Morris Manning & Martin, LLP

Georgia Health Law Update: CON Reform, Hospital Transparency, Low THC Oil, and other Healthcare Legislation Passed

04.18.2019

The 2019 General Assembly session was quite busy and resulted in significant legislation impacting healthcare and the healthcare industry including CON law, reporting requirements, THC oil, hospital and provider transparency, and Medicaid waivers. 

CON Reform

The Georgia General Assembly passed reforms to Georgia’s Certificate of Need (“CON”) law this session. The CON Reform legislation is subject to the governor's signature. The changes are significant, although less dramatic than some had hoped or feared. The CON law is still very much alive in Georgia. Though the governor has not yet signed all pieces of legislation, it is anticipated that it is forthcoming. 

Cancer Hospital Conversion

The legislation added a new avenue that allows a destination cancer hospital to file a CON application to convert to a general cancer hospital. The principal stated need for such a conversion is to remove the current restrictions on how many Georgia patients may be treated by a destination cancer hospital. For several sessions now, Cancer Treatment Centers of America has pushed for relief from the patient origin restrictions on destination cancer treatment hospitals and this amendment grants the opportunity to apply for such relief. DCH is charged with creating a form and process for this conversion CON application and the statute specifically forbids any opposition or appeal of the application by other healthcare facilities.

Additional Qualifications for Issuance of CON

Demonstration of compliance with survey requirements and indigent and charity care requirements is already a pre-requisite when filing a CON application under existing DCH rules. That requirement has now been codified as well. Applicants seeking new CONs or modifications or conversions of existing CONs may not have any unpaid and outstanding amounts owed to the state related to compliance with CON requirements, annual provider reports to DCH, or hospital provider fee payments Any outstanding fees or fines must be paid prior to the issuance of a CON. In a piece of good news for rural hospitals, CON applications filed by rural hospitals will no longer be subject to a filing fee.

Medical Use Rights

Healthcare facilities will no longer be able to include “medical use rights” as a means of restricting property use and cannot purchase, renew, lease, extend, maintain or hold medical use rights. “Medical use rights” are covenants restricting the sale or lease of real property for identified medical uses or privileges. Existing agreements containing such limitations as of the effective date of the legislation shall be allowed to stand. It remains to be seen how this will affect healthcare properties, particularly as agreements come up for renewal.

Opposition to CON Applications

Previously, there were no geographic limitations on who could oppose a CON application. Opposition to a CON application is now limited to existing providers of substantially similar services located within 35 miles of the applicant’s proposed services or who have a service area that overlaps the applicant’s proposed service area. Competing applicants for the same service in the same batching cycle may also oppose a project if there is an overlap between the two proposed service areas.

Revisions to Exemptions

Expenditures for the restructuring or acquisition of existing healthcare facilities by stock or asset purchase, merger, consolidation, or other lawful means are now exempt from CON review, regardless of ownership type. Previously, the purchase of a facility owned by hospital authority or political subdivision of the state would trigger review unless it was a hospital authority restructuring.

The revised statute also expands the list of specifically excluded non-clinical physical plant projects that are exempt from CON review and raises the capital expenditure threshold to $10 million. Hospitals may now spend up to $10 million to expand or add certain clinical services on their primary campus so long as they do not add or convert inpatient beds or use the funds to create dedicated outpatient operating rooms.

Finally, the threshold for expenditures for exempt diagnostic imaging equipment (excluding PET which requires a CON) for hospitals and private physician offices (LNR-EQTs) increased to $3 million. Importantly, the statute added a new provision that may affect the way in which physicians who seek CON exempt imaging centers in the future will be required to staff their centers. Such centers will be exempt from the requirement to file a CON (and LNR –EQTs will only be granted) if they are for use on the patients of private physician or single group practice and the physician or member of the single group practice of physicians is physically present at the practice location where the diagnostic or other imaging equipment is located at least 75% of the time that the equipment is in use. This may differ from the physician supervision requirements imposed by payors so physician-owned imaging centers will need to ensure that they plan to have a sufficient physician presence at their centers. This provision will likely also impact physicians who own multiple centers.

Ambulatory Surgical Center and Imaging Center Reporting Requirements

ASCs, Imaging Centers, and healthcare facilities requiring a CON have expanded reporting requirements added to their annual reports required by O.C.G.A. § 31-6-70. Covered healthcare facilities are additionally required to report transfers to a hospital or hospital emergency department; number of rooms, beds, procedures, and patients; patient origin by country; and operational information such as procedure types, volumes, and charges.

In congruence with the emphasis on transparency, these annual reports will now be made publicly available by the State of Georgia. Additionally, covered healthcare facilities must make their annual reports publicly available on their websites.

Low THC Oil

Gov. Kemp signed a bill into law legalizing the use of low-THC hemp oil for medical purposes. O.C.G.A. § 16-12-191, et seq. includes laws and guidance related to the production, manufacturing, and dispensing of low THC oil in Georgia. This bill will, for the first time, make the production, manufacture, and dispensation of low THC oil legal in Georgia. Previously, it was legal to possess low THC oil with the proper license, but was illegal to cultivate or distribute the oil. The governor signed the bill on April 17, 2019. 

This will bring big changes to pharmacies, including hospital pharmacies. The new law sets forth statutes for all sectors related to the production, manufacturing, and dispensing of low-THC oil in Georgia. The law specifically creates a legal framework for the production, manufacturing, and dispensation only for licensed and certified individuals, groups, corporations, and non-profits; the bill does not create a pathway to wider legalization or use, medicinal or recreational.

There are three areas of the new bill that should be of relevant interest to those in the healthcare community:

  1. Establishment of a low THC oil network
  2. Specialty dispensing licenses to be granted in accordance with Georgia State Board of Pharmacy rules and regulations and
  3. Immunity and restrictions placed upon physicians, pharmacists, and other healthcare providers as it relates to the prescription and dispensation of low-THC oil.

The law establishes a new Georgia Access to Medical Cannabis Commission, which is assigned to the Georgia Secretary of State. One of the commission’s duties will be to establish a distribution network for low-THC oil that patients can directly access.  The commission has the right to determine the “best use of facilities and resources to operate such [a] distribution network.”  It is not clear at this time if the commission will choose to establish its own direct-to-patient network, or will work with current healthcare providers and other distributors to create such a network. Therefore, there appears to be an opportunity for healthcare providers to work directly with the commission on providing patients' access to low THC oil. 

Separate from the commission’s distribution network, the new law also directs the State Board of Pharmacy (“SBP”) to establish a regulatory framework for the dispensation of “specialty dispensing licenses” for pharmacies to dispense low THC oil to registered patients. The SBP will also work in conjunction with the commission to establish similar rules for retail operations. The SBP will act as the authority tasked with granting, monitoring, and, if necessary, suspending and revoking specialty dispensing licenses. Additionally, the SBP is tasked with putting forward guidance on appropriate amounts and dosages for low THC oil prescriptions based on a one-month supply.

Finally, the low THC oil bill sets forth blanket immunity for all healthcare providers, including pharmacists and physicians who act in accordance with the low THC oil statutes and regulations.  As part of these statutes and regulations physicians will still be responsible to certify eligible patients to the Department of Community Health, and will now be required to “seek and review information about a patient from the prescription drug monitoring program database established pursuant to [O.C.G.A. §] 16-13-57 prior to certifying such patient to the Department…”  Likewise, pharmacists will need to ensure that it only dispenses low THC oil to registered patients in order to receive immunity.  

Additional Healthcare Legislation

In addition to the revisions to existing CON regulations, additional legislation will have a substantial impact on healthcare operations in Georgia. A primary driver of legislation this session, a marked emphasis on hospital and provider transparency, has resulted in new regulations that will require disclosures by hospitals, including nonprofits, of information that has previously not been required.

Additionally, the General Assembly has approved the governor seeking federal waivers that will expand Medicaid coverage up to 100 percent of the federal poverty threshold and allow Georgia to make changes in the way in which premium coverage is provided under the Affordable Care Act.

Hospital Transparency

Via the newly drafted O.C.G.A. § 31-7-22, substantial financial and business transparency requirements are to be imposed on certain hospitals, including nonprofits, those owned/operated by a hospital authority, and nonprofit corporations formed, created, or operated by or on behalf of a hospital authority. The required disclosures implicate integral operational information that previously was not subject to public scrutiny.

Beginning October 1, 2019, affected hospitals are required to post a link in a “prominent location” on their main website to the most recent version of “federal related disclosures” and “Georgia supplemental disclosures.”

Required federal related disclosures consist of two categories: (1) copies of audited financial statements which express the unqualified opinion of an independent certified public accounting firm for the most recently completed fiscal year; and (2) copies of audited Internal Revenue Service Form 990k, including Schedule H. The audited financial statements requirement extends to both subsidiaries and parent corporation financials. For those hospitals that do not file an IRS Form 990, a to-be-drafted form will be provided that will collect the same information as contained in Form 990 and Schedule H.

Georgia supplemental disclosures are multiple and varied and impose additional transparency requirements on hospitals, especially non-profits, that have not been previously required. These disclosures include: (1) a copy of the hospital’s completed annual questionnaire; (2) community benefit reports; (3) disproportionate share hospital survey; (4) listing of all real property holdings of the hospital, including property use and purchase price; (5) listing of any ownership or interest a nonprofit hospital has in any joint venture, partnership, subsidiary, or captive insurance, including where the entity is domiciled and the value of such ownership or interest; (6) listing of any bonded indebtedness, outstanding loans, and bond defaults; (7) a report identifying by purpose the ending fund balances of the net assets of the hospital and each affiliate; (8) copy of all going concern statements regarding the hospital; (9) most recent legal chart of corporate structure; (10) listing of salaries and fringe benefits for the ten highest paid administrative positions in the hospital; (11) evidence of hospital accreditation; and (12) copy of the hospital’s policy regarding provision of charity and indigent care.

These disclosures are required to be updated yearly and failure to post the required disclosures will result in the hospital being suspended from receiving any state funds or donations. Knowingly or willfully including false, fictitious or fraudulent information in the required disclosed documents will be a criminal offense.

Establishment of the Office of Health Strategy and Coordination (“OHSC”)

The OHSC is to be established within the office of the Governor and “focused on strategic healthcare management and coordination.” This is a realization of the General Assembly-declared public policy of “unit[ing] the major stakeholders of the state’s healthcare system under a strategic vision for Georgia.”

The OHSC will have broad, generalized oversight of the multi-modal provision of healthcare in Georgia and will function, primarily, to facilitate communication amongst the various healthcare stakeholders and advise and recommend policies, strategies, and measures to improve the provision of healthcare in Georgia. Additionally, the OHSC will compile and publish various reports from state agencies and offices involved in healthcare to improve consumer access to information. Given that this is a brand new office with expansive, yet general, obligations, the role to be played by the OHSC going forward will merit observation.

Medicaid Waiver Request Authorizations

Known colloquially as the “Patient’s First Act,” Senate Bill 106, signed into law by Governor Kemp on March 27, 2019, authorizes the governor to submit two separate waivers to the Centers for Medicare and Medicaid Services. The first would seek an increase in the income threshold for Medicaid eligibility up to 100% of the federal poverty level. While the exact nature of the waiver request remains to be seen, it is likely that it will seek a 90 percent federal match of state funds as is available to states under a full Medicaid eligibility expansion to 138 percent of the poverty level as authorized under the ACA. The alternative would be a 67 percent match under a standard Medicaid increase which would not require a waiver.

The second waiver authorization allows the governor to submit a Section 1332 state innovation waiver request as to the applicable provisions of the Affordable Care Act with respect to health insurance coverage and products. This is intended to allow Georgia flexibility to revise the state health insurance exchange and control rising premiums.

While these waivers could represent a substantial change in Medicaid and health insurance coverage for eligible Georgians, any programs initiated via the provisions of the ACA will remain in flux for the immediate future as the Trump Administration and the Department of Justice have thrown their weight behind a recent Texas federal district court decision that has ruled the ACA unconstitutional in its entirety. This decision is currently on appeal at the 5th Circuit Court of Appeals. Though the Governor has not yet signed all pieces of legislation, it is anticipated that it is forthcoming.