Could one Connecticut hospital get a second chronic disease license for its rehab unit?

Plain-English summary

In March 1994, Connecticut’s AG said the Department of Public Health and Addiction Services could not issue a second chronic disease hospital license for a rehabilitation unit within New Britain Memorial Hospital. The hospital was one institution, with a single corporate existence, chief executive and board. Its existing chronic disease hospital license already covered rehabilitation services. Neither the statutes nor the regulations allowed a second license in the same classification for that one institution.

The hospital sought the extra license because it expected a separate unit might receive a more favorable Medicare base rate. That reimbursement objective did not supply a basis under state licensing law. The AG observed in a footnote that federal rules might allow a distinct-part rehabilitation unit to seek Medicare certification without a separate state license. He also distinguished a genuinely separate institution, which would raise new licensing and certificate-of-need issues.

Hospital administrators at the time

The opinion rejected a second chronic disease license for the same hospital. It did not question the hospital’s ability to provide rehabilitation services under its existing license.

State licensing officials at the time

The AG read the licensing scheme as one license per institution in a given classification. His answer depended on the single-institution facts and the absence of a separate rehabilitation hospital classification then.

Currency note

This opinion was issued in 1994. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Could a hospital license its rehabilitation wing as a second chronic disease hospital?
A: The AG said no for the single institution described. Its current chronic disease license covered the wing’s services.

Q: Did a better Medicare payment rate justify the extra state license?
A: No. The AG said the state licensing statutes supplied no basis for the second license, whatever the anticipated payment effect.

Q: Was a separate state license needed to offer rehabilitation services?
A: No. The opinion said those services were within the chronic disease hospital license already held by this hospital.

Background and statutory framework

Conn.Gen.Stat. § 19a-491(a) required an institution to maintain a license, and Conn.Gen.Stat. § 19a-495(a) authorized institutional classifications. The AG found no provision for two licenses in one class for one institution. His footnote said a transfer to a separate entity could create a new institution, but would also trigger the change-of-ownership certificate-of-need question under Conn.Gen.Stat. § 19a-154.

Citations and references

Statutes: Conn.Gen.Stat. § 19a-491(a); Conn.Gen.Stat. § 19a-495(a); Conn.Gen.Stat. § 19a-154.

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Opinion page: https://portal.ct.gov/ag/opinions/1994-formal-opinions/susan-s-addiss-mph-murs-department-of-public-health-and-addiction-services-1994008-formal-opinion-at

Original opinion text

Susan S. Addiss, MPH, MUrS, Department of Public Health and Addiction Services, 1994-008 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General Richard Blumenthal

March 24, 1994

Susan S. Addiss, MPH, MUrS

Commissioner

Department of Public Health and Addiction Services

150 Washington Street

Hartford, CT 06106

Dear Commissioner Addiss:

You have sought our advice regarding the issue of whether a hospital which has been licensed as a chronic disease hospital may be issued a second chronic disease hospital license for a discrete portion of its premises which it intends to operate as a rehabilitation unit. After careful consideration, we must concur with the Department's June 1993 opinion, referenced in your letter requesting this advice, that a second chronic disease hospital license may not be issued.

In the example which you provided, New Britain Memorial Hospital ("the Hospital") requested a second chronic disease hospital license for a rehabilitation unit which it intends to locate in a newly constructed building addition. The Hospital argued that it had evolved into what has become, in effect, two separate hospitals, one for the treatment of chronic disease, and one a rehabilitation hospital. The chronic disease units serve patients who require long-term stays with few discharge options, whereas the rehabilitation program involves short stays with approximately 87% of the patients discharged into the community.

The reason for the request for a second license centers on Medicare rate limits. Under Medicare's Prospective Payment System ("PPS"), rate ceilings for current years are based on a "base rate" established in the "12-month cost reporting period immediately preceding the first cost reporting period subject to ceilings established under this section." 42 C.F.R. § 413.40(b)(1). The Hospital's base year is 1983. The Hospital claims that the gap between the base rate and reasonable Medicare costs has increased dramatically. The Hospital contends that issuance of a second chronic disease hospital license would establish a new base rate for the newly-licensed portion of the Hospital, which, in turn, would ensure greater federal participation.1 Thus, the Hospital seeks a second license in order to avail itself of the higher base rate, which, in turn, would lead to larger federal payments to the Hospital.

Connecticut does not have a rehabilitation hospital license. Conn.Gen.Stat. § 19a-495(a) provides that "the Department of [Public Health and Addiction Services] shall, ..., establish classifications of institutions." Hospitals are classified for licensing purposes into two main groups: short-term hospitals, which include general, children's general and special hospitals; and long-term hospitals, which include chronic disease hospitals. Conn. Agencies Reg. § 19-13-D1(a). A chronic disease hospital is defined as a "long-term hospital having facilities, medical staff and all necessary personnel for the diagnosis, care and treatment of a wide range of chronic diseases." Conn. Agencies Reg. § 19-13-D1(b)(2). The Hospital, which is licensed as a chronic disease hospital, has been providing rehabilitation services appropriately as coming within the definition of a chronic disease hospital.

Generally, "an institution" is required to maintain "a license." Conn.Gen.Stat. § 19a-491(a). What the Hospital proposes here is that a single institution, with a single corporate existence, including a single CEO and Board of Directors, be issued two licenses for the same classification. There is no provision in either the statutes or the regulations for a single institution to be issued more than one license in a single classification. Statutes should be construed so as to give effect to the intent of the legislature. State v. Parmalee, 197 Conn. 158, 161, 496 A.2d 186 (1985) (citation omitted); Nationwide Mut. Ins. Co. v. Pasion, 219 Conn. 764, 768-69, 594 A.2d 468 (1991) (citing Sanzone v. Board of Police Commissioners, 219 Conn. 179, 186, 592 A.2d 912 (1991)). "When the words of the statute are plain and unambiguous, we need look no further for interpretive guidance because we assume that the words themselves express the intention of the legislature." Rhodes v. Hartford, 210 Conn. 89, 93, 513 A.2d 124 (1986) (citation omitted).

Here, the statute is clear: a single institution is required to have a single license in a particular classification. There is nothing in either the statutes or the regulations which in any way contemplates a situation in which a single hospital would hold more than one license in the same classification.2 Further, since rehabilitation services would come within a chronic disease hospital license, and since the Hospital already has a chronic disease hospital license, no additional license is required in order for the Hospital to provide such services. There simply is no basis under the State licensing statutes for issuing a second license in the same classification to a single facility whose current license is sufficient for all intended uses.3

Thus, the statutory scheme clearly does not permit the issuance of a second license in the same classification to the same institution.

Very truly yours,

Sincerely,

RICHARD BLUMENTHAL

ATTORNEY GENERAL

Jennifer C. Jaff

Assistant Attorney General

Footnote:

1 The federal regulations provide for exclusions from the PPS (resulting in higher base rates) for free-standing rehabilitation hospitals, 42 C.F.R. § 412.23(b), and for "distinct part psychiatric or rehabilitation unit[s]." 42 C.F.R. § 412.25. Apparently, the rate is lower for a distinct part unit than for a free-standing rehabilitation hospital, although the rate for a distinct part unit would be higher than the 1983 base rate currently in effect for the Hospital. There is nothing in the federal regulations which would prevent the Hospital from applying to Medicare to certify the rehabilitation unit as a distinct part unit if they have not done so already, regardless of the fact that we will not issue the unit a separate license.

2 The Hospital notes that the Commission on Hospitals and Health Care ("CHHC") indicated that the Hospital would not require a new Certificate of Need ("CON") for the "new" rehabilitation unit. The Hospital's CON for the building addition approved both the addition and the necessary beds. However, it should be noted that if the Hospital conveyed the "new" unit to a separate corporate entity, thereby creating a new "institution," and justifying the issuance of a second license (if, of course, all other requirements were met), it also would be required to obtain a new CON pursuant to the change of ownership provisions governing the CHHC. Conn.Gen.Stat. § 19a-154.

3 As you noted in your response to the Hospital, the State currently does not offer a rehabilitation hospital license. Should this change, we could foresee a situation which would justify the issuance of both a chronic disease hospital license and a rehabilitation hospital license in the case of a single hospital which sought to offer services coming within the ambit of the two separate classifications. However, this is not presently the case.