to provide all necessary health services for residents of the area. "(2) To the extent practicable, the area shall include at least one center for the provision of highly specialized health services.

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42 USC 1320C-1.

Notice to Gov-

PUBLIC LAW 93-641-JAN. 4, 1975

[88

STAT.

"(3) The area, upon its establishment, shall lun-e a population of not less than five hundred thousand or more than three million; except that— " (A) the population of an area may be more than three million if the area includes a standard metropolitan statistical area (as determined by the Office of Management and Burltret) with a population of more than three million, and " (B) the population of an area may— " (i) be less than five hundred thousand if the area comprises an entire State which lias a population of less than five hundred thousand, or "(ii) be less than— " (I) five hundred thousand (but not less than two hundred thousand) in unusual circumstances (as determined by the Secretary), or " ( II) two hundred thousand in highly unusual circumstances (as determined by the Secretary). if the Governor of each State in which the area is located determines, with the approval of the Secretary, that the area meets the other requirements of this subsection. "(4) To the maximum extent feasible, the boundaries of the area shall be appropriately coordinated with the boundaries of areas designated under section 1152 of the Social Security Act for Professional Standards Beview Organizations, existing regional planning areas, and State planning and administrative areas. The boimdaries of a health service area shall be established so that, in the planning and development of health services to be offered within the health service area, any economic or geographic barrier to the receipt of such services in nonmetropolitan areas is taken into account. The boundaries of health service areas shall be established so as to recognize the differences in health planning and health services development needs between nonmetropolitan and metropolitan areas. Each standard metropolitan statistical area shall be entirely wathin the boundaries of one health service area, except that if the Governor of each State in which a standard metropolitan statistical area is located determines, with the approval of the Secretary, that in order to meet the other requirements of this subsection a health service area should contain only part of the standard metropolitan statistical area, then such statistical area shall not be required to be entirely within the boundaries of such health service area. " (b)(1) Within thirty days following the date of the enactment of this title, the Secretary shall simultaneously give to the Governor of each State written notice of the initiation of proceedings to establish health service areas throughout the Ignited States. Each notice shall contain the following: " (A) A statement of the requirement (in subsection (a)) of the establishment of health service areas throughout the United States. " (B) A statement of the criteria prescribed by subsection (a) for health service areas and the procedures prescribed by this subsection for the designation of health service area boundaries. " (C) A request that the Governor receiving the notice (i) designate the boundaries of health service areas within his State, and, where appropriate and in cooperation with the Governors of adjoining States, designate the boundaries within his State of health service areas located both in his State and in adjoining States, and (ii) submit (in such form and manner as the Secretary shall specify) to the Secretary, within one hundred and twenty

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days of the date of enactment of this title, such boundary designations together with comments, submitted by the entities referred to in paragraph (2), with respect to such designations. At the time such notice is given under this paragraph to each c.J^"^^',''^*'""'" r^

,

^

1 iP

1T 1

•

• 1 - 1 - 1 1 1

(governor, the becretary shall publish as a notice m the l<ederal Register a statement of the giving of his notice to the Governor and the criteria and procedures contained in such notice. "(2) Each State's Governor shall in the development of boundaries for health service areas consult with and solicit the views of the chief executive officer or agency of the political subdivisions within the State, the State agency which administers or supervises the administration of the State's health planning functions under a State plan approved under section 314(a), each entity within the State which has developed a comprehensive regional, metropolitan, or other local area plan or plans referred to in section 314(b), and each regional medical program established in the State under the title IX.

^^

Fsaeral Register.

'*2 USC 246.

42 USC 299.

"(3)(A) Within two hundred and ten days after the date of pe^demRe'TsJer. enactment of this title, the Secretary shall publish as a notice in the Federal Register the healtli service area boundarv designations. The boundaries for health service areas submitted by the Governors shall, except as otherwise provided in subparagraph (B), constitute upon their publication in the Federal Register the boundaries for such health service areas. " (B)(i) If the Secretary determines that a boundary submitted ^^"^""^IW'^f' to him for a health service area does not meet the requirements of sub- in FecL^rai Regissection (a), he shall, after consultation with the Governor who t<^rsubmitted such boundary, make such revision in the boundary for such area (and as necessary, in the boundaries for adioining health service areas) as may be necessary to meet such requirements and publish such revised boundary (or boundaries); and the revised boundary (or boundaries) shall uron publication in the Federal Register constitute the boundarv (or boundaries) for such health service area (or areas). The Secretary shall notify the Governor of each State in which is located a health service area whose boundary is revised under this clause of the boundary revision and the reasons for such revision. "(ii) In the case of areas of the United States not included within °'^^'" health the boundaries for health service areas submitted to the Secretary publication'in' .•'s requested under the notice under paragraph (1), the Secretary Federal Register. shall establish and publisli in the Federal Register health service area boundaries which include such areas. The Secretary shall notifv the Governor of each State in which is located a health service areri, the boundarv for which is established under this clause of the boundaries etablished. In carryiiiQf out the requirement of this clause, the Secretary may make such revisions in boundaries submitted under subparagraph (A) as he determines are necessary to meet the requirement of subsection (a) for the establishment of health service areas throughout the United States. "(4) The Secretary shall review on a continuing basis and at the Review. request of any Governor or designated health systems agency the appropriateness of the boundaries of the health service areas established under paragraph (3) and, if he determines that a boundary for a health service area no longer meets the T'equirements of subsection (a), he may revise the l>oundaries in accordance with the procedures prescribed by paragraph (3)(B) ( i i) for the establishment of boundaries of health service areas which include areas not included in boundaries submitted by the Governors. If the Secretary acts on his

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2232

Ante,

p. 2229.

Post,

p. 2242.

Post,

p. 2257.

42 USC 246.

Standards and criteria.

STAT.

own initiative to revise the boundaries of any health service area, he shall consult with the Governor of the appropriate State or States, the entities referred to in paragraph (2), the appropriate health systems agency or agencies designated under part B and the appropriate Statewide Health Coordinating Council established under part C. A request for boundary revision shall be made only after consultation with the Governor of the appropriate State or States, the entities referred to in paragraph (2), the appropriate designated health systems agencies, and the appropriate established Statewide Health Coordinating Council and shall include the comments concerning the revision made by the entities consulted in requesting the revision. "(5) Within one year after the date of the enactment of this title the Secretary shall complete the procedures for the initial establishment of the boundaries of health service areas which (except as provided in section 1535) include the geographic area of all the States. "(c) Notwithstanding any other requirement of this section, an area— "(1) for which has been developed a comprehensive regional, metropolitan area, or other local area plan referred to in section 314(b), and " (2) which otherwise meets the requirements of subsection (a), shall be designated by the Secretary as a health service area unless the Governor of any State in which such area is located, upon a finding that another area is a more appropriate region for the effective planning and developlnent of health resources, waives such requirement. HEALTH

42 USC 300Z-1.

[88

SYSTEMS

AGENCIES

"SEC. 1512. (a) DEFINITION.—For purposes of this title, the term 'health systems agency' means an entity which is organized and operated in the manner described in subsection (b) and which is capable, as determined by the Secretary, of performing each of the functions described in section 1513. The Secretary shall by regulation establish standards and criteria for the requirements of subsection (b) and section 1513. "(b)(1) LEGAL STRUCTURE.—A health systems agency for a health service area shall be— " (A) a nonprofit private corporation (or similar legal mechanism such as a public benefit corporation) which is incorporated in the State in which the largest part of the population of the health service area resides, which is not a subsidiary of, or otherwise controlled by, any other private or public corporation or other legal entity, and which only engages in health planning and development functions; " (B) a public regional planning body if (i) it has a governing board composed of a majority of elected officials of units of general local government or it is authorized by State law (in effect before the date of enactment of this subsection) to carry out health planning and review functions such as those described in section 1513, and (ii) its planning area is identical to the health service area; or " (C) a single unit of general local government if the area of the jurisdiction of that unit is identical to the health service area. A health systems agency may not be an educational institution or operate such an institution. "(2)

STAFF.—

" (A) EXPERTISE.—^A health systems agency shall have a staff which provides the agency with expertise in at least the following:

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PUBLIC LAW 93-641-JAN. 4, 1975

(i) Administration, (ii) the gathering and analysis of data, (iii) health planning, and (iv) development and use of health resources. The functions of planning and of development of health resources shall be conducted by staffs with skills appropriate to each function. " (B) SIZE AND EMPLOYMENT.—The size of the professional staff of any health systems agency shall be not less than five, except that if the quotient of the population (rounded to the next highest one hundred thousand) of the health service area which the agency serves divided by one hundred thousand is greater than five, the minimum size of the professional staff shall be the lesser of (i) - such quotient, or (ii) twenty-five. The members of the staff shall be selected, paid, promoted, and discharged in accordance with such system as the agency may establish, except that the rate of pay for any position shall not be less than the rate of pay prevailing in the health service area for similar positions in other public or private health service entities. If necessary for the performance of its functions, a health systems agency may employ consultants and may contract with individuals and entities for the provision of services. Compensation for consultants and for contracted services shall be established in accordance with standards established by regulation by the Secretary. "(3)

2233

Consultants and contracted serv-

GOVERNING BODY.—

" (A) IN GENERAL.—A health systems agency which is a public regional planning body or unit of general local government shall, in addition to any other governing body, have a governing body for health planning, which is established in accordance with subparagraph (C), which shall have the responsibilities prescribed by subparagraph (B), and which has exclusive authority to perform for the agency the functions described in section 1513, Any other health systems agency shall have a governing body composed, in accordance with subparagraph (C), of not less than ten members and of not more than thirty members, except that the number of members may exceed thirty if the governing body has established another unit (referred to in this paragraph as an 'executive committee') composed, in accordance with subparagraph (C), of not more than twenty-five members of the governing body and has delegated to that unit the authority to take such action (other than the establishment and revision of the plans referred to in subparagraph (B) (ii)) as the governing body is authorized to take. " (B) RESPONSIBILITIES.—The governing body— "(i) shall be responsible for the internal affairs of the health systems agency, including matters relating to the staff of the agency, the agency's budget, and procedures and criteria (developed and published pursuant to section 1532) Post, p. 2251. applicable to its functions under subsections (e), (f), and (g) of section 1513; "(ii) shall be responsible for the establishment of the health systems plan and annual implementation plan required by section 1513(b); "(iii) shall be responsible for the approval of grants and Grants and con contracts made and entered into under section 1513(c)(3); '"^'^' ^PP'°^^"(iv) shall be responsible for the approval of all actions taken pursuant to subsections (e), (f), (g), and (h), of section 1513; " (v) shall (I) issue an annual report concerning the Report. activities of the agency, ( II) include in that report the health

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PUBLIC LAW 93-641-JAN. 4, 1975

[88 STAT.

systems plan and annual implementation plan developed by the agency, and a listing of the agency's income, expenditures, assets, and liabilities, and ( III) make the report readily available to the residents of the health service area and the various communications media serving such area; " (vi) shall reimburse its members for their reasonable costs incurred in attending meetings of the governing body; " (vii) shall meet at least once in each calendar quarter of a year and shall meet at least two additional times in a year unless its executive committee meets at least twice in that year; and "(viii) shall (I) conduct its business meetings in public, ( II) give adequate notice to the public of such meetings, and ( III) make its records and data available, upon request, to the public. The governing body (and executive committee (if any)) of a health systems agency shall act only by vote of a majority of its members present and voting at a meeting called upon adequate notice to all of its members and at which a quorum is in attendance. A quorum for a governing body and executive committee shall be not less than one-half of its members. " (C) COMPOSITION.—The membership of the governing body and the executive committee (if any) of an agency shall meet the following requirements: "(i) A majority (but not more than 60 per centum of the members) shall be residents of the health service area served by the entity who are consumers of health care and who are not (nor within the twelve months preceding appointment been) providers of health care and who are broadly representative of the social, economic, linguistic and racial populations, geographic areas of the health service area, and major purchasers of health care. "(ii) The remainder of the members shall be residents of the health service area served by the agency who are providers of health care and who represent (I) physicians (particuliifly practicing physicians), dentists, nurses, and other health professionals, ( II) health care institutions (particularly hospitals, long-term care facilities, and health maintenance organizations), ( III) health care insurers, (IV) health professional schools, and (V) the allied health professions. Not less than one-third of the providers of health care who are members of the governing Dody or executive committee of a health systems agency shall be direct providers of health care (as described in section 1531(3)). "(iii) The membership shall— " (I) include (either through consumer or provider members) public elected officials and other representatives of governmental authorities in the agency's health service area and representatives of public and private agencies in the area concerned with health, " ( II) include a percentage of individuals who reside in nonmetropolitan areas within the health service area which percentage is equal to the percentage of residents of the area who reside in nonmetropolitan areas, and " ( III) if the health systems agency serves an area in which there is located one or more hospitals or other health care facilities of the Veterans' Administration, include, as an ex officio member, an individual whom the Chief Medical Director of the Veterans' Administration

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PUBLIC LAW 93-641-JAN. 4, 1975

shall have designated for such purpose, and if the agency serves an area in which there is located one or more qualified health maintenance organizations (within the meaning of section 1310), include at least one member who is representative of such organizations, "(iv) If, in the exercise of its functions, a governing body or executive committee appoints a subcommittee of its members or an advisory group, it shall, to the extent practicable, make its appointments to any such subcommittee or group in such a manner as to provide the representation on such subcommittee or group described in this subparagraph. "(4) INDIVIDUAL LIABILITY.—No individual who, as a member or employee of a health systems agency, shall, by reason of his performance of any duty, function, or activity required of, or authorized to be undertaken by, the agency under this title, be liable for the payment of damages under any law of the United States or any State (or political subdivision thereof) if he has acted within the scope of such duty, function, or activity, has exercised due care, and has acted, with respect to that performance, without malice toward any person affected by it. " (5) PRIVATE CONTRIBUTIONS.—No health systems agency may accept any funds or contributions of services or facilities from any individual or private entity which has a financial, fiduciary, or other direct interest in the development, expansion, or support of health resources unless, in the case of an entity, it is an organization described in section 509(a) of the Internal Revenue Code of 1954 and is not directly engaged in the provision of health care in the health service area of the agency. For purposes of this paragraph, an entity shall not be considered to have such an interest solely on the basis of its providing (directly or indirectly) health care for its employees. "(6) OTHER REQUIREMENTS.—Each health system agency shall— " (A) make such reports, in such form and containing such information, concerning its structure, operations, performance of functions, and other matters as the Secretary may from time to time require, and keep such records and afford such access thereto as the Secretary may find necessary to verify such reports; " (B) provide for such fiscal control and fund accounting procedures as the Secretary may require to assure proper disbursement of, and accounting for, amounts received from the Secretary under this title and section 1640; and (C) permit the Secretary and the Comptroller General of the United States, or their representatives, to have access for the purpose of audit and examination to any books, documents, papers, and records pertinent to the disposition of amounts received from the Secretary under this title and section 1640. "(c) SuBAREA COUNCILS.—A health systems agency may establish subarea advisory councils representing parts of the agencies' health service area to advise the governing body of the agency on the performance of its functions. The composition of a subarea advisory council shall conform to the requirements of subsection (b)(3)(C).

2235

42 USC 3ooe-9.

^a use 509.

Reports; record^^P'"^-

^°^'' P- -273.

Establishment.

"FUNCTIONS or HEALTH SYSTEMS AGENCIES

"SEC. 1513; (a) For the purpose of— ^ "(1) improving the health of residents of a health service area, "(2) increasing the accessibility (including overcoming geographic, architectural, and transportation barriers), acceptability, continuity, and quality of the health services provided tnem, "(3) restraining increases in the cost of providing them health services, and

^2 USC 300/-2.

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 2236

Coordination witri c o o p e r a t i v e

system.

PUBLIC LAW 93-641-JAN. 4, 1975

[88

STAT.

"(4) preventing unnecessary duplication of health resources, each health systems agency shall have as its primary responsibility the the provision of effective health plamiing for its health service area and the promotion of the development within the area of health services, manpov^er, and facilities which meet identified needs, reduce documented inefficiencies, and implement the health plans of the agency. To meet its primary responsibility, a health systems agency shall carry out the functions described in subsections (b) through (g) of this section. "(b) I n providing health planning and resources development for its health service area, a health systems agency shall perform the following functions: "(1) The agency shall assemble and analyze data concerning— " (A) the status (and its determinants) of the health of the residents of its health service area, " (B) the status of the health care delivery system in the area and the use of that system by the residents of the area, " (C) the effect the area's health care delivery system has on the health of the residents of the area, " (D) the number, type, and location of the area's health resources, including health services, manpower, and facilitieF, " (E) the patterns of utilization of the area's health resources, and " (F) the environmental and occupational exposure factors affecting immediate and long-term health conditions. jj^ Carrying out this paragraph, the agency shall to the maximum »/c^

J

.

^

J

L

7

c 5 « y

cxteut practicable use existing data (including data developed under Federal health programs) and coordinate its activities with the coop42 USC 242d. erative system provided for under section 306(e). pian.^^*^ ^^^'^"^ "(2) The agency shall, after appropriate consideration of the Establishment. recommcuded national guidelines for health planning policy issued by the Secretary under section 1501, the priorities ^ t forth in section 1502, and the data developed pursuant to paragraph (1), establish, annually review, and amend as necessary a health systems plan (hereinafter in this title referred to as the ' H S P ') which shall be a detailed statement of goals (A) describing a healthful environment and health systems in the area which, when developed, will assure that quality health services will be availaJDle and accessible in a manner which assures continuity of care, at reasonable cost, for all residents of the area; (B) which are responsive to the unique needs and resources of the area; and (C) which take into account and is consistent with the national guidelines for health planning policy issued by the Secretary under section 1501 respecting supply, distribution, and organiza"^^""6. tion of health resources and services. Before establishing an H S P, a health systems agency shall conduct a public hearing on the proposed H S P and shall give interested persons an opportunity Notice. ^Q submit their views orally and in writing. Not less than thirty days prior to such hearing, the agency shall publish in at least two newspapers of general circulation throughout its health service area a notice of its consideration of the proposed H S P, the time and place of the hearing, the place at which interested persons may consult the H S P in advance of the hearing, and the place and period during which to submit Avritten comments to the agency on the H S P. Annual impieu/gx rpj^ agency shall establisli, annuallv review, and amend mentation plan. V/ » '' ,., . '. i " / i • JLL. • J.\.Establishment. as nccessary an annual implementation plan (herematter m this title referred to as the ' A I P ') which describes objectives which

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PUBLIC LAW 93-641-JAN. 4, 1975

will achieve the goals of the H S P and priorities among the objectives. I n establishing the A I P, the agency shall give priority to those objectives which will maximally improve the health of the residents of the area, as determined on the basis of the relation of the cost of attaining such objectives to their benefits, and which are fitted to the special needs of the area. "(4) The agency shall develop and publish specific plans and projects for achieving the objectives established in the A I P. "(c) A health systems agency shall implement its H S P and A I P, and in implementing the plans it shall perform at least the following functions: "(1) The agency shall seek, to the extent practicable, to implement its H S P and A I P with the assistance of individuals and public and private entities in its health service area. "(2) The agency may provide, in accordance with the priorities established in the A I P, technical assistance to individuals and public and private entities for the development of projects and programs which the agency determines are necessary to achieve the health systems described in the H S P, including assistance in meeting the requirements of the agency prescribed under section 1532(b). "(3) The agency shall, in accordance with the priorities established in the A I P, make grants to public and nonprofit private entities and enter into contracts with individuals and public and nonprofit private entities to assist them in planning and developing projects and programs which the agency determines are necessary for the achievement of the health systems described in the H S P. Such grants and contracts shall be made fronv the Area Health Services Development Fund of the agency established with funds provided under grants made under section 1640. No grants or contract under this subsection may be used (A) to pay the costs incurred by an entity or individual in the delivery of health services (as defined in regulations of the Secretary), or (B) for the cost of construction or modernization of medical facilities. No single grant or contract made or entered into under this paragraph shall be available for obligation beyond the one year period beginning on the date the grant or contract was made or entered into. If an individual or entity receives a grant or contract under this paragraph for a project or program, such individual or entity may receive only one more such grant or contract for such project or program. " (d) Each health systems agency shall coordinate its activities with— "(1) each Professional Standards Review Organization (designated under section 1152 of the Social Security Act), "(2) entities referred to in paragraphs (1) and (2) of section 204(a) of the Demonstration Cities and Metropolitan Development Act of 1966 and regional and local entities the views of which are required to be considered under regulations prescribed under section 403 of the Intergoverimiental Cooperation Act of 1968 to carry out section 401(b) of such Act, "(3) other appropriate general or special purpose regional planning or administrative agencies, and " (4) any other appropriate entity, in the health system agency's health service area. The agency shall, as appropriate, secure data from them for use in the agency's planning and development activities, enter into agreements with them which Avill assure that actions taken by such entities which alter the area's

2237

p l a n s and projects.

Grants and contracts.

Post,

p. 2273.

Limitation.

Coordination.

42 USC 1320C.1.

42 USC 3334.

42 USC 4233, 4231.

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Use of Federal funds, approval.

42 USC 2681 note. 42 USC 4551 note.

42 USC 281, 292, 296.

43 USC 1602.

Information to Indian tribes or organizations.

PUBLIC LAW 93-641-JAN. 4, 1975

[88

STAT.

health system will be taken in a manner which is consistent with the H S P and the A I P in effect for the area, and, to the extent practicable, provide technical assistance to such entities. "(e)(1)(A) Except as provided in subparagraph (B), each health systems agency shall review and approve or disapprove each proposed use within its health service area of Federal funds— "(i) appropriated under this Act, the Community Mental Health Centers Act, or the Comprehensive Alcohol Abuse and Alcoholism Prevention, Treatment, and Rehabilitation Act of 1970 for grants, contracts, loans, or loan guarantees for the development, expansion, or support of health resources; or "(ii) made available by the State in which the health service area is located (from an allotment to the State under an Act referred to in clause (i)) for grants or contracts for the development, expansion, or support of health resources. " (B) A health systems agency shall not review and approve or disapprove the proposed use within its health service area of Federal funds appropriated for grants or contracts under title IV, VII, or VIII of this Act unless the grants or contracts are to be made, entered into, or used to support the development of health resources intended for use in the health service area or the delivery of health services. In the case of a proposed use within the health service area of a health systems agency of Federal funds described in subparagraph (A) by an Indian tribe or inter-tribal Indian organization for any program or project which will be located within or will specifically serve— " (i) a federally-recognized Indian reservation, "(ii) any land area in Oklahoma which is held in trust by the United States for Indians or which is a restricted Indian-owned land area, or "(iii) a Native village in Alaska (as defined in section 3(c) of the Alaska Native Claims Settlement Act), a health systems agency shall only review and comment on such proposed use, "(2) Notwithstanding any other provision of this Act or any other Act referred to in paragraph (1), the Secretary shall allow a health systems agency sixty days to make the review required by such paragraph. If an agency disapproves a proposed use in its health service area of Federal funds described in paragraph (1), the Secretary may not make such Federal funds available for such use until he has made, upon request of the entity making such proposal, a review of the agency decision. In making any such review of any agency decision, the Secretary shall give the appropriate State health planning and development agency an opportunity to consider the decision of the health systems agency and to submit to the Secretary its comments on the decision. The Secretary, after taking into consideration such State agency's comments (if any), may make such Federal funds available for such use, notwithstanding the disapproval of the health systems agency. Each such decision by the Secretary to make funds available shall be submitted to the appropriate health systems agency and State health planning and development agency and shall contain a detailed statement of the reasons for the decision. "(3) Each health systems agency shall provide each Indian tribe or inter-tribal Indian organization which is located within the agency's health service area information respecting the availability of the Federal funds described in the first sentence of this subsection. "(f) To assist State health planning and development agencies in carrying out their functions under paragraphs (4) and (5) of section 1523(a) each health systems agency shall review and make recommen-

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2239

dations to the appropriate State health planning and development agency respecting the need for new institutional health services proposed to be offered or developed in the health service area of such health systems agency. " (g)(1) Except as provided in paragraph (2), each health systems agency shall review on a periodic basis (but at least every five years) all institutional health services offered in the health service area of the agency and shall make recommendations to the State health planning and development agency designated under section 1521 for eacn State in which the health systems agency's health service area is located respecting the appropriateness in the area of such services. "(2) A health systems agency shall complete its initial review of existing institutional health services within three years after the date of the agency's designation under section 1515(c). " (h) Each health systems agency shall annually recommend to the State health planning and development agency designated for each State in which the health systems agency's health service area is located (1) projects for the modernization, construction, and conversion of medical facilities in the agency's health service area which projects will achieve the H S P and A I P of the health systems agency, and (2) priorities among such projects. "ASSISTANCE

TO E N T I T I E S DESIRING TO BE DESIGNATED AS SYSTEMS AGENCIES

HEALTH

"SEC. 1514. The Secretary may provide all necessary technical and other nonfinancial assistance (including the preparation of prototype plans of organization and operation) to nonprofit private entities (including entities presently receiving financial assistance under section 314(b) or title IX or as experimental health service delivery systems under section 304) which— "(1) express a desire to be designated as health systems agencies, and "(2) the Secretary determines have a potential to meet the requirements of a health systems agency specified in sections 1512 and 1513, to assist such entities in developing applications to be submitted to the Secretary under section 1515 and otherwise in preparing to meet the requirements of this part for designation as a health systems agency. "DESIGNATION

OF H E A L T H

Institutional health services, review.

42 USC 300Z-3.

42 USC 246, 299, 242b.

S Y S T E M S AGENCIES

"SEC. 1515. (a) At the earliest practicable date after the establishment under section 1511 of health service areas (but not later than eighteen months after the date of enactment of this title) the Secretary shall enter into agreements in accordance with this section for the designation of health systems agencies for such areas. " (b)(1) The Secretary may enter into agreements with entities under which the entities would be designated as the health systems agencies for health service areas on a conditional basis with a view to determining their ability to meet the requirements of section 1512 (b), and their capacity to perform the functions prescribed by section 1513. "(2) During any period of conditional designation (which may not exceed 24 months), the Secretary may require that the entity conditionally designated meet only such of the requirements of section 1512(b) and perform only such of the functions prescribed by section 1513 as he determines such entity to be capable of meeting and performing. The number and type of such requirements and functions

Agreements. 42 USC 300i-4.

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Termination.

Conditional esigna ion.

42 USC 246. 42 USC 299.

Renewai.

Termination.

Application.

PUBLIC LAW 93-641-JAN. 4, 1975

[88

STAT.

shall, during the period of conditional designation, be progressively increased as the entity conditionally designated becomes capable of added responsibility so that, by the end of such period, the agency may be considered for designation under subsection (c). "(3) ^^^y agreement under which any entity is conditionally designated as a health systems agency may be terminated by such entity upon ninety days notice to the Secretary or by the Secretary upon ninety days notice to such entity. " ^4) ^''j^g Secretary may not enter into an agreement with any entity under paragraph (1) for conditional designation as a health systems agency for a health service area until— " (A) the entity has submitted an application for such designation which contains assurances satisfactory to the Secretary that upon completion of the period of conditional designation the applicant will be organized and operated in the manner described in section 1512(b) and will be qualified to perform the functions prescribed by section 1513; " (B) a plan for the orderly assumption and implementation of the functions of a health systems agency has been received from the applicant and approved by the Secretary; and " (C) the Secretary has consulted with the Governor of each State in which such health service area is located and with such other State and local officials as he may deem appropriate, with respect to such designation. I n considering such applications, the Secretary shall give priority to an application which has been recommended for approval by each entity which has developed a plan referred to in section 314(b) for all or part of the health service area with respect to which the application was submitted, and each regional medical program established in such area under title IX. "(c)(1) The Secretary shall enter into an agreement with an entity for its designation as a health systems agency if, on the basis of an application under paragraph (2) (and, in the case of an entity conditionally designated, on the basis of its performance during a period of conditional designation under subsection (b) as a health systems agency for a health service area), the Secretary determines that such entity is capable of fulfilling, in a satisfactory manner, the requiremcuts aud fuuctious of a health systems agency. Any such agreement inider this subsection with an entity may be renewed in accordance with paragraph (3), shall contain such provisions respecting the requirements of sections 1512(b) and 1513 and such conditions designed to carry out the purpose of this title, as the Secretary may prescribe, and shall be for a term of not to exceed twelve months; except that. prior to the expiration of such term, such agreement may be terminated— " (A) by the entity at such time and upon such notice to the Secretary as he may by regidation prescribe, or " (B) by the Secretary, at such time and upon such notice to the entity as the Secretary may by regulation prescribe, if the Secretary determines that the entity is not complying with or effectively carrying out the provisions of such agreement. £ ^g) The Secretary may not enter into an agreement with any entity « under paragraph (1) for designation as a health systems agency for a health service area unless the entity has submitted an application to the Secretary for designation as a health systems agency, and the Governor of each State in which the area is located has been consulted respecting such designation of such entity. Such an application shall contain assurances satisfactory to the Secretary that the applicant meets the requirements of section 1512(b) and is qualified to perform

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or is performing the functions prescribed by section 1513. I n considering such applications, the Secretary shall give priority to an application which has been recommended for approval by (A) each entity which has developed a plan referred to in section 314(b) for all or part of the health service area with respect to which the application was submitted, and (B) each regional medical program established in such area under title IX. "(3) An agreement under this subsection for the designation of a health systems agency may be renewed by the Secretary for a period not to exceed twelve months if upon review (as provided in section 1535) of the agency's operation and performance of its functions, he determines that it has fulfilled, in a satisfactory manner, the functions of a health systems agency prescribed by section 1513 and continues to meet the requirements of section 1512(b). " (d) If a designation under subsection (b) or (c) of a health systems agency for a health services area is terminated before the date prescribed for its expiration, the Secretary shall, upon application and in accordance with subsection (b) or (c) (as the Secretary determines appropriate), enter into a designation agreement with another entity to be the health systems agency for such area. aP L A N N I N G

2241 Priority. "^ use 240. ^ 42 USC 299. Renewal. Post,

p. 2256.

GRANTS

"SEC. 1516. (a) The Secretary shall make in each fiscal year a grant 42 USC 300Z-5. to each health systems agency with which there is in effect a designation agreement under subsection (b) or (c) of section 1515. A grant under this subsection shall be made on such conditions as the Secretary determines is appropriate, shall be used by a health systems agency for compensation of agency personnel, collection of data, planning, and the performance of the functions of the agency, and shall be available for obligation for a period not to exceed the period for which its designation agreement is entered into or renewed (as the case may be). Use of fund:A health systems agency may use funds under a grant under this subrestriction. section to make payments under contracts with other entities to assist the health systems agency in the performance of its functions; but it shall not use funds under such a grant to make payments under a grant or contract with another entity for the development or delivery of health services or resources. "(b)(1) The amount of any grant under subsection (a) to a health systems agency designated under section 1515(b) shall be determined by the Secretary. The amount of any grant under subsection (a) to any health systems agency designated under section 1515(c) shall be the lesser of— " (A) the product of $0.50 and the population of the health service area for which the agency is designated, or " (B) $3,750,000, unless the agency would receive a greater amount under paragraph (2) or (3). "(2)(A) If the application of a health systems agency for such a non^'pedera" funds grant contains assurances satisfactory to the Secretary that the agency will expend or obligate in the period in which such grant will be available for obligation non-Federal funds meeting the requirements of subparagraph (B) for the purposes for which such grant may be made, the amount of such grant shall be the sum of— " (i) the amount determined under paragraph (1), and "(ii) the lesser of (I) the amount of such non-Federal funds with respect to which the assurances were made, or ( II) the product of $0.25 and the population of the health service area for which the agency is designated.

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[88 STAT.

" (B) The non-Federal funds which an agency may use for the purpose of obtaining a grant under subsection (a) which is computed on the basis of the formula prescribed by subparagraph (A) shall— "(i) not include any funds contributed to the agency by any individual or private entity which has a financial, fiduciary, or other direct interest in the development, expansion, or support of health resources, and "(ii) be funds which are not paid to the agency for the performance of particular services by it and which are otherwise contributed to the agency without conditions as to their use other than the condition that the funds shall be used for the purposes for which a grant made under this section may be used. "(3) The amount of a grant under subsection (a) to a health systems agency designated under section 1515(c) may not be less than $175,000. Appropriations. u^^^ ^-j^^ Qr the purpose of making payments pursuant to grants made under subsection (a), there are authorized to be appropriated $60,000,000 for the fiscal year ending June,30, 1975, $90,000,000 for the fiscal year ending June 30, 1976, and $125,000,000 for the fiscal year ending June 30, 1977. " (2) Notwithstanding subsection (b), if the total of the grants to be made under this section to health systems agencies for any fiscal year exceeds the total of the amounts appropriated under paragraph (1) for that fiscal year, the amount of the grant for that fiscal year to each health systems agency shall be an amount which bears the same ratio to the amount determined for that agency for that fiscal year under subsection (b) as the total of the amounts appropriated under paragraph (1) for that fiscal year bears to the total amount required to make grants to all health systems agencies in accordance with the applicable provision of subsection (b); except that the amount of any grant to a health systems agency for any fiscal year shall not be less than $175,000, unless the amount appropriated for that fiscal year under paragraph (1) is less than the amount required to make such M grant to each health systems agency. "PART C—STATE HEALTH PLANNING AND DEVELOPMENT "DESIGNATION or STATE HEALTH PLANNING AND DEVELOPMENT AGENCIES

42 USC 300m.

Conditions.

"SEC. 1521. (a) For the purpose of the performance within each State of the health planning and development functions prescribed by section 1523, the Secretary shall enter into and renew agreements (described in subsection (b)) for the designation of a State health planning and development agency for each State other than a State for which the Secretary may not under subsection (d) enter into, continue in effect, or renew such an agreement. " (b)(1) A designation agreement under subsection (a) is an agreement with the Governor of a State for the designation of an agency (selected by the Governor) of the government of that State as the State health planning and development agency (hereinafter in this part referred to as the 'State Agency') to administer the State administrative program prescribed by section 1522 and to carry out the State's health planning and development functions prescribed by section 1523. The Secretary may not enter into such an agreement with the Governor of a State unless— " (A) there has been submitted by the State a State administrative program which has been approved by the Secretary, " (B) an application has been made to the Secretary for such an agreement and the application contains assurances satisfactory

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to the Secretary that the agency selected by the Governor for designation as the State Agency has the authority and resources to administer the State administrative program of the State and to carry out the health planning and development functions prescribed by section 1523, and " (C) in the case of an agreement entered into under paragraph (3), there has been established for the State a Statewide Health Coordinating Council meeting the requirements of section 1524. "(2)(A) The agreement entered into with a Governor of a State under subsection (a) may provide for the designation of a State Agency on a conditional basis with a view to determining the capacity of the designated State Agency to administer the State administrative program of the State and to carry out the health planning and development functions prescribed by section 1523. The Secretary shall require as a condition to the entering into of such an agreement that the Governor submit on behalf of the agency to be designated a plan for the agency's orderly assumption and implementation of such functions. " (B) The period of an agreement described in subparagraph (A) may not exceed twenty-four months. During such period the Secretary may require that the designated State Agency perform only such of the functions of a State Agency prescribed by section 1523 as he determines it is capable of performing. The number and type of such functions shall, during such period, be progressively increased as the designated State Agency becomes capable of added responsibility, so that by the end of such period the designated State Agency may be considered for designation under paragraph (3). " (C) Any agreement with a Governor of a State entered into under subparagraph (A) may be terminated by the Governor upon ninety days' notice to the Secretary or by the Secretary upon ninety days' notice to the Governor. "(3) If, on the basis of an application for designation as a State Agency (and, in the case of an agency conditionally designated under paragraph (2), on the basis of its performance under an agreement with a Governor of a State entered into under such paragraph), the Secretary determines that the agency is capable of fulfilling, in a satisfactory manner, the responsibilities of a State Agency, he shall enter into an agreement with the Governor of the State aesignating the agency as the State Agency for the State. No such agreement may be made unless an application therefor is submitted to, and approved by, the Secretary. Any such agreement shall be for a term of not to exceed twelve months, except that, prior to the expiration of such term, such agreement may be terminated— " (A) by the Governor at such time and upon such notice to the Secretary as he may by regulation prescribe, or " (B) by the Secretary, at such time and upon such notice to the Governor as the Secretary may by regulation prescribe, if the Secretary determines that the designated State Agency is not complying with or effectively carrying out the provisions of such agreement. An agreement under this paragraph shall contain such provisions as the Secretary may require to assure that the requirements of this part respecting State Agencies are complied with. "(4) An agreement entered into under paragraph (3) for the designation of a State Agency may be renewed by the Secretary for a period not to exceed twelve months if he determines that it has fulfilled, in a satisfactory manner, the responsibilities of a State Agency during the period of the agreement to be renewed and if the

2243

Period of agreement.

Termination.

State Agency, designation.

Application submittal to Secretary.

Termination,

Renewal,

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42 USC 2681 note. use 4551 °42 note.

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[88

STAT.

applicable State administrative program continues to meet the requirements of section 1522. "(c) If a designation agreement with the Governor of a State entered into under subsection (b)(2) or (b)(3) is terminated before the date prescribed for its expiration, the Secretary shall, upon application and in accordance with subsection (b)(2), or (b)(3) (as the Secretary determines appropriate), enter into another agreement with the Governor for the designation of a State Agency. " (d) If, upon the expiration of the fourth fiscal year which begins after the calendar year in which the National Health Policy, Planning, and Resources Development Act of 1974 is enacted, an agreement under this section for the designation of a State Agency for a State is not in effect, the Secretary may not make any allotment, grant, loan, or loan guarantee, or enter into any contract, under this Act, the Community Mental Health Centers Act, or the Comprehensive Alcohol Abuse and Alcoholism Prevention, Treatment, and Rehabilitation Act of 1970 for the development, expansion, or support of health resources in such State until such time as such an agreement is in effect. "STATE ADMINISTRATIVE PROGRAM

42 USC 3oom-i. conditions,

"SEC. 1522. (a) A State administrative program (hereinafter in this section referred to as the 'State Program') is a program for the performance within the State by its State Agency of the functions prescribed by section 1523. The Secretary may not approve a State Program for a State unless it— " (1) meets the requirements of subsection (b); "(2) has been submitted to the Secretary by the Governor of the State at such time and in such detail, and contains or is accompanied by such information, as the Secretary deems necessary; and " (3) has been submitted to the Secretary only after the Governor of the State has afforded to the general public of the State a reasonable opportunity for a presentation of views on the State Program. " (b) The State Program of a State must—• "(1) provide for the performance within the State (after the designation of a State Agency and in accordance with the designation agreement) of the functions prescribed by section 1523 and specify the State Agency of the State as the sole agency for the performance of such functions (except as provided in subsection (b) of such section) and for the administration of the State Program; "(2) contain or be supported by satisfactory evidence that the State Agency has under State law the authority to carry out such functions and the State Program in accordance with this part and contain a current budget for the operation of the State Agency; "(3) provide for adequate consultation with, and authority for, the Statewide Health Coordinating Council (prescribed by section 1524), in carrying out such functions and the State Program; "(4)(A) set forth in such detail as the Secretary may prescribe the qualifications for personnel having responsibilities in the performance of such functions and the State Program, and require the State Agency to have a professional staff for planning and a professional staff for development, which staffs shall be of such size and meet such qualifications as the Secretary may prescribe;

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PUBLIC LAW 93-641-JAN. 4, 1975

2245

" (B) provide for such methods of administration as are found by the Secretary to be necessary for the proper and efficient administration of such functions and the State Program, including methods relating to the establishment and maintenance of personnel standards on a merit basis consistent with such standards as are or may be established by the Civil Service Commission under section 208(a) of the Intergovernmental Personnel Act of 1970 (Public Law 91-648), but the Secretary shall exercise no 42 USC 4728. authority with respect to the selection, tenure of office, and compensation of any individual employed in accordance with the methods relating to personnel standards on a merit basis established and maintained in conformity with this paragraph; "(5) require the State Agency to perform its functions in accordance with procedures and criteria established and published by it, which procedures and criteria shall conform to the requirements of section 1532; " (6) require the State Agency to (A) conduct its business meetings in public, (B) give adequate notice to the public of such meetings, and (C) make its records and data available, upon request, to the public; "(7)(A) provide for the coordination (in accordance with regulations of the Secretary) with the cooperative system provided for under section 306(e) of the activities of the State Agency Ante, p. 365. for the collection, retrieval, analysis, reporting, and publication of statistical and other information related to health and health care, and (B) require providers of health care doing business in Reports. the State to make statistical and other reports of cuch information to the State Agency; "(8) provide, in accordance with methods and procedures preafua°i^n"'^^ scribed or approved by the Secretary, for the evaluation, at least annually, of the performance by the State Agency of its functions and of their economic effectiveness; " (9) provide that the State Agency will from time to time, and Review of state in any event not less often than annually, review the State Pro- P"^^'"' gram and submit to the Secretary required modifications; "(10) require the State Agency to make such reports, in such Reports; recordform and containing such information, concerning its structure, ''^^P'"^operations, performance of functions, and other matters as the Secretary may from time to time require, and keep such records and afford such access thereto as the Secretary may find necessary to verify such reports; "(11) require the State Agency to provide for such fiscal control and fund accounting procedures as the Secretary may require to assure proper disbursement of, and accounting for, amounts received from the Secretary under this title; "(12) permit the Secretary and the Comptroller General of the ^"'^^'• United States, or their representatives, to have access for the purpose of audit and examination to any books, documents, papers, and records of the State Agency pertinent to the disposition of amounts received from the Secretary under this title; and "(13) provide that if the State Agency makes a decision in the performance of a function under paragraph (3), (4), (5), or (6) of section 1523(a) or under title X VI which is inconsistent P°S(, p. 2258. with a recommendation made under subsection (f), (g), or (h) of section 1513 by a health systems agency within the State— " (A) such decision (and the record upon which it was made) shall, upon request of the health systems agency, be reviewed, under an appeals mechanism consistent with State

38-194 O - 76 - 59 Pt. 2

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PUBLIC LAW 93-641-JAN. 4, 1975

[88

STAT.

law governinf^ the practices and procedures of administrative agencies, by an agency of the State (other than the State health planning and development agency) designated by the Governor, and " (B) the decision of the reviewing agency shall for purPost, p. 2258. poses of this title and title X VI be considered the decision of the State health planning and development agency. State Program, n(^Q^ 'pj-^g Secretary shall approve any State Program and any vfew""^^ ^" '^^' modification thereof which complies with subsections (a) and (b). The Secretary shall review for compliance with the requirements of this part the specifications of and operations under each State Program approved by him. Such review shall be conducted not less often than once each year. "STATE HEALTH PLANNING AND DEVELOPMENT FUNCTIONS

42 USC 3oom-2.

ug^c. 1523. (a) Each State Agency of a State designated under section 1521(b)(3) shall, except as authorized under subsection (b), perform within the State the following functions: "(1) Conduct the health planning activities of the State and implement those parts of the State health plan (under section 1524(c)(2)) and the plans of the health systems agencies within the State which relate to the government of the State. Preliminary "(2) Prepare aud review and revise as necessary (but at least p an. annually) a preliminary State health plan which shall be made up of the H S P ' s of the health systems agencies within the State. Such preliminary plan may, as found necessary by the State Agency, contain such revisions of such H S P ' s to achieve their appropriate coordination or to deal more effectively with statestit'ewidl^H'e°aith widc health needs. Such preliminary plan shall be submitted to Coordinating the Statcwldc Health Coordinating Council of the State for ^°""'''^" approval or disapproval and for use in developing the State health plan referred to in section 1524(c). faciutle'^^'^/an^ "(^) ^^slst the Statewide Health Coordinating Council of the review. ' State in the review of the State medical facilities plan required Post, p. 2259. under section 1603, and in the performance of its functions generally. "(4)(A) Serve as the designated planning agency of the State 42 USC i320a-i. ^^^ ^^^ purposes of section 1122 of the Social Security Act if the State has made an agreement pursuant to such section, and (B) administer a State certificate of need program which applies to new institutional health services proposed to be offered or developed within the State and which is satisfactory to the Secretary. Such program shall provide for review and determination of need prior to the time such services, facilities, and organizations are offered or developed or substantial expenditures are undertaken in preparation for such offering or development, and provide that only those services, facilities, and organizations found to be needed shall be offered or developed in the State. In performing its functions under this paragraph the State Agency shall consider recommendations made by health systems agencies under section 1513(f). "(5) After consideration of recommendations submitted by health systems agencies under section 1413(f) respecting new institutional health services proposed to be offered within the State, make findings as to the need for such services. "(6) Review on a periodic basis (but not less often than every five years) all institutional health services being offered in the

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State and, after consideration of recommendations submitted by health systems agencies under section 1513(g) respecting the appropriateness of such services, make public its findings. " (b)(1) Any function described in subsection (a) may be performed by another agency of the Stat« government upon request of the Governor under an agreement with the State Agency satisfactory to the Secretary. "(2) The requirement of paragraph (4)(B) of subsection (a) shall not apply to a State Agency of a State until the expiration of the first regular session of the legislature of such State which begins after the date of enactment of this title. " (3) A State Agency shall complete its findings with respect to the appropriateness of any existing institutional health service within one year after the date a health systems agency has made its recommendation under section 1513(g) with respect to the appropriateness of the service. "(c) If a State Agency makes a decision in carrying out a function described m paragraph (4), (5), (6), or (7) of subsection (a) which is not consistent with the goals of the applicable H S P or the priorities of the applicable A I P, the State Agency shall submit to the appropriate health systems agency a detailed statement of the reasons for the inconsistency.

2247

statement to

health systems agency.

"STATEWIDE HEALTH COORDINATING COUNCIL

"SEC. 1524. (a) A State health planning and development agency designated under section 1521 shall be advised by a Statewide Health Coordinating Council (hereinafter in this section referred to as the 'SHCC') which (1) is organized in the manner described by siibsection (b), and (2) performs the functions listed in subsection (c). " (b)(1) A SHCC of a State shall be composed in the following manner: " (A)(i) A SHCC shall have no fewer than sixteen representatives appointed by the Governor of the State from lists of at least five nominees submitted to the Governor by each of the health systems agencies designated for health service areas which fall, in whole or in part, within the State. "(ii) Each such health systems agency shall be entitled to the same number of representatives on the SHCC. "(iii) Each such health systems agency shall be entitled to at least two representatives on the SHCC. Of the representatives of a health systems agency, not less than one-half shall be individuals who are consumers of health care and who are not providers of health care. " (B) In addition to the appointments made under subparagraph (A), the Governor of the State may appoint such persons (including State officials, public elected officials, and other representatives of governmental authorities within the State) to serve on the SHCC as he deems appropriate; except that (i) the number of persons appointed to the SHCC under this subparagraph may not exceed 40 per centum of the total membership of the SHCC, and (ii) a majority of the persons appointed by the Governor shall be consumers of health care who are not also providers of health care. " (C) Not less than one-third of the providers of health care who are members of a SHCC shall be direct providers of health care (as described in section 1531(3)).

" ^ ^^'^ 3oom-3. ^

Membership.

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Chairman. Meetings.

Report.

Hearing.

6 u d g e t, review and report. Applications for grants, review and report. Post, p. 2273.

42 USC 2681 note. 42 USC 4551 note.

PUBLIC LAW 93-641-JAN. 4, 1975

[88

STAT.

" (D) Where two or more hospitals or other health care facilities of the Veterans' Administration are located in a State, the SHCC shall, in addition to the appointed members, include, as an ex officio member, an individual whom the Chief Medical Director of the Veterans' Administration shall have designated as a representative of such facilities. "(2) The SHCC shall select from among its members a chairman. "(3) The SHCC shall conduct all of its business meetings in public, and shall meet at least once in each calendar quarter of a year. "(c) A SHCC shall perform the following functions: "(1) Review annually and coordinate the H S P and A I P of each health systems agency within the State and report to the Secretary, for purposes of his review under section 1535(c), its comments on such H S P and A I P. "(2)(A) Prepare and review and revise as necessary (but at least annually) a State health plan which shall be made up of the H S P ' s of the health systems agencies within the State. Such plan may, as found necessary by the SHCC, contain revisions of such H S P ' s to achieve their appropriate coordination or to deal more effectively with statewide health needs. Each health systems agency which participates in the SHCC shall make available to the SHCC its H S P for each year for integration into the State health plan and shall, as required by the SHCC, revise its H S P to achieve appropriate coordination with the H S P ' s of the other agencies which participate in the SHCC or to deal more effectively with statewide health needs. " (B) In the preparation and revision of the State health plan, the SHCC shall review and consider the preliminary State health plan submitted by the State agency under section 1523(a)(2), and shall conduct a public hearing on the plan as proposed and shall give interested persons an opportunity to submit their views orally and in writing. Not less than thirty days prior to any such hearing, the SHCC shall publish in at least two newspapers of general circulation in the State a notice of its consideration of the proposed plan, the time and place of the hearing, the place at which interested persons may consult the plan in advance of the hearing, and the place and period during which to direct written comment to the SHCC on the plan. "(3) Review annually the budget of each such health systems agency and report to the Secretary, for purposes of his review under section 1535(a), its comments on such budget. "(4) Review applications submitted by such health systems agencies for grants under sections 1516 and 1640 and report to the Secretary its comments on such applications. "(5) Advise the State Agency of the State generally on the performance of its functions. " (6) Review annually and approve or disapprove any State plan and any application (and any revision of a State plan or application) submitted to the Secretary as a condition to the receipt of any funds under allotments made to States under this Act, the Community Mental Health Centers Act, or the Comprehensive Alcohol Abuse and Alcoholism Prevention, Treatment, and Rehabilitation Act of 1970. Notwithstanding any other provision of this Act or any other Act referred to in the preceding sentence, the Secretary shall allow a SHCC sixty days to make the review required by such sentence. If a SHCC disapproves such a State plan or application, the Secretary may not make Federal funds available under such State plan or application until he has made,

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2249

upon request of the Governor of the State which submitted such plan or application or another agency of such State, a review of the SHCC decision. If after such review the Secretary decides to make such funds available, the decision by the Secretary to make such funds available shall be submitted to the SPICC and shall contain a detailed statement of the reasons for the decision. ((GRANTS

FOR STATE HEALTH PLANNING AND DEVELOPMENT

"SEC. 1525. (a) The Secretary shall make grants to State health planning and development agencies designated under subsection (b)(2) or (b)(3) of section 1521 to assist them in meeting the costs of their operation. Any grant made under this subsection to a State Agency shall be available for obligation only for a period not to exceed the period for which its designation agreement is entered into or renewed. The amount of any grant made under this subsection shall be determined by the Secretary, except that no grant to a designated State Agency may exceed 75 per centum of its operation costs (as determined under regulations of the Secretary) during the period for which the grant is available for obligation. "(b) Grants under subsection (a) shall be made on such terms and conditions as the Secretary may prescribe; except that the Secretary may not make a grant to a State Agency unless he receives satisfactory assurances that the State Agency will expend in performing the functions prescribed by section 1523 during the fiscal year for which the grant is sought an amount of funds from non-Federal sources which is at least as great as the average amount of funds expended, in the three years immediately preceding the fiscal year for which such grant is sought, by the State, for which such State Agency has been designated, for the purposes for which funds under such grant may be used (excluding expenditures of a nonrecurring nature). "(c) For the purpose of making payments under grants under subsection (a), there are authorized to be appropriated $25,000,000 for the fiscal year ending June 30, 1975, $30,000,000 for the fiscal year ending June 30, 1976, and $35,000,000 for the fiscal year ending June 30, 1977.

^^ use 3oom-4.

Limitation.

Appropriations.

" G R A N T S FOR R A T E REGULATION

"SEC. 1526. (a) For the purpose of demonstrating the effectiveness '•^ use aoom-s. of State Agencies regulating rates for the provision of health care, the Secretary may make to a State Agency designated, under an agreement entered into under section 1521(b)(3), for a State which (in accordance with regulations prescribed by the Secretary) has indicated an intent to regulate (not later than six months after the date of the enactment of this title) rates for the provision of health care within the State. Not more than six State Agencies may receive grants under Limitation. this subsection. " (b)(1) A State Agency which receives a grant under subsection Requirements. (a) shall— " (A) provide the Secretary satisfactory evidence that the State Agency has under State law the authority to carry out rate regulation functions in accordance with this section and provide the Secretary a current budget for the performance of such functions by i t; " (B) set forth in such detail as the Secretary may prescribe the qualifications for personnel having responsibility in the performance of such functions, and shall have a professional staff for rate regulation, which staff shall be headed by a Director;

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" (C) provide for such methods of administration as fomid by the Secretary to be necessary for the proper and efficient administration of such functions; " (D) perform its functions in accordance with procedures established and published by it, which procedures shall conform to the requirements of section 1532; " (E) comply with the requirements prescribed by paragraphs (6) through (12) of section 1522(b) with respect to the functions prescribed by subsection (a); " (F) provide for the establishment of a procedure under which the State Agency will obtain the recommendation of the appropriate health systems agency prior to conducting a review of the rates charged or proposed to be charged for services; and " (G) meet such other requirements as the Secretary may prescribe. "(2) I n prescribing requirements under paragraph (1) of this subsection, the Secretary shall consider the manner in which a State Agency shall perform its functions under a grant under subsection (a), including whether the State Agency should— " (A) permit those engaged in the delivery of health services to retain savings accruing to them from effective management and cost control, " (B) create incentives at each point in the delivery of health services for utilization of the most economical modes of services feasible, " (C) document the need for and cost implications of each new service for which a determination of reimbursement rates is sought, and " (D) employ for each type or class of person engaged in the delivery of health services— "(i) a unit for determining the reimbursement rates, and "(ii) a base for determining rates of change in the reimbursement rates, which unit and base are satisfactory to the Secretary. Terms and con"(c) Grants under subsection (a) shall be made on such terms and ditions. conditions as the Secretary may prescribe, except that (1) such a grant shall be available for obligation only during the one-year period beginning on the date such grant was made, and (2) no State Agency may receive more than three grants tinder subsection (a). Report to secre(d) Each State Agency which receives a grant under subsection tary. (a) shall report to the Secretary (in such form and manner as he shall prescribe) on the effectiveness of the rate regulation program assisted fsT"*^*'° ^°"' by such grant. The Secretary shall report annually to the Congress on gress the effectiveness of the programs assisted by the grants authorized by subsection (a). Appropriations. "(e) Thcrc are authorized to be appropriated to make payments under grants under subsection (a), $4,000,000 for the fiscal year ending June 30, 1975, $5,000,000 for the fiscal year ending June 30, 1976, and $6,000,000 for the fiscal year ending June 30, 1977. "PART D—GENERAL PROVISIONS a DEFINITIONS

42 USC 3oon.

"SEC. 1531. FoT purposes of this title t "(1) The term 'State' includes the District of Columbia and the Commonwealth of Puerto Rico. " (2) The term 'Governor' means the chief executive officer of a State or his designee.

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" (3) The term 'provider of health care' means an individual— " (A) who is a direct provider of health care (including a physician, dentist, nurse, podiatrist, or physician assistant) in that the individual's primary current activity is the provision of health care to individuals or the administration of facilities or institutions (including hospitals, long-term care facilities, outpatient facilities, and health maintenance organizations) in which such care is provided and, when required by State law, the individual has received professional training in the provision of such care or in such administration and is licensed or certified for such provision or administration; or " (B) who is an indirect provider of health care in that the individual— "(i) holds a fiduciary position with, or has a fiduciary interest in, any entity described in subclause ( II) or (IV) of clause (ii); "(ii) receives (either directly or through his spouse) more than one-tenth of his gross annual income from any one or combination of the following: " (I) Fees or other compensation for research into or instruction in the provision of health caie. " ( II) Entities engaged in the provision of health care or in such research or instruction. " ( I l l) Producing or supplying drugs or other articles for individuals or entities for use in the provision of or in research into or instruction in the provision of health care. " ( IV) Entities engaged in producing drugs or such other articles, "(iii) is a member of the immediate family of an individual described in subparagraph (A) or in clause (i), (ii), or (iv) of subparagraph (B); or "(iv) is engaged in issuing any policy or contract of individual or group health insurance or hospital or medical service benefits. "(4) the term 'health resources' includes health services, health professions personnel, and health facilities, except that such term does not include Christian Science sanatoriums operated, or listed and certified, by the First Church of Christ, Scientist, Boston, Massachusetts. "(5) The term 'institutional health services' means the health services provided through health care facilities and health maintenance organizations (as such facilities and organizations are defined in regulations prescribed under section 1122 of the Social Security Act) ^2 USC i320a-i. and includes the entities through which such services are provided. "PROCEDURES AND CRITERIA

FOR R E VI E W S o r

PROPOSED HEALTH

SYSTEM CHANGES

"SEC. 1532. (a) I n conducting reviews pursuant to subsections (e), 42 USC soon-i. (f), and (g) of section 1513 or in conducting any other reviews of proposed or existing health services, each health systems agency shall (except to the extent approved by the Secretary) follow procedures, and apply criteria, developed and published by the agency in accordance with regulations of the Secretary; and in performing its review functions under section 1523, a State Agency shall (except to the extent approved by the Secretary) follow procedures, and apply criteria, developed and published by the State Agency in accordance with regulations of the Secretary. Procedures and criteria for reviews by

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[88

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health systems agencies and States Agencies may vary according to the purpose for which a particular review is being conducted or the type of health services being reviewed. "(J3) Each health systems agency and State Agency shall include in the procedures required by subsection (a) at least the following: "(1) Written notification to affected persons of the beginning of a review\ " (2) Schedules for reviews which provide that no review shall, to the extent practicable, take longer than ninety days from the date the notification described in paragraph (1) is made. "(3) Provision for persons subject to a review to submit to the agency or State Agency (in such form and manner as the agency or State Agency shall prescribe and publish) such information as the agency or State Agency may require concerning the subject of such review. "(4) Submission of applications (subject to review by a health systems agency or a State Agency) made under this Act or other provisions of law- for Federal financial assistance for health services to the health systems agency or State Agency at such time and in such manner as it may require. "(5) Submission of periodic reports by providers of health services and other persons subject to agency or State Agency review respecting the development of proposals subject to review. " (6) Provision for written findings which state the basis for any final decision or recommendation made by the agency or State Agency. "(7) Notification of providers of health services and other persons subject to agency or State Agency review of the status of the agency or State Agency review of the health services or proposals subject to review, findings made in the course of such review, and other appropriate information respecting such review. "(8) Provision for public hearings in the course of agency or State Agency review if requested by persons directly affected by the review; and provision for public hearings, for good cause shown, respecting agency and State Agency decisions. "(9) Preparation and publication of regular reports by the agency and State Agency of the reviews being conducted (including a statement concerning the status of each such review) and of the reviews completed by the agency and State Ajjencv (including a general statement of the findings and decisions made in the course of such reviews) since the publication of the last such report. " (10) Access by the general public to all applications reviewed by the agency and State Agency and to all other Avritten materials pertinent to any agency or State Agency review\ "(11) I n the case of construction projects, submission to the agency and State Agency by the entities proposing the projects of letters of intent in such detail as may be necessary to inform the agency and State Agency of the scope and nature of the projects at the earliest possible opportunity in the course of planning of such construction projects. "(c) Criteria required by subsection (a) for health systems agency and State Agency review shall include consideration of at least the following: "(1) The relationship of the health services being reviewed to the applicable H S P and A I P. "(2) The relationship of services reviewed to the long-range development plan (if any) of the person providing or proposing such services.

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"(3) The need that the population served or to be served by such services has for such services. "(4) The availability of alternatives, less costly, or more effective methods of providing such services. "(5) The relationship of services reviewed to the existing health care system of the area in which such services are provided or proposed to be provided. " (6) I n the case of health services proposed to be provided, the availability of resources (including health manpower, management personnel, and funds for capital and operating needs) for the provision of such services and the availability of alternative uses of such resources for the provision of other health services, " (7) The special needs and circumstances of those entities which provide a substantial portion of their services or resources, or both, to individuals not residing in the health service areas in which the entities are located or in adjacent health service areas. Such entities may include medical and other health professions schools, multidisciplinary clinics, specialty centers, and such other entities as the Secretary may by regulation prescribe, " (8) The special needs and circumstances of health maintenance organizations for which assistance may be provided under title XIII.

42 USC 300e.

" (9) In the case of a construction project— " (A) the costs and methods of the proposed construction, and " (B) the probable impact of the construction project reviewed on the costs of providing health services by the person proposing such construction project. ' " T E C H N I C A L ASSISTANCE FOR H E A L T H SYSTEMS AGENCIES AND H E A L T H P L A N N I N G A N D DEVELOPMENT AGENCIES

STATE

"SEC. 1533. (a) The Secretary shall provide (directly or through ^^ use 300n.2. grants or contracts, or both) to designated health systems agencies and State Agencies (1) assistance in developing their health plans and approaches to planning various types of health services, (2) technical materials, including methodologies, policies, and standards appropriate for use in health planning, and (3) other technical assistance as may be necessary in order that such agencies may properly perform their functions. " (b) The Secretary shall include in the materials provided under subsection (a) the following: " (1)(A) Specification of the minimum data needed to determine the health status of the residents of a health service area and the determinants of such status. " (B) Specification of the minimum data needed to determine the status of the health resources and services of a health service area. " (C) Specification of the minimum data needed to describe the use of health resources and services within a health service area. "(2) Planning approaches, methodologies, policies, and standards which shall be consistent with the guidelines established by the Secretary under section 1501 for appropriate planning and ^"'^' P- 2227. development of health resources, and which shall cover the priorities listed in section 1502. "(3) Guidelines for the organization and operation of health Guidelines. systems agencies and State Agencies including guideline's for— " (A) the structure of a health systems agency, consistent with section 1512(b), and of a State Agency, consistent with section 1522;

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National health planning information center. Establishment.

Operation c o s t system.

Cost accounting system.

R a t e s, calculation system.

PUBLIC LAW 93-641-JAN. 4, 1975

[88

STAT.

" (B) the conduct of the planning and development processes; " (C) the performance of health systems agency functions in accordance with section 1513; and " (D) the performance of State Agency functions in accordance with section 1523. "(c) I n order to facilitate the exchange of information concerning health services, health resources, and health planning and resources development practice and methodology, the Secretary shall establish a national health planning information center to support the health planning and resources development programs of health systems agencies, State Agencies, and other entities concerned with health planning and resources development; to provide access to current information on health planning and resources development; and to provide information for use in the analysis of issues and problems related to health planning and resources development. " (d) The Secretary shall establish the following within one year of the date of enactment of this title: "(1) A uniform system for calculating the aggregate cost of operation and the aggregate volume of services provided by health services institutions as defined by the Secretary in regulations. Such system shall provide for the calculation of the aggregate volume to be based on: " (A) The number of patient days; " (B) The number of patient admissions; "(C) The number of out-patient visits; and " (D) Other relevant factors as determined by the Secretary. "(2) A uniform system for cost accounting and calculating the volume of services provided by health services institutions. Such system shall: " (A) Include the establishment of specific cost centers and, where appropriate, subcost centers. " (B) Include the designation of an appropriate volume factor for each cost center. " (C) Provide for an appropriate application of such system in the different types of institutions (including hospitals, nursing homes, and other types of health services institutions), and different sizes of such types of institutions. "(3) A uniform system for calculating rates to be charged to health insurers and other health institutions payors by health service institutions. Such system shall: " (A) Be based on an all-inclusive rate f»r various categories of patients (including, but not limited to individuals receiving medical, surgical, pediatric, obstetric, and psychiatric institutional health services). " (B) Provide that sach rates reflect the true cost of providing services to each such category of patients. The system shall provide that revenues derived from patients in one category shall not be used to support the provision of services to patients in any other category. " (C) Provide for an appropriate application of such system in the different types of institutions (including hospitals, nursing homes, and other types of health service institutions) and different sizes of such types of institutions. " (D) Provide that differences in rates to various classes of purchasers (including health insurers, direct service pay-

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ors, and other health institution payors) be based on justified and documented differences in the costs of operation of health service institutions made possible by the actions of such purchasers. "(4) A classification system for health services institutions. syslem^'^'''^"°" Such classification system shall quantitatively describe and proup health services institutions of the various types. Factors included in such classification system shall include— " (A) the number of beds operated by an institution; " (B) the geographic location of an institution; " (C) the operation of a postgraduate physician training program by an institution; and " (D) the complexity of services provided by an institution. "(5) A uniform system for the reporting by health services Reporting sysinstitutions of— " (A) the aggregate cost of operation and the aggregate volume of services, as calculated in accordance with the system established by the Secretary under paragraph (1); " (B) the costs and volume of services at various cost centers, and subcost centers, as calculated in accordance with the system established by the Secretary under paragraph (2); and "(C) rates, by category of patient and class of purchaser, as calculated in accordance with the system established by the Secretary under paragraph (3). Such system shall provide for an appropriate application of such system in the different types of institutions (including hospitals, nursing homes, and other types of health services institutions) and different sizes of such institutions. " C E X T E R S FOR H E A L T H

PLANNING

"SEC. 1534. (a) For the purposes of assisting the Secretary in carrying out this title, providing such technical and consulting assistance as health systems agencies and State Agencies may from time to time require, conducting research, studies and analyses of health planning and resources development, and developing health planning approaches, methodologies, policies, and standards, the Secretary shall by grants or contracts, or both, assist public or private nonprofit entities in meeting the costs of planning and developing new centers, and operating existing and new centers, for multidisciplinary health planning development and assistance. To the extent practicable, the Secretary shall provide assistance under this section so that at least five such centers will be in operation by June 30, 1976. "(b)(1) No grant or contract may be made under this section for planning or developing a center unless the Secretary determines that when it is operational it will meet the requirements listed in paragraph (2) and no grant or contract may be made under this section for operation of a center unless the center meets such requirements. "(2) The requirements referred to in paragraph (1) are as follows: " (A) There shall be a full-time director of the center who possesses a demonstrated capacity for substantial accomplishment and leadership in the field of health planning and resources development, and there shall be such additional professional staff as may be appropriate. " (B) The staff of the center shall represent a diversity of relevant disciplines.

42 USC soon-s.

Requirements.

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