Public law 93-461 (the National Health Planning and Resources Development Act of 1974) established a national system of health care planning agencies at the state and local level that were required to produce health plans and conduct capital expenditure review programs. The minimum federal requirements were that a state require health care institutions to submit for review and approval all proposed expenditures above a certain level for equipment, constructions, or services. Additionally, Section 1122 of the Social Security Act (1972) established a voluntary program under which states could inform the federal government of proposed capital expenditures by health care institutions for the purpose of regulating federal assistance to those institutions based on the institutions compliance with certificate of need (CON) regulations.
In Wisconsin, the state legislature's concerns over the rate of increase in health care expenditures resulted in the creation of a CON Program as part of the 1977-1979 Biennial Budget. The program became fully operational in July 1978. As authorized by Wis. Stats. Chap. 150, the CON rules directed Department of Health and Social Services (DHSS) to review and either approve or disapprove proposals to expend health care operations by hospitals and other institutional health care providers. The goals of the program were to
conserve the limited health care resources of personnel and facilities in order to provide quality health care to all citizens, to minimize duplication of facilities and services, to encourage development of alternative methods of delivering health care and to maximize the effectiveness of expenditures for health care.
The program's work was considered a mixed success by the agency. In 1981 DHSS decided to review the program, and consequently, promulgated a two year moratorium on all new CONs and all new hospital and nursing home construction above a certain dollar amount. The study concluded “that while the CON had not been extremely cost effective overall, it had a large impact upon a narrowly defined set of projects which comprise a large proportion of the dollar amount of capital expenditure reviews.” The agency chose to replace the CON with a Capital Expenditure Review Program/Resources Allocation Program (CERP/RAP) which was enacted in the 1983-85 biennial budget (Wis. Act 27). The CERP adjusted the focus of the effort from determining needs and apportioning services to a greater focus health care cost containment. The CERP set standards for projects that would have a significant impact on the state's health care cost containment efforts; the RAP set standards for nursing home expansion and placed limits on the number of nursing home beds. Additionally the threshold for CERP/RAP reviews was raised from projects of $150,000 or higher to those of $600,000+.
Over the course of the next five years, the state's role in this area gradually diminished until hospital construction and other capital outlays were largely deregulated. Nursing homes continued to have stricter regulation on capital expenditures, but these rules have also recently been weakened setting the stage for the current RDA revision. At the same time that the state was retrenching its efforts to regulate health care capital outlays, cost control efforts were refocused on hospital rates under the regulation of the Hospital Rate-Setting Commission created in 1983. This commission survived for four years before it was abolished in 1987.
The state legislature again attempted to devise a system to effectively control hospital capital outlays in 1991. 1991 Wis. Act 250 created the Cost Containment Commission along with an advisory Cost Containment Council and attached them both to Department of Health and Family Services (DHFS). The function of the Commission was to “develop and implement a statewide policy to contain costs of health care services and capital expenditures while promoting quality outputs and geographic access for all consumers in Wisconsin.” It would achieve by through the following measures.
- approve hospital capital expenditure programs that exceed $1 million, programs that add new hospital services that exceed $500,000, and purchases by hospitals and other medical practices of clinical equipment that exceeds $500,000
- promulgate administrative rules to establish requirements for capital expenditure proposals
- adopt a state health services plan at least once every three years that describes the hospital system of Wisconsin and identifies health care needs and surpluses in services, equipment, and facilities.
The Commission completed its rule drafting process in 1994, and it published a statewide health that year. The Commission's role and powers were controversial and received considerable criticism from elements in the health care industry. In the preparation of the 1995-1995 biennial budget the Commission was “axed” by the Joint Finance Committee. We have several active RDAs from the Commission transferring records to us, but none have been received as of yet.
See the Agency History in the catalog.
