Taking into consideration the basis for decision set forth in Section 127165:

(a)  The office may, in individual cases, grant certificates of need for projects when it determines that one of the following is applicable:

(1)  The applicant has provided evidence that the project will meet the needs or reasonably anticipated needs of a special population including members of a religious body or denomination who desire to receive care and treatment in accordance with their religious convictions.

(2)  The applicant has provided evidence that the project is or will be necessary to meet the health needs or reasonably anticipated health needs of adult residents of a nonprofit community care facility, as defined by subdivision (a) of Section 1502, that is owned by the applicant.

(3)  The applicant has provided evidence that, as a health facility, it has developed community support for its services as indicated by its current utilization patterns, and has provided health care services for at least five years.

(4)  The applicant has provided evidence, when the project is for a new health facility or an increase in bed capacity, that there will be an equal or greater reduction in bed capacity in other health facilities in the area.

(5)  The applicant has provided evidence that it will deliver the service proposed to be offered as a result of the project in an innovative and more competitive manner, or at a lower cost than the service is provided by other facilities in the area, and has provided evidence that the quality of care offered will be comparable to that offered by other facilities in the area; or that as a health facility, it serves a disproportionate volume of publicly funded patients, or patients for whom the cost of health care is uncompensated. The office director shall, as he or she deems appropriate, ensure fulfillment of the requirements of this subdivision through conditions mutually agreed upon by the applicant and the office. This paragraph does not apply to projects for the addition of licensed skilled nursing beds by construction or conversion.

If an applicant is requesting the exercise of discretion by the office director pursuant to this paragraph, prior to granting a certificate of need, the office director shall receive an evaluation from the department assessing the potential negative financial impact upon any county owned or operated general acute care hospital. If there is a significant negative potential financial impact, a certificate of need shall not be granted.

Nothing in this subdivision requires the office to grant certificates of need as authorized by this section in any of the above categories.

(b)  In the case of a project for a service to be provided by or through a health maintenance organization for which assistance may be provided under Title XIII, the office shall grant a certificate of need for the project unless the office director finds that the project is not needed by the enrolled or reasonably anticipated new members of the HMO or proposed HMO or the beds or services to be provided are available from non-HMO providers or other HMO’s in a reasonable and cost-effective manner that is consistent with the basic method of operation of the HMO.

For the purposes of subdivision (b), beds or services shall not be considered available if they are any of the following:

(1)  Dispersed in more than one facility when the HMO’s basic method of operation is to provide services through medical centers that consist of a hospital and medical offices at the same site.

(2)  Not available under a contract of at least five years’ duration, with an option to extend the contract for an additional time period as is reasonably necessary for the HMO to obtain a certificate of need and to construct and equip and begin operating alternative beds or service, in the event the non-HMO provider or other HMO gives notice that it intends to terminate the contract.

(3)  Not available under circumstances that would grant full and equal staff privileges to an adequate number of physicians associated with the HMO in appropriate specialties, or otherwise not conveniently accessible through physicians and other health care professionals associated with the HMO.

(4)  Not available in a manner that is administratively feasible to the HMO.

(5)  More costly than if the services were provided by the HMO.

In order to qualify under this section, a project that is proposed to be provided by or through a health maintenance organization for which assistance may be provided under Title XIII, and that consists of or includes the construction, development, or establishment of a new inpatient health care facility, shall be a facility that the office determines will be utilized by members of the health maintenance organization for at least 75 percent of the projected annual inpatient days, as determined in accordance with the recommended occupancy levels under the applicable health systems plan.

(c)  In the case of a project for a service to be provided by or through an HMO, the office shall not deny a certificate of need with respect to the service (or otherwise make a finding that the service is not needed) in those cases (1) when the office has granted a certificate of need that authorized the development of the service, or expenditures in preparation for the offering or development (or has otherwise made a finding that the development or expenditure is needed), and when the offering of this service will be consistent with the basic objectives, time schedules, and plans of the previously approved application. However, the office may impose a limitation on the duration of the certificate of need that shall expire at the end of this time unless the health service is offered prior thereto, or (2) solely because there is an HMO of the same type in the same area, or solely because the services are not discussed in the applicable health systems plan, annual implementation plan, state health plan, or state medical facilities plan.

(d)  A project for a service to be provided by, or through, an HMO that is subject to review under this chapter shall remain subject to that review, unless the federal law states that an approved state program shall not require a certificate of need for the project.

The office shall establish uniform procedures and criteria for approving applications under this section.

(Added by Stats. 1995, Ch. 415, Sec. 9. Effective January 1, 1996.)