COOPERATIVE TRANSPLANT PROGRAM APPROVAL AND MONITORING
As used in this division unless the context requires otherwise:
(1) "Board of governors" means the governors of a cooperative program as described in OAR 410-145-0020.
(2) "Cooperative program" means a program among two or more health care providers for the purpose of providing heart and kidney transplant services including, but not limited to, the sharing, allocation and referral of physicians, patients, personnel, instructional programs, support services, facilities, medical diagnostic, laboratory or therapeutic services, equipment, devices or supplies, and other services traditionally offered by health care providers.
(3) "Director" means the Director of the Department of Human Services.
(4) "Health care provider" means a hospital, physician or entity, a significant part of whose activities consist of providing hospital or physician services in this state. For purposes of the immunities provided under ORS 442.700 to 442.760 and 646.740, "health care provider" includes any officer, director, trustee, employee, or agent of, or any entity under common ownership and control with, a health care provider.
(5) "Hospital" means a health care facility defined in ORS 442.015(14)(a) to (d) and licensed under ORS 441.015 - ORS 441.097 and includes community health programs established under ORS 430.610 - ORS 430.700. In other words, as used in this division the term "hospital" includes health care facilities licensed as hospitals, special inpatient care facilities, skilled and intermediate long term care facilities, and ambulatory surgical centers. It also includes community mental health and developmental disabilities programs established under ORS 430.610 to 430.700. It does not include establishments furnishing primarily domiciliary care.
(6) "Order" means a decision issued by the director under OAR 410-145-0010 either approving or denying an application for a cooperative program and includes modification of an original order under OAR 410-145-0040(3)(b) and orders under OAR 410-145-0060(1) and (4).
(7) "Party to a cooperative agreement" or "party" means an entity that enters into the principal agreement to establish a cooperative program and applies for approval under this division and any other entity that, with the approval of the director, becomes a member of the cooperative program.
(8) "Physician" means a physician defined in ORS 677. 010(12) and licensed under ORS Chapter 677.
(9) "Urban area" means a Metropolitan Statistical Area as defined by the federal Bureau of the Census.
(1) The Oregon Health Sciences University and one or more entities, each of which operates at least three hospitals in a single urban area in this state, may apply to the director for approval of a cooperative program.
(2) The application must include all of the following information, in the order specified:
(a) The names and addresses of each of the entities to be involved in the cooperative program, with a narrative describing how each entity meets the eligibility requirements set out in section (1) of this rule;
(b) A list of the names of all health care providers who propose to provide heart and kidney transplant services under the cooperative program, together with appropriate evidence of compliance with any licensing or certification requirements for those health care providers to practice in this state. The services to be provided by each provider and the location where these services are to be provided should be identified. In the case of employed physicians, the list and the information to be submitted may be limited to the employer or organizational unit of the employer;
(c) A description of the activities to be conducted by the cooperative program;
(d) A description of proposed anticompetitive practices listed in paragraphs (A) through (E) of this subsection, any practices that the parties anticipate will have significant anticompetitive effects and a description of practices of the cooperative program affecting costs, prices, personnel positions, capital expenditures and allocation of resources. As provided in ORS 442.715(1), practices which may be authorized by an order issued under this rule include:
(A) Setting prices for heart and kidney transplants and all services directly related to heart and kidney transplants;
(B) Refusing to deal with competitors in the heart and kidney transplant market;
(C) Allocating product, service, geographic and patient markets directly relating to heart and kidney transplants;
(D) Acquiring and maintaining a monopoly in heart and kidney transplant services; and
(e) A list of the goals identified in paragraphs (A) through (H) of this subsection that the cooperative agreement expects to achieve, together with an explanation, including documentation as necessary, of the way in which such goals will be achieved and the anticipated time schedule for meeting these goals. The phrase "Reduction of, or protection against", as used in paragraphs (A), (B) and (D) of this subsection, means that the applicants have two options for demonstrating accomplishment of these goals. The application may compare the projected results for the cooperative program to the existing situation, in which case a reduction in price, cost and duplication of resources compared to present conditions must be demonstrated. Alternatively, the application may compare the projected results for the cooperative program to the situation that would have existed if there were separate, competing transplant programs. In this latter case, the application must demonstrate that the proposed cooperative program will result in protection against the rising costs, rising prices and duplication of resources that might result if there were competing programs. As provided in ORS 442.705(2), goals which might be achieved through cooperative transplant programs include:
(A) Reduction of, or protection against, rising costs of heart and kidney transplant services;
(B) Reduction of, or protection against, rising prices for heart and kidney transplant services;
(C) Improvement or maintenance of the quality of heart and kidney transplant services provided in this state;
(D) Reduction of, or protection against, duplication of resources including, without limitation, expensive medical specialists, medical equipment and sites of service;
(E) Improvement or maintenance of efficiency in the delivery of heart and kidney transplant services;
(F) Improvement or maintenance of public access to heart and kidney transplant services;
(G) Increase in donations of organs for transplantation; and
(H) Improvement in the continuity of patient care.
(f) A description of the proposed places and manner of providing heart and kidney transplant services and services related to heart and kidney transplants under the cooperative program. This description should include a discussion of whether service sites have or will receive membership in the United Network for Organ Sharing (UNOS). If the cooperative program will not initially include both heart and kidney transplant services, the application shall identify which services will not initially be included, and will describe what will be done by the parties to work towards inclusion of such services in the future. The application must describe the ongoing efforts being made and any planned efforts for including both heart and kidney transplant services in the cooperative program;
(g) Projections of the number of heart transplants and the number of kidney transplants which the cooperative program expects to perform in each of its first three years of operation. These projections should be accompanied by a discussion of the methodology by which they were derived. A description of the expected service area(s) for the cooperative program's services should also be included;
(h) If the application claims that the program will achieve the goal in paragraph (e)(G) of this section, or if the application projects an increase in the total number of heart or kidney transplants in the state, the application should discuss how donor organ availability would change as a result of the cooperative program's operations, and explain the reasons why such changes are anticipated;
(i) If the applicants intend to demonstrate that the cooperative program will result in a reduction of costs, prices and duplication of resources compared to present conditions, the application must include a budget for the most recently completed fiscal year for each existing heart and kidney transplant program, as well as a proposed budget for operating the cooperative program for its first three years. The budget for the cooperative program must account for all applicable services listed in OAR 410-145-0000(2). Both the budgets for existing programs and the projected budget for the proposed cooperative program must include the following information:
(A) Gross revenues;
(B) Direct expenses, including a breakdown into salaries, payroll taxes and fringe benefits, any compensation to physicians to be paid by the program, supplies, bad debts, depreciation and interest, and other direct expenses;
(C) Indirect expenses, identified by categories which should include operation and maintenance of plant, housekeeping, billing, insurance, another indirect expenses;
(D) Deductions from revenue by component, including charity care;
(E) Net operating income (or loss) after the allocation of indirect expenses from non-revenue producing departments;
(F) Anticipated gross and net operating revenue per case for heart transplants and for kidney transplants;
(G) If either existing programs or the proposed cooperative programs charge or anticipate charging any flat fees for any transplant services, the amount of such fees (projected for the first three years of operation, in the case of the cooperative program);
(H) For the cooperative program only, any proposed capital expenditures; and
(I) Projected cost savings or cost increases to the health care system of the proposed cooperative program, compared to the costs of existing transplant services.
(j) If the applicants intend to demonstrate that the cooperative program will result in protection against rising costs, rising prices and duplication of resources compared to the situation that would have existed if there were separate, competing transplant programs, the application must include a proposed budget for operating the cooperative program for its first three years. This budget must account for all applicable services listed in OAR 410-145-0000(2) which will be delivered at a new transplant program site, and for all new services which will be delivered through the cooperative program at an existing site. The budget must also separately account for any existing services that will be included in or provide support to the cooperative program, but the application may provide a lesser level of detail for the budget information on existing services. The applicant must also provide a projected three year budget for new transplant service sites and associated support services, showing what would occur if the services proposed to be delivered by the cooperative program were to be delivered through separate, competing programs. Both the cooperative program budget and the hypothetical budget for a competing program must include the following information:
(A) Gross revenues;
(B) Direct expenses (for services provided through a new transplant program site or for new services at an existing site, include a breakdown into salaries, payroll taxes and fringe benefits, any compensation to physicians to be paid by the program, supplies, bad debts, depreciation and interest, and other direct expenses);
(C) Indirect expenses (for services provided through a new transplant program site or for new services at an existing site, identified by categories which should include operation and maintenance of plant, housekeeping, billing, insurance, and other indirect expenses);
(D) Deductions from revenue (for services provided through a new transplant program site or for new services at an existing site, deductions should be broken out by component, including charity care);
(E) Net operating income (or loss) after the allocation of indirect expenses from non-revenue producing departments;
(F) Anticipated gross and net operating revenue per case for heart transplants and for kidney transplants;
(G) If it is anticipated that either the cooperative or competitive program would charge any flat fees for any transplant services, a projection of such fees for the first three years of operation;
(H) For services provided through a new transplant site or for new services at an existing site, any proposed capital expenditures; and
(I) Projected cost savings or cost increases to the health care system of cooperative vs. competitive programs for transplant services.
(k) Satisfactory evidence of financial ability to deliver heart and kidney transplant services in accordance with the cooperative program. Such evidence shall include:
(A) Financial statements for each party to the application for each of the three previous years;
(B) The anticipated sources or reimbursement for heart transplants and sources of reimbursement for kidney transplants during the first three years of cooperative program operations. The application should discuss whether the cooperative program anticipates receiving Medicare certification for any proposed new heart and kidney transplant sites and, if so, when such certification is expected. The application should also discuss any existing or anticipated contractual agreements with third party payers regarding cooperative program services, and any anticipated modifications of existing contractual agreements concerning cooperative program services between parties to the cooperative agreement and third party payers.
(l) The agreement that establishes the cooperative program and policies that shall govern it.
(3) A joint application must be submitted on behalf of all parties to the proposed cooperative agreement. Four copies of the application shall be submitted to the Office of the Director, Oregon Health Authority, Human Services Building, Salem, Oregon 97310. The application must be accompanied by an application fee of $30,000. Checks should be made payable to the Oregon Health Authority.
(4) An application shall be considered filed as of the date that a complete application is received by the director. A complete application must meet all the requirements of sections (2) and (3) of this rule. Within 14 days of the receipt of an application, the director shall determine whether the application is complete, and notify the applicants if the application is complete or incomplete. If the application is incomplete, this notification shall include a detailed description of the additional information that is needed. The applicants may provide the additional information requested to make the application complete, or the applicants may elect to proceed with the review process without providing this information. The applicants should notify the director of their choice in this matter in writing within seven days of the director's finding in regard to completeness. If the applicants elect to submit additional information, the notification to the director should include an acknowledgment by the applicants that the application as originally submitted was incomplete. If such notification and acknowledgment is not received by the director within seven days, it will be assumed that the applicants do no intend to submit additional information and wish to proceed immediately with the review. If the applicants elect to provide the additional information requested, a complete application shall not be considered to have been submitted until such information is received by the director. If the applicants elect not to provide such information, a complete application will be considered to have been submitted as of the date that the initial application was received by the director. In such an instance, however, the director may make negative findings concerning any areas that were found to be incomplete.
(5) The director shall review the application in accordance with the provisions of this rule and shall grant, deny or request modification of the application within 90 days of the date the application is filed. The director shall hold one or more public hearings on the application, which shall conclude no later than 80 days after the date the application is filed. Hearings shall be held in the applicants' urban area. At least 14 days notice of any hearing will be provided. Notice of hearings shall be provided to the applicants; to all other hospitals located in the applicant's urban area(s); to all wire services, daily newspapers and TV stations serving the state; and to any other persons who have requested notice of such hearings or who the director believes may have any interest in such hearings. The decision of the director shall be considered an order in a contested case for the purposes of ORS 183.310 to 183.550.
(6) The director shall approve an application made under this rule after:
(a) The applicants have demonstrated they will achieve at least six of the goals of subsection (2)(e) of this rule, including at least the goals listed in paragraphs (2)(e)(A) to (2)(e)(D); and
(b) The director has reviewed and approved the specifics of the anticompetitive activity expected to be conducted by the cooperative program.
(7) In evaluating the application, the director shall consider whether a cooperative program will contribute to or detract from achieving the goals listed under subsection (2)(e) of this rule. The director may weigh goals relating to circumstances that are likely to occur without the cooperative program, and relating to existing circumstances. The director may also consider whether any alternative arrangements would be less restrictive of completion while achieving the same goals.
(8) An order approving a cooperative program shall identify and define the limits of the permitted activities for the purposes of granting antitrust immunity under ORS 442.700 to 442.760.
(9) An order approving a cooperative program shall include:
(a) Approval of specific activities listed in subsection (2)(d) of this rule;
(b) Approval of activities the director anticipates will have substantial anticompetitive effects;
(c) Approval of the proposed budget of the cooperative program;
(d) The goals listed in subsection (2)(e) of this rule that the cooperative program is expected to achieve; and
(e) Approval of the cooperative program as described in the application and a finding that the cooperative program is in the public interest.
(10) An order denying the application for a cooperative program shall identify the findings of fact and reasons supporting denial.
(11) Either the director or all parties to the cooperative program may request an modification of an application made under this section. A request for a modification shall result in one extension of 30 days after submission of the modified application. The director shall issue an order under this section within 30 days after receipt of the modified application.
Board of Governors
(1) If the director issues an order approving an application for a cooperative program under OAR 410-145-0010, the director shall establish a board of governors to govern the cooperative program. The board of governors shall not constitute, for any purpose, a governmental agency.
(2) The board of governors shall consist of the president or other chief executive officer of each health care provider that is a party to the cooperative program agreement and the director or a designee of the director. The designee shall serve at the pleasure of the director. The designee shall not have any economic or other interest in any of the health care providers associated with the cooperative program.
(3) In governing the cooperative program, the board of governors shall develop policy and approve budgets for the implementation of the cooperative program.
(4) The director or designee of the director may reject any operating or capital budget of the cooperative program upon a finding by the director that the budget is not consistent with the goals listed in OAR 410-145-0010(2)(E) that the cooperative program is expected to achieve.
Not later than 60 days following each anniversary date of the director's approval of a cooperative program, the board of governors of the cooperative program shall deliver four copies of an annual report to the director, accompanied by a review fee of $16,000. The report shall specifically describe:
(1) How heart and kidney transplant services and related services of the cooperative program are being provided in accordance with the order;
(2) Which of the goals identified in the order are being achieved and to what extent; and
(3) Any substantial changes in the cooperative program.
(4) If the cooperative program does not include both heart and kidney transplant services, the annual report will describe any efforts that have been made by the parties over the previous year to provide for inclusion of both heart and kidney transplants in the cooperative program, and will describe what the parties will do to work towards inclusion of such services in the future. The annual report must describe the ongoing efforts being made and any planned efforts for including both heart and kidney transplant services in the cooperative program.
Review and Evaluation of Annual Report
(1) The director shall review and evaluate the annual report delivered under OAR 410-145-0030. The director shall:
(a) Determine the extent to which the cooperative program is achieving the goals identified in the order;
(b) Review the activities being conducted to achieve the goals; and
(c) Determine whether each of the activities is still necessary and appropriate to achieve the goals.
(2) If the director determines that additional information is needed for the review described in section (1) of this rule, the director may order the board of governors to provide the information within a specified time. Such an order shall be issued no later than 14 days after receipt of the cooperative program's annual report.
(3) Within 60 days after receiving the annual report or any additional information ordered under section (2) of this rule, the director shall:
(a) Approve the report if the director determines that the cooperative program is operating in accordance with the order and that the goals identified in the order are being adequately achieved by the cooperative program;
(b) Modify the order as appropriate to adjust to changes in the cooperative program approved by the director and approve the report as provided in subsection (a) of this section;
(c) Order the board of governors to make remedial changes in anticompetitive activities not in compliance with the order and request the board of governors to report on progress not later than a deadline specified by the director;
(d) Revoke approval of the cooperative program; or
(e) Take any of the action set forth in OAR 410-145-0060.
(1) Any person may file a complaint with the director requesting that a specific decision or action of a cooperative program supervised by the director be reversed or modified, or that approval for all or part of the activities permitted by the order be suspended or terminated. The complaint shall allege the reasons for the requested action and shall include any evidence relating to the complaint.
(2) The director on the director's own initiative may at any time request information from the board to governors concerning the activities of the cooperative program to determine whether the cooperative program is in compliance with the order.
Action on Complaints
(1) During the review of the annual report described in OAR 410-145-0040, after receiving a complaint under 410-145-0050, or on the director's own in initiative, the director may take one or more of the following actions:
(a) If the director determines that a particular decision or action is not in accordance with the order, or that the parties are engaging in anticompetitive activity not permitted by the order, the director may direct the board of governors to identify and implement corrective action to insure compliance with the order or may modify the order.
(b) If the director determines that the coopera-tive program is engaging in unlawful activity not permitted by the order or is not complying with the directive given under subsection (a) of this section, the director may serve on the cooperative program a proposed order directing the cooperative program to:
(A) Conform with the directive under sub-section (a) of this section; or
(B) Cease and desist from engaging in the activity.
(2) The cooperative program shall have up to 30 days to comply with a proposed order under subsection (1)(b) of this rule, counted from the order's date of issuance, unless the board of governors demonstrates to the director's satisfaction that additional time is need for compliance.
(3) If the director determines that the participants in the cooperative program are in substantial noncompliance with the cease and desist directive, the director may seek an appropriate injunction in the circuit courts of Marion or Multnomah Counties.
(4) If the director determines that a sufficient number of goals set forth in OAR 410-145-0010(2)(e) are not being achieved or that the cooperative program is engaging in activity not permitted by the order, the director may suspend or terminate approval for all or part of the activities approved and permitted by the order.
(5) A proposed order to be entered under subsection (1)(b) or section (4) of this rule may be served upon the cooperative program without prior notice. The cooperative program may contest the proposed order by filing a written request for a contested case hearing with the director not later than 20 days following the date of the proposed order. The proposed order shall become final if no request for a hearing is received. Unless inconsis-tent with this section, the provisions of ORS 183.310 - ORS 183.550, as applicable, shall govern the hearing procedure and any judicial review.
(6) The only effect of an order suspending or terminating approval under ORS 442.700 - ORS 442.760 shall be to withdraw the immunities granted under ORS 442.715(3) for anticompetitive activity permitted by the order and taken after the effective date of the order.
Stat. Auth.: ORS 413.042
Stats. Implemented: ORS 413.042
Hist.: HR 16-1994, f. & cert. ef. 3-31-94
Confidentiality of Information
(1) If parties to a cooperative program agreement provide the director with written or oral information that is confidential or otherwise protected from disclosure under Oregon law, the disclosures shall not be considered a waiver of any right to protect the information from disclosure in other proceedings.
(2) The parties to a cooperative agreement shall specifically identify to the director any information that meets the requirements of section (1) of this rule, and the director shall considered only information that has been so identified by the parties to be confidential. The director will make the decision as to whether such information is in fact protected from disclosure under Oregon law. The director shall inform the party who submitted the information of any decisions regarding its confidentiality. Information which has been found to be subject to disclosure under Oregon law may be released by the director to any requesting persons subject to the provisions of ORS 192.410 - ORS 192.505.
Reconsideration and Judicial Review
(1) Orders, modifications of orders, findings and directives issued under OAR 410-145-0010, 410-145-0040(3), or 410-145-0060(1)(a) are subject to reconsideration and stay under the procedures provided in 137-003-0080 through 137-003-0092.
(2) Notwithstanding the provisions of ORS 183.310(6) and 183.480, only a party to a cooperative program agreement or the director shall be entitled to a contested case hearing, reconsideration, or judicial review of an order issued pursuant to ORS 442.700 to ORS 442.760.
(3) The director may recover any expenses incurred in the conduct of any hearing under this rule, including hearing officer and court reporter fees and the director's legal expenses, through an assessment on other parties to the hearing.
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